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Gig Economy Workers: What is their employment status?

The Gig economy is a common free market system involving temporary positions being contracted to independent workers for short-term engagements. It is not a new phenomenon, however recent judicial decisions in the UK on the employment status of drivers for Uber and Deliveroo has brought this issue to the fore. The High Court here addressed the matter for the first time recently in Karshan (Midlands) Trading as Dominos Pizza -v- Revenue Commissioners [2019] IEHC 894.

The High Court

The matter concerned an appeal of the October 2018 decision of the Tax Appeals Commissioner (“the Commissioner”), that found pizza delivery drivers engaged by the Appellant (Dominos) during the relevant years of assessment, were under Contracts of Service and therefore, were employees and subject to PAYE.

Dominos in appealing this decision by way of case stated to the High Court argued that they were in fact employed under Contracts for Services and as such, were self-employed independent contractors responsible for their own tax affairs. Dominos submitted that the Commissioner had erred in her interpretation of Irish law and the Court addressed the issues under four concepts:

Mutuality of Obligation the concept whereby the employer is obliged to provide work for the employee and the employee in turn must perform that work. The argument put forth by Dominos was that the drivers worked under the terms of an overarching umbrella contract, having the freedom to work when they choose and therefore the concept of mutuality of obligation did not apply to the relationship.

However, the Court agreed with the Commissioner in this matter and “recognised the necessity to adapt to modern means of engaging workers”.  The Commissioner had  found that a driver who wanted to work had to put their name on the availability sheet and once rostered by Dominos, there was a contract which retained mutual obligations.

Substitution The Court again agreed with the findings of the Commissioner in regard to the substitution clause in the Agreement between Dominos and their driver’s. There was an absence of an ability by drivers to genuinely subcontract, therefore indicating that the drivers worked under ‘contracts of’, as opposed to ‘contracts for’ service.  A driver could merely nominate a substitute driver, who was ultimately approved and then paid by Dominos.

Integration Dominos argued that drivers were merely corollary and not integral to the business. The Court rejected this argument and favoured the reasoning of the Commissioner in her application of the law in relation to integration. The Commissioner looked at numerous factors in finding sufficient integration by drivers, including the requirement of drivers to wear uniforms, place logo’s on their cars and take telephone orders from the Appellant and not the customer.

Written Terms Dominos argued that no weight was given to the actual terms and conditions of the agreement between the drivers and the business. The Court however noted and agreed with the Commissioner and referred to the necessity “…to look at how the contract is worked out in practice as mere wording, cannot determine its nature”.

Significance of Decision

It is essential for employers to ensure that exiting contractual arrangements with their service providers and employees are correctly categorised, reflecting the true nature and reality of the relationship. Failure to do so can lead to significant tax and employment law consequences.

7th February 2020

Anne O’Connell Solicitors

Fitzwilliam Hall

Fitzwilliam Place

Dublin 2.


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