ADJ-00004929

ADJUDICATION OFFICER DECISION 

Adjudication Decision Reference: ADJ-00004929

Parties

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

Date of Adjudication Hearing: 14/12/2016

Workplace Relations Commission Adjudication Officer: Michael McEntee

Procedure:

In accordance with Section 41(4) of the Workplace Relations Act, and or section 6 of the Payment of Wages Act, 1991 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).

1:        Complainant’s Submission and Presentation:

2:        Summary of Respondent’s Submission and Presentation:

 The Complainant has no standing to bring this complaint under the Payment of Wages Act, 1991 as she was not an “employee” of the Business. She was a Director of the Company in a partnership with the other Director –the Respondent.

Without prejudice to the above the Complainant left the business on the 4^th June 2016 and has not worked there since. A basic common sense requirement of the Payment of Wages Act, 1991 is that the party bringing a claim has actually carried out the disputed work or has some other legal entitlement or foundation to base their claim for wages on. Neither applies in this case.

The claim must accordingly be dismissed.

3:        Decision:

Section 41(4) of the Workplace Relations Act 2015 and or section 6 of the Payment of Wages Act, 1991 require that I make a decision in relation to the complaint(s)/dispute(s) in accordance with the relevant redress provisions under the cited Acts.

4:        Issues for Decision:

 Was the Complainant “an employee” as required by the Act? This can best be defined by examining the key question i.e. did they hold a Contract “OF” Service (an employee) or was it of a Contract “FOR “Service (Self Employed or other type of non employee arrangement)?

Depending on the answer to the above is there a valid claim under the Payment of Wages Act, 1991

5:        Legislation involved and requirements of legislation:

Payment of Wages Act, 1991

6:        Decision:

6:1          Both parties gave Oral evidence and were open to cross questioning by respective legal representatives. The Burden of Proof rested on establishing the exact nature of the Employment relationship in the case.

6:2          Section 1 “Interpretation” of the Payment of Wages Act, 1991 is quoted below

Specifically the definitions of a “Contract of Employment” and “Employee”

Section 1 (b)

“employee” means a person who has entered into or works under (or where the employment has ceased, entered into or worked under) a contract of employment.”

“contract of employment” means –

(b) any other contract whereby an individual agrees with another person to do or perform personally any work or service for a third person (whether or not the third person is a party to the contract) whose status by virtue of the contract is not that of a client or customer of any business undertaking carried on by the individual ,and the person who is liable to pay the wages of the individual in respect of the work or service shall be deemed for the purposes of this Act to be his employer”

In accepted practice this Section means that to avail of the protections of the Act the Complainant has to be an “Employee” as defined, i.e. has a Contract “OF” service.

6:3          The evidence presented indicated that the Complainant entered into a business and personal relationship with the Respondent in late 2012 – effectively a partnership between the two parties. The Complainant stated that she had been appointed a Director in November 2012.

Difficulties both of a personal and business nature arose during 2105. The Complainant resigned as a Director on the 4^th June 2016, the same day as an alleged physical incident took place between the parties.

6:4          Applying the standard tests , for Contract Of and For Service the following points are of note-specifically, the Control test and the Enterprise /Entrepreneurial tests and the written intentions of the parties

6:5          From the evidence The Control of the Business appeared to have been a joint operation – the Complainant had total access to the IT Systems and Company Bank Account. She was able to make and receive payments necessary for the running of the business via same. All evidence (hours of work, extra personal commitment etc.) pointed to the fact that her daily work was in the business as a joint owner – not as a direct employee of the Respondent.

6:6          The “Enterprise & Entrepreneurial” test was telling – the Complainant had a direct influence on and was a direct beneficiary of any profits made.

This point is referenced in the Supreme Court case of Denny & Sons (Ireland) Ltd v the Minister for Social Welfare Henry Denny & Sons Ltd v Minister for Social Welfare [1998] 1 I.R. 34; [1998] E.L.R. 36 (SC); – Keane J stated

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

All the evidence presented pointed to the fact that the Complainant had agreed to enter into a business relationship with the Respondent in late 2012. She was bringing her considerable skills and experience of the jewellery business to the arrangement. It was understood that she would have a 50% stake in the business and although this % percentage share holding became matter of contention later, it was her clear understanding that she was a joint owner of the business. The success or failure of the business was clearly identified as being due to her skills and contacts in the Jewellery business –this skill and expertise was what the item of great value she brought to the business.

6:7     In regard to Written Intention between the parties the Complainant had no Contract of Employment. The disputes cited in the evidence pointed to disagreements over shareholdings in the business between the parties and a very unfortunately marriage breakup between the parties not disagreement between an employee and an employer.

6:8     In addition there were a number of references in the written submission from the Complainant to her being required to “sign off on the Accounts” by the Company Accountant. This is the action of a Director not an employee. During the period involved the Complainant paid Class S1 Social Welfare contributions which are defined below in a quote from the Department of Social Protection.

A Guide to PRSI for the Self-Employed - SW74

PRSI Class S is paid by self-employed people such as:

• farmers, professional people (for example, doctors, dentists, solicitors etc.), people in business on their own account or in partnerships, authors, artists, religious, contractors, sub-contractors carrying on independent businesses,

• people with income from investments, rents or maintenance payments

• employees who are also self-employed pay Class S PRSI in addition to their PRSI contribution as an employee

• certain company directors, motorcycle couriers etc. who pay their tax through the PAYE system but who are not regarded as employees for social insurance purposes.

  Note

  PRSI Class S applies to working directors who own or control 50% or more of the shares in the company in which they work. The classification of working directors who own or control less than 50% of the shareholding of the company is determined on a case by case basis, taking into consideration the Code of Practice for Determining the Employment or Self-employment Status of Individuals.

  Specifically Class S1 is not paid by Employees. A P60 for the Tax Year 2014 stating Class S1 was produced in Evidence. Difficulties in finalising the 2015 accounts appeared to have delayed the 2015 P60.

7:Summary and Conclusion

Taking all the evidence and facts as stated above in Section 6 of this Adjudication into account I have to find that the Complainant was not an “Employee” as required by the Payment of Wages Act.1991.

The claim is accordingly not well founded and is dismissed.

Dated:   25 April 2017