Complainant

Respondent

Parties

Mckella  Daly

Zenoz Ltd

Complainant

Respondent

Anonymised Parties

Representatives

Self-Represented

Mr. William Wall, Peninsula

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-00054428-001

10/01/2023

The Complainant commenced her engagement with the Respondent on 12th November 2021. At all relevant times the Complainant’s title was that of “Product Designer”. The Complainant submitted that she received an average weekly payment of approximately €369.23. The Complainant’s engagement with the Respondent ended on 21st December 2022.

On 10th January 2023 the Complainant referred the present complaint to the Commission. Herein, she alleged that the Respondent had failed to pay a significant portion of outstanding wages. By response, the Respondent submitted that the Complainant was not in fact an employee and was engaged as a contractor. They submitted that the Complainant’s invoices were not fully paid as, in their view, issues arose regarding the work submitted.

A hearing in relation to this issue was convened for 9th June 2023. The Complainant gave evidence in support of her complaint while the Managing Director of the Respondent gave evidence in defense. All evidence was given under oath or affirmation and was opened to cross examination by the opposing side. Following the hearing, the Adjudicator took the unusual step of corresponding with the parties and inviting submissions in relation to a recent Supreme Court authority that would be considered as part of the determinations. Both parties issued submission in this respect, with the final such submission being received on 24th January 2024.

Given the nature of the preliminary issue raised by the Respondent, this will be considered following a summary of all substantive matters.

In evidence, the Complainant submitted that prior to joining the Respondent complaint, she was a recent graduate in the area of production design. She stated that she attended for an interview with the Respondent in late 2021 and received confirmation that she would be taken on by the company shortly thereafter.

In November 2021, the Complainant received an email from the Respondent setting out certain terms of engagement. This email outlined the Complainant’s job description and contained a further sub-heading entitled “terms of employment”. These terms provided that the Complainant may work remotely or onsite, with a preference for onsite so as to allow for ongoing training. These terms further stated that the Complainant was to be engaged on a three-month trial. Regarding pay, the Complainant was to receive payment of €11 per hour, with her statutory working time entitlements outlined.

The Complainant commenced under these terms and commenced employment from 12th November 2022. In evidence she stated that she would receive work from the managing director of the Respondent and complete the same to the best of her ability. The managing director would then review her output and make various suggestions or amendments as required. In this regard the Complainant submitted that she was in continuous contact with the managing director and worked exclusively under his supervision.

The Complainant submitted that she worked remotely for a period of time due to the ongoing restrictions arising from the Covid-19 pandemic. However, following the partial lifting of said restrictions, the Complainant moved to the area where the office was located and attended the Respondent’s premises each day. The Complainant was provided with a key to the Respondent’s premises and worked exclusively from there for the rest of her employment.

From September 2022, the Respondent began to fail to pay her full wages. In this regard, the Complainant issued the Respondent with an invoice for hours worked and received payment thereafter. From September 2022 to her final date of employment, the Complainant was underpaid by the sum of €6,101.30. The Complainant issued correspondence to the Respondent on 27th December 2022 seeking payment of this amount. When it became apparent that the Respondent had no intention of discharging these outstanding wages, the Complainant referred the present complaint.

By submission, the Complainant stated that she was directly employed by the Respondent and denied that she was engaged as a contractor. In answer to a question posed in cross examination, the Complainant accepted that she described herself as a “freelance product designer” on her complaint form but stated that this was simply a description and was not determinative of her employment status. The Complainant submitted that in circumstances whereby she was an employee, the underpayment of wages constituted an unauthorised deduction for the purposes of the present Act and, consequently, her application should succeed.

From the outset, the Respondent submitted that the Complainant was not an employee and was at all times engaged as a contractor with the Respondent.

In evidence, the Managing Director of the Respondent stated that the organisation was small and in 2021, was looking to expand. In this regard, the Managing Director advertised for an industrial product designer.  He submitted that the Complainant attended for interview and was aware the nature of therole. In this regard he stated that the understanding was that the Complainant was to be engaged as a sub-contractor at all times.  The Managing Director stated that from the outset, the Complainant issued invoices for her hours worked which were then discharged by the company.

Regarding the work itself, the Respondent submitted that the Complainant was free to carry out work on her own time. In this regard, the Respondent stated that they did not have control over the manner by which the Complainant completed the work assigned to her. The Respondent further submitted that they had no control over any disciplinary matters relevant to the Complainant. In addition to the foregoing, the Respondent submitted that the Complainant used her own software for the completion of tasks.

Having regard to the foregoing, the Respondent submitted that the Complainant was not an employee of the Respondent, and as a consequence of the same, she did not enjoy the protections of the impleaded Act.

In advance of the hearing, the Respondent submitted that the Complainant was not their employee and, as a consequence, could not avail of the protections set out in the Act. I

In this regard, Section 1 of the Act defines “employee” as,

“…a person who has entered into or works under (or, where the employment has ceased, entered into or worked under) a contract of employment”.

The subject of what constitutes a “contract of employment” for these purposes has been the focus of numerous superior court matters in recent times. Most recently, the Supreme Court issued an authoritative determination in the matter of Revenue Commissioners v. Karshan [2023] IESC 24. Here, following a consideration of the considerable body of law in this particular area, the Supreme Court posed the following five questions that must be examined prior to reaching a determination in this regard:

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.

Regarding the factual matrix as presented, it is apparent that questions one and two are unambiguously answered in the affirmative. In addition to the foregoing, it is apparent that question five is not applicable to the present circumstances.  Having regard to the foregoing, the relevant questions to be considered are question three, the matter of control and question four, the application of the relevant evidence.

Regarding the third point, it is apparent that the Respondent exhibited a significant degree of control over the Complainant in the exercise of her duties. In this regard, it is noted that the Respondent, via the Managing Director, assigned all of the Complainant’s tasks and reviewed the same on daily or almost daily basis. It is further apparent that following a brief period spend working from home, the Complainant attended the Respondent’s premises in order to receive direct, face-to-face instruction from the Managing Director. Finally, the contract issued by the Respondent at the commencement of the Complainant’s employment refers to “personal targets”, and a requirement for daily updates. This document also refers to a “three-month trial” to be “reviewed monthly”. Having regard to the accumulation of foregoing points, I find that the control test outlined is part three, reference above, has been satisfied.

Regarding the fourth point, I note that for the majority of the Complainant’s engagement, she worked at the Respondent’s premises, under the direct control and supervision of the Managing Director. In evidence, the Complainant stated that she kept regular office hours during this period and had a key to the premises for this purpose. The Complainant clearly could not outsource her work to a third party, nor is it in any way apparent that she was entitled to refuse work once the same was assigned to her. Again, referring the terms issued by the Managing Director, I note that the same contains a sub-heading entitled “Terms of Employment”. I further note that the same sets out an hourly rate of pay, and sets out the Complainant’s statutory working time entitlements. The document obliquely references the Complainant’s annual leave entitlements and a prospective sick pay entitlement. Each of the foregoing points clearly indicates that the Complainant was engaged under a contract of employment. While the Respondent has submitted that the Complainant utilised her own software for the purposes of completing some tasks and issued “invoices” in respect of work completed, I find that the same does override the finding that the Complainant worked under the direct control and supervision of the Respondent. While the Respondent is a small enterprise, it is apparent that the Complainant was fully integrated into the same, attending their premises each working day. The working relationship existed entirely between the Complainant and the Managing Director, with none of the Complainant’s work being completed by third parties.  In consideration of the factual matrix presented by the parties, I find that the fourth criteria outlined by the Supreme Court has also been satisfied.

Having regard to the totality of the foregoing points, I find that the Complainant was engaged under a contract of employment for the purposes of the present Act. As a consequence of the same, I accept jurisdiction in relation to the complaint as referred, and the substantive matter falls to be considered.

Section 1 of the Payment of Wages Act 1991, defines “wages” as “any sums payable to the employee by the employer in connection with his employment, including…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”.

In the matter of Marek Balans v Tesco Ireland Ltd [2019 No. 83 MCA], McGrath J stated that when considering complaints under the present Act,

“Central to the Court’s analysis must be the concepts of wages properly payable and the circumstances in which if there is a deficiency in respect of those such payments”.

Regarding the substantive matter, it is not in dispute that the Complainant’s rate of pay was €11 per hour. Nor is it in dispute that the Complainant worked for a significant period of time under this rate without payment. In this regard, the Respondent submitted that certain issues arose regarding the standard of the Complainant’s work. In circumstances whereby they were of the opinion that the Complainant was engaged as a sub-contractor, they refused payment of these grounds.

Setting aside the fact that no deficiencies in the Complainant’s work were established at any point of the hearing, it has been determined that the Complainant was engaged under a contract of employment and was entitled to be paid at her contractual rate. In this regard, any issues in respect to the quality of the Complainant’s output were to be addressed by way of internal procedure, with the withholding of the Complainant’s wages constituting an illegal deduction for the purposes of the present Act.

Having regard to the foregoing, I find that the complaint is well-founded, and the Complainant’s application succeeds.

I find that the complaint is well-founded.

Regarding redress, Section 6(2) of the Act (as amended) empowers me to award such redress as deemed reasonable in the circumstances, so long as the same does not exceed the total amount of wages owed. In this regard, I award the Complainant the sum of €6,101.30.  This payment should be subject to all normal deductions as income.

Employment Status, Karshan, Deduction