ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00007322
Parties:
Complainant Respondent
Business Development Director Vs E-Commerce Company
Complaint:
Act Complaint/Dispute Reference No. Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977 CA-00009848-001 22/02/2017
Date of Adjudication Hearing: 23/10/2017 Workplace Relations Commission Adjudication Officer: Eugene Hanly
Procedure:
In accordance with Section 8 of the Unfair Dismissals Acts, 1977 – 2015 following the referral of the complaint to me by the Director General, I inquired into the complaint and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint.
Background:
The Complainant was employed as Business Development Director from 1st February 2014 to 6th September 2016. He did not receive a salary but had the potential to acquire a shareholding. He has claimed that he was unfairly dismissed and has sought re-instatement.
Preliminary Point Employer / Employee RelationshipSummary of Respondent’s Case: The Respondent stated that the Complainant joined the company on 1st February 2014. He was at that time a self-employed Company Director. He would receive no monetary compensation but instead he would receive an option grant under the company’s option scheme. He was satisfied with that arrangement. He was issued with a contract of employment, which was in error as this was a contract for services. He was expected to perform 25 hours of work each week. He received no salary and no company equipment. He was only provided general parameters for work to be performed and was otherwise free to direct the manner in which the said services were provided. He operated as a consultant and was treated as a consultant. He was provided two option grants as forms of compensation for services provided. He was not an employee and this claim for unfair dismissal is without merit.
Summary of Complainant’s Case: The Complainant accepted a contract of employment for 25 hours per week. The contract clearly states that it was a contract of employment, not a consultancy agreement. While he was not paid a salary, he was given a share option ownership arrangement. He accepts that he worked as a self employed company director for half of his working time. He worked at least the 25 hours per week and often more. The Respondent controlled what he did for the them. He was an employee of this company, they had control over what he did, he was integrated into their business and there was a mutual arrangement for the provision and delivery of services. This was a contract of employment and he has the right to pursue this complaint for unfair dismissal.
Findings and Conclusions: I find that there was conflict of evidence in this case. I note that in the “Kerry Foods” case the Supreme Court decided that each case must be determined in the light of its own particular facts and circumstances. I note that there is an amount of case law on this subject that will require attention in order to arrive at a decision on this matter. The Code of Practice for Determining Employment or Self-Employment Status of Individuals issued through the Department of Social & Family Affairs helps to form an understanding of this complex matter. It states “The overriding consideration or test will always be whether the person performing the work does so ‘as a person in business on their own account ‘. Is the person a free agent with an economic independence of the person engaging the service? This economic test is paramount”. I note that Langford in The Classification of Workers: Employees and Independent Contractors “ (1998) 5 (3) CLP 63 states, “The courts have over the years sought to decide the issue by reference to a variety of legal tests, traditionally the control test. More recently, the courts have tended to adopt a practical test such as that of economic reality, or to have regard to all the different features of the work relationship and to engage in a balancing exercise in relation to all the various factors. The modern tendency would seem to be not to regard any one issue as conclusive but to look at the whole picture of the work situation”. I note that in the case of McAuliffe v Minister for Social Welfare, Barr J. said it was not possible to devise any hard and fast rule as to what constitutes a contract of service. In Sunday Tribune Ltd [1984] I.R. 505 Carroll J. stated: “The Court must look at the realities of the situation in order to determine whether the relationship of employer and employee in fact exists, and it must do so regardless of how the parties describe themselves”. I have decided that it is necessary to consider the evidence as presented at the hearing under a series of tests as set out in the varying court cases that have dealt with this type of matter in the past. 1)Contract I find that the Complainant was issued with a contract of employment, not a consultancy contract. He was expected to work 25 hours per week and he was expected to be flexible with his hours. Under this test I find that this was a contract of employment and the Complainant was an employee. 2)Salary / Consideration I find that there was no provision of a salary in this contract. There was a share option offered. I find that in any contract the four key aspects are offer, acceptance, consideration and capacity. In this contract, there was no salary so I conclude that this would be a most unusual term in any contract of employment. However, there was the consideration of the share option. I find that this test was inconclusive. 3) Taxation / VAT I note in the Henry Denny & Sons (Ireland) Ltd t/a Kerry Foods v The Minister for Social Welfare Kerry Foods case the demonstrator in question submitted an invoice yet it was deemed that she was an employee. I also note that in the Phelan case a VAT invoice was submitted and it was also decided that he was an employee. In this case, there was no consideration other than the share option therefore no salary was paid, no statutory deductions and there was no requirement for an invoice. Under this test, I conclude that this was a contract of employment and the Complainant was an employee. 4) Mutuality of Obligation In order for a contract of service to exist there must be mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer. So there is an ongoing duty to provide work and one to accept work. In a recent High Court case Minister for Agriculture and Food v Barry & Ors the mutuality test of obligation was endorsed by Edwards J. when he stated, ”The requirement of mutuality of obligation is the requirement that there must be mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer. If such a mutuality is not present, then either there is no contract at all or whatever contract there is must be a contract for services or something else, but not a contract of service”. In this case the Complainant was operating on a part time basis as a self-employed company director. In addition he was expected to provide 25 hours of work per week. Therefore, there was an obligation on the Respondent to provide 25 hours of work and for the Complainant to work those hours. I find that there was a mutuality of obligation. Under this test, I find that this was a contract of employment and the Complainant was an employee. 5) Control Under this test the following matters needs to be addressed: deciding the thing to be done, way it is to be done, the means to be employed doing it and the time and place. I note that there was a conflict of evidence regarding this matter. On the balance of probability, I find that the Complainant had to perform 25 hours of work each week. The Respondent had determined that work had to be produced and they had arranged that he would work in consort with the co complainant. Under this test, I find that this was a contract of service. I find that the Complainant was an employee. 6) Integration I find that there was very limited integration into the Respondent’s company which was based in the UK. I find that under this test the outcome is inconclusive. 7) In business on own account I find that the Complainant was employed in a part time self-employed basis. However, he was also required to provide 25 hours of service to the Respondent. I find that he was in business on his own account only in respect of his self-employed business. Under this test, I find that this was a contract of employment in respect of the 25 hours per week that he committed to the Respondent. I find that the Complainant was an employee.
Decision on Preliminary Point I have reflected on the evidence and I have concluded from the facts as presented at the hearing that the Complainant was on a contract of service. I find that he was an employee. Therefore, under this circumstances I find that I have jurisdiction to deal with his complaint for unfair dismissal.
Substantive Matter -Unfair DismissalSummary of Respondent’s Case: This complaint is without merit. The Original option grant awarded to the Complainant was performance based with 2000 option shares vesting upon reaching specific sales related targets by February 2015.The Complainant failed to reach these targets. The owner of the business spoke to him about this and expressed his disappointment about his expectations not being met. A different option grant was then agreed on 13th April 2015. By early 2016 the owner was becoming concerned with the Complainant’s lack of progress in developing the business. No revenue generation clients had been signed up in two years and he was failing to keep the owner informed of activities. E-mails and ‘phone conversations confirmed their concerns that he was not putting in the agreed hours. Despite encouragement from the owner matters came to a head in early 2016. In an exchange of emails the owner explained that the current arrangement was not acceptable. The parties attempted to negotiate a new deal. In an email from the Complainant to the owner on 15th July 2016 he acknowledged that “we were not meeting original agreed expectations”. The fact that he was negotiating a new deal is an admission that he was aware that there were performance issues. Given his failures to live up to his commitments and his unwillingness to provide more specific deliverables and measureable work as part of the new proposals it was decided to end the relationship by giving 30 day notice. He was not dismissed unfairly He was given repeated opportunities to address performance issues but he failed to do so. His rights to previously granted options expired in accordance with the scheme.
Summary of Complainant’s Case: The Complainant stated that he accepted that the owner had e-mailed him in July querying the amount of time that he was putting into the job. He didn’t query that mail. Problems were raised between 18th July to termination in August. When the position was terminated, he didn’t appeal the decision because he was not offered an appeal. He was dismissed by “Whats App” which is disgraceful. There was a very small period of time upon which the working relationship broke down. There was no investigation leading to a decision to dismiss. No fair procedures were applied. This dismissal was both substantively and procedurally unfair. He was denied all fair procedure and natural justice. He is seeking re-instatement and compensation. He has concentrated all his time since then on the self-employed business.
Findings and Conclusions: I find that this was an unusual employment relationship. I note that this contract did not provide for any salary, however there was a share option available. I note that the Complainant was to provide 25 hours of work and generate business. I note that the Respondent expressed concern about performance achievement particularly from mid July 2016 to the termination date in August. I note that the Complainant did not take issue with the owner’s e-mail of 18th July. I note that there was an acceptance by the Complainant that he was not achieving the required standards of performance. I note that there was a willingness to negotiate a different business deal. I note that a decision was taken to terminate the contract and this was done electronically. I note the Respondent’s position that this was not an employer / employee relationship. Substantive Matters I find that the Complainant was not achieving his performance targets. I find that any employer is such a situation is entitled to address such a shortfall in performance, but to do it correctly. I did not find sufficient evidence that a dismissal was warranted at that point, given the brief time when dissatisfaction was raised. I find that dismissal was substantively unfair. Procedural Matters I find that no formal investigation took place. I find that no face to face meetings took place. I find that the Complainant was unaware that the Respondent was considering terminating the employment. I find that the dismissal lacked all forms of fair procedure and natural justice. I find that the guidelines as set out in the Statutory Instrument 146/2000 were completely ignored. I find that the Complainant was not advised in advance of the decision to dismiss. I find that he was not given the opportunity to defend himself. I find that he was denied the right of representation. I find that he was denied the right to appeal the decision to dismiss. I find that this dismissal was procedurally unfair.
Decision: Section 8 of the Unfair Dismissals Acts, 1977 – 2015 requires that I make a decision in relation to the unfair dismissal claim consisting of a grant of redress in accordance with section 7 of the 1977 Act. For the above stated reasons, I find that this dismissal was both substantively and procedurally unfair. I have decided that the Respondent should reinstate the Complainant to his position. For the avoidance of doubt reinstatement is that he should return to work as if he had never left it. This is to be implemented within six weeks of the date below.
Dated: 14/12/17 Workplace Relations Commission Adjudication Officer: Eugene Hanly
Key Words: Employer/Employee Relationship: Unfair Dismissal