Employed or Self-Employed?

In recent years there have been a number of cases that highlight the question of whether an individual is an employee, or in fact, self-employed – but employment status can sometimes be difficult to determine as an employer. Examples, where confusion regarding employment status could occur, include cases such as a dental nurse in your practice, a teacher in your school, or a hairdresser that rents the chair in your salon. Are these individuals self-employed or are they employees? It’s important to establish employment status from the start of any contract, as this can have an impact on a number of things such as:

• Tax and PRSI
• Employment law legislation under the Organisation of Working Time Act, including rest periods and annual leave entitlements
• Social welfare benefits
• Vicarious liability

An example case In recent case law ADJ-00004931, An Art Teacher v A Health Provider, a claim was made under the Unfair Dismissal Act 1977-2015. In this particular case, the complainant had been employed for 15 years to provide art lessons for people experiencing mental health difficulties. He provided two sessions each week, for one and a half hours each session. His employment was subsequently terminated following an allegation of an inappropriate relationship with a service user. The respondent claimed that the teacher was not an employee, and therefore the Unfair Dismissal Act did not apply to him. The health provider also made that claim because he was not paid via payroll and wasn’t pensionable the same as an employee would normally be. He was employed to carry out seasonal work and had no entitlement to any benefits that other employees got, and was entitled to organise his work as he saw fit without direct supervision. While tax had been deducted from his wages, this had only been done since 2015. He also received a P45 on termination of his employment – but there was no mutuality of obligation between the parties, so, therefore, how could he be an employee? The disciplinary process was never revoked, as he was not an employee although he accepted that there was an intimate relationship with the service user. Determining employment status There are a number of tests that a court will use to determine whether this individual was an employee or self-employed. The Revenue Commissioners of Ireland have a code of practice which outlines a series of questions to try and determine this:

1. Are they under control of another person who directs how, when and where the work is to be carried out?
2. Supplies labour only
3. Receives a fixed wage
4. Cannot subcontract the work
5. Does not supply materials for the job
6. Is not exposed to personal or financial gain in carrying out the work
7. Works set hours or a given number of hours

It will be obvious from these questions that the art teacher meets the criteria required for a contract of service:

• He was paid a fixed rate of €25 an hour and nothing he would do would alter that payment – he could not make the decision to increase or reduce the price per hour.
• He had set hours that were organised by the employer.

The court found that yes, in fact, he was an employee, and as no procedure was followed he won his claim under the Unfair Dismissal Act and was awarded €5,040.00 in compensation Can you determine now if that employee is really self-employed? If you have any questions in relation to employment status, please contact our expert employment law advisors on the 24 Hour Advice Service on 0818 923 923