ADJUDICATION OFFICER DECISION

Adjudication Decision Reference: ADJ-00000183

Complaint(s)/Dispute(s) for Resolution:

Date of Adjudication Hearing: 14/01/2016

Workplace Relations Commission Adjudication Officer: Ray Flaherty

Procedure:

In accordance with Section 41(4) of the Workplace Relations Act, 2015 [and/or Section 8(1B) of the Unfair Dismissals Act, 1977, and/or Section 9 of the Protection of Employees (Employers’ Insolvency) Act, 1984, and/or Section 79 of the Employment Equality Act, 1998, and/or Section 25 of the Equal Status Act, 2000] following the referral of the complaint(s)/dispute(s) to me by the Director General, I inquired into the complaint(s)/dispute(s) and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint(s)/dispute(s).

Complainant’s Submission and Presentation:

The Complainant informed the Hearing that he commenced working for the Respondent on 16 May 2003 as a Bookkeeper on a rate per hour basis. While the initial rate would have been lower, the hourly rate for the majority of the period under review was €30 ph.

For the first seven years, the payment of monies owed to the Complainant took place on an ad hoc basis with payment being made every few weeks when the Complainant requested same from the Respondent. Payment was then made by cheque.

The Complainant stated that his payment arrangements changed in March 2003 when a weekly standing order was set up for €90, representing payment for three hours work per week. [Evidence was presented to the Hearing showing the standing order payment commencing on 2 March 2010 and continuing uninterrupted until 16 October 2015, when the final payment was paid]

In addition, the Complainant stated that he was put on the company payroll at the same time as the standing order arrangement was put in place and as a result, was returned on the employers P35 form on a weekly basis from then on. The Complainant claimed this confirmed his status as a an employee of the company.

Following the introduction of the standing order payment arrangement in 2010, shortfalls in payment emerged when the Respondent worked hours in excess of the three per week which were reflected in the €90 pw payment being made by standing order. The Respondent stated that on three occasions (2010, 2011 and 2014) he approached the Respondent seeking payment for the shortfall in the amounts of €645, €350 and €750 respectively. These amounts were duly paid, albeit in several tranches in some cases due to cash flow issues.  

In September 2013 the company had an inspection from NERA following which written Statements of Terms of Employment were produced for all employees, including the Respondent. It was confirmed to the Hearing that these documents were completed by the Respondent, in his role as bookkeeper, and brought to one of the directors of the company to have signed.

The Complainant stated that he received a telephone call from Ms McHugh on the afternoon of 24 September 2015 informing him that the proprietors were withdrawing from the business and were leasing the premises. The Complainant was requested by Ms McHugh to prepare P45s for all staff and to ensure all monies due, including holiday pay, was included in the final payments.

The Complainant further stated that he was not requested to include himself in this regard even though his position was also being dispensed with. According to the Complainant, he was the only member of the staff who met the service qualifications for redundancy purposes and should therefore have received his entitlements in this regard.

Respondent’s Submission and Presentation:

Contractual Status of the Respondent:

The Respondent claims that the Complainant is a freelance bookkeeper who is paid €90 per week for doing the accounts, including weekly payroll calculation and related Revenue calculations, for the business. Consequently, the Respondent contends that the Complainant was an independent contractor under a contract for service. In support of this contention the Respondent put forward the following:

• The Complainant was responsible for paying all his own taxes as a self-employed person. In this regard the Respondent stated that they were unaware of the fact that the Complainant had registered himself as an employee by including himself on P35 list from March 2010 onwards. According to the Respondent this placed them in a position where they may be liable for his taxes.

• The Complainant never sought permission to take annual leave. He merely informed the Respondent when he was going away.

• The Complainant worked as a bookkeeper in a number of other businesses in the area at the same time as he worked with the Respondent.

• The Complainant had keys to the Respondent’s premises and could come and go as he pleased and was left to his own devices to carry out the bookkeeping for the Respondent.

• The Respondent did not exercise the normal level of control over the Complainant as they would with an employee.

Taking all of the above into consideration, the Respondent contends that the Complainant operated on the basis of a contract for services and not a contract of employment. Consequently, the Respondent claims that the statutory entitlements associate with a contract of service do not apply to the Complainant.

Claim under Payment of Wages Act:

The Respondent claims that the Complainant has been paid in full for all work done. However, the Respondent stated that in the event that the Adjudication Officer found in the Complainant’s favour in this regard, the maximum that can be claimed is in relation the last six months wages.

Claim for Holiday Pay:

The Respondent submits that the Complainant is not an employee and, as such, has no entitlement to the statutory entitlements of the Organisation of Working Time Act (1997)

Claim for Redundancy – Notice and Payment:

The Respondent submits that the Complainant is not an employee and, as such, has no entitlement to the statutory entitlements of the Minimum Notice and Terms of Employment Act (1973) or the Redundancy Payment Act (1967)

In conclusion, the Respondent claimed that they were unaware that the Respondent had registered himself as an employee or that a Contract of Employment, though signed by a director of the business, existed for the Complainant. The Respondent claims that all of this only emerged when the Complainant submitted his complaint to the Workplace Relations Commission. The Respondent stated that they placed a great deal of trust in the Complainant with regard to the work he carried out for them and they submit that he has abused this position.

Decision:

Section 41(4) of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint(s)/dispute(s) in accordance with the relevant redress provisions under Schedule 6 of that Act.

Issues for Decision:

The complaint before me consists of the following elements:

• A claim for outstanding wages made under the Payment of Wages Act 1991.

• A claim for redundancy under the Redundancy Payment Act 1967.

• A claim for unpaid holiday pay under the Organisation of Working Time act 1997

In each of the above claims the relevant legislation extends entitlements to individuals who are employees of the Respondent employers at the time the respective entitlements arise.

In this case the Respondent contends that the Complainant was not an employee but was working under a contract for services and, as a result, was not entitled to any of the reliefs sought. In addition, the Respondent further contends that as the Complainant was not an employee, the adjudication officer does not have any jurisdiction to hear the complaint.

Based on the above contention by the Respondent it is clear that the first matter before me for decision is whether or not the arrangement in place between the Complainant and the Respondent was one of a contract of service or a contract for service.

Legislation involved and requirements of legislation:

The following legislation had relevance in this case:

• Payment of Wages Act 1991
• Redundancy Payment Act 1967
• Organisation of Working Time act 1997

Decision:

Having carefully considered all the evidence adduced at the Hearing, I am satisfied that the following are the pertinent facts pertaining to this case:

• The Complainant was engaged by the Respondent in 2003 as a Bookkeeper on the basis that this would entail the provision of services amounting to approximately three hours per week.

• In 2010 a payment arrangement was put in place whereby a Standing Order of €90 per week, representing €30 per hour for three hours work. The Standing Order was set up on 2 March 2010 and continued uninterrupted to 16 October 2015 when the last payment was made.

• On three separate occasions (January 2010, June 2011 and April 2014) the Complainant sought payment from the Respondent in relation to additional hours which had been worked in excess of the three hours per week covered by the weekly Standing Order payment. On each of these occasions the Respondent paid the amount requested.

• Following a NERA inspection in September 2013 the Respondent was required to provide contracts of employment for all employees. This task was undertaken by the Complainant and a batch of contracts of employment was signed by a director of the Respondent on 28 September 2013. Included in this batch was a contract of employment for the Complainant.

• In September 2015 the Respondent entered into a commercial arrangement with a third party in relation to the leasing of the main element the Respondent's business. As a result of this arrangement, which was put in place with immediate effect, the services of the Complainant were no longer required.

From the evidence adduced at the Hearing the following facts, in relation to the Complainant's working arrangements with the Respondent, can be established:

• The Complainant carried out the role of Bookkeeper for the Respondent. While other tasks were required of the Complainant by the Respondent, from time to time, over the 12 years in which the arrangement existed, the most significant service provided related to the completion of the weekly payroll.

• This latter service was provided off site by the Complainant, who called to the Respondent's premises on a weekly basis to collect the relevant information with which to complete the payroll. The Complainant was provided with keys to the Respondent's premises in order that he could gain access at times convenient to him (the Complainant).

• From the commencement of the arrangement in 2003 to the establishment of the Standing Order in 2010 the Complainant sought payment on an ad hoc basis. The evidence adduced at the Hearing suggests that the Complainant was responsible for any tax liability arising from these payments up to a point in 2008 when he (the Complainant) started returning himself on the P35 Revenue return. According to the Complainant's evidence, the level of payment at €90 per week was such that it did not attract any PAYE liability. The Respondent contends that they were unaware of the fact that the Complainant was being returned on the P35.

• In his evidence to the Hearing, the Complainant stated that the three payments relating to the shortfall between the weekly Standing Order and the actual hours worked which were claimed and paid in January 2010, June 2011 and April 2014, were not returned on the Respondent's P35 form but were dealt with as part of his personal taxation arrangements.

• The evidence adduced at the hearing suggests that the Respondent is one of a number of clients to whom the Complainant provides similar services.

In considering whether or not a particular arrangement or relationship between respective parties constitutes a contract of service or a contract for service, Keane J, in the Supreme Court decision in Henry Denny & Sons v Minister for Social Welfare (1998) 1 IR 34, stated that "each case must be considered in the light of the particular facts". In that decision, Keane J went on to state as follows:

"The degree of control exercised over how the work is to be performed, while a factor to be taken into account, is not decisive. The difference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment, where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her."

It is clear to me from the evidence adduced in the case before me that the Complainant exercised almost complete control over the work being conducted on behalf of the Respondent. The Complainant had total control over when and how the work was performed. He was provided with keys to the Respondent's premises to allow him to collect the information, required in the performing of the task, at his convenience.

The evidence also suggests that the Complainant completed the work in premises other than those owned by the Respondent. Other than providing the Complainant with the information pertaining to individual employee hours of work for a particular period, the Respondent did not provide the Complainant with any equipment, premises or other material in relation to the completion of the task.

The Complainant contended that he was an employee of the Respondent on the basis that he was returned on the P35 Revenue form on a regular basis from 2008 onwards and that he had a contract of employment dated 28 September 2013.

The evidence suggests that the Complainant was returned on the Respondents P35 in relation to the €90 per week he received by way of Standing Order. However, it is also clear that the additional shortfall payments made in 2010/2011/2014 were not recorded as income in a similar manner. I am satisfied that all payments made by the Respondent to the Complainant throughout the 12 years this arrangement was in place, represented payment for the work being carried out by the Complainant in his role as a Bookkeeper. I do not accept that a distinction can be made between that portion of the payment paid by Standing Order and the shortfall portion which was paid by other means. Therefore, I do not accept the contention that these payments fall to be treated differently from a taxation perspective.

With regard to the contract of employment, the evidence suggests that it was created as part of a batch of such contracts which were completed as a result of an instruction from NERA, following a review in September 2013. The Respondent's contention is that they were unaware that they had signed such a contract for the Complainant and/or that it was in existence. Clearly, it is the responsibility of the employer to ensure that they are fully aware of the details and implication of any such contracts they sign. However, I believe that greater significance in relation to my decision on the issues before me lies in the content of the contract as opposed to the manner in which it came into effect.

With regard to what might be considered as key elements in a contract of employment (i.e. hours of work, holiday or unpaid leave) the contract in question states that these do not apply in this case. This clearly undermines any contention that this represents a normal contract of employment and is strongly suggestive that what is in existence here is more a contract for services than a contract of service.

From the evidence adduced at the Hearing, it also appears that the Complainant has a number of clients to whom he provides a service similar to that provided to the Respondent. This evidence strongly suggests that the Complainant is, in effect, running his own business and that the Respondent is a client of his rather than his employer.

Taking all the evidence presented during the Hearing into account, I find that the Complainant was not an employee of the Respondent but was rather working under a contract for services, albeit no formal contract was ever put in place.

Consequently, I find that the Complainant has no entitlement to any of the reliefs sought as they apply, in their entirety, to individuals engaged under contracts of service. On that basis I conclude that I have no jurisdiction in this regard.

Dated:   15/3/2016