At a glance
- In a landmark decision, the Irish Supreme Court has held that that Domino’s pizza delivery drivers are employees rather than independent contractors.
- This decision is of great significance to employers and those in the gig economy as it explores the test for determining employment status.
- The decision sets out five key issues to be considered in measuring the degree of mutuality of obligation within the contract.
In a landmark decision, the Irish Supreme Court has held that that Domino’s pizza delivery drivers are employees rather than independent contractors.
‘Mutuality of obligation’ is the key consideration in the decision – the extent to which the relationship was one where the employer was obliged to provide work, and the worker was obliged to perform it. Drivers working within the gig economy may be viewed as employees rather than contractors, notwithstanding contractual language to the contrary.
The decision sets out five key issues to be considered in measuring the degree of mutuality of obligation within the contract. The decision does not, however, provide a simple list of characteristics that must be present for a worker to be considered an independent contractor.
Background
Earlier judgments by both the Tax Appeals Commissioner and the Irish High Court had found that the pizza delivery drivers were working as employees and as such were subject to tax in the form of PAYE and PRSI, which must be deducted at source by their employer (rather than the drivers, as independent contractors, being responsible for filing individual tax returns). The Court of Appeal (COA) rejected this conclusion in June 2022, holding that the drivers were contractors due to a lack of mutuality of obligation.
Written agreements between Domino’s and each driver stated that the drivers were independent contractors, were not guaranteed a minimum number of deliveries and provided for a right of substitution between drivers. Payments were made for each delivery. Domino’s provided an additional second payment for brand promotion, whereby the drivers wore a Domino’s uniform and placed Domino’s signage on their vehicles.
A key concept within this decision and previous cases was ‘mutuality of obligation’ – when the employer is obliged to provide work, and the worker is obliged for perform that work, the relationship is likely to be an employer / employee relationship. In the COA decision, it was held unnecessary to consider other factors in a situation where mutuality of obligation did not exist. Although all contracts require some element of mutual obligation, the test for whether an obligation is specific enough to form an employment contract has been a key source of dispute.
On one side, Domino’s argued that the contract’s mutuality was not sufficient as:
- Drivers could unilaterally choose not to provide services – even when rostered – without sanction;
- Domino’s was not obliged to provide work to the drivers.
On the other hand, the Revenue Commissioners argued there was sufficient mutuality from the moment drivers entered into specific contracts (under the overall umbrella contract between the parties) to be rostered for particular shifts which required attendance.
Supreme Court
The Court found that there are five key elements to consider in determining whether a contract is one of service (employer / employee) or for services (independent contractor):
- Does the contract involve the exchange of wage or other remuneration for work?
- Is the agreement one pursuant to which the worker is agreeing to provide their own services, and not those of a third party, to the employer?
- Does the employer exercise sufficient control over the putative employee to render the agreement one that is capable of being an employment agreement?
- 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 arrangements between the parties as disclosed by the evidence, are consistent with a contract of employment, or with some other form of contact having regard, in particular, to whether the arrangements point to the putative employee working for themselves or for the putative employer.
- Whether there is anything in the legislative regime under consideration that requires the court to adjust or supplement any of the foregoing.
The distilled criteria may be viewed as a combination and extension of previous tests relating to employment status; namely tests of control, enterprise, integration and mutuality.
Partial Clarity
The enumeration of five questions creates an appearance of simplicity that is not necessarily borne out, given the nuance involved in reaching an answer to each. For example, in its discussion of question two above, the court found that a contract does not need to be a contract of pure personal service to be deemed a contract of employment – a limited and partial right of substitution is not inconsistent with an employer / employee relationship. This pattern is borne out in the case of each of the questions, with careful consideration of a matrix of factors, rather than simple ‘yes’ or ‘no’ answers.
Murray J noted that this decision cannot and does not bind any driver who may wish to contend that they were in fact not an employee, as no individual driver was party to the proceedings between Domino’s and the Revenue Commissioners. This leaves scope for future litigation by drivers impacted by the case.
The Court additionally stated that:
The question of whether the drivers have continuous service for the purpose of other legislation, and in particular employment rights legislation, cannot be decided here.
A consideration of whether the drivers are entitled to the various statutory protections afforded to employees was not undertaken in this case, and the Supreme Court considered each work assignment to be a sub-contract agreed against the backdrop of the overall umbrella agreement between Domino’s and the drivers. This finding of employee status is likely to be persuasive but not determinative of a similar outcome in a case where a party sought protection under, for example, the Unfair Dismissals Act.
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