The employment relationship is essentially one based on contract however before we can examine the rights and obligations of employees it is first necessary to determine whether a particular person is in fact an “employee” or an “independent contractor”.
An “employee” works under a contract of service to perform specific duties such as an office worker whereas an “independent contractor” provides services under a contract for services and is retained to perform a particular job such as a doctor for example. The distinction between “employee” and “independent contractor” is of particular importance in employment disputes as only “employees” benefit from the protection afforded by the employment legislation therefore the status of persons carrying out work has frequently come under legal consideration before the employment tribunals and Courts. Where a person wishes to seek redress in an employment context, it is vital that he establishes that he is an employee in the first instance.
Whilst it would appear that the distinction between the two types of worker is relatively straightforward, this is not always the case and the Courts have developed a number of tests to differentiate one type of contract from another. Regardless of the label attributed to the employment relationship, the Courts have shown that they will look beyond labels and focus on the factual situation and surrounding circumstances in determining what type of relationship exists.
The Courts have developed a number of different tests to determine the employment status of an individual, the most significant of which is known as the “mutuality of obligations test”. This test was applied by the Court in the recent decision of Minister for Agriculture and Food v Barry & Others  1 I.R. 215. The case concerned the employment status of a number of veterinary surgeons and in this instance the Court held that no mutuality of obligations existed and as such the vets were self-employed under a contract for services by reason of the fact that they were entitled to refuse work up to 16% of the work provided.
The Courts look at a whole range of criteria to assist them in determining an individual’s employment status and will have regard to the following factors:
- Measure of control exercised over how the work is carried out
- Whether the individual supplies labour only or whether they supply equipment
- Opportunity to make a profit
- Requirement of personal service in carrying out the duties
- Responsibility for payment of tax
In summary, the consequences arising from the determination of an individual’s status can be far reaching and will affect their obligations in relation to the manner in which they make tax and PRSI payments and social welfare entitlements such as job seekers and disability benefits, and other rights and entitlements under employment legislation such as protections in respect of unfair dismissal, redundancy, working time, payment of wages and holidays to name but a few.
20 March 2013