Complainant

Respondent

Parties

Conor  McGrath

Hoban Technology Holdings Ltd. t/a Ingenio Global

Representatives

Colm Hickey Arthur McLean Solicitors

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-00036094-001

11/05/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 7 of the Terms of Employment (Information) Act, 1994

CA-00036094-002

11/05/2020

The complainant was a Contract Front End Developer working for the respondent, providing service to a client of the respondent from 26th August 2019 to 30th November 2019. His start date with the Respondent was disputed. He contended that he was an employee of the respondent and that he was owed the amount of €6393 in unpaid wages relating to payments due in December 2019. He also contended that there were changes made to his terms and conditions and that he was not notified in writing of those changes.

The respondent was a specialist technology recruitment business.  The respondent refuted the allegations.

Preliminary Issue: Whether there is an employer/employee relationship between the parties

The Respondent contended that there was no employer/employee relationship between the parties and further that the Complainant did not have legal standing to bring an application to the Workplace Relations Commission in circumstances where there was no relationship in law or in contract between the Respondent and the Complainant.

A determination on this matter in favour of the respondent would determine the substantive complaint whilst a substantive hearing would follow a determination in favour of the Complainant.

Preliminary Issue:

The complainant submitted that the employment relationship was established by consultancy agreement dated 25th July 2019 between the Respondent and Software Developer CMcG and the contract operated from 26th August to 31st December 2019.

The complainant outlined the following parties and their respective roles to assist in understanding the employment relationship:

·        The Respondent – responsible for the recruitment, assignment and payment of the contractor

·        The Contractor – CMcG Software Developer assigned to Saudi Arabia to work for client/end user

·        Saudi Contractor – CS contracted to Client

·        Saudi Client/end user – A/S responsible for software development project

The complainant submitted that the terms of the employment relationship were outlined in the Assignment Schedule dated 30th July 2019 prepared by the respondent.  The Schedule identified the respondent as responsible for payments to CM – and he submitted that the respondent complied with the Agreement from August to November 2019.

In relation to his employment status the complainant outlined that agencies may be involved in establishing employment relationships in two ways:

1.      The Agency introduces the individual to the Client/end user – the individual is employed directly by the client/end user

2.      The Agency assigns the individual to the Client/end user on a project/temporary basis under an Agency contract – in these circumstances the employer is the Agency

The Complainant submitted that in order to establish who the employer was in this case it is necessary to consider the understanding and intention of the parties who made the agreement.

He submitted that the Assignment Schedule dated 30th July 2019, prepared by the respondent identified CM as the contractor, CS as the Client.  He further submitted that in two emails the Respondent identified himself as “the employer” as follows:

·        Email of 23rd August 2019, where Mr. RMcG stated “We’re your employer, not him”

·        Email of 26th August 2019 where Mr. R McG set out arrangements for claiming payments

The Complainant submitted that the Assignment Schedule and the aforementioned emails left him in no doubt about the identity of his employer.  The complainant further submitted that the employer for the purpose of employment statutes is defined as the person liable to pay the wages of the Agency Worker.

Evidence given at hearing regarding the Preliminary Issue

At hearing the Complainant stated that he believed himself to be an employee of the respondent and that this was verified in an email from Mr. RMcG, when he asserted himself as the employer. He stated that the Assignment Schedule was completed by the respondent and that it was a “contracting out of the organisation of working time.”

The complainant stated that he agreed with the respondent position that it was necessary to look at the totality of the issue but he stated that this included the intention of the parties to the Agreement, he stated that this was central to his understanding that he was an employee of the Respondent. He stated that his understanding arose from the intention of the Assignment Schedule which identified him as the contractor, the Respondent as the agency and identified the Client.

He further confirmed that by email of 23rd August Mr. McG had identified the respondent as his employer while setting out arrangements for claiming payment.  He confirmed that he was to supply a timesheet and that there were no difficulties experienced until December, when his payment was withheld. He stated that based on the Assignment Schedule he believed himself to be employed on an agency basis.

In response to the respondent position that this was not an agency/employee relationship he stated that it was very simple, he had been recruited by Mr. RMcG, that he had been sent to Saudi Arabia by him and that he had been paid by him.

CA – 00036094-001 (The substantive issue)

In his complaint form, the complainant stated that the respondent had decided that he was not going to be paid until he could produce an official timesheet, signed by the client, yet the respondent had refused to provide him with an editable timesheet which he could complete.  He stated that the respondent had said it was his responsibility to find an official timesheet for the company but that he could not understand how he was expected to have their official documents, without them being provided to him.  He advised that he had raised the matter with them on a number of occasions by email and that he believed the respondent was seeking to penalise him for making another complaint about them.

He stated that he had provided the respondent with all the information, relevant to the timesheet, signed and approved by the client but that the respondent will not accept the document provided. The complainant stated that the payment was due on 31st December and that he had never before been asked for a timesheet, nor had he been made aware of any discrepancies in his invoices.  He stated that it was only after the respondent was made aware of his complaints that they withheld his pay and advised him that they would not pay him until he withdrew his complaints.

He stated that in response he advised them that he had made another complaint against them and that it was at that stage that they “came up with” the issue of discrepancies and timesheets as the reason for not paying him.  He stated that he had tried to provide them with all the information sought, that he believed the respondent was being unreasonable and that he had been left with no option but to pursue his complaints.

In his submission the complainant provided copies of emails between him and the respondent from 5th February 2020 until 13th January 2021.  He submitted that he provided the Respondent with his December 2019 timesheet on 8th January 2020 and that under the terms of the Agreement he should have been paid within 5 working days.  He submitted that when he did not receive payment, he lodged a case with the Workplace relations Commission.  In his email of 5th February 2020, the complainant confirmed to the respondent that he would not be withdrawing his complaint in relation to terms of employment and that his wages were a separate matter.  He suggested that the respondent take the opportunity to address the matter of his pay.

By email response the respondent advised that the pursuit of his complaint was a matter for the complainant but that, in the meantime, his last timesheet was still missing and that this was why the final payment was being withheld.  The respondent also stated that they could help out the complainant by paying him but posed the question -why should they “help someone who is filling complaints against” them. The complainant provided a copy of a further email of the same date where the respondent stated that the complainant should ask the Client for the timesheet “given that they’re now your employer”, to which the respondent replied that he was not employed by the Client and that he had always previously received timesheets from an employee of the respondent and that he did not understand why this occasion needed to be different.

The complainant submitted further emails of the same date where he advised the respondent that had made contact and been advised that the Client did not understand why he needed the forms so long after the applicable date and that the need for timesheets had been eliminated as the respondent had been prepaid up to year end.  He also furnished a copy of an email response he received which stated that the Client “won’t respond to you, …given the action you have taken.”

The complainant submitted that in the meantime he had been contacted by the WRC who advised him that the party against whom he had submitted his complaint was not his employer and so he withdrew those complaints and again contacted the respondent to advise them of the situation and that he would now be submitting his complaints against the respondent.  He suggested that this now provided an opportunity to resolve matters.

The complainant provided a copy of an email from the respondent where the respondent advised that the timesheet was still needed and confirming that the respondent was happy to address his complaints as the complainant had not fulfilled his obligations.

The complainant submitted emails from March 2020 showing that he was unable to obtain the official timesheet and that he had provided emails outlining the information required in the timesheet and approval from the Client.  He also stated in those emails that this was the format he had provided heretofore for payment. He further provided copies of emails between the parties to demonstrate that he had provided all information required, albeit, not on the prescribed timesheet and responses from the respondent continuing to refuse to process the payment. The respondent refused to process the payment on the following basis:

·        That previous approvals were signed and payment in dispute was electronic

·        That the approver was different to previous approvals

·        That the formal timesheet was not used

The complainant provided a copy of his response which stated that he had provided all information requested, other than the timesheet and that he had requested the respondent send him a timesheet on multiple occasions, but the respondent had refused to do so.

The complainant submitted that in the context of the pending WRC case the respondent offered him settlement terms on 23rd November 2020 and again on 12th January 2021.  He submitted that he declined both offers and that he was seeking the full amount of wages due to him, together with holiday pay outstanding and penalties and interest i.e., December 2019 payment of €6393, holiday pay in the amount of €2080 plus penalties and interest.

The complainant submitted that under the Payment of Wages Act the non-payment of the amounts owed constituted an unlawful deduction unless the deficiency was the result of an error or miscalculation, which he submitted did not apply to the instant case.

CA – 00036094-002 (The substantive issue)

On his complaint form, the complainant stated that he was not notified in writing of a change to his terms of employment. Specifically, he outlined that he was given a start date and was offered the option of weekly or monthly pay.  He confirmed that he chose weekly pay.  He stated that once he signed the contract and was sent to another country to work, the start date was more than a month before he was actually due to start and the respondent changed the payment terms to monthly, leaving him waiting more than a month without pay, resulting in him building up credit card debt.

General

The respondent submitted that it is a specialist technology recruitment business founded in 2015, with offices in Dublin and London. It has clients in Ireland, the UK and internationally and provides recruitment services in the areas of leadership, sales and marketing, product and project and software development.

The respondent submitted that the complainant incorporated a company in the UK, provided the registered address of the company and appended the certificate of incorporation of the company to its submission.  The respondent further submitted that the complainant carried on the business of a Contract Software Developer.

In its submission the respondent outlined that by consultancy agreement dated 25th July 2019 (the Agreement) the respondent and the company incorporated in the UK by the complainant entered into a contract of service for the provision of consultancy services by the company and that the terms of that Agreement were further defined in a document referred to as the “Assignment Schedule”.  The respondent appended copies of both the “Agreement” and the “Assignment Schedule” to its submission

Preliminary Issue

The respondent submitted that there was no employer/employee relationship between the parties and that therefore the complainant did not have legal standing to bring an application to the Workplace Relations Commission in circumstances where there was no relationship in law or in contract between the respondent and the complainant.

The respondent submitted that the complainant was not an employee of the Respondent and that (CM) UI Ltd is not an employee of the Respondent given that a corporate entity cannot be an employee.  The respondent further submitted that the complainant did not meet the definition of “employee” as defined in the relevant legislation for both complaints and it submitted that the complainant was not an employee for the purposes of the Workplace Relations Commission but was an independent contractor/consultant.

The respondent outlined that the parties to the Agreement were parties to a Contract of Service as opposed to a Contract for Service. It outlined that the Agreement provided that

·        “(the Respondent) may request that the Consultancy provides Consultancy Services from time to time in accordance with this Agreement”

·        “(the Respondent) is not obliged to offer Assignments to the Consultancy, the Consultancy is not obliged to accept any Assignment and there is no intention for mutuality of obligation to exist between (G UI Limited] or the Consultancy staff at any time.”

·        “the Consultancy is an independent business and acknowledges that the responsibility of complying with all statutory and legal obligations relating to the Consultancy staff, including the payment of taxation and compliance with immigration laws in the relevant jurisdiction shall be discharged exclusively by the Consultancy.”

·        “Nothing in this Agreement shall render any member of Consultancy Staff an employee or worker of either (the Respondent) or the Client and if any individual/government body should claim or make any finding that any member of the Consultancy staff is an employee or worker of (the Respondent) or the Client, the Consultancy shall indemnify (the Respondent) and the Client for any losses which they shall incur as a result.”

·        “If a member of the Consultancy Staff is unable or unavailable to provide the Consultancy Service, the Consultancy may substitute the member of Consultancy Staff for an alternative member of the Consultancy Staff.

·        “The Consultancy shall ensure that the Consultancy and the Consultancy Staff…. do not hold themselves out to be an employee or worker of either (the Respondent) or the Client.”

·        “The Consultancy must….unless otherwise agreed, provide at it’s own cost all such equipment and training as is necessary for the proper performance of the Consultancy Services…”

The respondent submitted that the complainant did not come under the definition of “employee” outlined in the either of the relevant Acts nor did the respondent come under either definition of “employer”. The respondent further submitted that it was clear from the terms of the Agreement that the parties intended it to be a Contract for Service and not a Contract of Service.  The respondent submitted that it was also clear that there was no intention to create an employee/employer relationship. In particular circumstances where the Agreement was between two limited companies.

In its submission the respondent outlined that in considering the nature of the relationship between two parties and whether it gives rise to employer/employee obligations, regard should be given to relevant extracts from the Revenue Commissioners – Code of Practice for Determining Employment or Self- Employment Status of individuals, and drew specific attention to the following extract:

“It is important that the job as a whole is looked at, including working conditions and the reality of the relationship, when considering the guidelines.  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 consideration can be a useful indicator of the person’s status and should be considered in conjunction with the other criteria listed in this code of practice.”

The respondent submitted that the code determined that an employee

·        Is under the control of another person who directs as to how, when and where the work is to be carried out

·        Cannot subcontract the work. If the work can be subcontracted and paid on by the person subcontracting the work, the employer/employee relationship may simply be transferred on.

·        Does not supply materials for the job

·        Does not provide equipment other than the small tools of the trade. The provision of tools and equipment

The respondent further submitted that a self-employed person is characterised in the Code as

·        Owning his own business

·        Having control over what is done, how it is done, when and where it is done, and whether he or she does it personally

·        Is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken

·        Can provided the same services to more than one person or business at the same time

·        Provides the materials for the job

·        Provides equipment and machinery necessary for the job….,

Case Law

The Respondent opened a number of cases it considered relevant to demonstrate precedent in relation to mutuality of obligation, contract with a corporate entity, the complainant’s knowledge of the nature of the Agreement and the working and wording of the Agreement.  The respondent drew parallels between the case law cited and the instant case and summarised its’ position as follows:

·        The complainant was not an employee within the meaning of the relevant legislation

·        The complainant is an independent contractor/consultant providing services under a contract for service

·        The Agreement is between two limited companies and is a contract for service

Finally, the respondent submitted that the complainant does not have locus standi to bring any complaint as he has failed to demonstrate that there was any relationship in law between him and the respondent and furthermore, that even if there was such a relationship, the complainant was not an employee within the meaning of that term in the relevant legislation.  In that context, the respondent submitted that the WRC does not have jurisdiction to hear these complaints and therefore, the complaints should be dismissed.

CA – 00036094-001 (The substantive issue)

The respondent submitted that should the WRC decide the preliminary issue in favour of the complainant it was the respondent position that the complaint should be dismissed for the following reasons:

The Consultancy Agreement outlined the procedures for invoices and payments

Clause 5.1.1 of the Agreement - The respondent submitted stated that “at the end of each week or month of the assignment, as indicated within the Assignment Schedule, or at such interval as may be agreed between the Consultancy and (the Respondent) from time to time, the Consultancy shall deliver to (the Respondent) a timesheet or progress report detailing the work carried out and time spent by the Consultancy in providing consultancy services, such progress report to be in a format acceptable to (the Respondent) and the Client.”

Clause 5.1.2 – The respondent submitted that “the Consultancy shall obtain the signature of an authorised representative of the Client as verification of the timesheet or progress report, and this must be received by (the Respondent) together with a corresponding invoice no later than 14.00on the Monday following the week or month to which it relates.”

Clause 5.1.3 – the respondent submitted that “the Consultancy acknowledges that failure to deliver and obtain approval by the Client he Consultancy of a progress report may delay payment.”

Clause 5.1.4 – the respondent submitted that “where (the respondent) has agreed to pay expenses to the Consultancy in addition to the Consultancy Fees, no such expenses shall be payable by (the Respondent) until the Consultancy has submitted an invoice for such expenses, supported by itemised receipts.”

Clause 6.1.8- the respondent submitted that “(the Respondent) will pay the Consultancy fees within 5 working days of receiving an accurate timesheet or progress report, subject to:

·        The satisfactory performance of the Consultancy services;

·        The Consultancy’s compliance with this Agreement.”

Further elaboration by the Respondent Representative at hearing

The respondent representative contended that there was no relationship in law or in contract between the complainant and the respondent, that the complainant was not an employee of the respondent and therefore, he had no standing to make these complaints.

In relation to references to issues under the Organisation of Working Time contained in the complainant submission the respondent representative stated that such issues were not before the WRC, that they had not been included in the complaint form and cannot now simply be added to avoid the time limits set down in the Act.

The respondent representative stated that the complainant could not simply rely on the wording contained in one email from the respondent to prove an employee/employer relationship, that the relationship as a whole must be considered.  He stated that in so doing it was evident that the Agreement was between two corporate entities, and that it was clear that there was never an intention to create an employee/employer relationship.   He stated that the wording of the Agreement “couldn’t be clearer.  He stated that the consultancy was an independent contractor not an agency worker.  He further stated that if the Agreement and the working relationship was considered in the context of case law cited in their submission it would be evident that the contract between the parties was a contract between two companies and constituted a contract for service.

The respondent representative stated that the Respondent had made payments for work done to a limited company, registered in the UK, that the Agreement between the parties was the basis of the relationship, that the complainant had signed that Agreement in July 2019 and that he had made no complaint in relation to the terms of that Agreement.  The respondent representative advised that the case should be dismissed on the grounds that the complainant did not have standing to pursue case under the legislation relevant to his complaints.

CA – 00036094-002 (The substantive issue)

The respondent submitted that should the WRC decide the preliminary issue in favour of the complainant it was the respondent position that the complaint should be dismissed, as the Assignment Schedule clearly set out the commencement date of the Agreement as 27th August 2019 for a period of 6 months.

Preliminary Issue

In considering the preliminary issue, along with the submissions and representations made at hearing I paid particular attention to the Agreement and to the Assignment Schedule governing the relationship between the parties.  I also considered carefully the case law opened by the respondent.

I noted the respondent position that this was not an employer/employee relationship but was in fact governed by a contract for service. I noted the alternative position of the complainant that he had a clear understanding that he was employed by the respondent and that this had been verified in two emails by the respondent.

I examined the totality of the relationship between the parties and considered the evidence under the various tests established by case law that dealt with the question of a contract of service vs a contract for service. In that context I considered a number of tests to establish the relationship between the parties as follows:

·        mutuality of obligation

·        Control

·        Integration

·        Entrepreneurial Test

I further examined the question of taxation and other relevant matters, such as pay arrangements, insurance arrangements and the status of the complainant’s limited company.

Mutuality of Obligation:

For a contract of service to exist there must be a mutual obligation on the employer to provide work for the employee and on the employee to perform work for the employer.  It was accepted that the complainant had established a limited company in the UK and I noted that the company was registered there on 17th December 2018.  I further noted that payments for invoices were made to that company.

A copy of the consultancy agreement was appended to the respondent submission. I noted that the Agreement was signed by the complainant on 25th July 2019 and that the Agreement was between the Respondent and a limited company.  I noted the specifics contained in the Agreement which clearly set out the relationships between the parties, confirming that the complainant’s company is free to take on other work and is free to employ others to carry out the work assigned by the respondent.

I noted the following from the decision of Edwards J in Barry & Others v Minister for Agriculture [2011] IEHA 41 commenting on the mutuality of obligation test: “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 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.”

The parties to the relationship as set down in the Agreement are clearly two corporate entities and the terms of that agreement make clear that the Consultancy is free to engage others to carry out the work and free to take on other work, not in conflict with the Respondent assignment.  The Agreement also makes clear that the respondent is not obliged to provide on-going work for the Consultancy.  I consider that the informal language contained in the two emails referenced by the complainant is not sufficient to undermine or alter the Agreement signed by the complainant nor does it convert the legal agreement between the respondent and a limited company from a contract for service into a contract of service between the complainant and the respondent.  In that context I find that there was no mutuality of obligation between the complainant and the respondent.

Control

I noted that in the case of Roche v Kelly [1969] IR 100 Walsh J held “it is the right to control the work rather than the actual exercise of that right that matters. Ordinarily, the greater level of skill required for the performance of the work in question, the less significant is control in determining whether the person performing the work is an employee.”

In this case the complainant is a qualified front end developer.  He received work assignments but how he carried out those assignments was a matter of his skill, experience and initiative in carrying out his work.  I noted further that the Consultancy was free to engage others to carry out part or all of the assignment and therefore I am satisfied that no evidence was presented to conclude that the complainant was employed on a contract of service.

Integration

This test is used in considering if the work performed was an integral part of the business, or whether it was only an accessory to the business. In the instant case the complainant provided services as a developer to a client of the respondent and did not engage in an activity associated directly with the respondent.  I noted that under the terms of the Consultancy Agreement the complainant’s limited company was free to carry out other work.  While I am satisfied that there existed a 6-month working relationship between the parties I am not satisfied that determines there was an employee/employer relationship.

Entrepreneurial Test

This test is designed to assist in deciding if a person is in business on their own account.  The complainant confirmed at hearing that he had established a limited company and that he had done so at the behest of the respondent.  He further stated that he then entered into a consultancy agreement but that the agreement did not reflect the reality of the relationship between the parties. While contractual documentation that is not consistent with the day-to day reality of the working relationship cannot determine the employment status, such documents need careful consideration.

In the instant case the complainant acknowledged that he had established a limited company, the consultancy agreement between the limited company and the respondent operated for the duration set out in the Agreement.  During that time the respondent made payments on foot of receipt of verified timesheets and invoices to the limited company.  No evidence was presented to suggest that the respondent made any other payments, other than vouched expenses incurred in carrying out the assignment and as set out in the Agreement.  The limited company was paid a per diem rate.

I noted that the email correspondence provided by both parties were issued by the respondent to the complainant’s company email and not to a personal email or an email provided for staff by the respondent. There was no evidence that the complainant was issued any form of staff identification, and the complainant was not on the respondents’ payroll.

I am satisfied that; on the balance of probabilities the complainant was fully aware when he established the limited company that he was not entering into a contract of service and that he was in business on his own account.

Taxation & other relevant matters

I noted that the Consultancy Agreement stipulated that the limited company had obligations in terms of their own insurance and their own tax liabilities. 

I further noted that the Assignment Schedule confirmed the relationship between the respondent and the limited company and confirmed the frequency of payment of invoices, as well as a per diem rate.

In addition to the above I reviewed the Certificate of Incorporation of the complainant’s company in the UK and noted that the company was registered on 17th December 2018.

This indicates that the complainant was in business on his own account and not an employee of the respondent.

Conclusion

Having carefully considered the submissions, the evidence presented at the hearing, the legal authorities relied upon and the totality of the relationship between the complainant and the respondent, I find, on the balance of probabilities, that the complainant was not an employee who worked under a contract of employment.  There was a commercial contract for services between the respondent and a limited company and that cannot be converted into another type of contract.  It is clear to me that the Agreement between the parties is an agreement between two corporate entities and does not constitute an employer/employee relationship and as such, I do not have jurisdiction to hear these claims.

Preliminary Issue

There was no contract of employment between the complainant and the respondent rather there existed an agreement between two corporate entities and such agreement does not constitute an employer/employee relationship.

CA – 00036094-001

As there was no contract of employment between the complainant and the respondent, I do not have jurisdiction to hear a claim under the Payment of Wages Act, 1991.  Consequently, it is my decision that this complaint is not well founded.

CA – 00036094-002

As there was no contract of employment between the complainant and the respondent, I do not have jurisdiction to hear a claim under the Terms of Employment (Information) Act, 1994

Consequently, it is my decision that this complaint is not well founded.

Employment status, payment of wages, terms of employment