The Supreme Court in its recent judgment on the 20th October 2023 in the matter of The Revenue Commissioners v Karshan (Midlands) Ltd T/A Domino’s Pizza confirmed that delivery drivers should be treated as employees and not contractors.
This is a decision that has important implications for both employers and employees.
The case concerned delivery drivers engaged under contracts in 2010 and 2011 by Karshan (Midlands) Ltd, trading as Dominos Pizza.
The drivers argued they were employees for tax purposes and Karshan said they were independent contractors under “contracts for service”.
Karshan appealed a 2018 decision of a Tax Appeals Commissioner that the delivery drivers should be treated as PAYE workers. The High Court rejected that appeal, but the Court of Appeal, in a 2-1 majority, overturned that decision.
The Revenue Commissioners brought an appeal to the Supreme Court, who in a unanimous verdict overturned the Court of Appeal decision.
Mr Justice B. Murray in his judgment noted that a key factor to the appeal was whether a requirement that the employer and worker owe each other certain “mutual obligations” was necessary to the establishment of the employment relationship.
Karshan’s “theory of mutuality of obligation” was that mutual commitments had to present some type of continuity and to have a forward-looking element. It also argued there had to be an obligation on the part of the employer to provide work and there had to be an obligation on the part of the employee to perform work.
However, Mr Justice Murray said there was no such requirement in Irish law. He indicated the question of whether a contract is one “of” or “for” services should, having regard to well-established case law, be resolved by reference to five questions.
The first three that must be met are:
- Does the contract involve the exchange of wage or other remuneration for the work?;
- If so, is the agreement one in 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 putative employee to render the agreement one that is capable of being an employment agreement?
- If these three requirements are met, the decision maker must then determine whether the terms of the contract between employer and worker, interpreted in the light of the admissible factual matrix and having regard to the working arrangement between the parties, are consistent with a contract of employment or some other form of contract. Regard must also be had to whether the arrangements point to the putative employee working for themselves or for the putative employer.
- 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.
In observations accompanying the judgment, Mr Justice Murray noted that the finding that these drivers were employees did not bind any driver who may wish to contend that they were not an employee.
Finally, the question of whether drivers have continuous service for the purpose of other legislation – in particular employment rights legislation – cannot be decided here, he said.
Our Employment Team will be analyzing the judgment to consider the implications for our commercial clients.