In October 2023 Justice Brian Murray delivered the Supreme Court’s unanimous decision that delivery drivers employed by Domino’s Pizza were employees and not contractors and PAYE should have been deducted on the payments made to them.
The Court stated that the question of whether a worker is an employee should be resolved by reference to the following five questions:
- Does the contract involve the exchange of wage or other remuneration for work?
- If so, is the agreement one where 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 supposed employee to render the agreement one that is capable of being an employment agreement?
- If requirements 1-3 are met, the decision maker must then determine whether the terms of the contract between employer and worker and the reality of the working arrangements are consistent with a contract of employment, or whether they point to some other form of contract.
- 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.
The last test can be restated as whether there is anything in legislation which would be relevant when determining whether a worker’s status is self-employment or employment?
This landmark decision has wider implications for any business which engages with contractors and is not only relevant to the gig economy.
While it is just a tax case the Supreme Court expressly said that its decision would not determine that drivers had continuous service for employment rights legislation. However, the decision is of critical importance to employers in determining worker status. If a person is misclassified as a contractor, it may lead to potential tax liabilities, social welfare liabilities and employment law cases.
Revenue have advised that employers should review their relationship with contractors to determine whether PAYE should be operated on payments made.
It is advisable to do this now before Revenue commence a detailed investigation with employers into their worker relationships.