ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00040758
Parties:
| Complainant | Respondent |
Parties | Loukas Anastasiadis | European Supporters Alliance Sd Europe |
Representatives |
| John O' Keeffe & Co, Solicitors. |
Complaint:
Act | Complaint Reference No. | Date of Receipt |
Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991 | CA-00052877-001 | 19/09/2022 |
Date of Adjudication Hearing: 06/02/2024
Workplace Relations Commission Adjudication Officer: Pat Brady
Procedure:
In accordance with Section 41 of the Workplace Relations Act, 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 was employed on the basis of a number of contracts which purported to be contracts for services.
His employment concluded on July 31st, 2022, and he complains under the Payment of Wages Act that he is owed wages and expenses. The respondent raises a number of preliminary points.
The first is that due to the nature of his contract he is not an employee and therefore not covered by the Act. In any event, it says that even if he were an employee, he is not entitled under the act to seek reimbursement of expenses as this is excluded under the Act. |
Summary of Complainant’s Case:
The complainant gave his evidence on affirmation.
He says that his relationship with the respondent went back fifteen years and in 2016 following a reorganisation he was given his first contract.
In the FSE/SDE (i.e., European Supporters Alliance) Business Transfer Agreement document, in Annex 6, page 27, under "SDEuropeliabilities", his staff fee (see line "staffmemberJulyfee 3,600") and staff expenses (see lines "staff member July expenses 103" and "staff member May expenses 1,645") are clearly mentioned.
There is email correspondence with the Director at the European Supporters Alliance, in which he refers to the complainant as 'staff' and he moves on specifying the process through which staff claim expenses paid on behalf of the organisation. The latter has been a standard practice of the organisation towards him and other staff since it was set up in 2016.
There were three contracts with European Supporters Alliance prior to the one already submitted. A contract signed on 01.10.2016, a revised contract signed on 01.07.2019 and another revised contract signed on 31.12.2019; the latter was revised by the contract signed on 31.12.202. All contracts are almost identical and show the long-term exclusive relationship and commitment between European Supporters Alliance and the complainant.
He reported to the CEO and worked remotely as the respondent did not have a fixed premises as its base. He was expected to be available during normal working hours although these had never been specifically set out in writing.
He was paid a fixed monthly fee of €3600 which never varied although he did submit invoices for this each month. He also was the beneficiary of 20 to 25 days paid leave every year and there was no deduction from his monthly payment for any time off taken.
In the course of cross examination, he was asked whether the CEO directed his work and whether he got detailed instructions from the CEO; he said he did. His role was to communicate with fan groups, identify their strengths and weaknesses and come up with ideas and projects for capacity building.
Projects were assigned by the CEO and could take 12 to 36 months to bring to fruition during which time he had to report to the CEO.
In response to a question, he confirmed that he was given a gross amount and that he paid tax in his native Greece. And asked whether this resembled how a business would pay its tax he said it was not the same. He repeated in response to a requestion that he had to get permission to take annual leave and that while he accepted that his contract provided that he could nominate a substitute this could only be done with the approval of the organisation.
He also accepted that there was no restriction on him undertaking work outside the organisation, but said he had not done so, specifically in relation to a named entity in the sailing sector.
He agreed that his hours of work were not written anywhere, and he confirmed that his regular conversations with the CEO's were mostly online meetings and apart from updating projects he provided general updates on his work. He said that he was required to do this daily or weekly.
In summary, he submitted the following regarding the nature of his contract of employment.
He says that he was under the control of the CEO who directed him as to how, when and where the work was to be carried out and he was obliged to perform work on a regular basis that European Supporters Alliance was obliged to offer him.
He received a fixed hourly/weekly/monthly wage and regularly received expense payments to cover subsistence and travel expenses and had to request and get approval in order to go on a leave and could not control the hours of work, nor could he refuse taking on specific work.
He did not assume any responsibility for investment and management in the business nor could he hire other people on his terms to do the work (see clause 3.6, page 5, of contracts provided.
He could not provide the same services to more people or services. |
Summary of Respondent’s Case:
The respondent is a Limited Liability company which contracted with the complainant on foot of Consultancy Agreement dated December 31st, 2020. The contract was a contract for services rather than an employment contract and was expressed to continue until 30th June 2023. Clauses 3.5 and 3.6 of the contract specified how the services might be provided by someone other than the complainant. Clause 5 of the contract made provision for the complainant to engage in other business, trade, profession, or occupation. Clause 11 of the contract recorded the parties’ agreement that the complainant was an independent contractor and not an employee or worker and, furthermore, that the contract was a contract for the provision of services and not an employment contract.
Section 6 of the Payment of Wages Act, 1991,as amended (“the Act”), provides that an “Employee” may make a claim against an employer in respect of wages.
1. Section 1 of the Act states that.
"employee" means a person who has entered into or works under (or, where the employment has ceased, entered into or worked under) a contract of employment and references, in relation to an employer, to an employee shall be construed as references to an employee employed by that employer; and for the purpose of this definition, a person holding office under, or in the service of, the State (including a member of the Garda Síochána or the Defence Forces) or otherwise as a civil servant, within the meaning of the Civil ServiceRegulation Act, 1956, shall be deemed to be an employee employed by the State or the Government, as the case may be, and an officer or servant of a local authority for the purposes of the Local Government Act 2001(as amended by the Local Government Reform Act 2014), a harbour authority, a health board or a member of staff of an education and training board shall be deemed to be an employee employed by the authority or board, as the case may be”.
Section 1 of the Act states that a "contract of employment" means—
(a) a contract of service or of apprenticeship, and
(b) any other contract whereby an individual agrees with another person to do or
perform personally any work or service for a third person (whether or not the third person is a party to the contract) whose status by virtue of the contract is not that of a client or customer of any profession or business undertaking carried on by the individual, and the person who is liable to pay the wages of the individual in respect of the work or service shall be deemed for the purposes of this Act to be his employer, whether the contract is express or implied and if express, whether it is oral or in writing.” As the complainant has agreed with the respondent, firstly, that he is not an employee within the meaning of that term in the Act, and, secondly, that the respondent’s status under the contract is that of a client or customer of a profession or business undertaking carried out by the complainant, we submit that his complaint is inadmissible.
If the complainant were an employee of the respondent, he would not be entitled to claim for alleged expenses under the Act. A claim by an employee under Section 6 of the Act lies only in respect of their wages, tips, or gratuities. Section 1 of the Act states that
“"wages", in relation to an employee, means any sums payable to the employee by the employer in connection with his employment… 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….”
Accordingly, a claim for expenses under the Act is inadmissible. The complainant was obliged by Clause 4.2 of the contract to have expenses approved and vouched and evidence would be tendered at the hearing, should it be necessary, that he failed to comply with Clause 4.2 in respect of his expenses.
If the complainant were entitled to make a claim in respect of his fees, it is submitted that the claim is not well founded as he failed, refused, or neglected to comply with his contractual obligations to the respondent.
Mr. Stuart Dykes, CEO of the respondent gave evidence on affirmation.
He said that he has known the complainant since 2010 and worked on a generally similar contractual basis. He said that he was contracted to deliver a service and was never instructed by the CEO as to how this should be done. He did not have to request annual leave or book it.
He said that in the course of the month for which the complainant is seeking payment he did not do any work for the respondent.
Ms Sofia Bohlin also gave evidence on affirmation.
She worked with the complainant, and he reported to her. She referred to a conversation she had with the complainant some years ago about whether he would be interested in changing his status to that of an employee. She said that he expressed a preference for remaining as he was because it was more tax efficient.
In summary, the respondent says that the complainant is not an employee, partly by his own choosing, and that while he reported back to the CEO on the projects, he was undertaking he was not in any way controlled by the respondent. |
Findings and Conclusions:
The original complaint related to a sum of €5316.50 comprising €3,600 in wages and the balance in expenses. As is clear from the respondent’s submission and the relevant extract from the Payment of Wages Act, a complaint related to expenses is excluded by the Act.
The respondent has submitted that whether the balance of the complaint is within jurisdiction turns on whether the complainant was engaged on a contract of service and was therefore an employee, or as submitted by the respondent, a contract for services, a contractor.
That indeed is one issue which I consider below.
But there is a further, related issue. As will be seen from the submissions of the complainant (who was not professionally represented), his current contract was the fourth in a sequence since October 2016. A revised contract was signed in July 2019, another on 31.12.2019; and finally, the current contract on December 31st.
The complainant has submitted that all these contracts were almost identical and show ‘the long-term exclusive relationship and commitment’ between him and the respondent.
While the complaint was not submitted under the terms of the Protection of Employees (Fixed Term Work) Act 2003, that Act, at section 9 (3) provides that a contract of indefinite duration will arise by operation of law if a contract is awarded in breach of sections 9(1) or 9(2) of the act. Specifically, if an employee is employed on two or more successive fixed term contracts in continuous employment for a period of four years, then further fixed term contracts are unlawful and void and the employee is entitled to a contract of indefinite duration, unless the employer can justify the award of further contracts on objective grounds. The complainant, who, as noted, was representing himself as a lay litigant made no reference to this and, unsurprisingly neither did the respondent.
Nonetheless, I find as a matter of law that the complainant’s contractual status had changed and that he was on a contact of indefinite duration at the material time.
But turning to the employment status case for the sake of completeness, and as this was the case that was argued at the hearing, there is no doubt that the contractual agreement governing the employment relationship defined the relationship as being a contract for services. However, the matter does not end there as the determination of employment status is a matter to be decided, not solely by the intentions of the parties, nor even the text of any contract, but by reference to a number of objective tests.
As a matter of law parties to a contract of employment are not free to define its legal nature regardless of the objective factual position and the legal tests. They may not collude in such a way as to cause a worker to be denied his access to statutory rights, social welfare benefits etc or to bypass Revenue requirements as to how that person should pay their taxes. See In re Sunday Tribune Ltd [1984] IR 508 in which the Court made it clear that it was necessary to look further than the parties’ own description of any contractual arrangement and go to the realities of the situation.
This was further emphasised in Henry Denny & Sons (Ireland) v Minister for Social Welfare [1997] IESC 9 [1998] 1 IR 34 in which the Supreme Court confirmed that ‘if the reality of the relationship is different to that expressed in the contract, an adjudicating body is entitled to draw its own conclusions from that reality’. (Per ‘Employment Law in Ireland, Cox, Corbett, Ryan, Clarus Press, 2009 at paragraph 3-30).
There was some suggestion by the respondent that the possibility of employee status was discussed with the complainant, but that he had expressed a preference for remaining as he was for tax reasons.
This was a flimsy enough effort to suggest that the complainant was somehow responsible for his status, and in any event, for the reasons just set out, it is irrelevant. However, this appears to have been a very casual conversation and the attempt by the respondent to imply that it was merely complying with the complainant’s wishes, even if true, offers it no defence whatsoever. Following the decision in The Revenue Commissioners v. Karshan (Midlands) Ltd. t/a Domino’s Pizza. [2023] IESC 24 on October 20th, 2023, and referred to in the respondent’s submission the Revenue Commissioners issued the following statement. ‘The detailed judgment was delivered by Mr. Justice Brian Murray in The Revenue Commissioners v. Karshan (Midlands) Ltd. t/a Domino’s Pizza. The case was concerned with whether the delivery drivers were independent contractors under a “contract for service” and taxable under Schedule D of the Taxes Consolidation Act 1997, or employees under a “contract of service”, and taxable under Schedule E of that Act (PAYE). Revenue welcomes this judgment and the significant clarity it provides on these matters. Justice Murray decided that the question of whether a contract is one “of service” or “for service” should be resolved by reference to the following five questions: 1. Does the contract involve the exchange of wage or other remuneration for work? 2. If so, is the agreement one pursuant to which the worker is agreeing to provide their own services, and not those of a third party, to the employer? 3. If so, does the employer exercise sufficient control over the putative employee to render the agreement one that is capable of being an employment agreement? 4. If these three requirements are met the decision maker must then determine whether the terms of the contract between employer and worker interpreted in the light of the admissible factual matrix and having regard to the working arrangements between the parties as disclosed by the evidence, are consistent with a contract of employment, or with some other form of contract having regard, in particular, to whether the arrangements point to the putative employee working for themselves or for the putative employer. 5. Finally, it should be determined whether there is anything in the particular legislative regime under consideration that requires the court to adjust or supplement any of the foregoing. In this case, Justice Murray found that the Tax Appeal Commissioner was entitled to conclude that the drivers were employees for the purposes of income tax. Businesses are responsible for ensuring that the correct taxes are deducted from their employees’ pay (which includes both salary payments and any notional pay received) and remitted to Revenue under Schedule E (PAYE), at the right time. 27/10/2023 Prior to the Karshan decision, the case in which the criteria were best set out was the leading UK case of Market Investigations Ltd v Minister of Social Security [1969] 2 QB 173. In that case a number of tests were formulated. Those following address in particular the question of whether a person is what is colloquially described as a contractor, i.e., engaged on a contract for services. 1) Does the person performing the services supply his own equipment 2) Can he hire his own helpers? 3) Does he carry any financial risks and to what extent? 4) What opportunity does he have to make a profit? 5) To what extent does he carry the responsibility for investment/management.
The Revenue Commissioners of Ireland had outlined similar tests in their Code of Practice for Determining Employment or Self Employment (since revised as outlined above following the Supreme Court decision in Karshan) These relate to whether the employee.
1) Is under the control of another person who directs as to how, when and here the work is to be carried out, 2) Supplies labour only, 3) Received a fixed wage 4) Cannot subcontract the work 5) Does not supply materials for the job 6) Does not provide equipment other than small tools of the trade 7) Is not exposed to personal financial risk in carrying out the work 8) Works set hours or a given number of hours
Beginning with the tests just set out, (1-8) and applying these to the complainant in this case, I find that he comfortably meets the generality of the criteria.
Conversely, he could not be said to meet any of the tests above (1-5) which provide indications of self-employment. It also comfortably meets the first four of the tests set out above in the Karshan judgement. Note that the control test there is refined to that of ‘sufficient’ control.
I find that while the reporting relationship between the parties may have been somewhat overstated by the complainant it represents’ sufficient’ control having regard to the nature of the complainant’s skillset and work.
It is true that he had considerable autonomy over how the work was carried out, but this can be true of many people especially in a relatively senior position, or, as in the complainant’s case where there is a degree of special expertise in his subject matter, which was acknowledged by the respondent in evidence.
It is also the case that he had frequent interactions with the respondent CEO in the course of which the direction and content of his work was reviewed; again, the analogy of a senior or expert employee applies.
There was a provision in the contract to enable the complainant to provide a substitute. However, this was subject to the approval of the respondent and was in any case never used. Indeed, it is difficult to imagine circumstances in which it would be.
Therefore, either on the grounds that the complainant meets the test of an employee and/or that he had acquired, as a matter of law a contract of indefinite duration, I find that the complaint is within jurisdiction.
The sum at issue was withheld because of what the respondent alleged was a serious and, to it, costly refusal or failure by the complainant to properly hand over various resources or access to information.
While he protested his innocence in that regard, and I note the very serious sense of grievance expressed by the respondent, withholding wages is not a lawful action or sanction in such circumstances and I find that the amount of wages due to him for his final month of employment of €3,600 is properly payable to him. |
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.
For the reasons set out above complaint CA-00052877-001 under the Payment of Wages Act 1991 is well founded and I award the complainant €3,600 in wages due. |
Dated:13/02/2024
Workplace Relations Commission Adjudication Officer: Pat Brady
Key Words:
Payment of Wages |