Complainant

Respondent

Anonymised Parties

A Fundraiser

A Nursing Home

Representatives

Des Ryan BL instructed by Holmes O'Malley Sexton Solicitors

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977

CA-00010391-001

23/03/2017

The complainant was a Fundraiser with the respondent from 1st February 2007 until 28th February 2017. She claims that she was unfairly dismissed and the respondent claims that she was never an employee and/or she was not unfairly dismissed.

The complainant was happy to proceed representing herself. The complainant detailed that she was at all times an employee and outlined that in early 2007 she was contacted by Sr A, who was then CEO and Board member. She was asked by Sr A to become the respondent’s fundraiser as well as manage various projects. The complainant was offered a salary of €44,000 to work 40 hours exclusively for the nursing home and was provided with a job spec.

She outlined that she was requested to invoice the respondent and did so over 10 years.

She detailed that she was never asked to produce professional indemnity, public liability or tax clearance certificate. 

In response to the economic downturn, in 2009, the complainant offered to reduce her time by half as it would be difficult to bring in fundraising within the economic climate of the country. It was agreed she would work an average of 80 hours per month – an average of 20 hours per week.

The complainant detailed her successes including securing major funding, the appearance of the nursing home on television programmes and representing the nursing home at events.

The complainant detailed that she reported at all times to the board and that all necessary purchases or engagements were paid for by the respondent.

She had an office at the respondent, was supplied with necessary equipment such as phone line, computer, furniture, printing facilities and stationary and had access to all areas of the respondent’s premises that other employees had.

Sr A retired in approximately 2013 and the relationship the complainant had enjoyed continued with the new CEO Ms B but who only stayed in the role of CEO for a short period of time.   A new CEO, Ms C was appointed around 2014. The complainant was acquainted with her as Ms C had been manager of the day care centre.   Further changes that took place around this time included changes in the members of the Board including a new Chairperson who was instrumental in improving the respondent’s accounting practices.

In 2014, the complainant first became aware of issues with regard to her employment status when it was mentioned to her by the Accounts Manager Ms D that the Chairperson Mr X had raised concerns with the complainant’s status.

In the early part of 2015 the CEO Ms C called the complainant into the office and advised her there might be Revenue exposure because of the complainant’s employment relationship with the respondent. Ms C detailed that she would have to review her contract. The complainant replied that she had never had a contract and that it operated on the basis of ‘custom and practice’ for over nine years.   Around October 2015 the complainant received a contract during one of her regular meetings with Ms C. The complainant sought legal advice and rejected this contract on 27th January 2016.

The complainant noticed a further change in attitude from the beginning of 2016 in terms of the removal of her responsibilities as well as a notable change by Ms C in her commitment to events that had been the source of much support in the community.

Correspondence continued to be exchanged between the parties around the proposed contract but the complainant felt she could not sign the contract which in effect, gave her a year’s notice, no commitment to hours, she would have to insure the respondent against public liability, she would have to supply all materials equipment and facilities, there was no increase in her hourly rate, and she would have to indemnify the respondent against any revenue tax or other liabilities.   She advised Ms C on 27th September 2017 that she could not enter into this consultancy agreement.

In very early January 2017, in a letter dated 30th December 2016 the complainant received notification from Ms C that her services were no longer required and that she was afforded “two month notice period”. On 10th January 2017 the complainant replied and she was called to meet with Ms C who expressed her unhappiness that agreement could not be reached and that the board had no appetite for fundraising. A further letter was sent from Ms C on 2nd February 2017 confirming that her contract for services would cease on 28th February 2017 and that no further correspondence would be entered into. The complainant replied to this letter asking a number of questions which she believed had not been replied to and she continued to work till the 28th February 2017 when she expressed her upset that nobody came near her on that final day after 10 years’ service and that the respondent failed to afford her fair procedures with regard to her dismissal.

Case law and literature cited included:

Code of Practice for Determining Employment or Self-Employment Status of Individuals developed by the Employment Status Group and which the complainant detailed supported her claim that she was an employee.

Pimlico Plumbers v Smith [2017] EWCA Civ 51 and Dewhurst v City Sprint UK Case No: 2202512/2016 which supported those complainants as workers and which the complainant identified with as being similar to herself.

IBEC’s submission to the consultation on the use of intermediary-type structure and self-employment arrangements.

Principles governing an employment contract including offer, acceptance, intention to create legal relations and consideration and articles.

A letter was also submitted by the complainant allegedly from the former CEO Ms B. Ms B was not available at the hearing to give direct evidence or to have that evidence examined

Additional correspondence was received after the hearing including efforts by the complainant to mitigate her loss as well as projects she had been working on during her time with the respondent.

The respondent raised a preliminary issue, namely that the complainant was never an employee but instead operated as an independent contractor.

Without prejudice to this preliminary issue, the respondent maintained that the complainant was not unfairly dismissed and that there was a substantial reason justifying the dismissal of the complainant within the meaning of the Unfair Dismissal’s Acts.

Preliminary Issue

The respondent detailed that the nursing home operates as a not-for-profit- charitable foundation, designed and purpose-built to cater for the elderly. Sr A became acquainted with the complainant and engaged her as an independent contractor to assist as a Fundraiser. Sr A was not available to give evidence as she has retired and resides in the US.

It was accepted that a job description was issued but only with regards to giving input into the complainant’s role as a contractor.

When Ms C took on the role of CEO in 2014, she saw it necessary to regularise the needs of the organisation’s fundraising. Ms C was unclear how much time was spent on particular projects and was unable to confirm their cost effectiveness or otherwise due to the autonomous nature of the input from the complainant. Greater clarity was sought to detail the nature of the tasks and the input of the complainant but the complainant would not engage with the respondent’s ‘document tool’ that Ms C produced.

It was detailed that all of the incidents of the working relationship between the complainant and the respondent pointed to that of independent contractor. This included:

Monthly invoices were furnished stating that they were “for services provided” and were submitted on headed paper detailing the “X Y (complainants name and surname) Consultancy” and contained a VAT number.

Her hours decreased since being engaged in 2007.

She was never prevented from doing fundraising work for other organisations.

The role of fundraiser is not integral to a nursing home.

She was not under the control of the respondent in her day-to-day consultancy.

She was not subject to disciplinary procedures, unlike other employees.

She was responsible for her own tax and social welfare contributions.

She was not included in any payment or benefit scheme applicable to employees such as sick pay scheme.

She determined her own holidays: both with regards to timing and length.

No mutuality of obligation existed between the complainant and the respondent.

The respondent also objected to the letter submitted by the complainant allegedly from Ms B on the basis that they had no opportunity to question Ms B, regarding the contents of this letter.

Case law cited included:

Henry Denny & Sons (Ireland) Ltd t/a Kerry Foods – V Minister for Social Welfare [1998] 1 IR 34, with regards to “each case must be determined in the light of its particular facts and circumstances” and reference to control test, integration test, economic reality test and entrepreneurial test.

Ready Mixed Concrete Ltd (South East) – v Minister of Pensions [1968] 2 QB 497, with regard to the three conditions which must be fulfilled for a “contract of service” to exist and which it was detailed that the complainant did not satisfy the tests and that the role of a fundraiser is not integral to the business of a nursing home.

Minister for Agriculture v Barry [2009] 1 IR 215 with regard to the emphasis it places on the requirement of mutuality of obligation to be shown for an employment relationship to exist and the more recent supreme court hearing.

Substantive Issue:

Without prejudice, to the above, it was detailed that should the complainant be found to be an employee then the complainant was dismissed in a fair manner and that there were substantial ground justifying the dismissal. It was detailed that the “substantial grounds justifying the dismissal” included owing to the reorganisation of the business and cited Polkey v AE Dayton Services Ltd [1987] ICR. This reorganisation came about after the CEO Ms C set out a clear business need for a reorganisation of fundraising services and that the continuation of the work done by the complainant and its manner was no longer tenable. When the respondent attempted to engage with the complainant, she refused to engage and thus there was no alternative but to terminate the relationship. It was detailed that procedural fairness was ensured at all times, evidenced by much correspondence with the complainant and affording her two months-notice.

In response to correspondence received from the complainant following the hearing regarding mitigation and projects she had been engaged in, the respondent outlined that she had not made sufficient efforts to mitigate her loss.

Preliminary Issue:

In order to determine whether I have jurisdiction to hear this complaint, it is necessary in the first instance to determine the nature of the relationship between the parties and decide whether the complainant was engaged under a “contract of service” or “contract for service”.

The case law has been developed over the years and it has been accepted in the case of McAuliffe v Minister of Social Welfare [1994] ELR 239 that it is not possible to devise any hard and fast rule as to what constitutes a contract of service. It is necessary for me to look at the totality, therefore, of the relationship between the parties and consider each case on its own merits and to consider the evidence as presented under a series of tests as set out in varying court cases that have dealt with this issue. The Code of Practice for Determining Employment or Self-Employment Status of Individuals developed by the Employment Status Group further assists to form an understanding of this complex matter. It states “An important consideration in this context, will 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”.  The Supreme Court of Henry Denny & Sons (Ireland) Ltd t/a Kerry Foods -v Minister for Social Welfare [1998] 1 IR 34 made clear that in determining the status of an individual both the contractual terms and the surrounding practical circumstances of the relationship should be considered.

I have considered the evidence adduced taking into consideration all the factors relating to the working relationship between the Complainant and the Respondent. These factors are set out in summary hereunder. It should be noted that some are supportive of the view that the complainant was engaged as an independent contractor, others support the view that the complainant was an employee and others are inconclusive.

In Business on her own Account and/or Integration:

In the Barry High Court 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 the following factors:

Whether the person provides the necessary premises, or equipment or some other form of investment.

In the instant case the complainant did not provide premises, equipment or any investment.

Whether the person employs others to assist in the business.

The claimant did not employ others to assist in the business, and

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 complainant could not have earned extra money by working harder or conducting the business differently. The pay she received was paid on submission by her of calendar-type time sheets detailing hours worked and a subsequent invoice.

In effect, the complainant appeared integrated in the respondent’s business, working in the same building as other employees with nothing obviously distinguishing her from the other employees except, that she was paid on submission of an invoice. She organised some team events including the Christmas party and up to the Ms C coming on board, met regularly with the board.

In O'Coindealbhain (Inspector of Taxes V Mooney) [1990] IR 422 the critical question was whether the person was performing the relevant services as a person in business in his/her own account. There was no credible evidence presented in the instant case, to suggest that the complainant was on her own account.

Thus, while the above would give an inference of an employee-type relationship, they are not sufficient on their own and consideration must be given to other matters including:

Mutuality of obligation:

The case of Minister for Agriculture -v- Barry [2009] 1 IR 215 has placed strong emphasis on the requirement of mutuality of obligation to be shown in order for an employment relationship to exist. Indeed the respondent outlines that it is of central relevance to this case. The main judgement of the High Court (Edwards J) outlined that 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”.   Indeed “if there is no mutuality of obligation, it is not necessary to go further”. The hours of work which the complainant completed were reduced over the years from a high of 48 hours in 2007 initiated by the complainant. I note also that following the recession years in 2009-2011, her hours did increase in 2012 and 2013 but were reduced again in 2014, which was the same period that the new CEO Ms C came on board. On the whole, I am satisfied that that the respondent was obliged to provide work to the complainant and the complainant was obliged to perform that work, which would suggest an employee-type relationship.  

Relevant Contracts/Intention of the Parties:

Prior to the contractor agreement being put forward by Ms C in 2016, there was no written agreement in place. There was a job description but this is unsigned and undated. Therefore, we are left with 'intent' of the parties. The only witness available to provide evidence on the intention at the start of this relationship was that of the complainant. I find the complainant a credible witness when she submits that the intention was that she was brought on board as an employee and I therefore, find that the intention of the relationship was that of an employee.

Control:

The degree of control exercised by a person may provide guidance in deciding whether a contract is one "for service" or "of service" although it may not always be a satisfactory test to apply clear from an older case of Cassidy V Minister for Health (1951 2 KB 343).  The respondent detailed that the complainant operated independently and therefore they were not able to exercise any control including that they could not subject her to disciplinary procedures. The complainant details that she could have been subject to disciplinary action but it never arose because there were never issues with her performance. Furthermore, she detailed that while she had flexibility with regard to her work, she was ultimately accountable to Sr A and the board with regards to the success or otherwise of her fundraising activities. I am satisfied the complainant did enjoy flexibility and autonomy within her role but that this should not be confused with "control" which I am satisfied that the respondent had over her work. I find on this test that she was an employee.

Taxation:

It was accepted that the claimant was paid on submission of an invoice and that she looked after her own taxation and VAT. While this may indicate independent contractor status, it is not decisive and as has been well documented in the Denny case where the demonstrator paid her own tax, the Supreme Court held she was still an employee. While the demonstrator in the Denny case did not appear to have presented VAT invoices, Revenue do not accept payment of VAT or not as an automatic declaration of self-employment. This test is, therefore, inconclusive.

Sick Pay:

The respondent detailed that the complainant was not entitled to sick pay, however, I note that the complainant was never out sick during her time at the respondent, therefore this test is inconclusive.

Holidays:

She was not paid annual leave, but took leave as she required and did not invoice for same. I find that under this test she was a contractor.

Substitution:

The complainant believed and no evidence was put forward to suggest otherwise, that she could not use another person to substitute for her, especially taking into consideration that she utilised the respondent’s premises, equipment, phone etc. Under this test, I find the complainant an employee.

As can be seen, there is no single test, with the need for each case to “be considered in the light of its own particular facts”. However, looking at the working relationship as a whole, and taking into consideration the legal principles set out above, I determine that the complainant was working as an employee for the respondent. I, therefore have jurisdiction to hear the claim under the Unfair Dismissals Acts.

Substantive Issue:

Having determined that the complainant was an employee I must next look to whether the complainant was unfairly dismissed.

Section 6 of the Unfair Dismissals Act, 1977 provides:

“(1)   Subject to the provisions of this section, the dismissal of an employee shall   be deemed, for the purposes of this Act, to be an unfair dismissal unless, having regard to all the circumstances, there were substantial grounds   justifying the dismissal.…

(4) Without prejudice to the generality of   subsection (1) of this section, the dismissal of an employee shall be deemed, for the purposes of this Act, not to be an unfair dismissal, if it results   wholly or mainly from one or more of the following:

(a) the capability, competence   or qualifications of the employee for performing work of the kind which he   was employed by the employer to do,

(b) the conduct of the employee

(c) the redundancy of the   employee, and

(d) the employee being unable   to work or continue to work in the position which he held without   contravention (by him or by his employer) of a duty or restriction imposed by   or under any statute or instrument made under statute.

(6)   In determining for the purposes of this Act, whether the dismissal of an   employee was an unfair dismissal or not, it shall be for the employer to show that the dismissal resulted wholly or mainly from one or more of the matters specified in subsection (4) of this section or that there were substantial grounds justifying the dismissal.

The respondent draws upon the defence that there were other substantial grounds justifying the dismissal, namely that a reorganisation of the business was undertaken by Ms C and that she sought to engage with the complainant with a view to regularising the arrangement. The complainant details that the discussions that took place, much by correspondence were around the central issue of her status, namely whether she was deemed a contractor or employee. Having reviewed the correspondence between them, I note that the complainant was willing to engage with discussions regarding her future relationships with the respondent. However, the respondent would not shift from their position that she was never an employee and thus I do not believe that the respondent displayed sufficient willingness to resolve the issue. Albeit noting that they paid her two months’ notice on the cessation of the contract, there were no real efforts to afford her any due process around the dismissal and thus she was deprived of the principles of natural justice.

Therefore, having considered the written and oral submissions of the parties, and for the aforesaid reasons, I find this complaint to be well-founded pursuant to Section 8 of the Unfair Dismissals Acts 1977-2015 and conclude that the Complainant was unfairly dismissed by the Respondent.

Section 7 of the Unfair Dismissals Act 1977 sets out the various forms of redress including reinstatement, re-engagement and financial compensation which may be awarded and relevant to the instant case where compensation only is sought, Section 7(1)(c)(i) of the Act provides: “…if the employee incurred any financial loss attributable to the dismissal, payment to him by the employer of such compensation in respect of the loss (not exceeding in amount 104 weeks remuneration in respect of the employment from which he was dismissed calculated in accordance with regulations under section 17 of this Act) as is just and equitable having regard to all the circumstances,…” Section 7(2) sets out the factors to be considered when determining the level of compensation and of most relevance to this case are the measures adopted to mitigate losses

Taking all the circumstances into consideration, I find that compensation is more appropriate.

The complainant is not currently working and with regards to efforts to mitigate her loss detailed some efforts to seek alternative work including going into business for herself. The respondent disputed her efforts and highlighted that there had been very little evidence to support the view that she had been actively seeking employment. I have considered the efforts of the complainant which she submitted and the submission by the respondent in relation to such efforts. The standard for mitigation is set out by the Tribunal in Sheehan v Continental Administration Co Ltd (UD 858/1999) which details that a “claimant who finds himself out of work should employ a reasonable amount of time each weekday in seeking work. It is not enough to inform agencies that you are available for work nor merely to post an application to various companies seeking work ... The time that a claimant finds on his hands is not his own, unless he chooses it to be, but rather to be profitably employed in seeking to mitigate his loss." Ifind that the complainant made some efforts but not significant efforts to seek work following the termination of her employment.

The complainant’s rate of pay was €23.50 per hour and she worked on average hours 20 hours per week. Taking into consideration also income earned by the complainant by going into business for herself, I award the complainant 40 week’s compensation which would amount to an award of €18,800 and I find that this should be reduced by 20% owing to the failure of the Complainant to mitigate her loss to the level expected.   Therefore, taking all that into consideration, I direct the Respondent to pay the Complainant the sum of €15,040.

I find that the complainant was unfairly dismissed and the complaint succeeds and I award €18,800. However, I hold that the Complainant failed to mitigate her loss sufficiently and I reduce that award by 20% such that I order the Respondent to pay the Complainant the total sum of €15,040 for the unfair dismissal.

Unfair dismissal, contractor, employee