knowledge 23 July 2015 |

Important Supreme Court Decision on Employment Status

The case involved five individuals engaged by the Minister for Agriculture and Food (the “Minister”) as TVIs who claimed that, as employees, they were entitled to statutory redundancy payments and minimum notice on the closure of the Galtee meat plant in Mitchelstown where they had been working inspecting animals, both prior to and after slaughter, some for more than 30 years.

This case has had an extraordinary legal journey with two hearings before the Employment Appeals Tribunal (“EAT”), two hearings before the High Court and following last week’s Supreme Court decision now goes back to the EAT for a third time.

EAT (1)

On the preliminary point of whether the TVIs were employees or contractors, the EAT found that the TVIs were employees. It based its decision on the traditional tests set down in the Henry Denny case (a previous High Court case on employment status) and other decisions of the Courts which identify a number of tests to be applied in determining whether workers are contractors or employees.

High Court (1)

On appeal to the High Court by the Minister on a point of law, Judge Edwards decided that the EAT had “erred in law” by failing to have regard to all the possibilities in determining the nature of the working relationship between the parties. He also decided that the finding of the EAT that there was “mutuality of obligation” between the Minister and the TVIs (ie that the Minister was obliged to provide work to the TVIs and that the TVIs were obliged to carry it out), was made on a “flawed and untenable basis”. In addition, he found that the EAT had misinterpreted the decision in the Henry Denny case and should have used the full range of legal tests in coming to the conclusions that they did.

The focus on the importance of “mutuality of obligation” as the initial hurdle to be overcome before applying the tests for employment status was a novel one in this jurisdiction at the time.

EAT (2)

The High Court ordered that the matter be returned to the EAT at which point the EAT reversed its original determination on the basis that, despite still being of the opinion that the TVIs were employees, it felt compelled to do so by the decision of the High Court. On that basis, the EAT concluded that the TVIs were not employees.

High Court (2)

The TVIs appealed the second decision of the EAT to the High Court on a point of law on the basis that it had “erred in law” on a number of grounds, including in finding that it was bound to reverse its decision based on the earlier decision of the High Court.

The High Court found that there was nothing in the additional evidence produced by the TVIs which was of such importance that no reasonable Tribunal, having heard it, would be entitled to conclude that the TVIs were engaged other than under a contract for service ie contractors rather than employees. The Judge did not deal with the matter as to whether the EAT was bound by the decision of the High Court in arriving at its determination. This decision was appealed to the Supreme Court. 

Supreme Court

The Supreme Court, in a unanimous decision overturning the High Court, held that the EAT was in error in its second determination. The matter is to be sent back to the EAT for its consideration on the basis of the facts of the case and the judgment of Edwards J in the first of the High Court decisions.

This case highlights the very complex distinction between employees and contractors. It further highlights that courts and tribunals must have regard to all the circumstances of an engagement before determining whether an individual is an employee or not. Businesses must take great care when engaging contractors to assess whether, in fact, the individual should be engaged as an employee instead. This is particularly the case given the Revenue Commissioners’ increased focus on such arrangements in recent years.

Contributed by Natasha Canniffe