Complainant

Respondent

Anonymised Parties

A Childcare Provider

Mr & Ms, X

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-00017174-001

31/01/2018

Preliminary Application

The complainant has brought a claim pursuant to section 6 of the paying the wages act stating that the respondent has failed to pay her wages.

The complainant was employed as a live out childminder on a contract of service. It was agreed between the parties that the complainant would be paid €1,100 gross per month. The complainant was known to the respondents as one of her children is in the same class as one of the respondent’s children. In December, 2016 there was a discussion between the parties as to whether or not the complainant would like to take care of the respondents two children in her home. The complainant had informed the respondents that she was giving up her job in the business world to commence childcare from her own home. The complainant indicated that in line with best practice she would register with childminding Ireland and would insure yourself for business purposes. It was also agreed that she would collect the children from school in her private vehicle and bring them back to her home. All of the facilities and or equipment necessary for the purposes of child minding were provided by the complainant. On the 10th of February 2017 complainant emailed a draft working agreement of a contract for service for a childminding business to the respondents. That contract for service was signed by one of the respondents (the mother) and was returned to the complainant.

The respondents argue that on that basis the complainant is a self-employed childminder running her own business and therefore the adjudicator has no jurisdiction to hear her claim under the payment of wages act.

Preliminary Application:

The complainant stated that she is working as a childminder out of her own home. She drew up the contract for service and the only amendment that had to be made to it was that the respondent insisted on a three month, Notice Period, be inserted. She consented to that amendment. Issues arose between the parties which lead to one of the respondents (the mother) emailing the complainant on the 11th of February 2017 stating that she was removing her children from her care with immediate effect. The contract between the parties has a 3 month, Notice Period and the complainant states that she is entitled to be paid for those 3 months pursuant to the Payment of Wages act 1991.

Wages are defined by Section 1 of the 1991 Act as follows:

“wages”, in relation to an employee, means any sums payable to the employee by the employer in connection with his employment, including—

(a) any fee, bonus or commission, or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under his contract of employment or otherwise, and

(b) any sum payable to the employee upon the termination by the employer of his contract of employment without his having given to the employee the appropriate prior notice of the termination, being a sum paid in lieu of the giving of such notice:

Provided however that the following payments shall not be regarded as wages for the purposes of this definition:

(i) any payment in respect of expenses incurred by the employee in carrying out his employment,

(ii) any payment by way of a pension, allowance or gratuity in connection with the death, or the retirement or resignation from his employment, of the employee or as compensation for loss of office,

(iii) any payment referable to the employee's redundancy,

(iv) any payment to the employee otherwise than in his capacity as an employee,

(v) any payment in kind or benefit in kind.

In order to establish if the claim is well founded I must first establish if the complainant was an “ employee”

It is settled law that the question of whether a contract is one of services or for services is dependent on the particular facts, rather than a straightforward application of a clear test. However, it is submitted that there is one critical question that the courts always turn to, namely, whether the individual is in business on his or her own account and has an opportunity to make a profit or gain by the manner in which the work is executed.  In  Market Investigations v Minister for SocialSecurity    Cooke J stated:

“the fundamental test to be applied is this; if the person has engaged himself to perform these services performing them as a person in business on his own account’

If the answer to that question is ‘yes’, then the contract is a contract for service.  If the answer is ‘no’ then the contract is a contract of service. It is submitted that at all times the Claimant was in business on her own account. She was paid for the hours she work. She was responsible for her taxes when they fell due. She was responsible for her own insurance. She was responsible for the provision of equipment to run her business. She was responsible for transport.  She received no fixed pay or benefits and was not in receipt of sick pay or payment for annual leave.

In Autoclenz Limited v Belcher and ors    the Court focused heavily on the test to establish whether a contract of service exists set out by McKenna J in Ready Mixed Concrete (SE) Limited v Minister of Pensions and National Insurance    where he stated;

“I must now consider what is meant by a contract of service.  A contract of service exists if these three conditions are fulfilled.

(a)       The servant agrees that, in consideration of a wage or other remuneration, he  will provide his own work and skill in the performance of some service for his master.

(b)     He agrees, expressly or implicitly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.

(c)    The other provisions of the contract are consistent with it being a contract of          service

McKenna J further states :

Condition (c) is sometimes called an “enterprise test” and it focuses on the typical characteristics of an entrepreneur ‘that is a person who is in business on his own account’.  Per Cooke J in Market Investigations:

“factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether or how far he has an opportunity of profiting from sound management in the performance of his task”.

The Supreme Court in Autoclenz added to those propositions the following:-

i.    That there must be a irreducible minimum of obligation on each side to create a contract of service

ii.   That a genuine right of substitution will negate an obligation to perform work personally and is inconsistent with employee status; and

iii.  If a contractual right, as for example the right to substitute exits, it does not matter that it is not used.

It is submitted that it is clear from the contract that the complainant did not have a contractual right to provide someone other than her to provide the service. Despite that she did give evidence that her husband would help her out from time to time. This however did come as news to the respondents.

In the case of O’Coindealbhain v Mooney  , Blayney J commented that the power of dismissal, while inherent in the master servant relationship, could also equally be found in a contract for services.  The case related to a contract that Mr Delaney had entered into with the Department of Social Welfare to act as a branch manager of a labour exchange. In this case, Blayney J stated;

“The second test to be applied “is whether the respondent is in business on his own account.” In my opinion he is.  I have no doubt that he is running a business, the nature of the business being to provide a particular service for the Minister.  His profit is the amount by which his remuneration exceeds his expenses; The lower he can keep his expenses the greater the profit”.

This precise argument can be applied to the complainant. The lower she kept her expenses, the great the profit she would make. She and only she was in control of that situation.

In the seminal case of Henry Denny & Sons (Ireland) Limited v Minister for Social Welfare     Keane J upheld the adjudication of the social welfare appeals officer who was “entirely correct in holding that he should not confine his consideration to what was contained in the written contract but should have regard to all the circumstances of {the demonstrator’s} employment”

Keane J, at page 49, cited with the approval of Cooke J in the of Market Investigations case, ”that the fundamental test to be applied is this:

‘is the person who has engaged himself to perform these services, performing them as a person in business on his own account?…The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as a sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how he has an opportunity of profiting from sound management in the performance of his task’.    

Keane J also cites the Irish case of Graham v Minister for Industry and Commerce    that the Supreme Court “…had also made it clear that the essential test was whether the person alleged to be a servant” was in fact working for himself or for another person.”

Keane J, at page 50, goes on to say:

“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”.

In the case of Tierney v An Post [2000] , the Court concluded that even a modest capacity to regulate or influence earnings or profit was a vital factor in determining that the contract in question of the postmaster was a contract for services. The postmaster was stated to be under the control of the regional manager of An Post and the permission of the head postmaster was required before an assistant could be hired. The premises had to be kept to a certain standard and he was directed to provide certain facilities for the public to use. There was substantial control relating to the running of a post office and the Court found that Mr Tierney was bound by the rules contained in certain rulebooks subject to any amendments or additions. It was common case that the rules were contained in a loose leaf folder entitled ”Postmasters Manual”. The rules were divided into thirteen sections and comprised in all almost 100 pages. They covered every aspect of a sub- Postmaster’s work in detail. Notwithstanding this level of detailed control the Court found that he was employed on a contract for services. The Supreme Court stated:

“It is true that under art 2.25 the authority of the head postmaster is required for the employment of any person at a sub-office. It is not surprising to find that the respondent has, as it were, a right of veto over the appointment of persons who for any reason it might not be appropriate to employ in a post office: the fact remains that it is not normal to find in a contract of service that the employee can hire assistants to perform the work which he or she is employed to do.

Counsel for the applicant relied on clause 2.5 of the Postmaster’s Manual which provides that:- “Postmasters are under the control and direction of the regional manager and are also subject to the immediate direction of their respective head postmaster, to whom in case of doubt arising on any point, reference should be made for instructions….” “As to the right of the respondent to control and direct his operations, it has frequently been emphasised in the authorities that, while the degree of control exercised by the other party is always a factor to be taken into account, it has long since ceased to be regarded as the only factor to be taken into account.”

. The key issue is the Claimant’s ability to influence and regulate her earnings which was entirely within her own hands. The more children she looked after, the lower her expenses the greater the earnings.

It is also relevant to consider how the parties view their own relationship and how they behave. This may extend to tax or insurance treatment. Accordingly, in Stringfellow Restaurants vQuashie   the individual’s remuneration came from customers of the restaurant, not from the putative employer, and she was treated (by the employer and by herself) as self-employed for tax purposes. The Court of Appeal (Elias LJ) made the point that:

The Employment Tribunal’s conclusion [that the claimant there was not an employee] was strongly reinforced by the fact that the terms of the contract involved the dancer accepting that she was self employed, and she conducted her affairs on that basis, paying her own tax. In addition, and again consistently with that classification, she did not receive sick pay or holiday pay. It is trite law that the parties cannot by agreement fix the status of their relationship: that is an objective matter to be determined by an assessment of all the relevant facts. But it is legitimate for a court to have regard to the way in which the parties have chosen to categorise the relationship, and in a case where the position is uncertain, it can be decisive, as Lord Denning recognised in Massey v Crown Life Insurance [1978] 2 All ER 576,578. To similar effect is the following observations of Lord Justice Ralph Gibson in Calder v H Kitson Vickers Ltd [1988] ICR 232, 251:

“the fact that the parties honestly intend that between themselves the contract should be a contract for services and not a contract of service is not conclusive, but it is a relevant fact, and…it may afford strong evidence that that is their real relationship.”

I am satisfied based on the evidence of the parties and on the supporting case law that the complainant was running a business on her own account and the factual circumstances that existed between the parties show that the complainant was operating under a contract for services and therefore was not an employee. On that basis I do not have jurisdiction to hear or determine a case pursuant to Section 6 of the Payment of Wages Act.