Court decision on when workers are employees is significant for farmers

This wasn’t the first outing for the case, it had been heard at the Tax Appeals Commission, the High Court, the Court of Appeal and ultimately the Supreme Court. The judgement itself runs to a massive 279 pages. 

The document recognizes changes in economic and social conditions, the evolving nature of working arrangements, and the increasingly complex legal regimes in which they operate. These tests have developed from a base that was directed to the extent to which the employer controlled the operations of the worker, to a focus upon whether the worker was providing their labour by way of their own enterprise, to an examination of the degree to which the worker and their labour were integrated into the employer’s business. 

On the face of it whether a person is an employee or not may seem easily ascertained, but the answer can be elusive in non-standard environments. The tests usually performed include an examination of whether the would-be ‘employee’ works solely for the would-be ‘employer’, whether they are paid by the hour or piece-meal, whether they have their own insurance, whether they supply labour only, whether they have the capacity to substitute other persons for the task and whether they work for other customers.

Working for limited amounts of time or seasonally doesn’t bypass the tests. This case has effectively now dealt with a new aspect of worker relations—that of the so-called gig economy. The gig economy is defined as that part of the economy that relies on freelancers and independent contractors. 

The relationship between the parties is typically much freer than what typically exists. A business may offer a contractor some work but is typically absent of any commitments for future work, the offer can be at short notice and can either be accepted or rejected by the contractor. 

This type of arrangement exists for delivery drivers and shared taxi car drivers but also for a variety of others from carpet installers to garden shed erectors who are paid by the job on a take-it-or-leave-it basis. Zero-hour contracts are another recently termed phenomenon and refer to those employees working typically in service sector employments such as retail, restaurants, hotels and pubs where the employee's hours can vary from week to week with no guarantee of work. 

Taxes

The difference between zero hour contract employees and gig-economy workers is that the employer in the former arrangement accepts responsibility for the operation of employment taxes, whereas the independent contractors of the gig economy are responsible for operating their own taxes. 

The determination of the Supreme Court does not mean that all independent contractors are employees, far from it. But what it does mean is that the bar is set higher, the looseness of the relationship in a take-it-or-leave-it arrangement doesn’t seem to cut it as a factor in whether a person is to be regarded as an employee.

The decision puts in place a framework by which one should assess the arrangements at hand. The court decided that the question of whether a contract is one “of service” or “for service” should be resolved by reference to five questions which I have paraphrased for simplicity as follows:

• Does the contract involve the exchange of wage or other remuneration for work?
• 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?
• If so, does the employer exercise sufficient control over the person to render the agreement one that is capable of being an employment agreement?
• If these three requirements are met the decisionmaker must then determine inter alia whether the arrangements point to the person working for themselves or for the employer.
• Finally, it should be determined whether there is any particular legislation which otherwise impacts on the decision.

As mentioned, the actual tests put down by the court are more meaty and if in doubt one should consult that court ruling and seek independent legal and tax advice. Meanwhile, the Revenue are expected to update their guidance on the Code of Practice for Determining Employment Status. 

For farmers and other businesses, a more cautious approach should be taken to make sure that those non-employees working for you are correctly regarded as non-employees.