ADJUDICATION OFFICER DECISION
Adjudication Decision Reference: ADJ-00000656
Complaints for Resolution:
Act
Complaint Reference No.
Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967
CA-00000933-001
18/11/2015
Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967
CA-00000951-001
19/11/2015
Date of Adjudication Hearing: 24/02/2016
Workplace Relations Commission Adjudication Officer: Kevin Baneham
Procedure:
On 18 and 19 November 2015, the complainant referred complaints to the Workplace Relations Commission in relation to her entitlement to a redundancy lump sum payment. The complainant was employed as an administrative assistant and the respondent is a limited company in the business of distributing organic produce. The complaints were scheduled for adjudication on 24 February 2016.
At the time the adjudication was scheduled to commence, it became apparent that there was no appearance by or on behalf of the respondent. I waited for some time to accommodate their late arrival and also verified that the respondent was on notice of the time, date and venue of the adjudication. Having waiting some time and been satisfied in relation to notice, I proceeded with the adjudication in the absence of the respondent.
The complainant attended the adjudication and was accompanied by a former director of the respondent as well as by an accountant, who represented the complainant at the adjudication.
In accordance with the Workplace Relations Act, 2015 and the Redundancy Payments Act, 1967, as amended by section 76 of the Workplace Relations Act, 2015, following the referral of the complaints to me by the Director General, I inquired into the complaints and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaints.
Complainant’s Submission and Presentation:
The complainant outlined that she commenced working for the respondent on 7 January 2013 and was initially employed to work on customer accounts. She worked some three or four mornings a week and mainly followed up on domestic customer accounts to ensure that deliveries had been paid for. She could be asked to go home at some time in the late morning or early afternoon, once her work had been completed. Her hourly rate of pay was €10 and she worked between 12 and 20 hours per week. In 2014, the complainant said that she was paid €9,786 and had worked 978 hours (an average of 18 hours per week). She was paid weekly by means of electronic transfer and received pay slips. In this role, the complainant reported to a named person, who held overall responsibility for all accounts. This was the person who had trained the complainant in the tasks associated with the job.
The complainant outlined that she held an 11% shareholding in the company and was also a director. She submits that she had been placed by the respondent on the wrong class of PRSI stamps and that as an employee, she ought to have been placed on Class A stamps. She outlines that she was placed on Class S stamps but this was not correct as her shareholding of 11% deemed her as a non-proprietary director and she did not meet the Class S criteria. As she owned or controlled less than 50% of the company, she could also not be considered to have been self-employed.
The complainant outlined that she resigned as a company director in May 2015. She continued to work for the company in the same capacity and in the same way as before. The complainant’s representative outlined that he had made representations and the complainant’s PRSI designation was amended to Class A. He had also been told by the respondent that the complainant’s situation would be regularised. On 25 September 2015, she was informed that the company was entering liquidation. The complainant outlines that her employment came to an end on 9 October 2015.
The complainant submits that she was an employee of the respondent and referring to the Code of Practice for Determining Employment or Self-Employment Status, she referred to the following indices that point to her being an employee. She outlines that she was under the control and direction of two named directors (the majority shareholders) when at work. She supplied only her labour, did not supply materials or equipment and received a fixed salary. She was engaged as an administrative assistant and could not assign her work to another. She took no financial risk in carrying out her duties, and could not make additional personal profit from how she performed her work. Her hours of work and the tasks she carried out from under the supervision of a manager and she was also eligible for overtime and travel and subsistence.
Respondent’s Submission and Presentation:
The respondent did not attend the adjudication and nor did it make submissions in relation to this complaint.
Findings and reasoning:
This claim relates to the complainant’s entitlement to a redundancy lump sum payment pursuant to the Redundancy Payments Acts. She also asserts that she ought to have been assigned to Class A PRSI contributions and that she had been wrongly assigned Class S.
The categorisation of a PRSI class to a person is not, of course, within the bailiwick of a Workplace Relations Commission Adjudication Officer. What is within the jurisdiction of this adjudication are the questions of the complainant’s entitlement to a redundancy lump sum payment pursuant to the Redundancy Payments Acts, and the underlying question of her employment status.
The Redundancy Payments Acts defines “contract of employment” as including a “contract of service” and defines “employee” as “a person… who has entered into or works under (and where the employment has ceased, entered into or worked under) a contract of employment…” The Acts also define eligibility for the redundancy lump sum payment.
Whether a complainant is an employee or an independent contractor is a matter to be determined according to the facts and circumstances arising out of the relationship of the parties. In Henry Denny & Sons (Ireland) Ltd v. Minister for Social Welfare [1998] 1 I.R. 34, Keane J. held, at page 50,
“It is, accordingly, clear that, while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself.”
These principles were re-iterated by the Supreme Court in Castleisland Cattle Breeding Society Ltd v. Minister for Social and Family Affairs [2004] 4 I.R. 150. The complainant makes reference to the Code of Practice for Determining Employment or Self-Employment Status, pointing to 12 factors it says indicates that she was an employee of the respondent.
The facts that the complainant was a director of the respondent and had an 11% shareholding are added elements to this case. Such a scenario was considered by Laffoy J. in Neenan Travel Ltd v. the Minister for Social and Family Affairs [2011] IEHC 458, where the shareholder/director, Mr Leech, held a 16.7% holding of the issued share capital of the company. Laffoy J. concluded
“On the authority of the decision of the Supreme Court in the Henry Denny case, in order to find that Mr. Leech was in employment under a contract of service, the Appeals Officer had to find that he performed the services he was contracted to perform for the appellant, and not on his own account. It is not in issue that, prior to becoming a shareholder of the appellant, the relationship of employer and employee existed between the appellant and Mr. Leech and that Mr. Leech provided services to the appellant under a contract of service. In my view, the Appeals Officer applied the law correctly in determining that the acquisition of the 16.7% minority shareholding in the appellant did not change that relationship.”
Addressing facts where the director/shareholder held a 90% shareholding in the company, the UK Court of Appeal held in Secretary of State for Business v. Neufeld [2009] EWCA Civ 280:
“Whether or not such a shareholder/director is an employee of the company is a question of fact for the court or tribunal before which such issue arises. In any such case there may in theory be two such issues, although in practice the evidence relevant to their resolution will be likely to overlap. The first, and logically preliminary one, will be whether the putative contract is a genuine contract or a sham. The second will be whether, assuming it is a genuine contract, it amounts to a contract of employment (it might, for example, instead amount to a contract for services).” [para 81]
While addressing the definition of “worker” in EU equality law, the Court of Justice of the European Union in Danosa v. LKB Lizings SIA (C-232/09) concluded, at para 56,
“a member of a capital company’s Board of Directors, who provides services to that company and is an integral part of it, must be regarded as having the status of worker for the purposes of Directive 92/85, if that activity is carried out, for some time, under the direction or supervision of another body of that company and if, in return for those activities, the Board Member receives remuneration.”
Having considered the above authorities and the facts adduced in evidence, I find as fact that the complainant was an employee of the respondent. This status is not negated by the fact that until May 2015, she was also a director/secretary of the respondent and held an 11% shareholding. I reach this finding for the following reasons. The complainant carried out specific tasks relating to deliveries of produce to domestic homes and following up on customer accounts. She reported to a manager and she would end her day of work at the instructions of the respondent. She carried no financial risk and had no opportunity to make profit. She supplied only her labour and could not assign her work to anyone else. She gave uncontradicted evidence that she was eligible for overtime and travel and subsistence. On the basis of these facts, I find that the complainant was engaged pursuant to a contract of employment. Applying Keenan and other authorities, the fact of the 11% shareholding and her place on the company board did not negate her status as employee of the respondent.
It follows from the above finding that the complainant was an employee of the respondent. On the basis of the evidence proffered by the complainant, I also find that the complainant was dismissed from her employment with the respondent by way of redundancy. I find that she qualifies for a redundancy lump sum payment under the Redundancy Payment Acts, 1967 to 2014, based on the following information:
Date of commencement: 7 January 2013
Date of termination: 9 October 2015
Weekly gross pay: €188.19
Decision:
The Workplace Relations Act 2015 and the Redundancy Payments Act, 1967, as amended by section 76 of the Workplace Relations Act, 2015 require that I make decisions in relation to the complaints in accordance with the relevant redress provisions.
I decide that, pursuant to the Redundancy Payment Acts, the complainant is entitled to a redundancy lump sum calculated according to the following criteria:
Date of commencement: 7 January 2013
Date of termination: 9 October 2015
Weekly gross pay: €188.19
Dated: 1st June 2016