ADJUDICATION OFFICER DECISION/RECOMMENDATION
Adjudication Reference: ADJ-00006800
Parties:
| Complainant | Respondent |
Anonymised Parties | A Music Teacher | A School Of Music |
Representatives | Mr Mark Rooney |
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Complaint(s):
Act | Complaint/Dispute Reference No. | Date of Receipt |
Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991 | CA-00009222-001 | 22/01/2017 |
Date of Adjudication Hearing: 24/04/2017
Workplace Relations Commission Adjudication Officer: Gerry Rooney
Location of Hearing: The Ardboyne Hotel
Procedure:
In accordance with Section 41 of the Workplace Relations Act, 2015 and Section 6 of the Payment of Wages Act, 1991, 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 alleged that she resigned her position and her employer owes her €150 of outstanding wages and where her employer has failed to pay her this amount. |
Summary of Complainant’s Case:
The Complaint maintained that she had a contract for services with a school of music where she commenced employment on 1st November 2016. She contended that she was employed to work Mondays, Tuesdays, and Thursday from 2 to 3pm up to 7 to 8pm and was paid €20 per hour. However due to issues the Complainant tendered her resignation on 6th December 2016 which was accepted by the Respondent.
The Complainant contended that at the time of her resignation she was owed €300 in wages of which €150 has since been paid to her. The Complainant maintained that she was told by her employer that she would not be paid the outstanding €150 relating to 7.5 hours of teaching because she did not give adequate notice of her resignation.
The Complainant maintained that she did provide notice in that she advised the Respondent that if further issues arose she would have no option but to terminate her contract. As further issues arose she then provided the Respondent with her notice. The Complainant maintained that the Respondent accepted the resignation but refused to pay the outstanding €150 wages.
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Summary of Respondent’s Case:
The Respondent did not attend the hearing on the basis the WRC does not have jurisdiction to hear the case. The Respondent maintained the Complainant was not on a contract of employment, but was self employed and was on a contract for service. The Respondent did not attend the hearing but made a submission in writing to the WRC. In this submission the Respondent contended it was not an employer of the Complainant and that the Complainant was never an employee of the Respondent. The Respondent maintained that it was never liable to pay wages and that the Complainant was aware of that in the terms of the contract, a copy of which was submitted to the WRC. The Respondent alleged that the Complainant breached that contract in that the Complainant was required to provide one months notice in writing by registered letter, but the Respondent was only provided four hours notice by email. Notwithstanding the respondent submitted that its understanding was that the jurisdiction of the WRC relates to employment and equality matters, and as neither of these matters are related to the complaint the WRC does not have jurisdiction to hear the complaint. |
Findings and Conclusions:
Before deciding on whether I can hear the case I must first decide whether the complaint was on a contract of employment (a contract of service) or a contract for services. It is recognised an individual would normally be an employee if they:
In the evidence provided the contract is referred to as a Contract for Service. The contract further states the Complainant will be paid fees for the provision of services and where such fees would be paid upon issue of an invoice from the Complainant. The contract also allows for the assignment of the work subject to written agreement; and that that the Complainant may delegate the work to a suitably competent and qualified person. In her evidence the Complainant acknowledged that she considered herself to be self employed and where she maintained the relevant insurance for her work. A decision in relation to contract of service or contract for service is set out in UD 1096/2014 – O’Hanlon v Ulster Bank Limited. In UD 1096 the Respondent's Representative submitted that the Tribunal did not have jurisdiction to hear the claim because the claimant was not an employee as defined in the Unfair Dismissals Act 1977 but that she was an independent contractor. The Tribunal referred to a number of High Court decisions and the Supreme Court Case of John Barry, Conor O’Brien, Mary O’Connor, Michael Spratt, Ciara Dolan and The Minister for Agriculture and Food [Appeal No. 86/2011], (hereinafter “the Barry Case”). In UD 1096 the Tribunal considered following issues, as being relevant to the Tribunal’s decision: [was the claimant] in business on her own account and/or integration; relevant contracts; mutuality of obligation; the intention of the parties; control; actions of claimant; taxation, pension entitlements; sick pay; substitution; whether the profit which she derived was dependent on how she carried out her work; was she paid for holidays; did she have support staff; how and where she did the work; could she engage someone else to do the work instead of her. The Tribunal in UD 1096 did not close its mind to other factors which might arise during the hearing of the case. In UD 1096 the Tribunal referred to the Barry Case which provides a detailed analysis of the jurisprudence on the tests which should be considered in deciding whether a person is working under a Contract for Service [Independent Contractor] or a Contract of Service [Employee]. These considerations included the traditional tests set down in the Henry Denny Case and other decisions of the Courts which identify a number of tests to be applied in determining whether workers are contractors or employees. These other decisions include - “Mutuality of Obligation” (i.e. that the Respondent was obliged to provide work to the Complainant and that the Complainants were obliged to carry it out).
- "The so called Enterprise Test" (i.e. examination of whether or not a person is in business on his/her own account.
- the existence of a contractual document stating that the relationship between the parties was a contract for services, although this should not be considered decisive or conclusive as “each case must be considered in the light of its particular facts and of the general principles which the courts have developed. In the Denny case: "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 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"
Accordingly, as Adjudicator I must have regard to the fact that "each case must be considered in the light of its particular facts and of the general principles which the courts have developed". I must therefore consider all the facts in the case. The Judge in the Denny case felt that statements, such as "you are deemed to be an Independent Contractor" etc., in the contract should be disregarded, on the basis that they represent the opinion of the contracting parties but were of minimal value in deciding the work status of the person engaged. Whilst the degree of control exercised by a person may provide guidance in deciding whether a contract is one "for service" or "of service", the inference that a person is engaged in business on their own account is more readily drawn when they provide their own premises or equipment, where they employ others to assist them in their business and where the profit is dependent on the efficiency with which they conduct their business. While in most cases it is obvious whether a person is an employee or self-employed, it can sometimes be difficult to assess whether an individual providing services to another person or business can properly be described as self-employed. The terms "employed" and "self-employed" are not clearly defined in law, but some guidance has been provided by the courts. Therefore before deciding on this matter it is necessary to look at what the worker actually does, the way the worker does it, and the terms and conditions under which the worker is engaged. In considering the current case it is helpful to refer to the UD 1096/2014 case which deliberated on the following: a) Was the Complainant in business on her own account and/or Integration. In the Barry Case Mr. Justice Edwards considered that the appropriate test as to whether a person is engaged in business on his or her own account should consider, among other matters [see below], the following factors: i. Whether the person provides the necessary premises, or equipment or some other form of investment. In the current case, similar to UD 1096, the Complainant did not provide premises, equipment or any investment. Furthermore, the Complainant had no involvement with the ownership or rental of the building.
ii. Whether the person employs others to assist in the business. In UD 1096 the claimant did not employ others to assist in the business. In the current case the Complainant was allowed in her contract to delegate her work to a competent and qualified person. She was also allowed to assign the contract to another provided both parties agreed in writing.
iii. Whether the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her. The claimant in UD 1096 could not have earned extra money by working harder or conducting the business differently. The pay she received was the same, which was paid on submission by her of an invoice. This is similar to the current case.
These tests are useful in assessing how integrated the Complainant was in the working relationship between the parties. Whilst in the current case it is acknowledged that the Complainant provided the piano instruction at the Respondent’s site, her contract allowed that she could have delegated others to do the work on her behalf.
b) That the Employment Status issue it is not confined to these three tests is clear from Mr. Justice Edwards’s reference to "among other matters". The "other matters" which the Tribunal in UD1096 also considered were i. Relevant Contracts/Intention of the Parties: In the case in hand the Complainant commenced on an Independent Contract in October 2016 and where the contract allowed for a series of renewals. The language of the Contract in this case, as per the evidence provided, was clearly those of an Independent Contractor. The Complainant did not raise any objections to this, albeit she was only providing the service for approximately one month. The Complainant in her evidence acknowledged she was self-employed and provided similar services elsewhere.
ii. Mutuality of obligation In UD 1096 the Tribunal was satisfied that the employer (Respondent) was obliged to provide work for the employee (claimant) and the employee was obliged to perform that work. In the current case the contract does allow the Complainant to delegate her work.
iii. Control: Whilst the degree of control exercised by a person may provide guidance in deciding whether a contract is one "for service" or "of service" it may not always be a satisfactory test to apply. In UD 1096 the Tribunal considered the question of "control" and found that the Respondent exercised certain control over the claimant’s work and where she was allocated the work which she then did. In the current case the degree of Control is very dependent on the interpretation that is placed on the “Work” of the Complainant. The Respondent provides the Complaint a place of work, a student/students and a piano. The contract has a degree of Control over some legal obligations such as confidentiality and copyright issues etc. but the Complainant appears to be personally responsible for the relationship with the student. Indeed, the Complainant in her evidence maintained that as she was receiving feedback from some students she ultimately decided whether she would continue to provide the services based on whether she would receive further complaints from the students.
iv. Actions of the Complainant. In UD 1096 the Tribunal was satisfied that the claimant worked to a Contract for Service initially through her company. In the current case the Complainant worked on an independent contract from 2016 that was subject to renewal each year. There can be no doubt that the Complainant’s status was understood by the Complainant- she described herself as being self-employed. It was also clear that she used the freedom of her status to secure other work, and where she also decided whether she would continue providing the service or not. In this case, she chose to terminate the contract.
v. Taxation. The Tribunal in UD 1096 noted that even Revenue do not accept the fact that because an individual has registered for self-assessment or VAT it does not automatically makes that person self-employed. In the same way Revenue, do not automatically accept that because a person is taxed under the PAYE system that the person is automatically an employee. This is clear from a Revenue document – Code of Practice for Determining Employment or Self-Employment Status of Individuals. In this case the Complainant looked after her own tax affairs.
vi. Pension Entitlements: There was no contribution of pension by the Respondent in either case.
vii. Sick Pay/Time off in lieu: In the current case no sick leave or holiday entitlements applied in the contract for service.
viii. Substitution: In UD 1096 the claimant could not use another person to substitute for her – she had to perform the work allocated to her. In the current case the Contract allowed for a delegation of the service to a competent and qualified person, although this was never tested in practice.
ix. Whether the profit she derived was dependent on how she carried on her work? In UD 1096 the Tribunal did not believe that if the claimant worked harder, or differently, that she could have earned more money. There was no bonus entitlement. She was paid a standard amount, which did not change. In the current case the contract provides for a 15% bonus if the Complainant renews her contract annually. Whilst the Complainant was subject to a set fee per hour this points to the conclusion that Complainant could not significantly improve her prospects other than by providing more services per hour to the Respondent. There was no facility in the contract for the Complainant to share in the profit of the Respondent.
x. In business on her own account: In UD 1096 no credible evidence was presented to the Tribunal that the claimant was in business on her own account. In this case, there was evidence that the Complainant was in business on her own behalf –she stated she was self-employed, and worked elsewhere providing her services.
xi. Holidays: The Complainant was not paid annual leave.
xii. Support Staff: In this case no Respondent staff reported directly to the Complainant in a Superior/Reporting relationship.
Accordingly, whether a worker is an employee or self-employed depends on many factors. The Tribunal in UD 1096 stressed that the issue is not determined by adding up the number of factors pointing towards employment and comparing that result with the number pointing towards self-employment. It is the matter of the overall effect which is not necessarily the same as the sum of all individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. When the detailed facts have been established they must be considered as a whole to see if the overall effect is that of a person working in a self-employed capacity, or a person working as an employee in somebody else's business. A key factor in the above considerations is the nature of the “Work” involved. In this case the nature of the services provided by the Complainant was that of piano instruction and this was based on her own ability, qualifications and experience, and in addition appears to depend on the ability of the Complainant to build a relationship with her students. She is therefore providing an individual service unique to herself, albeit to students provided by the Respondent. The Complainant pointed out that she had experience and qualifications that were specific to her. Her evidence also indicated that she believed she could choose whether she could work with an individual student based on whether she received complaints or not i.e. she would withdraw her service if further complaints were received. |
Decision:
Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act, and Section 6 of the Payment of Wages Act, 1991
Having reviewed the legal Precedents, applied as far as possible the legal tests cited to the complaint, and given serious consideration to the question of what type of service the Complainant was providing, I find that the Complaint was engaged on an Independent Contract for Service and was not an employee as claimed. The complaint therefore fails as the WRC does not have jurisdiction to hear it as the Complainant is not deemed to be an employee. |
Dated: 9th May 2017
Workplace Relations Commission Adjudication Officer: Gerry Rooney
Key Words:
Contract For Service Contract of Service Payment of Wages |