Irish Court of Appeal

THE COURT OF APPEAL

Civil

 

UNAPPROVED

Neutral Citation Number: [2022] IECA 124

Appeal Number: 2020/53

 

Whelan J.

Costello J.

Haughton J.

 

 

 

BETWEEN/

 

KARSHAN (MIDLANDS) LIMITED T/A DOMINO'S PIZZA

 

APPELLANT

 

- AND –

 

 

THE REVENUE COMMISSIONERS

 

RESPONDENT

 

 

 

JUDGMENT of Ms. Justice Máire Whelan delivered on the 31st day of May 2022

 

Introduction

 

1.             This appeal was brought by Karshan (Midlands) Ltd. (“Karshan”) from the judgment and order of O'Connor J. made in the High Court on 21 January 2020 in a case stated by the Tax Appeals Commissioner for an opinion pursuant to s. 949AQ of the Taxes Consolidation Act 1997 (“TCA”) heard over three days in July 2019. The decision of the Appeal Commissioner made on 8 October 2018 had determined that pizza delivery drivers engaged by Karshan who had worked during the years of assessment 2010 and 2011 (“the relevant years”) had done so pursuant to contracts of service and as such were taxable pursuant to Schedule E of the TCA.

 

Consultative case stated

2.             The case stated posed nine questions for the opinion of the High Court. Questions 1 to 4 were as follows: -

“(1)      Whether upon the facts proven or admitted I was correct in law in my interpretation and application of the concept of mutuality of obligation as set out at pages 20 - 28 (paras. 53 - 87 of my determination).

(2)        Whether upon the facts proved and admitted I was correct in law to determine that it was not necessary to consider whether the overarching contract contained mutuality of obligation, for the reasons set out at pages 49 - 52 (paras. 156 - 166) of my determination.

(3)        Whether upon the facts proved or admitted I was correct in law in the interpretation and application of the concept of “integration” contained at paras. 36 - 39 (paras. 114 - 125) of the determination.

(4)        Whether upon the facts proved or admitted, I was correct in law in the interpretation and application of the concept of “substitution” contained at pages 30 - 34 (paras. 90 - 105) of the determination.”

The trial judge responded “yes” to the above questions. It followed from same that the answers provided by the trial judge to questions 5 to 9 - as to whether the Appeals Commissioner had in each stated respect erred in law - were in the negative.

3.             For the reasons outlined hereafter, I am satisfied that the High Court judge correctly answered each of the questions posed and rightly concluded that the Appeals Commissioner was correct in her conclusions that the relationship between the appellant and the driver in each case gave rise to a contract of service. I differ in certain respects with the trial judge in regard to some aspects of the approach whereby he reached his determination on the case stated but not his conclusions. Accordingly, I would dismiss the appeal on all grounds.

4.             It is to be borne in mind that the findings of the Commissioner in the first instance were not to be disturbed by the High Court unless there was no evidence on which she could have reasonably reached the conclusions which she did or she erred in her application of the law. As was stated by Hamilton C.J. in Henry Denny & Sons (Ireland) Ltd. v. Minister for Social Welfare [1997] IESC 9, [1998] 1 IR 34:-

“Where conclusions are based upon an identifiable error of law or an unsustainable finding of fact by a tribunal such conclusions must be corrected. Otherwise it should be recognised that tribunals which have been given statutory tasks to perform and exercise their functions as is now usually the case with a high degree of expertise and provide coherent and balanced judgments on the evidence and arguments heard by them it should not be necessary for the Courts to review their decisions by way of appeal or judicial review.” (pp. 37-38)

Background

5.             The consultative case stated arose in the context where the central issue confronting the Appeals Commissioner was whether drivers engaged in the delivery of pizzas for the appellant (Karshan) in the relevant years were independent contractors working under contracts for services or whether, as the Appeal Commissioner determined, they worked under contracts of service and as such were employees.

6.             Karshan is engaged to the manufacturing and delivery of pizzas and both elements are integral to its business model. The relevant retail outlets are situated at Athlone, Mullingar and Tullamore. Delivery of takeaway food within each catchment hinterland requires drivers. Without doubt drivers are integral to and a central element of the company's organisation.

7.             Each driver was obliged to execute an overarching contract of open ended and indefinite duration. In addition, the Appeals Commissioner found that individual contracts were operated in practice in the course of dealing between the drivers and the individual branches whereby the individual drivers submitted details of their availability and in reliance on same the pizza shop manager prepared weekly rosters. Acceptance of the offer to work for the roster period was communicated when the roster was circulated to the individual drivers each week by the store manager.

8.             Karshan contend that the said delivery drivers work under contracts for services. The Revenue Commissioners argue that on its true construction the contractual relationship between Karshan and its pizza delivery drivers constituted a hybrid contract, comprising of two distinct elements - each considered separately below - the anterior overarching contract and the discrete individual contracts operating under the overarching contract in respect of specific weekly assignments of driving work giving rise to contracts of service. The overarching terms were intended to apply both to the general engagement and to each individual contract entered into.

9.             The practical issue is whether Karshan should deduct income tax and other relevant contributions from the payments it makes to drivers whom it engages to effect delivery of pizzas at its Domino pizza outlets in the Midlands. The liability to make such deductions depends on establishing that the relationship between the company and each driver is governed by a contract of employment (otherwise a contract of service) rather than a contract for services under which they would operate as independent contractors. The Appeals Commissioner assessed the appellant company on the basis that the drivers are in effect employees engaged under contracts of service. The appellant contends that she erred and that the drivers are self-employed.

Asymmetrical nature of overarching agreement

10.         Statements in written agreements disavowing any intention to create a relationship of employment cannot prevail over the true legal effect of the agreement's terms. In that behalf, regard must be had to the asymmetrical nature of a transaction where one party is the exclusive author of the instrument and the other can only generate an income in an arrangement with the company by signing the document. Hence the labels to be found in the overarching agreement cannot by themselves be determinative of any issue as to status.

11.         The contract under consideration here was asymmetrical being crafted and framed by Karshan and its legal advisers with no input from the individual drivers. Since the contracts were all identical and there was no evidence to the contrary, it can reasonably be inferred that same were offered to prospective drivers on a “take it or leave it” basis.  

Terms of Overarching agreement

Clauses 1 and 17

12.         Clause 1 and Clause 17 stated that the driver was being retained by the appellant as an independent contractor. The categorisation of a relationship by the parties themselves can be taken into account but is not dispositive of status which falls to be determined as a mixed question of fact and law. Insofar as Clauses 1 and 17 describe the driver as an “independent contractor”, it is to be borne in mind that the drivers had no input whatsoever into the drafting of the agreement. Ultimately, categorisation is an objective test and it is manifest that parties cannot establish a particular categorisation merely by describing it in such a fashion.

13.         In regard to the issue of the weight to be afforded to a bare statement such as Clause 1 of the agreement, assistance can also be gleaned from decisions such as that of the English Court of Appeal in Autoclenz Limited v. Belcher [2009] EWCA Civ 1046, upheld on appeal by the UK Supreme Court in Autoclenz Limited. v. Belcher [2011] UKSC 41, which reaffirmed that in determining the issue of status a court or tribunal must always take an objective approach. Further, that decision is authority for the proposition that a person should not be estopped from contending that he was an employee “merely because they have been content to accept self-employed status for some years.” (para. 57) This approach was supported by Lord Clark's judgment in the Supreme Court.

14.         This approach to the characterisation of the relationship between parties has well-established pedigree including the judgment of Elias L.J. in Quashie v. Stringfellows Restaurant Limited [2012] EWCA 1735 at para. 52 where he observed: -

“It is trite law that parties cannot by agreement fix the status of their relationship: that is an objective matter to be determined by an assessment of all the relevant factors. But it is legitimate for a court to have regard to the way in which the parties have chosen to characterise the relationship, and in a case where the position is uncertain, it can be decisive…”

Also relevant in this regard is the judgment of Lord Denning in Massey v. Crown Life Insurance Co. [1978] 2 All ER 576 which accords with Calder v. H. Kitson Vickers & Sons (Engineers) Ltd [1988] I.C.R. 259. This analysis accords in turn with the views of Keane J. in the Supreme Court in Henry Denny that “each case must be considered in light of its particular facts” (p. 49). The input, if any, of the individual into the terms of any contract is such a “particular fact”.

15.         In reality, the only way to obtain work as a driver in a Midland Domino's pizza branch was to execute the overarching contract. It was tendered on a “take it or leave it” basis. There is no suggestion that drivers or representatives of drivers had any input into the content of the contracts including Clauses 1 or 17.

Clause 3

16.         This clause provides that the company would pay drivers depending on the amount of deliveries which were successfully undertaken by them. However, in addition remuneration was being paid for “branded promotion through the wearing of fully branded company supplied clothing and/or the application of company logos affixed temporarily to the contractor's vehicle” as per Clause 3 of the overarching contract. This applies throughout the entire shift and not just to apparel being worn during the course of a delivery.

Thus, attending at the pizza shop in uniform constituted active engagement in the core work of the appellant. The uniform comprised of a crew shirt, baseball cap, name tag and driver jacket. According to the evidence, managers checked the uniforms to ensure they were in order. The rate of pay in respect of the wearing of uniform was on an hourly basis: “The brand promotion or advertising rate was €5.65 per hour” (para. 34 of determination). That payment was augmented depending on the amount of deliveries undertaken during the shift. However, an hourly rate was payable even if there was no driving work at all arising and accordingly it was available to both sides to calculate in advance once the available hours were communicated by the driver to the manager and the roster was drawn up accordingly. Obviously the additional sum in respect of the amount of deliveries remained to be ultimately calculated. Thus, this manner of payment coupled with the fact that during downtime between deliveries, the clear evidence of at least one of the company's managers was that he required drivers to make pizza boxes and a driver was subject to a significant sanction for refusing to do so, namely, being sent home with an ensuing loss of their hourly rate of payment and the opportunity to make deliveries during that shift. That fact, coupled with the overall analysis of Clause 3 and in light of the evidence before the Commissioner pointed to a significant integration of drivers into the company's enterprise. It further points to the relevant level of control consistent with the relationship of employer and employee subsisting between the parties.

Clause 5

17.         It is contended by the appellant in support of the appeal:-

“Clause 5 provided that the drivers would insure their own vehicles (although Clause 4 stated if the driver did not have his own vehicle that he could apply to rent a company vehicle from the appellant).” (p. 9)

This contention was not established in my view. It would appear from the evidence that was adduced that Clause 4 never operated as between the parties and in practice no delivery vehicles were available for rent from the company. Furthermore, Clause 5(a) significantly modifies the initial obligation to insure and expressly states: -

“If the contractor does not have the appropriate business use insurance the company is prepared to offer same (third party only) at a pre-determined rate.”

In its totality, Clause 5 could point more towards the relationship of employer and employee, particularly insofar as the company anticipates that an individual driver could encounter difficulties, financial or otherwise, in obtaining business use insurance, and agrees to discharge same “at a pre-determined rate”. The assumption of a further obligation on the part of the driver to discharge the business use insurance premia to the company might be expected to incentivise the submission of availability sheets on an ongoing basis in connection with the creation of rotas and rosters to facilitate the discharge of that sum to the company.

 

 

Clause 9

18.         Clause 9 provides:-

“The company points out to the contractor that in keeping with all self-employed individuals the financial risks and/or rewards associated with providing the services as outlined in this contract are strictly under the control of the contractor, and the company bears no responsibility whatsoever for same. In particular, the company does not warrant a minimum number of deliveries. Consequently, the contractor undertakes to operate his/her own accounting system. He furthermore agrees to provide a weekly invoice with the information necessary to agree the amount owed by the company.”

19.         This clause must be stress tested against the evidence. The Appeals Commissioner identified in the Determination including at paras. 110 and 111 several countervailing factors which pointed towards the existence of a contract of service. The said provisions betrayed a grip by Karshan on a driver's economy inconsistent with him being a truly independent contractor. Requirements imposed by Karshan on a driver under the overarching agreement including uniforms, branded apparel, vehicle markings, restrictions on freedom to work specified in clause 11, were capable of constituting, in the language of Wilson L.J. in Pimlico Plumbers v. Smith [2018] UKSC 29 at para. 48 “…lapses which shed light on [the] true nature” of the agreement between the parties. It is apparent from para. 110 of the determination that the Appeals Commissioner is alive to the relevance of such factors to the exercise she was undertaking.

20.         The evidence was that on an approximately weekly basis the rosters were circulated. For the hours rostered, the driver was entitled to the remuneration which at the time in respect of the branding promotion aspect entitled a payment of €5.65 per hour with a delivery rate fixed per drop in addition. Drivers gave evidence that in practice the company pre-prepared invoices for the drivers to sign. This is arguably more consistent with a relationship of employer/employee. Whereas Clause 9 did not warrant a minimum number of deliveries, it has to be borne in mind that it could not do so since they could not definitively anticipate in advance the number of orders as might be placed on any given day or evening for a food delivery. However, what is not stated but was the case, is that when the weekly roster was drawn up by the company based on the availability sheets and circulated to the drivers, the company did warrant to pay for the specified number of hours in relation to the brand promotion/advertising aspect at €5.65 per hour.

Clause 11 

21.         Clause 11 is of crucial importance in that it cast obligations on the driver during the periods between his work on rostered driving assignments for Karshan and not

just during the performance of the successive or discrete rostered assignments as were provided to him in the weekly rosters. It is indicative of an ongoing level of subordination of the driver to the Karshan even on the days and times between rostered assignments. Its terms are considered in detail below.

Clause 12

22.         The substitution clause on its face, considered in the context of the latter part of Clause 14, appears to confer a right of substitution on the driver. The Commissioner and the High Court judge (at para. 55) erred in finding that the overarching agreement “required” the driver to find a substitute when unavailable. However, that error in itself does not operate to alter the validity of the Commissioner's conclusion at para. 164 or the High Court judgment at para. 60. On its true construction, this clause created a right on the part of the driver to proffer a substitute if the narrow circumstances contemplated arose. Such right does not necessarily reduce the binding nature of the work contract and does not eliminate its obligational core. It does not amount to a genuine entitlement on the part of the individual to subcontract the work out to whomsoever he/she chose. This is consistent with the company exercising a far higher degree of control than the language of Clause 12 implies. That degree of control over substitution is more consistent with the relationship of employer and employee. Substitution for a shift when a driver was unavailable did not alter the contractual obligation of the driver to work the balance of the unworked shift for the rostered period.

23.         Personal performance was the norm but it was not an absolute requirement. Decisions such as Mirror Group Newspapers Limited v. Gunning [1986] I.C.R. 145, Sheehan v. Post Office Counters Limited [1999] I.C.R. 73 and, from the point of view of tax, IRC v. Post Office Limited [2003] I.R.L.R. 199 have construed the definitional requirement of personal performance of imposing merely an obligation that personal performance must be the “predominant purpose” of the contract rather than an absolute requirement. In this case Karshan offered no evidence that personal performance was other than the norm.

I am satisfied that the trial judge was correct in his conclusion not to interfere with the decision of the Commissioner in regard to the operation of Clause 12. The worker had a right but not an obligation to engage a substitute. As stated above, I am satisfied that there was no evidence to suggest that the substitutes were conventionally third parties with no contractual relationship with the appellant. Otherwise it could not be said that such an individual was “capable of performing the contractor's contractual obligations in all respects” as Clause 12 itself mandated.

 

 

Clause 14

24.         This exclusion clause is noteworthy. It indicates that there is no obligation on the part of the company to offer work. This speaks to the inherent and subtle imbalance between the rights of the company and those of drivers within the overarching agreement which in its terms and tenor favours the company. Significantly, as stated above, Clause 14 does not state anywhere that there is no obligation on the driver to accept work. A far more modified position is ordained for the driver by its terms. It is crafted in favour of the company. The use of the word “unavailability” does not connote freedom to gratuitously refuse to carry out a previously agreed rostered shift. There is an ongoing obligation operating at all material times under the overarching agreement that the driver makes himself available for work on “certain days and certain times” of his own choosing to be identified by him and communicated to the company. Submission weekly by the driver of an availability sheet represents the discharge of that ongoing obligation.

As an exclusion clause, Clause 14, in the overarching contract requires to be stress-tested as to its effect against the operational reality of the relationship between the parties. The overarching contract falls to be interpreted in a realistic manner and in accordance with the operating facts. That is what the trial judge did. The construction advanced by the appellant that the clause conferred a freedom on a driver to work when he or she chose is not supported by the language of the clause. No driver gave evidence of so operating or understanding the said term. The trial judge was entitled to prefer the common sense construction contended for by Revenue, which he implicitly did; that Clause 14, in its true context, objectively viewed and in light of the evidence, implicitly required a driver to initiate an individual agreement with the company in relation to his availability for work. 

 

General principles for ascertaining employment status

25.         The locus classicus for the definition of a contract of service is the judgment of MacKenna J. in Ready Mixed Concrete v. Minister of Pensions [1968] 2 QB 497 which identified the three key elements of a contract of service as being: -

                (i)               The servant agrees that, in consideration of a wage or other remuneration, he would provide his own work and skill in the performance of some service for his master.

              (ii)              He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master.

            (iii)               The other provisions of the contract are consistent with it being a contract of service.

26.         The Ready Mixed test has demonstrated its resilience and has withstood the test of time because of its inherent flexibility and overall applicability to a significant variety of scenarios in both the Revenue and employment domain. The Ready Mixed principles are to be understood in this jurisdiction in the context of later jurisprudence including the judgments of the Supreme Court in Denny & Sons (Ireland) Limited v. Minister for Social Welfare [1998] 1 IR 34 and Edwards J. Minister for Agriculture v. Barry [2008] IEHC 216 and inter alia, the principle of mutuality of obligation.

27.         In light of the extensive jurisprudence including the taxonomy posited by Edwards J. at para. 44 of Minister for Agriculture and Food v. Barry (“Barry”), and the observations of the Supreme Court in Denny & Sons (Ireland) Limited v. Minister for Social Welfare [1998] 1 IR 34 (“Denny”), the ascertainment of the true status of an individual in the context of work or alleged employment prima facie necessitates in the first instance a thorough examination of the facts and circumstances, not alone in relation to any formal written contract but in relation to the operational day to day arrangements that obtain.

Economic Reality & Work Contracts

28.         Harvey on Industrial Relations and Employment Law (LexisNexis Butterworths, 2021) notes the importance of a court having regard to the economic reality of the relationship between the parties. The approach is explained thus at paragraph 35: -

“The particular advantage of the economic reality test is that it enables the court to see through the disguise with which the parties sometimes clothe their relationship. An employer may prefer to arrange a contract for services rather than a contract of employment, for it can thereby escape many statutory restrictions and free itself from its proper responsibilities. The worker may readily acquiesce, for the independent contractor enjoys a favourable tax position as compared with the employee; and the worker may be willing to sacrifice the long term security of the employment protection laws for the short term advantage of a larger pay packet. Even if the parties honestly believe they have a contract for services, the court may say they have a contract of employment.”

29.         The gig economy can throw into sharp relief the inequality of bargaining power between an individual who seeks work and those in a position to provide it. It is appropriate therefore that strict commercial law principles governing the construction of contracts not be unduly rigidly applied in the context of work. In my view, work-type cases require to be considered more broadly and account can be taken of factors such as whether the contract was prepared entirely by the company alone which drafted all documentation without any input from the individual providing the work or where there was no opportunity offered or available to vary any contract terms  or where a contract was presented on a “take or leave it” basis or where the individual offering to work did not obtain independent legal advice prior to entering into or signing an agreement in determining the true nature of such an agreement. What has to be ascertained is, in its totality, the true nature of the agreement concluded between the parties as gleaned from the documentation and from the operation of the agreement in question in practice over time.

Construction of Contracts as to Status

30.         Our Supreme Court, in the analogous context of landlord and tenant law, has repeatedly made clear that in construing an agreement as to status the terms of a written agreement will not necessarily determine the matter. In Whipp v. Mackey [1927] I.R. 372 at p. 382, Kennedy C.J. observed;

“Neither the application of the term “rent” to the annual payment nor the description of [the grantee] as “the tenant” would be sufficient to determine the character of the document as a grant or demise, or agreement for a grant or demise, rather than a licence or agreement for a licence.”

31.         As was made clear by Griffin J. in Gatien Motor Co. Ltd v. Continental Oil Co. Ireland Ltd. [1979] I.R. 406, the court in evaluating any written agreement said to be probative as to status between parties attaches significant weight as to whether it was negotiated at arm's length;

“The parties negotiated at arm's length, both were fully legally advised, and the Caretaker's Agreement which was signed by [the tenant] expressed the intention of the parties and was entered into at the behest of the solicitors for the tenant”. (p. 415)

It is to be inferred from that judgment that purposive approaches to construction are required for contracts where there is a material imbalance between the parties in the negotiation of the written agreement and the availability of independent legal advice.

Kenny J.  in that case observed at p. 420;

“The existence of the relationship…is determined by the law on a consideration of many factors and not by the label which the parties put on it.”

32.         The Supreme Court has demonstrated that it is astute to the risks that a written agreement as to status may not represent the true status of the parties. In Irish Shell & B.P. Ltd v. Costello [1981] I.L.R.M. 66, a majority of the court found that a purported licence had created the relationship of landlord and tenant, Griffin J. stating at p. 70;

“Although a document may be described as a licence it does not necessarily follow that, merely on that account, that it is to be regarded as amounting only to a licence in law.”

33.         In this regard, in the context of work-related contracts, I find helpful the observations of Lord Clark in the English Supreme Court in Autoclenz Limited v. Belcher [2011] UKSC 41 - a decision that echoes the dicta of the Irish Supreme Court in Gatien Motor Co. Ltd v. Continental Oil Co. Ireland Ltd. [1979] I.R. 406 -  that the court will have regard to inequality between the parties and access to independent legal advice in evaluating a contract's ostensible terms - where Clark L.J. observed at para. 34: -

“The critical difference between this type of case and the ordinary commercial dispute is identified by Aikens LJ in para [92] as follows:

‘I respectfully agree with the view, emphasised by both Smith and Sedley LJJ, that the circumstances in which contracts relating to work or services are concluded are often very different from those in which commercial contracts between parties of equal bargaining power are agreed. I accept that, frequently, organisations which are offering work or requiring services to be provided by individuals are in a position to dictate the written terms which the other party has to accept. In practice, in this area of the law, it may be more common for a court or tribunal to have to investigate allegations that the written contract does not represent the actual terms agreed and the court or tribunal must be realistic and worldly wise when it does so…'”

The judgment continued:-

“35. So the relative bargaining power of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed and the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only a part. This may be described as a purposive approach to the problem. If so, I am content with that description.”

34.         Briggs J. in Weight Watchers (UK) Ltd v. Revenue and Customs Commissioners [2012] STC 265 observed at para. 20:-

“…before leaving Autoclenz Ltd. v Belcher, it is necessary to note that the Supreme Court also resolved an issue which had emerged in previous decisions about whether in the employment context the court was constrained by an apparently complete written contract to conclude that its terms represented the true agreement, unless the application of the traditional doctrine of sham (which required proof that both parties intended the written contract to paint a false picture) permitted a different conclusion. The Supreme Court held that no such constraint is rigidly to be implied in the employment context because of the normally superior bargaining position of the employer, and its consequential ability to dictate the terms to be included in the written contract: see per Lord Clarke at [20]–[35]. In passing, he approved the following passage in the judgment of Elias J in Kalwak v Consistent Group Ltd. [2007] IRLR 560:

‘[57] The concern to which tribunals must be alive is that armies of lawyers will simply place substitution clauses, or clauses denying any obligation to accept or provide work in employment contracts, as a matter of form, even where such terms do not begin to reflect the real relationship. Peter Gibson LJ was alive to the problem. He said this (p. 369)

“Of course, it is important that the industrial tribunal should be alert in this area of the law to look at the reality of any obligations. If the obligation is a sham it will want to say so.”

[58] In other words, if the reality of the situation is that no one seriously expects that a worker will seek to provide a substitute, or refuse the work offered, the fact that the contract expressly provides for these unrealistic possibilities will not alter the true nature of the relationship. But if these clauses genuinely reflect what might realistically be expected to occur, the fact that the rights conferred have not in fact been exercised will not render the right meaningless.

[59]. … Tribunals should take a sensible and  and robust view of these matters in order to prevent form undermining substance …'

[21]     Lord Clarke concluded, at [35] as follows:

‘So the relative bargaining power of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed and the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only a part. This may be described as a purposive approach to the problem. If so, I am content with that description.'”

Context not Label

35.         Where, as in the instant case, the written (overarching) agreement does not reflect the sum total of the key elements of the work relationship between the parties, it is necessary to consider the evidence as to the individual personal work relations and in particular to look beyond the label imposed on the arrangement particularly where one party alone has drafted the agreement, to evaluate whether on its true construction an agreement accords with the label ascribed to it by its drafter.

36.         It is not the function of a court to re-cast a party's bargain. That said, the denomination or characterisation accorded to an agreement or the ostensible intentions of the parties embodied therein ought not preclude a thorough examination of the true circumstances underpinning its creation and operation so that an informed determination as to its true characterisation can be arrived at.

37.         There are a variety of scenarios which can emerge and the prism through which one considers an arrangement can pivot that assessment in one direction or another. Work might be carried out under a single contract which, on the facts when properly considered and understood, might fall to be classified as either a contract of service or a contract for services. Alternatively, on each occasion that work is performed the individual might be considered to have entered a new contract which, again depending on the circumstances, might fall to be classified as either a contract for services or a contract of service. A third potential scenario (which arises in the instant case) is what in effect has come to be known in practice as a hybrid or overarching contract whereby there is “an over-arching contract in relation to certain matters, supplemented by discrete contracts for each period of work” (Weight Watchers UK Limited v. HMRC [2011] UKUT 433 TCC, para. 30). As in the instant case, generally speaking, overarching contracts are in writing whilst the individual arrangements are conventionally not in written terms. Another possible hybrid contractual relationship was contemplated by Edwards J. at para. 44 of Barry, although on the facts of this case, the described scenario is not particularly relevant.

38.         From an employment perspective, the authors Maeve Regan and Ailbhe Murphy in Employment Law (2^nd edn, Bloomsbury Professional, 2017), at para 2.30 comment:-

“The parties may agree that the relationship is one of employment or otherwise. However, any label such as ‘independent contractor' or ‘employee' is a conclusion as to the nature of the relationship. The label means nothing if the reality of the relationship does not accord with it. As Murphy J held in Henry Denny & Sons (Ireland) Ltd v Minister for Social Welfare: 

‘[The provisions of the contract are] not of decisive importance. In my view their value, if any, is marginal. These terms are included in the contract but they are not contractual terms in the sense of imposing obligations on one party in favour of the other. They purport to express a conclusion of law as to the consequences of the contract between the parties. Whether Ms Mahon [the shop demonstrator engaged by Denny] was retained under a contract of service depends essentially on the totality of the contractual relationship express or implied between her and the appellant and not upon any statement as to the consequence of the bargain.'”

Discrete Contracts

39.         Revenue's contention in the instant case is that on each occasion when a driver is rostered by the shop manager, an individual contract comes into existence which operates as a contract of service. The issue is whether individual rostered weekly assignments worked by a driver, in respect of which the Appeals Commissioners claimed the company was liable for the payment of income tax, did or did not amount to a contract of service in its own right. A similar issue was considered by Waite L.J. in McMeechan v. Secretary of State for Employment [1997] IRLR 353 at 564 - 565: -

“That is a question which, though it remains essentially one of fact and degree (O'Kelly's [1983] IRLR 369 case at p.382 …) …is one which largely falls to be determined on the interpretation of the conditions.

Those must however be construed according to the context afforded by a specific, as opposed to a general, engagement.”

40.         The issue whether the individual rostered weekly contracts in their operation constitute contracts of employment is legally distinct from the issue as to whether the overarching contract itself gives rise to a contract of service. It is to be observed that the terms of the overarching contract are not decisive in that assessment, but they are certainly relevant and were considered by the High Court judge.

41.         The Appeals Commissioner concluded that the individual contracts were contracts of service and that it was unnecessary to proceed to consider the overarching contracts in that regard.  Logically, given the hybrid nature of the agreement, it is sufficient for Revenue's purposes if either the overarching contract or the individual contract is one of service as long as that is also the contract pursuant to which the remuneration or sums in question have been paid. As is evident from para. 164 of the Determination, a discrete bilateral contract came into existence weekly on foot of which work was done and payment was calculated and discharged.

42.         In the judgment of Waite L.J. in McMeechan, the focus of the court's consideration was a single stint of four days' work carried out in the month of January 1992. Relying, inter alia, on the English textbook Harvey on Industrial Relations and Employment Law, Waite L.J. considered that where a claim relates to pay for a single stint it was logical to “relate the claim to employment status to the particular job of work in respect of which the payment is sought”. He noted that Harvey had stated, “The better view is not whether the casual worker is obliged to turn up for, or do, the work but rather, if he turns up, and does the work, whether he does so under a contract of service or for services.” (paragraph A [53]) He concluded that there was no incongruity in determining that the individual was an employee in respect of each stint actually worked even if he was not an employee under the general terms of engagement i.e. the overarching contract.

43.         The judgment of the English Court of Appeal in McMeechan is also instructive in regard to its analysis of the earlier decision of O'Kelly. Waite L.J. noted that in O'Kelly the overarching contract and the individual work contracts had been considered separately. This he considered to be the correct approach, citing with approval the view expressed by Sir John Donaldson M.R. in O'Kelly that it was an irresistible inference that a Tribunal determining the status of a claimant is under a positive duty in such circumstances to consider the terms of both the overarching contract and the individual contract. I agree.

44.         Such an approach applies in the instant case where the overarching terms were intended to apply both to the general engagement and to each individual contract entered into. The parties are thus entitled to have the contractual status of each determined separately. This does not mean that the Appeals Commissioner was obliged to separately determine the status of the overarching contract. Had Revenue contended that drivers were employees taxable under Schedule E in the periods between individual contracts the position would have been different.

45.         Mark Freedland FBA and Nicola Kountouris in The Legal Construction of Personal Work Relations (Oxford University Press, 2012) explore the binary divide that has emerged over time to signify the dichotomy between a contract of employment and a contract for services. Though it is an English text book, nevertheless its analysis is useful. At p. 107 they observe:-

“Three basic approaches seem to compete or interact with each other:

                                      (1)         the working person is to be regarded as an employee employed under a contract of employment if but only if he or she works under the control of the employer (using the idea of control in a loose and extended sense);

                                      (2)         the working person is to be regarded as an employee employed under a contract of employment if but only if he or she is integrated into the organization of the employer; and

                                      (3)         the working person is to be regarded as an independent contractor employed under a contract or contracts for services if but only if he or she is in business on his or her own account.”

46.         The authors use the terminology of “working person” as “a categorically neutral one to identify the relational roles of the persons who, in the context of contracts of employment, figure as ‘employees'”. The authors continue at p. 107 -

“There is a deep lack of resolution between these three approaches, and moreover therefore the disagreements about the way in which any of these approaches, or any combination of them, is to be operated. Further doctrines emerge which seem to modify or elaborate those three basic approaches to the test for the binary divide but without making their application or their interrelationship especially clearer. These modifications may be expansive or restrictive of the scope of employment under a contract or contracts of employment. The ‘economic reality test' seems to be an inclusionary modification to the effect that a personal work relationship is to be regarded as giving rise to a contract of employment if there is an ‘economic reality' of dependence by the working person for security of employment and income upon the work-purchaser, even if there is an appearance of absence either of control over the working person on the part of the work-purchaser or of integration into the organisation of the work-purchaser. On the other hand, the court's ‘mutuality of obligation test' is an exclusionary modification, amounting to a rule that employment under a contract or contracts of employment exist only if the working person and the work-purchaser are in a state of continuing mutuality of contractual obligation.”

47.         The authors posit that some features of a personal contract for services “seem to be ascertained by deducing that they must be different from or indeed opposite to the corresponding attributes of the contract of employment.” They continue at p. 111 -

“This would seem to be especially true with regard to certain structural features and implied terms which are deemed to be expressive of the fundamental nature of the contract of employment; it seems accordingly to be assumed that personal contracts for services must have different or opposite structural features, or implied terms in those particular respects.”

They identify three key areas: -

“Firstly, almost throughout its development during the last twenty years, the implied obligation of mutual trust and confidence seems to have been regarded as a special attribute of the contract of employment: it seems to have been assumed that no such implied obligation would attach to a contract for services, even if that were a personal contract for services.”

Secondly, the authors note: -

“… the emergence during the last decade or so of a doctrine to the effect that the notion of mutuality of obligation applies either in a unique way or at least with special force to the contract of employment. Hence we encounter the view that the presence of mutuality of obligation has become not only a prerequisite for the existence of a contract of employment but also a basis for distinguishing between the contract of employment and the contract for services. In this way it has become an assumption that the contract for services, even when it is a personal contract, does not exhibit mutuality of obligation in the way that the contract of employment must necessarily do.”

The authors further contend that the obligations of mutual trust and confidence and of mutuality of obligation:-

“…can both be regarded as in some sense derived from the idea of the contract of employment as a specially personal one, and so also might we regard the special application of the doctrine of restraint of trade to contracts of employment, and also the special approach to remedies for wrongful termination which has developed with regard to contracts of employment.” (p. 112)

Grounds of appeal 1 & 2 - Mutuality of obligation

48.         Karshan contends for six distinct errors by the High Court judge on his approach to mutuality of obligation. Citing paras. 50 and 51 of the High Court judgment it is asserted:-

“The High Court (O'Connor J.) erred in its application of the law concerning mutuality of obligation. The High Court adopted an approach which is significantly out of line with the existing binding precedents on mutuality of obligation, and fails to distinguish sufficiently, or at all, those binding precedents.” (p. 4 of submissions)

 

Mutuality of obligation - General principles

49.         Edwards J. in Barry observed:-

“The requirement of mutuality of obligation is the requirement that there must be mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer. If such mutuality is not present, then either there is no contract at all or whatever contract there is must be a contract for services or something else, but not a contract of service. It was characterised in Nethermere (St Neots) Ltd v Gardiner [1984] I.C.R. 612 … as the ‘one sine qua non which can firmly be identified as an essential of the existence of a contract of service'…in Carmichael v. National Power plc [1999] ICR 1226 at 1230 it was referred to as ‘that irreducible minimum of mutual obligation necessary to create a contract of service.' Accordingly the mutuality of obligation test provides an important filter.” (para. 47)

50.         Edwards J. in Barry confirmed that the English jurisprudence on mutuality of obligation was part of Irish law and one important factor in establishing the legal nature of a work relationship. On its own, it is never outcome-determinative as to status.  Edwards J. in Barry does not reference the terms of any particular clauses contained in the written agreement between the parties. The decision is entirely consistent with the principle that the ongoing working or operational practice between the parties may demonstrate the necessary mutuality of obligation irrespective of the express terms of any written agreement between the parties.

51.         Analysis of the true nature of the relationship between the parties involves an evaluation as to whether there are mutual obligations on the part of the company and the individual concerned. In a case such the present, where the individual contract was not in writing, the ascertainment of its true operational terms is informed primarily by the ongoing nature of the relationship and the course of conduct and dealings between the parties over time. There is no authority for the proposition that exact symmetry is essential to mutuality of work-related obligation.

52.         In Windle v. Secretary of State for Justice [2016] EWCA Civ 459 Underhill J. in the English Court of Appeal held that in determining whether a claimant is an employee an essential question is not to what extent he is acting “under direction” or is in a “subordinate” position while at work. Underhill L.J. observed at para. 23: -

“…the ultimate question must be the nature of the relationship during the period that the work is being done. But it does not follow that the absence of mutuality of obligation outside that period may not influence, or shed light on, the character of the relationship within it. It seems to me a matter of common sense and common experience that the fact that a person supplying services is only doing so on an assignment-by-assignment basis may tend to indicate a degree of independence, or lack of subordination, in the relationship while at work which is incompatible with employee status…Of course it will not always be so…its relevance will depend on the particular facts of the case; but to exclude consideration of it in limine runs counter to the repeated message of the authorities that it is necessary to consider all the circumstances.”

53.         The judgment in Windle followed the earlier decision of Elias L.J. in Quashie v. Stringfellows Restaurant Limited [2012] EWCA Civ 1735 which had held: -

 

12. …However, whilst the fact that there is no umbrella contract does not preclude the worker being employed under a contract of employment when actually carrying out an engagement, the fact that a worker only works casually and intermittently for an employer may, depending on the facts, justify an inference that when he or she does work it is to provide services as an independent contractor rather than as an employee. This was the way in which the employment tribunal analysed the employment status of casual wine waiters in O'Kelly v Trusthouse Forte plc [1983] IRLR 369, and the Court of Appeal held that it was a cogent analysis, consistent with the evidence, which the Employment Appeal Tribunal had been wrong to reverse.” (emphasis added)

54.         It may be borne in mind that the observations of Elias L.J. in Quashie were directed towards facts which contended that an unfair dismissal had taken place. Further, it is to be borne in mind that the judgment pertained to status and whether the claimant could be characterised as a “worker” pursuant to s. 230(3) of the Employment Rights Act (UK) 1996, a provision with no counterpart in this jurisdiction. That provision has no relevance to this case. That said, the dicta regarding mutuality of obligation are germane to the exclusionary modification aspect of the assessment of whether a contract of service exists or not on given facts.

55.         Is it material or relevant that either side could hypothetically walk away without sanction at the conclusion of a roster period? In my view it is not, since all the material individual contracts considered by the Appeals Commissioner had been fulfilled. The options of the parties regarding future individual contracts are not germane to the issue. The question is rather whether the fact that either side could choose not to fulfil individual contracts and the extent to which, if at all, that occurred in practice without any possibility of sanction is material.

56.         The McMeechan decision as well as the other jurisprudence relied upon, though not binding on this court, is of course of interest in the context of the evolution of the common law in this particular area. That line of authority demonstrates that it is not necessary to find mutuality of obligation in the overarching contract provided it is located within the context of each single engagement entered into thereunder, and further: -

               (1)              The question of whether a single engagement gives rise to a contract of employment is not resolved by a decision that the overarching contract does not give rise to a contract of employment.

               (2)              In particular, the fact that there is no obligation under the overarching contract to offer, or to do, work in the event that it is offered or indeed where there are to be found clauses expressly negating any such obligation is not in and of itself determinative that a single engagement cannot give rise to a contract of employment and the relationship of employer and employee.

               (3)              The nature of each contract is a distinct question to be examined and considered in light of the facts.

               (4)              A single engagement can give rise to a contract of employment if work which has in fact been offered is in fact carried out by the worker for payment.

The decision reinforces the correctness of the view of the Commissioner at paras. 156-160 and in particular at para. 164 of the Determination.

57.         The appellants cited in argument the decision of Upper Tribunal in Commissioners for Her Majesty's Revenue and Customs v. Professional Game Match Officials Limited [2020] UKUT 147 (TCC) which at the date of this appeal hearing was under appeal to the English Court of Appeal. Since the decision in the said appeal was delivered subsequently to this hearing and consequently was not the subject of argument its relevance, if any, to the matters in issue herein will fall to be considered on another occasion.

58.         The evidence in this case demonstrated that the completed roster when submitted to the driver amounted to an acceptance by the appellant of the offer he/she had previously made when he/she initially signified the days and times of availability for work for the week in question. That process gave rise to a bilateral contract on each separate occasion which ended at the conclusion of the transaction covered by the roster in question and when invoices were submitted for payment.

Weight Watchers

59.         One would have thought that the statement of Briggs J.  at para. 42 of Weight Watchers UK Limited v. HMRC [2011] UKUT 433 TCC was uncontroversial:

“Putting it more broadly, where it is shown in relation to a particular contract that there exists both the requisite mutuality of work-related obligation and the requisite degree of control, then it will prima facie be a contract of employment unless, viewed as a whole, there is something about its terms which places it in some different category. The judge does not, after finding that the first two conditions are satisfied, approach the remaining condition from an evenly balanced starting point, looking to weigh the provisions of the contract to find which predominate, but rather for a review of the whole of the terms for the purpose of ensuring that there is nothing which points away from the prima facie affirmative conclusion reached as the result of satisfaction of the first two conditions.”

It is unnecessary to approach the definition of the obligation which is required on the employer's side upon too narrow a basis. Briggs J.  cited with approval the judgment of Sir Christopher Slade in Clark v. Oxfordshire Health Authority [1998] IRLR 125. At para. 27 Briggs J. noted:

“In Clark v Oxfordshire Health Authority (1997) 41 BMLR 18,

[1998] IRLR 125, in the Court of Appeal, it was held that the requisite

mutuality of obligation must subsist ‘over the entire duration of the relevant

period': see per Sir Christopher Slade (41 BMLR 18 at 24, [1998] IRLR 125,

para 22). In its context, the reference in the passage quoted above to ‘the

relevant period' meant the period of the existence of the contract alleged to amount to a contract of employment.”

60.         It is noteworthy that Sir Christopher Slade in Clark had also stated at para. 41:-

“…The mutual obligations required to found a global contract of employment need not necessarily and in every case consist of obligations to provide and perform work. To take one obvious example, an obligation by the one party to accept and do work if offered and an obligation on the other party to pay a retainer during such periods as work are not offered would in my opinion, be likely to suffice. In my judgment, however …what the authorities require is to hold that some mutuality of obligation is required to found a global contract of employment.”

61.         The decision in Weight Watchers suggests that a contract which entitles a worker to find a replacement for an agreed shift but where the company actually pays is not inconsistent with an employment relationship.

62.         The headnote for the Weight Watchers' decision in Simon's Tax Cases succinctly notes;

“In relation to any specific meeting or series of meetings, leaders

conducted them pursuant to specific contracts for the taking of those

meetings. In addition to those meeting-specific contracts, there was an

over-arching or umbrella contract (constituted by the conditions, the MOA and

the policy booklets) between WWUK and each leader, dealing in particular

with obligations of leaders affecting them otherwise than when taking

meetings. The umbrella agreement was no more than an agreement to agree,

requiring a further and distinct contract-making process for the conduct of any

particular meeting or series of meetings. The initiative was on the leader who

had to propose the relevant timing, date and venue of any meeting or series of

meetings for WWUK's agreement. Those meeting-specific agreements

satisfied the mutuality of obligation condition. The condition which permitted

a leader not to take a particular meeting was not unfettered; the leader was

required to show some good reason for proposing not to take a meeting, to

seek to find a suitably qualified replacement, to notify WWUK if he was

unable to do so, and to conduct all subsequent meetings in the series which had

been agreed. That condition did not make the replacement leader the original

leader's delegate but gave rise to a new contract in relation to that particular

meeting between WWUK and the replacement leader. Further, looking at the

contractual provisions as a whole, there was sufficient control by WWUK over

the leaders. On a review of the contractual relationship between WWUK and

its leaders as a whole, the indicators of employment constituted by the

requisite mutuality of obligation and degree of control were not overridden by

some other relevant aspect of the relationship. On balance, the leaders were

employees of WWUK rather than independent contractors.”

63.         In my view there is a strong analogy with the instant case. The overarching agreement was an agreement to agree and the rosters embodied the “further and distinct contract-making process”. It contained provisions - such as Clause 11 - which affected, restricted or controlled drivers at times outside those when they were actually delivering pizzas. The initiative was on the driver to propose his “days” and “times” of availability to drive for Karshan's agreement and there is a strong alignment with Clause 6 of the Weight Watchers contract in that regard. The roster once agreed satisfied the mutuality of obligation condition. It obliged Karshan to engage the driver for the shifts and to pay him accordingly and required him to attend for driving duties save where “at short notice” he became “unavailable”. Under the discrete contract the freedom of a driver not to drive was not unfettered and was envisaged to arise exceptionally where “unavailability” arose “at short notice”. This connotes exceptionality and is not consistent with a general unfettered right not to show up for a rostered shift. Since unavailability for one shift did not terminate the discrete rostered contract there was a continuing obligation to work the subsequent shifts remaining on the roster. While the worker was not obliged to find a replacement there was a qualified entitlement to propose a driver who met the criteria of being “capable of performing the contractor's obligations in all respects”. The appellant's argument that Weight Watchers is distinguishable on its facts does not stand up to scrutiny.

64.         In my view the substitution provision was analogous to that in Weight Watchers in its operation. Briggs J. observed at para 33 - 34:-

“[33] At the other end of the spectrum, contracts for work frequently provide

that if the worker is for some good reason unable to work, he or she may

arrange for a person approved by the employer to do it, not as a delegate but

under a replacement contract for that particular work assignment made

directly between the employer and the substituted person. In MacFarlane v

Glasgow City Council [2001] IRLR 7, a qualified gymnastic instructor was

entitled, if unable to take a particular class, to arrange for a replacement from

a register of coaches retained by the council, upon the basis that the

replacement would be paid for taking the class directly by the council, rather

than by the originally appointed instructor. The Employment Appeal Tribunal

had no difficulty in concluding, distinguishing Tanton, that this provision was

not necessarily inconsistent with a contract of employment between the

council and the instructor.

[34] The true distinction between the two types of case is that in the former

the contracting party is performing his obligation by providing another person

to do the work whereas in the latter the contracting party is relying upon a

qualified right not to do or provide the work in stated circumstances, one of

the qualifications being that he finds a substitute to contract directly with the employer to do the work instead.”

65.         It is to be borne in mind that each individual case is substantially fact-driven. The case-law is of general interest but often decisions are no more than examples of a court's application of broad underlying principles to very specific and often highly individualised sets of facts. It is not necessarily profitable or indeed prudent to mine the authorities in the expectation of extrapolating a definitive answer to the issues raised in this appeal.

66.         It is to be borne in mind that the term “mutuality of obligation” does not have a single universal definitive meaning. It can operate differently in different contexts. There is a risk of selectively extrapolating judicial observations from a myriad of different authorities to illustrate a proposition. The assignment of mutual obligation - which the Respondents correctly acknowledge is the sine qua non of an employment relationship - to an arrangement is in each case substantially fact dependent.

67.         The terms of an overarching agreement are to be construed against evidence of any sustained course of dealing between the parties and the terms and operation of any individual contract. In general, the existence or non-existence of a contract of service ought not to be decided by a rule of thumb but rather by an evaluation of all the various indicia having due regard to the authorities and having regard to the distinguishability of cases decided in various areas such as revenue and employment law.

68.         A key factor to be taken into account in assessing the issues in this appeal is what was/were the actual contract(s) governing the relationship between the parties? Whilst the relationship in question was governed by the overarching contract there were also individual contracts triggered and operated on foot of the weekly rosters and performed by the drivers and the company as bipartite arrangements. The sums which are the subject matter of the claim by revenue were paid pursuant to the individual contracts.

Mutuality of obligation - Alleged error no. 1

69.         The first alleged error in relation to the trial judge's approach to mutuality of obligation is stated thus: -

“The conclusion of O'Connor J. to the effect that Minister for Agriculture and Food v Barry [2008] IEHC 216 can be distinguished because the claims in Barry were for redundancy payments is not borne out by either the wording of the judgment in Barry itself or indeed by the subsequent decision of the High Court in McKayed v Forbidden City Limited trading as Translations.ie [2016] IEHC 722.

McKayed did not concern eligibility for redundancy payment but instead dealt with the claim under the unfair dismissal's legislation. There is no suggestion in either Barry or McKayed that the legal statement of the nature of mutuality in Barry was limited to any such context of statutory redundancy payments or other statutory employment rights protection. On the contrary, the language of mutuality in Barry and McKayed is universal and all encompassing: mutuality is a sine qua non for all contracts of service. This is not dependent on the context in which the issue of mutuality of obligation is raised for determination in the absence of any different statutory test.” (p. 5 of the Notice of Appeal)

This criticism is unduly wide and also unsound. The characterisation of the status of an individual as an employee or an independent contractor can be context dependent.

 

 

Context

70.         The jurisprudence, particularly in England and Wales, confirms that an employment tribunal or court may regard an individual as an employee for the purposes of, say, unfair dismissal or redundancy, notwithstanding the fact that the revenue authorities have determined that that individual is self-employed for tax purposes. The decision in Airfix Footwear Limited v. Cope [1978] I.R.L.R. 396, [1978] I.C.R. 1210, which was cited by Edwards J. in Barry is illustrative of that principle.

71.         Furthermore, one legal forum be it an employment tribunal or otherwise may, depending on context, regard the same individual as an employee for certain purposes but not for others. There are many authorities in this regard including Denham v. Midland Employers Mutual Assurance Limited [1955] 2 Q.B. 437, [1955] 2 All ER 561 a decision of the English Court of Appeal and Cross v. Redpath Dorman Long (Contracting) Limited [1978] I.C.R. 730. These and other cases illustrate the principle that for instance, depending on the facts and the context in which the issue falls to be determined, there may be held to be a sufficient degree of control to render an individual vicariously liable for the torts of another on a master and servant basis but nonetheless insufficient control to render that same entity liable to pay employers contributions in respect of the individual.

72.          The trial judge's statement at para. 51 that “overarching and hybrid contracts require more ongoing commitments in unfair dismissal, redundancy and other labour rights cases due to the statutory triggers based on defined periods of employment” is correct as Airfix, Denham and Cross v. Redpath show.

73.         To contend, as the appellant appears to, that the absence of a statement in either Barry or McKayed “that the legal statement on the nature of mutuality in Barry was limited to any such context of statutory redundancy payments or other statutory employment rights protection” constitutes evidence that the observations of Edwards J. are of “universal or all-encompassing application” is unsound. Edwards J. at no point contended or implied that his observations were intended to be of universal application.

Mutuality of obligation - Alleged error no. 2

74.         The appellant contends that “in concluding that mutuality existed, the trial judge appears to regard this conclusion as determinative of the question of whether the drivers were employees”. This is asserted to be inconsistent with the approach of the High Court in Barry where Edwards J. cautioned: -

“If mutuality of obligation is found to exist, the mere fact of its existence is not, of itself, determinative of the nature of the relationship and it is necessary to examine the relationship further.” (para. 13)

The appellant continues -

“O'Connor J.'s judgment does not explain how the decision of the High Court in McKayed where a contract of service was rejected on facts even more compelling in pointing towards that status than those in the instant case - can be distinguished from the facts of this case.” (p. 5 of the Notice of Appeal)

A consideration of the judgment of the High Court under appeal as a whole does not support this contention, however. A case such as McKayed, an alleged statutory unfair dismissal, considered hereafter, turns on its own particular facts and the specific language and provisions of the written contract in that case.

75.         The appellant complains that the judge regarded a conclusion on the issue of mutuality of obligation as determinative of the nature of the relationship itself. A failure by the trial judge to exhaustively and expressly engage with various dicta in the Barry decision does not support such a complaint. The High Court judge had clearly read and gave adequate consideration to Barry. The High Court judge gave significant attention to the mutuality of obligation issue in the context of the multiple individual contracts. That reflects the importance accorded to it by the appellant. He also properly engaged with the other issues arising such as whether a finding that the overarching contract encompassed mutuality was necessary, substitution, integration, and the inter-relationship between the written overarching agreement and “how the contract worked out in practice” and he correctly did so in a manner consistent with the decisions in Henry Denny and Castleisland Cattle Breeding v. Minister for Social Welfare [2004] IESC 40, [2004] 4 IR 150.

76.         Indeed, a substantial aspect of the judgment focuses on the approach that the High Court should adopt towards previous decisions of that court including the decisions of Clarke J. in the matter of Worldport Ireland Limited (in liquidation) [2005] IEHC 189, Khadri v. Governor of Wheatfield Prison [2012] IESC 27. The fundamental difference between the cases lies in the tenor and language of the contract in each case.

77.         Contrary to the contentions advanced on behalf of the appellant, neither in his judgment or in his conclusions, did the trial judge treat mutuality of obligation as, in and of itself, determinative of the question as to whether the drivers were employees.

78.         The decision in McKayed turns on its own facts, which cannot be said to be “even more compelling” than the facts of the instant case. The issue centred on an alleged unfair dismissal rather than tax law. Another significant distinguishing factor is that McKayed was an appeal from the Employment Appeals Tribunal, the expert body nominated by statute to decide the issue of status in that case. That body after a comprehensive hearing had concluded that the plaintiff was not an employee of the defendant. It is noteworthy that Ní Raifeartaigh J. did not disturb that finding. Significantly, in the context of the facts of the instant case, in McKayed there was no evidence of rosters of work being prepared and agreed weekly on an ongoing basis.

79.         On the facts Ní Raifeartaigh J. concluded that there was no mutuality by reason that the plaintiff's contract did not guarantee him work from the defendant. Her observation at para. 39 that, “the fact that work was given regularly for a period of time is not determinative of whether one party has had a legal obligation to provide the other party with work” is indeed true in the context of the facts. However, the fact that in a given case an individual worked regularly over an appreciable period of time in return for remuneration can, in light of the economic reality and when coupled with other factors, including the control test and the indicia of the integration test be a significant indicator that a contract of service exists and that the relationship between the parties is that of employer and employee. Observations made in specific or exceptional cases such as in the decision in McKayed v. Forbidden City Limited trading as Translations [2016] IEHC 722 ought not to be elevated into universal propositions.

Mutuality of obligation - Alleged error no. 3

80.         The third alleged error is characterised thus: -

“O'Connor J.'s conclusion that the Appeal Commissioner's decision in relying upon Weight Watchers UK Limited v HMRC [2011] UKUT 433 TCC ‘did not go against Irish law but rather recognised the necessity to adapt modern means of engaging workers' was incorrect in:

(i)      making reference to ‘workers' which is the statutory intermediate category at issue in Weight Watchers under s. 230 of the Employment Rights Act, 1996 but which is of no application in Irish employment law and

(ii)     being inconsistent with the separation of powers in that any such policy change is a matter for the legislature and not the courts.” (p. 5 of the Notice of Appeal)

Reliance was placed by the appellant on a judgment of Underhill L.J. in Uber BV v. Aslam [2018] EWCA Civ. 2748, where he cautioned that if a court concludes that the scope of protection does not go far enough then “the right answer is to amend the legislation”, adding at para. 164 that “courts are anxious so far as possible to adapt the common law to changing conditions, but the tools at their disposal are limited, particularly when dealing with statutory definitions.”

81.         Dealing with the last point first, reliance is being placed here on a dissenting judgment of the English Court of Appeal. Underhill L.J's view did not find favour with either the majority of that court itself. However, while the decision of Underhill L.J. in Uber BV v. Aslam [2018] EWCA Civ 2748 was relied on, it is noted that following the conclusion of the hearing of this appeal a judgment of the UK Supreme Court was delivered in that case. Consideration of that decision's relevance to any issue arising in this appeal will fall to be considered on another occasion.

82.         The findings of the High Court judge were based on his evaluation of the correctness of the approach of Appeals Commissioner to the construction exercise undertaken. Legislation was not required to construe the terms of the contractual relationship. Neither does such an exercise in this instance trench on the separation of powers. O'Connor J. did not find that the Appeals Commissioner had proceeded to “adapt the law” in the strict sense. The complaint selectively distorted the import of the judge's findings in that regard. Reading the judgment in the context of the determination, the judge's observations mean nothing more than that the Appeals Commissioner used the approach of “looking beyond the label” imposed by Karshan on the arrangement to identify the true nature of the relationship between the parties. This approach was approved by Murphy J. in the Supreme Court decision in Henry Denny and reflects other Supreme Court decisions such as Gatien and Irish Shell.

83.         It is readily understood by any reasonable reader of the judgment under appeal that the use of the word “workers” by the High Court judge is to be taken as connoting an individual engaged under contract of service or an individual carrying out tasks in return for remuneration depending on the context. On no reasonable construction could the word “workers” in the High Court judgment be construed as referring to a statutory category under UK legislation which has no analogue under Irish law. The judge was obviously aware of the distinction as para. 62 of the judgment makes clear. Cases from England and Wales that consider the concept of mutuality of obligation sometimes concern statutory “workers” and some such judgments are of assistance to the issue. Nowhere was the construction of that concept misapplied by the trial judge as the appellant contends.

Mutuality of obligation - Alleged error no. 4

84.         The fourth contention is characterised thus:-

“The learned trial judge did not determine the appellant's arguments that the Commissioner (at para. 49 of her determination) misapplied Weight Watchers UK Limited v Revenue and Customs Commissioners [2011] UKUT 433 TCC, [2011] All ER (D) 229 in the absence of an identified contractual obligation on a driver to make oneself available for work. The judge did not determine the arguments concerning the Commissioner's important finding that a driver was contractually obliged to initiate an agreement based on this judgment. The relevant finding made by the judge was:

‘49. The description by the Commissioner about an obligation for drivers to initiate an agreement should be taken in context. The court understands that the initiation of the relevant contract for each roster depended on a driver making himself available. The Commissioner did not err in characterising the overarching and hybrid agreements.'”

85.         The objection continues: -

“The focus of argument was - as it must be - on any alleged obligation to initiate, not whether same occurred as a matter of practice. In finding that ‘the case is concerned with whether the Commissioner misstated or misunderstood the law about the mutuality of obligation' the judge ignored the arguments that arguments were also made about the manner in which the law was applied to the facts of the case.” (p. 6 of the Notice of Appeal)

86.         These complaints are not sustainable, and no error is identified in the approach of the trial judge in his assessment in turn of the approach of the Commissioner. Perhaps the trial judge's process of analysis and reasoning could have been more thoroughly laid out. It is to be understood from his judgment that the trial judge did analyse the Weight Watchers decision, the Commissioner's treatment of it and, considered the criticisms of same by the appellant unpersuasive. In my view he was correct in that regard for, inter alia, the reasons identified at para. 50 of his judgment.

87.         No Irish authority was identified by the appellant which was inconsistent with or expressly rejected the reasoning of Briggs J.  in Weight Watchers UK Limited v. Revenue and Customs Commissioners. The conclusion of Briggs J. in Weight Watchers that cancelling a shift did not relieve the individual of work -related obligations is consistent with common sense. The same outcome could readily have been arrived at by the Appeal Commissioner based on the ordinary principles of contract interpretation irrespective of Weight Watchers.

88.          The appellant contends that the Commissioner “became hopelessly confused because of her reading of Weight Watchers.” (p. 37 of Transcript) that assertion was not made out. I am satisfied that “unavailability” “at short notice” for a single shift did not relieve a driver from his other obligations including the rostered. Furthermore the evidence of Mr. Paliulis that “ there would be follow up if an employee did not attend work having been rostered.” (para. 24. of Determination) contradicts Karshan's contention. Since Karshan was free to accept or reject the next offer of availability by a driver to work a roster of days, that  reality operated as a powerful ongoing disincentive - if not an implicit sanction -for failure of a driver to work the agreed shifts.

89.         I am not satisfied that the trial judge ignored arguments made regarding the manner in which the Commissioner applied the jurisprudence to the facts of the case. Indeed, a fair minded consideration of paras. 49 to 66 inclusive demonstrates that he broadly engaged with the jurisprudence and considered the approach of the Commissioner to its application in arriving at her determination.

90.         Paragraphs 53 to 55 of the judgment are clear: -

“The written overarching contract did indeed require a driver to initiate an agreement with the appellant.

54. I cannot criticise the Commissioner's findings that –

(i)      A driver who wanted to work had to put his name on the availability sheet.

(ii)    Once rostered by the appellant, there was a contract which retained mutual obligations.

55. In the circumstances the right to cancel a shift at short notice imposed obligations to engage a substitute and work out the remainder of the shifts in the series.”

91.         Implicit in the High Court's findings was that the Appeals Commissioner was correct in concluding that that there was an obligation on the driver to trigger individual contracts. There was clear evidence supporting that conclusion.

92.         Take for instance Clause 14: “The company does not warrant or represent that it will utilise the contractor's services at all”. There is no reciprocal provision that the driver does not warrant or represent that they will work for the company at all. That is very significant. If one delves more closely into the contract a combination of clauses 14 and 12, considered in the context of the established hebdomadal practice of drivers submitting time sheets of their availability which operated on an ongoing basis, it does become clear that operationally the mutual understanding, expectation and intention of the parties was that the driver had an ongoing contractual obligation to make himself available by filling out weekly availability sheets. If Karshan intended that a driver had no obligation to drive then one would expect Clause 14 to state “The driver does not warrant or represent that he will ever drive for the company at all”, or words to that effect.

93.         The language of Clause 14 in that regard viewed against the ongoing practice as found by the Commissioner regarding the creation of rosters is instructive. At Clause 14 the company “recognises the contractor's right to make himself available on only certain days and certain times of his own choosing”. Hidden in plain sight within the delimiting language (“only certain days”) of that clause is the implicit ongoing positive obligation of the driver to make himself available to drive on “certain days”. This contrasts fundamentally with cases such as O'Kelly where workers reserved the right not to work and the company reserved the equal right not to engage them. The deftness of the drafting does not dilute the positive obligation on the driver to “make himself available” for work which is embedded in the language of the clause. The ongoing weekly engagement via creation and circulation of rosters reflected the actual terms of that clause. The judge was entitled to find that the Commissioner had not misunderstood or misapplied the law.

94.         The trial judge was correct in his assessment of the Commissioner's approach in having regard to what occurred in practice. It independently corroborated her reasonable construction of Clause 14, namely the ongoing obligation imposed on the driver underpinning the words “the contractor's right to make himself available on only certain days and certain times of his own choosing” on its true operational construction. At para 38 she had found, “Based on the witness evidence together with the documentary evidence, I find … as a material fact that practice was that drivers would fill out an “availability sheet” approximately one week prior to a roster being drawn up.”

Mutuality of obligation - Alleged error no. 5

95.         The fifth error contended for is that:-

“The learned trial judge erred in holding that ‘mutuality of obligation can occur under an overarching contract' in circumstances where the Appeal Commissioner found that it was not necessary to consider whether the overarching contract contained mutuality of obligations.” (p. 6 of the Notice of Appeal)

96.         The judgment demonstrates that the trial judge was in no doubt as to the determination of the Commissioner. At para. 13 he observed:-

“The Commissioner held in this case that there was an overarching contract supplemented by individual contracts in respect of each assignment or roster of work. The requirement of mutuality was satisfied in the individual contracts.”

His approach was comprehensive in that regard and was correct. An analysis of the overarching contract from the perspective of mutuality of obligation can be relevant and can have a reinforcing impact in arriving at a rounded and comprehensive view of the true nature of the relationship between the parties - but it is not necessary to establish mutuality with regard to the overarching contract where it is demonstrated to exist in each of the individual agreements.

Mutuality of obligation - Alleged error no. 6

97.         The appellant contends that:-

“The learned trial judge erred in holding that mutuality of obligations existed in circumstances where the workers were not obliged to make themselves available for work and were not compelled to attend work and the appellant was not obliged to provide work.” (p. 6 of the Notice of Appeal)

98.         This assertion is wrong and premised on an erroneous understanding of the individual contracts. The company had an ongoing need for pizza drivers as an integral part of its daily operations.

Obligations of Driver

99.         The following obligations can be inferred from Clause 14:

(a)          the driver had an ongoing obligation to make himself available to drive (Clause 14);

(b)          that obligation extended to “certain days” (Clause 14) (noted to be plural) on which he made himself available;

(c)          the driver had to commit to identified shifts - the “certain times” within the days in question that he made himself available;

(d)          The driver's obligation to make himself available to drive was given effect to by submitting in advance the days and times of availability for a forthcoming week

(e)          The company created driving rosters based on stated availability of the driver thereby creating binding individual contracts with each.

(f)           The company circulated the rosters to the drivers in advance each week.

(g)          The company was obliged to provide work for “the days and times” (Clause 14 of Overarching Agreement) specified in the weekly roster circulated.

(h)          If the driver should become unavailable to drive for a pre-agreed shift, he was obliged to notify the company in advance.

(i)            The company was obliged to pay the worker - a “drop rate” of €1.20 plus an additional 20 cent payable to the driver in respect of insurance.

(j)            By wearing the necessary Domino's branded promotion apparel the company was obliged to pay the driver an hourly “advertising rate” of €5.65.

Thus it cannot be stated that the driver had no obligation on foot of the reasonable construction of the overarching agreement to make himself available to drive.

100.     The operational modalities whereby that obligation was discharged were gleaned by the Commissioner from the evidence of the nine witnesses who testified. Their evidence demonstrates that the performance of Clause 14 (i.e. assignments of work) was effected by the filling out of the availability sheets approximately one week prior to a roster being drawn up by the company. This roster was found to be drawn up by the store manager and based on the availability sheets. Merely because it was the driver rather than Karshan who triggered the process by submitting the availability sheet prior to the creation of each roster does not detract from its significance. That factor is crucial to understanding the operating dynamic underpinning the relationship between the company and the drivers.

101.     Rosters came into being and were devised based on two factors:

(a) the availability sheets of the driver submitted for the relevant days/times each week; and,

(b) the anticipated need of the company for food deliveries for the like time frame.

In that context, Clause 14 of the overarching agreement is text which falls to be construed in context. Hypothetically, the company did not warrant that it would utilise a driver's services but there was no evidence that the company in practice ever operated Clause 14 to withdraw work hours previously agreed under a roster created after a driver had indicated days of availability to drive. Presumably that clause could be availed of were the company not open for any reason on a given day/week and when, accordingly, it had no need for drivers. In practice, the creation of the individual contracts arose after the drivers submitted details of availability as required by Clause 14 which enabled the creation and circulation of the rosters.

102.     For the Appeals Commissioner to determine that a contract of service existed, it was not necessary that she should find that the appellant was “required to accept any such invitation or offer”. It was sufficient that the evidence demonstrated that such offers were routinely accepted. There was no evidence adduced on behalf of the appellant at the hearing that store managers ever disregarded indications of drivers' availability when fixing rosters.

103.     Further it is material that there was, apparently, no evidence put before the Commissioner that the company ever purported to repudiate an agreement once a roster had been created and circulated to drivers, agreeing to work times (“certain days and certain times”) chosen by them. There was no evidence that the company thereafter ever purported to unilaterally prevent a driver from working a pre-agreed shift except for a threat to send home a driver for failure of a driver to make up pizza boxes. Thus, the first sentence of Clause 14 came to be modified in practice on each occasion that the manager created a roster which accepted some/all of the days/hours offered by a driver to drive.

104.     The ongoing obligation of the drivers to make themselves available for work is located in the true construction of Clause 14, as stated above. In the opening words of Clause 14, it is expressly stated that “the company does not warrant or represent that it will utilise the contractor's services at all”. The omission of a reciprocal statement that a driver was not obliged to ever be available for work at all, coupled with the actual balance of Clause 14, is fatal to the appellant's contention in this regard.  If it were intended that the drivers were never obliged to make themselves available for work, that would have been expressly stated. The finding at para. 38 (a) of the determination is entirely consistent with the tenor of Clause 14.

105.     Regarding the appellant's contention that workers were “not compelled to attend work”, neither the language of the overarching contract nor the evidence with regard to the operation of the individual contracts support that contention. Clause 14 “recognises the contractor's right to make himself available on only certain days and certain times of his own choosing”. However, nowhere does it state that having indicated his availability for the said “certain days and certain times” in question, he is then entirely free to habitually or routinely proceed not to show up for work. The language in Clause 12 references unavailability “at short notice”. This speaks to some exceptionality that might arise. Unavailability in the context of Clause 14 pertains to “a previously agreed delivery service” which arises under a binding individual contract. This strongly indicates that it is a single once-off state of affairs rather than the driver who had submitted his availability and received a designated roster being entitled to decide not to work a shift or the balance of a roster for the week in question. Work obligations under the individual contract resume once the exigency has passed in accordance with the ordinary principles of contract law.

106.     Para. 81 of the Appeals Commissioner's determination ought not to be taken out of context but rather is to be read in light of the totality of the Determination and the fact that the findings and conclusions were expressly confined to the individual contracts actually worked. True enough the company had no obligation to offer work as Clause 14 of the Overarching Agreement makes clear. But in practice, the operative ongoing arrangement under the hybrid agreement meant that the driver was obliged to submit weekly availability details in advance based upon which the company invariably created the weekly rosters allocating driving work to the said drivers giving rise to binding contracts for work and wages which encompassed, inter alia, mutuality of obligation between the parties albeit triggered by the driver rather than the company.

107.     Counsel for the appellant argued that the test must be applied before the workers actually “do the work”.  No authority for this proposition was identified. It merely aims to retrofit a hypothetical version of the relationship between the parties that did not occur in practice. It requires the court to disregard the way in which individual contracts actually came about and were concluded in practice whereby the employer in circulating the weekly roster assumed an obligation to provide work to the employee who had triggered Clause 14. 

108.     At the level of the individual contract, once the company accepted the offer to work by circulating the roster, the parties were contractually bound to perform it subject to any exceptional eventuality. There was no evidence that, having provided a roster, the company ever considered itself at liberty to repudiate same by declining to permit a driver who had become “unavailable at short notice” on one day of a roster to work the balance of that agreed roster. Thus, this contended error is not supported by any evidence and is misconceived.

109.     A further factor is that, in circumstances where drivers were standing around waiting for pizza orders, the evidence was that the appellant would ensure that the drivers would only get one delivery on any occasion when another driver was also awaiting a delivery assignment. This tends to point towards an understanding on the part of the appellant of an obligation to provide actual delivery work and behave in an equitable fashion as between drivers notwithstanding that, for instance, two deliveries might efficiently and more cheaply be carried out by one driver on the occasion in question. Such conduct points towards a mutuality of obligation and an underlying mutual trust and confidence between the parties which is consonant with contract of service.

Rostering

110.     Key findings of fact on the part of the Commissioner led her to conclude that the drivers worked under multiple contracts of service and were taxable in relation to the emoluments arising therefrom in accordance with s. 112 TCA without having to determine conclusively whether there was mutuality of obligation under the overarching agreement. That conclusion, in my view, was inevitable and entirely sufficient for the Appeals Commissioner's purposes and arose from the witness evidence, referred to at paras. 21, 22 and 23 of the Determination and findings of fact on the part of the Commissioner referred to at para. 38 (a) of the Determination, particularly in relation to the ongoing obligation on the driver to trigger individual contracts and the rostering process. Particularly significant in that regard was that the witnesses who gave evidence included the appellant's own operations director, Mr. Fergus McDonnell, Mr. Martynas Paliulis, a former store manager and area manager with the appellant's sister company, and Mr. Arkadiusz Milczarek, a former driver of the appellant company. Thus her findings at para. 49 of the Determination was based on a clear and logical foundation having due regard to the evidence combined with para. 14 of the Overarching Agreement and her analysis of, inter alia, the decision of Briggs J. in Weight Watchers (UK) Ltd at para. 42- 48. At para. 38 she had made clear that her material findings of fact were; “Based on the witness evidence together with the documentary evidence … as a material fact that practice was that drivers would fill out an “availability sheet” approximately one week prior to a roster being drawn up.”.

111.     The appellant faults the High Court's decision to uphold of the findings of the Commissioner in regard to rostering, contending that there is no finding as to the basis on which a driver was rostered. However, I conclude that such criticism does not withstand scrutiny. This was a hybrid agreement. A key material finding of fact by the Commissioner at para. 38(a) of her determination was that the “practice was that drivers would fill out an “availability sheet” approximately one week prior to a roster being drawn up indicating their availability for work and that the roster would be drawn up by a store manager based on the availability sheets”. Thus, the substance of the transactional relationship embodied in the individual discrete contracts was predicated on the prior identification by the driver of anticipated availability for driving work and the prior identification by the manager of anticipated driving needs on a weekly (or so) basis.

112.     In my view the trial judge was entitled to uphold the Commissioner's determination even on the basis alone that the language of Clause 14 did impose an obligation on the driver to initiate the agreement via engagement with the roster. The Commissioner had heard the witnesses in regard to, inter alia, rostering at para. 38(a). The rosters created contracts. The Commissioner was entitled to conclude, as she did at para 49  “[o]nce the appellant rostered a driver for one or more shifts of work, there was a contract in place in respect of which the parties retained mutual obligations.” The trial judge was correct in his analysis and conclusions in this regard at para. 53 and 54 of his judgment.

113.     Mutuality of obligation was not the only criterion to be fulfilled and the individual contracts operating as outlined herein met all of the other relevant criteria including control, integration, obligations of mutual trust and confidence subsisting between the parties and the relationship of employer and employee accorded with the economic reality of the arrangement in all material respects.

The reasoning in Pimlico Plumbers and Autoclenz

114.     At para. 81 of the Determination, the Commissioner said she had regard to the reasoning in Pimlico Plumbers and Autoclenz, to the effect that a clause which provides that the provider of work has no obligation to offer work and the putative recipient no obligation to accept work does not mean that mutuality of obligation is absent, and that same was of assistance to her analysis and approach accords with settled Irish jurisprudence long before Autoclenz and Pimlico Plumbers were decided as the decisions of the Irish Supreme Court outlined above and J.C.W. Wylie Landlord and Tenant Law (3^rd edn, Bloomsbury Professional, 2014) in his observations at para. 2.30 illustrate:-

“…the courts are well aware of the danger that the written agreement, however explicit its terms, may not represent the true agreement of the parties. In particular, unlike in the Gatien case, the parties may not be in an equal bargaining position and fully advised, so that the courts are astute to spot the “sham” agreement and will not be blinded by clever draftsmanship.”

115.     The Commissioner cannot be criticised in her approach at para. 81 et. seq.- particularly in light of the jurisprudence above. Her approach in that limited aspect is entirely consistent with the jurisprudence of the Supreme Court outlined above. I construe Clause 14 as imposing an obligation on a driver to submit details of days and hours of availability.

116.     The decisions of the UKSC in Autoclenz and Pimlico Plumbers was informed by landlord and tenant jurisprudence and the challenge of “sham” arrangements. Lord Clark S.C.J. in Autoclenz found that the written documentation was not the same as the “true agreement” that subsisted between the parties. He observed that:

“…the relevant bargaining power of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed and the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only a part. This may be described as a purposive approach to the problem.

117.     The decision in  Autoclenz echoes the Supreme Court's observations in cases such as Gatien Motor Co v. Continental Oil, particularly since Autoclenz demonstrates the assistance to be derived from landlord/tenant jurisprudence in evaluating the economic reality in contracts with apparent bargaining imbalances between the parties in employment law. This “purposive” approach to characterisation is entirely consistent with the jurisprudence from the Supreme Court in the field of landlord and tenant law and clearly entitled the Appeals Commissioner to disregard 'terms inconsistent' with independent contractor status in the written overarching contract insofar as those terms did not reflect the reality of the working arrangements

Ground of Appeal 2 - Mutuality of Obligation under the Overarching Contract

118.     In light of her conclusions regarding the individual contract, the Appeals Commissioner did not need to proceed to determine whether, inter alia, mutuality of obligation was established under the overarching contract. The appellant has not identified any basis on which Appeals Commissioner was obliged to separately determine mutuality of obligation under the overarching contract. Had Revenue contended that drivers were employees taxable under Schedule E in the periods between individual contracts the position would have been different.

119.     Was the driver obliged to accept engagements under the roster? The appellant contends that the driver was not so obliged. However, the tenor of the overarching agreement, the inferences to be drawn from its structure, considered in the context of the genesis of individual contracts coupled with the absence of evidence of any kind suggesting that assignments previously agreed to and rostered were routinely or normally declined by drivers without valid reason and with no consequence for their continued engagement by the company for driving activity undermines that contention.

120.     It is clear from the jurisprudence, particularly the judgment of Murphy J. in Henry Denny (with which the Chief Justice agreed) that great care is to be taken where a document purports to express a conclusion of law as to the consequences of its execution between the contracting parties. The initial commencement and recitals indicate that the company wished to subcontract the delivery of pizzas, promote its brand logo and the parties are characterised as “the company” and “the contractor” respectively. The labels attached are not to be taken at face value or probative, without more, as to status. Hence, at Recital No. 1 the phrase, “The contractor shall be retained by the company as an independent contractor” is not dispositive of any issue.

121.     The continuing mutual obligations on the part of the company appear to include that he/she - the contractor - is retained by the company (Recital 1). From the company's perspective it assumes the obligation to pay the driver “according to the number of the deliveries successfully undertaken and in addition to pay for brand promotion as specified in Clause 3.” The significance of this is considered below.

122.     Analogous to the facts in the instant case, the company in the Denny case maintained a panel of individuals. A retail store would contact the local customer service manager requesting a demonstration on a specified day or days as required. Three or four days prior to a demonstration day in a supermarket a demonstrator from the panel was telephoned enquiring as to availability to provide her services on a particular day at a particular shop premises. The Supreme Court found that she worked under a contract of service. As Keane J. found: -

“Generally speaking, neither the demonstrator nor the appellant knew prior to this time whether or not a demonstration was to be given at any particular shop or store during the immediately following weekend. If the demonstrator was available, it was agreed that the service should be provided.” (p. 39)

123.     Indeed, in the instant case it could be said that drivers by submitting their schedules of availability in advance for the purposes of creations of rosters on a weekly basis approximately, enjoyed a far greater continuity of expectation of work that did a demonstrator on one of the Henry Denny panels.

124.     Whilst the overarching contract contemplates the availability of a delivery vehicle for rent, in practice this clause did not operate between the parties. No inference as to status arises from that fact.

125.     The obligation imposed at Clause 7 accords at least as much with the contract of employment as with the contract for services insofar as the driver acknowledges that when effecting deliveries by motorbike or moped, “it is necessary to use and wear protective clothing, helmets and other items as approved and mandated by the Department of the Environment or such regulatory authority as such department may approve of.” Were the company of the view that the driver was truly an independent contractor, the company would be unlikely to control the driver's conduct or require the use and wearing of protective clothing. The necessity for a provision in the contract in terms of Clause 7 would likely not arise were the relationship on its true and strict construction, that of a contract for services.

 

 

Implicit permanent duration

126.     The overarching agreement is not expressed anywhere on its face to be a temporary arrangement, neither is it expressed that it will determine or be extinguished after any specific period of time, duration or event. It encompasses a state of affairs and an intention that the relationship between the parties thereunder will be open ended and of indefinite duration.

127.     The putting in place by Karshan of insurance for the benefit of the driver in a manner provided for at Clause 5(a) speaks to the anticipated continuous nature of the arrangement between the parties. Each party anticipates some continuity and is not consistent with a unitised or “spot” exchange of work for remuneration akin to a “once-off” taxi journey. Clause 5(a) is consistent with an expectation of a continuing contractual relationship between the parties.

128.     Furthermore, Clause 6 also accords with the mutual commitment and anticipated expectation implicit in a continuing arrangement. It obliges, in the event that the driver has insurance withdrawn, that the company is to be notified immediately “so that the company is aware that the contractor might not be in a position to continue to provide services under this agreement”.

Hybrid agreement

129.     The issue as to whether a contract of employment in truth came into existence could not be resolved merely by an analysis of the overarching agreement alone. The trial judge had to consider whether in fact there was evidence before the Commissioner entitling her to find that the contractual relationship between the parties comprised a hybrid agreement consisting of what had variously been described as an overarching contract supplemented by individual contracts in respect of assignments of work.

130.     The presence of mutuality of obligation per se is not the sole qualifying test for the existence of a contract of employment. Its absence is, however, fatal. Its presence opens the gateway to comprehensively evaluating the relationship including aspects such as control and integration. As Edwards J. has made clear in Barry, the court has to have regard to all the circumstances in the round, evaluating the facts in their operational context before determining whether on its true construction it gave rise to a contract of employment.

131.     The existence, kind and degrees of continuing mutual obligation to be located within a work supply relation is ultimately a matter of construction of the operational arrangement rather than an evaluation of the apparent craftsmanship, deft deeming and skill inherent in the language of the overarching agreement itself. As the commissioner found at para. 164 it was located within the individual contracts.

Continuity of relationship contemplated even when driver not engaged in driving

132.     The continuity of the relationship in the sense of continuously spanning both periods when the driver was “driving” or “at work” and periods when he/she was not, when viewed from the perspective of the continuing obligations operating and imposed on either party speaks potentially to continuous mutuality of obligation subsisting even under the overarching agreement.

133.     For instance, on days when no driving work was being provided or required, the company continued to maintain the “appropriate business use insurance” for the benefit of the driver in accordance with Clause 5(a) of the overarching agreement and the worker had a continuing obligation to defray the “predetermined rate” for same. Likewise, the obligation of the driver to provide information of events that might compromise or cause the lapse of an insurance policy was a continuing obligation to be found in Clause 6 and operated and could only be construed as being directed towards the clear anticipation on the part of the company of an ongoing mutual expectation that “the contractor would be in a position to continue to provide services under the agreement.” This speaks to the intended nature and contours of an ongoing relationship as anticipated on the part of the company.

134.     In construing Clause 11 in its totality, the continuing obligations and concomitant lack of freedom inherent in its provisions operated to circumscribe the work options available to the driver at all times throughout the duration of the overarching agreement and operated for the benefit of the company. In its intent and operation, Clause 11 was consistent only with a continuing obligation imposed on a driver of a kind that it characteristic of a contract of service which subsisted for so long as “this contract is in force”.

135.     When considered from an operational context on a week-by-week basis, whilst the appellant is correct that Clause 12 conferred a right on the driver to effect a substitution should they become “unavailable at short notice”, it did not impose an obligation to do so.

Ground of appeal 3 - Integration

136.     The appellant further contends that the trial judge erred in his approach to the test of integration as follows: -

“The appellant contends that the relevant enquiry under the ‘integration' test is not solely whether the kind of work done by the putative employee is integral to the business of the putative employer, but rather asks whether the particular individual putative employee concerned is himself or herself so personally integrated into the business of the putative employer as to lead to the conclusion that the contract amounts to a contract of service. See generally Re. Sunday Tribune Limited [1984] IR 505.” (p. 6 of the Notice of Appeal)

137.     It will be recalled that the trial judge considered the Sunday Tribune decision and arguments at paras. 44 and 45 of his judgment. The contention of the appellant was that drivers were to be regarded as “only accessory” to the business of the appellant:-

“If the broader integration test had been applied [i.e. did the drivers from part of the appellant's organisation?] there should have been a finding of contracts for services between the drivers and the appellant because the drivers, as opposed to their work, were not integrated into the business of the appellant.”

138.     Unsurprisingly, this construct of the integration test did not find favour with the trial judge.

139.     The Sunday Tribune decision arising from the winding up of the Sunday Tribune almost 40 years ago in 1982 is instructive insofar as there were three individual claimants who sought priority for sums due in the context of the winding up. The first was a subeditor of the newspaper. The second wrote a weekly column which was submitted to the newspaper for publication and the third wrote articles from time to time as might be commissioned separately by the company. Carroll J. had no difficulty in finding that the first and second claimants ought to be construed as employees rendering their debts preferential debts in the winding up.

140.     Carroll J. observed: -

“The determining factor is whether the work which was done by each claimant was done on foot of a contract of service which created the relationship of employer and employee or whether it was done on foot of a contract for services which did not create that relationship. The court must look at the realities of the situation in order to determine whether the relationship of employer and employee in fact exists, and it must do so regardless of how the parties describe themselves: see Ferguson v John Dawson & Partners [1976] 1 WLR 1213. The simple test is whether the employer possessed the right not only to control what work the employee was to do but also the manner in which the work was to be done. However, the test is no longer of universal application. In the present day, when senior staff with professional qualifications are employed, the nature of their employment cannot be determined in such a simplistic way.” (p. 508 of the judgment)

141.     Carroll J. cited Beloff v. Pressdram Limited [1973] 1 All E.R. 241, a decision in the context of journalists, and the judgment of Denning L.J. in Stevenson, Jordan and Harrison Limited v. McDonald [1952] 1 T.L.R. 101 which is considered to be the source of the “integration test” where at p. 111 it was stated: -

“…under a contract of service, a man is employed as part of the business, and his work is done as an integral part of the business; whereas under a contract for services, his work although done for the business, is not integrated into it but is only accessory to it.”

142.     It is to be observed that the test laid down by Lord Denning has oft been criticised for its vagueness. It appears that his intention was that the integration test as articulated by him would replace the control test (cf. Bank Voor Handel En Scheepvaart Nv v. Slatford [1953] 1 Q.B. 248, [1951] 2 All E.R. 777, CA). Ultimately, over time, the so called integration test did not entirely supplant the control test which tends to be a factor coupled with mutuality of obligation considered essential to the existence of a contract of service both in this jurisdiction an in England and Wales.

143.     Having considered the relevant dicta in Stevenson, Jordan and Harrison Limited v. McDonald and Beloff, Carroll J. observed regarding the first claimant: -

“…His employment satisfies the simple test of control by the employer. He worked at specified times under the guidance of the chief sub-editor and to his instructions. The fact that he worked part time does not change the nature of his employment. A person may be an employee even though employed part time: Market Investigations v Minister of Social Security [1969] 2 Q.B. 173.” (p. 510)

A similar view was taken of the second journalist. In regard to the third journalist, the judge considered that she was an independent contractor, “She was under no obligation to contribute on a regular basis”. (p. 510)

144.     That key determination contrasts starkly with the facts in the instant case. Drivers were integral to the company's day to day pizza delivery business. Delivery was its unique selling point. Without drivers its business model could not operate. I am satisfied further, that in contrast with a third individual in the Sunday Tribune case, each driver had an obligation to fill in an availability sheet at approximately one week intervals on foot of which a roster was drawn up by the appellant. In each case, it was drawn up by the store manager based on the availability sheets. That is what happened in practice, as was found by the Commissioner, and that was what was implicitly required from the driver in each case having due regard to Clause 14 of the overarching agreement.

145.     Hence the factual matrix of the third claimant in Sunday Tribune is wholly distinguishable with the facts in the instant case. The drivers had more in common with the first and second claimants in that case, both of whom were held to be employees than the third claimant because they were contractually obliged to submit weekly or so availability sheets and work the ensuing rostered days.

146.     In his judgment, the trial judge had regard to the material distinguishing element in the instant case from the facts in Sunday Tribune which Revenue had asserted, namely that in the Sunday Tribune case each of the reporters had different roles within the newspaper. By contrast, in this appeal the drivers were engaged under similar terms and conditions which fact, Revenue correctly contended, also supported the integration of the drivers.

147.     Insofar as the appellant contends that the trial judge erred in his interpretation and application of the concept of “integration”, the judge clearly articulated the appellant's relevant contentions at inter alia para. 44 of the judgment. It was open to the trial judge to evaluate the approach adopted by the Commissioner including her consideration of Uber BV v. Aslam. I am satisfied that the trial judge was correct, firstly, at para. 63 when he observed:-

“Despite the indignation expressed on behalf of the appellant, the distinction between ‘a worker' and an ‘employee' in the UK legislation was not central to the reliance placed by the Commissioner on the Uber and the other UK judgments cited in the determination for the integration and mutuality issues.”

Secondly, he correctly noted: -

“This case stated is not a judicial review of the procedures adopted by the Commissioner. The court repeats that the appellant bears the onus of satisfying this court that the Commissioner erred in her application of the law in relation to integration.” (para. 64)

148.     The trial judge was correct in his approach. It was self-evidently clear that the Commissioner was alive to the relevance under UK legislation of the concept of “worker” and the statutory definition. She sets this out expressly at para. 117 of her determination. The factors identified by the trial judge at para. 65 as having been taken into account by the Commissioner at paras. 120 to 125 of her determination supported her finding as he correctly concluded. There was ample evidence before the trial judge entitling him to find that the Commissioner was correct in law in the interpretation and application of the concept of integration as stated in the determination.

The issues of control and integration

149.     The issue of control of the individual contracts is to be approached from the perspective of whether it can be said, having due regard to the totality of the evidence, that there was a sufficient framework of control in light of the relationship between the parties. The terms of the overarching contract are potentially relevant to the question as to whether there was a sufficient framework of control in respect of individual contracts.

150.     The operation of the rosters and the weekly allocation of work under the individual contracts could operate as a significant lever with which to influence the performance by drivers of their individual engagements and is plainly capable of being relevant to the questions of control and integration.

151.     The individual contract was formed when the driver submitted to the branch manager a schedule of available dates and times for the relevant week. The branch manager then created a shift rota for the week and circulated it to the drivers. That amounted to acceptance on the part of the company under the ordinary law of contract. The driver showed up for work on the nominated shift and was integrated into the company's enterprise by the activities engaged in including activities such as the making up of pizza boxes and the wearing of branded apparel and the attachment of branding to their vehicle. There was no evidence that a branch manager on receipt of an availability sheet from a driver had ever failed to roster such a driver for driving duties in the relevant week.

152.     A practical limitation on the ability to intervene in the real time performance of a task does not in and of itself mean that there is not sufficient control to create the relationship of employer and employee. What is significant is the entitlement of the company to give directions or to impose sanctions such as sending a driver home for refusal to make up pizza boxes. The company had control over the manner drivers dressed, the time drivers were there as specified in the roster, the number and extent of deliveries drivers were to undertake and the particularities with regard to insurance etc. in relation to vehicles.

153.     It is noteworthy that there was no provision that the contract would end if a driver did not accept an offer to drive or failed to show up for a rostered period.

154.     In addition to the specific driving assignments under the individual contracts, its terms continued to operate for the duration of the entire week in question in circumstances where the driver had an obligation to prepare and create weekly invoices and submit same to the company. Arguably each individual contract was completed when the invoices for the drivers in question were submitted. It would appear that the local branch was actively involved routinely in the preparation and filling out of such invoices in question which is reflective of control and integration of the drivers into the company's enterprise.

155.     On its true construction the overarching agreement goes far beyond providing a mere framework for a series of successive ad hoc contracts for services. By contrast with much of the case law relied upon, where the requirement for services could be exceptional, episodic or occasional e.g. banqueting staff for special events and weddings (O'Kelly) tour guides for power stations (Carmichael) the need for drivers was a continuing and fixed requirement integral to the business being operated by the company.

156.     The undisputed evidence of the appellant's own witness was that a manager was entitled to call upon a driver who was awaiting a driving job to fold pizza boxes. This evidence was not contested or disputed by any witness. Furthermore, it is significant that the evidence of the consequence for a driver who refused to make up pizza boxes was not disputed either namely, that the manager or assistant manager was entitled to send the driver home for the remainder of that shift. That was a considerable sanction consistent with the relationship of employer and employee.

157.     That fact demonstrates the degree of control exercised by the company over the driver, the extent of the driver's integration into the company's enterprise and the lack of freedom on the part of the driver to decline to do other work on the premises. It is not correct in the circumstances to suggest, as the appellant has done, that there was no evidence either of any obligation on the part of the driver to assemble boxes or of any payment or any other consideration for doing so. In particular the company's witness, Mr. Milczarek gave evidence that where drivers refused to make boxes the managers would issue a warning to such a driver that they would be sent home. This demonstrates that the drivers were under the company's control and were expected to engage in activities integral to the company's enterprise in pizza making as well as delivery and failure to do so would potentially have economic consequences. The risk of being sent home in the event of a driver refusing to assemble boxes did have an immediate and direct potential impact on payments.

The enterprise test in context of control and integration

158.     In this context, the decision of Market Investigations Limited v. Minister of Social Security [1969] 2 Q.B. 173, [1969] 2 W.L.R. 1 (considered by Carroll J. in Sunday Tribune) is of no little significance. It was considered also in the Barry and McKayed judgments referenced above. In essence, the question is: was the driver in business on his own account and their own boss (akin almost to a taxi driver of pizzas) rather than an employee?

159.     Market Investigations involved a consultative case stated. At p. 8 Cooke J. observed:-

“I think it is fair to say that there was at one time a school of thought according to which the extent and degree of the control which B. was entitled to exercise over A. in the performance of the work would be a decisive factor. However, it has for long been apparent that an analysis of the extent and degree of such control is not in itself decisive.”

The court cited cases and examples illustrative of the proposition that in certain instances “the absence of control and direction in that sense can be of little, if any, use as a test.” Cooke J. continued:-

“If control is not a decisive test, what then are the other considerations which are relevant? No comprehensive answer has been given to this question, but assistance is to be found in a number of cases.”

Having considered some of the authorities he noted -

“The observations of Lord Wright, of Denning L.J. and of the judges of the [US] Supreme Court suggest that the fundamental test to be applied is this:

‘Is the person who has engaged themself to perform these services performing them as a person in business on his own account?'” (p. 9)

The analysis continued;

“If the answer to that question is ‘yes', then the contract is a contract for services. If the answer is ‘no' then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.”

Applying the principles to the facts before him, Cooke J. noted:-

“It is apparent that the control which the company had the right to exercise in this case was very extensive indeed. It was so extensive as to be entirely consistent with Mrs. Irving's being employed under a contract of service. The fact that Mrs. Irving had a limited discretion as to when she should do the work was not in my view inconsistent with the existence of a contract of service…Nor is there anything inconsistent with the existence of a contract of service in the fact that Mrs. Irving was free to work for others during the relevant period. It is by no means a necessary incident of a contract of service that the servant is prohibited from serving any other employer.” (p. 11)

In the instant case, inter alia, Clause 11 of the overarching agreement is strongly indicative of significant continuing control by the company over the driver inconsistent with a contract for services.  

Control and Clause 11

160.     Clause 11 of the overarching contract imposes significant limitations on the driver's freedom to work which operated continuously even at times and days between individual contracts when the driver was not rostered by the company. The structure of the clause is noteworthy, not least the usage of the words “at the same time” in the second sentence. Those words however, derive their colour and meaning from the first sentence in Clause 11 which modify the words as follows: “at the same time as this contract is in force”.

161.     This points towards the existence of a very high level of control by the company over the freedom of the driver to take other driving work even in the time between individual contracts. It places restraints on the general freedom of a driver to earn a livelihood as a driver performing like work. It prohibits delivery of “similar type products into the same market area from a rival company at the same time where a conflict of interest would be possible.” This is a continuing obligation on the part of the driver for the benefit of the company for which the driver receives per se no remuneration or compensation. It is noteworthy that this continuing obligation is not expressly confined to the delivery of pizzas for rival companies but extends to anything that might be characterised as “similar type products” to those being delivered for the appellant. “Similar type products” are nowhere defined in the overarching agreement.

162.     Thus, at all material times while the overarching contract is operative - and not just during the operation of individual contracts - the Clause 11 restrictions imposed on the driver continue. It is consistent with the existence of continuing obligations of mutual trust and confidence characteristic of a contract of service. The continuing obligation of the driver to the company embodied in this clause in and of itself is, arguably, inconsistent with a driver being characterised as an independent contractor. The point was not argued. It is raised merely to illustrate the importance of approaching the issue of status in light of the totality of the terms governing the relationship between the parties. It is understandable that the appellant might object to the close analysis being carried out by the trial judge of the overarching contract. I am not satisfied that the trial judge was precluded from considering its tenor and whether it shed light on the distinct issues arising in relation to the individual contracts such as control and integration, in addition to mutuality of obligation. The issue is also considered at para 175 post.

163.     The Commissioner's relevant findings in that regard were noted at para. 17 of the judgment under appeal. It was appropriate for the trial judge to look at the overarching contract from the perspective of mutuality of obligations since it was a hybrid contract and indeed that is borne out by the jurisprudence, including para. 30 of Weight Watchers. The trial judge specifically cites that dicta at para. 21 of his judgment. The approach of the judge was correct in law. That the ambit of his consideration was in part wider than that of the Appeals Commissioner reflects its comprehensiveness. It was indicative of his careful approach to the issues presented in the consultative case stated. The contentions of the appellant to the contrary in substance amount to an argument that in any given case an unduly narrow construct be imposed on the legal exercise of ascertaining whether a work-wage bargain has been concluded between parties so as to give rise to a contract of service. There is no authority identified for such a proposition or for such an approach.

Ground of appeal 4 - Substitution

164.     The appellant contends that the trial judge erred in interpreting and applying the law and the facts regarding substitution. The error is characterised thus: -

“At para. 58 of the judgment the learned trial judge erred in holding that:-

‘The reliance by the appellant on the Supreme Court judgment in Castleisland conveniently overlooks the fact that the inclusion of terms requiring approval for substitutes occurred in that social welfare appeal due to the necessity to comply with statutory regulations for artificial inseminators. The appellant imposed the terms about substitution.' (p. 6)

In Castleisland Cattle Breeding Society Limited v. Minister for Social and Family Affairs [2004] 4 IR 150 the Supreme Court (Geoghegan J.) expressly stated at pp. 161-162:

‘I see no significance whatsoever…in the inclusion in the contract of terms which require the approval of Castleisland to any substitute inseminator or the ability to assign the contract. Indeed, even if there were no statutory regulations they would obviously be in the interests of Castleisland's business to ensure competence and therefore to include such a provision.'”

The appellant continues:-

“Nowhere in the judgment of the High Court does the learned trial judge explain why he rejected the contention that the distinction posited in Weight Watchers Ltd. between two distinctive forms of substitution is not recognised in Irish Law.

That distinction is between a situation where on the one hand, there is a right to substitute in a manner which allows for another person wholly or substantially to do the promised work, and on the other, a situation where a contract provides that in the event of the worker being unable to work he or she may arrange for a person approved by the employer to do it, not as a delegate but under a replacement contract made directly between the employer and the substituted person.” (p. 7)

At para. 8 of the judgment the trial judge noted that “the appellant confined its challenge under the ‘substitution' and ‘terms of the written contract' to the application of the law by the Commissioner.”

165.     At the appeal hearing, counsel on behalf of the appellant acknowledged (p. 28 of the transcript): -

“…the finding by the Commission as a matter of fact was that frequently the driver didn't nominate a substitute and it was the company itself which nominated the substitute.”

166.     Clause 12 of the Overarching Agreement envisages substitution arising where the driver became “unavailable at short notice”; language which speaks to an unexpected or unforeseen exigency. There is a limited right conferred on the driver to engage a substitute delivery person in such circumstance. It is not a right at large. It was very extensively fettered. In practice, as is clear from Clause 12, only other drivers who had executed an overarching agreement and were on the books of the company as drivers met the threshold since a substitute had to be “capable of performing the contractor's obligations in all respects”. (emphasis added)

167.     In practice, neither under individual contracts nor under the terms of the overarching agreement did a driver have a general right or entitlement to substitute another to work a shift save in the exceptional circumstances and terms provided. It was a conditional right. This is reinforced by the final sentence of Clause 14 of the overarching agreement which obligated the driver to notify the company in advance of any unavailability to undertake a previously agreed delivery service. There was no evidence adduced by the appellant to suggest that the right of substitution was exercised otherwise than on a limited or occasional basis. Whilst the observation of the Commissioner complained of by the appellant was indicative of an obligation to find the substitute, the determination when read in its entirety elsewhere clearly demonstrates that she was aware that the terms of the agreement between the parties did not impose such an obligation.

Finding of Commissioner on Substitution

168.      The Commissioner's analysis is to be found at para. 24, 38(b), 82 and 90 of the Determination. At para. 24 it was noted that,” [d]rivers were entitled to substitute another of the Appellant's drivers in the event they were unavailable to attend for a registered work shift.” (emphasis added). Para. 38(b) stated “I find as a material fact that the substitution clause permitted drivers to substitute another of the appellant's drivers when they were unavailable…” (emphasis added). Para. 90 states “…if a driver was rostered for a shift but was unable to turn up, he had an entitlement under clause 12 of the written agreement, to arrange for the work to be done by another…” (emphasis added).

169.     Para.82, which attracted particular criticism by the appellant warrants being considered in full; “…the right of the driver to cancel a shift was qualified by the requirement to engage a substitute, to provide advance notification to the appellant and to work out the remainder of the shifts in the series which had been agreed” (emphasis added). It considers three distinct factors in the context of her analysis of the right to cancel a driving shift. Two factors, namely, providing advance notification and the obligation to work out the remaining shifts were requirements but the engagement of a substitution was not. Thus the statement is partially correct. It is clear from her analysis of Clause 12 of the written agreement and paras. 24, 38(b) and 90 in the Determination that the Commissioner was well aware that substitution was an “entitlement” or “permitted” and not a “requirement”. The reference to a requirement to engage a substitute (repeated in para. 105) is not correct. However that error does not undermine her overall conclusions has no bearing on the conclusion at para. 155 “…that these contracts are contracts of service.”

170.     In my view in light of the terms of the agreement the trial judge erred at that part of para. 55 where he finds that obligation were imposed on the driver cancelling a shift at short notice to find a substitute. However, that error is also not material to the outcome. The more limited the right of substitution a worker has, the more consistent the contract is with the obligation for personal performance inherent in a contract of service. 

171.     Wilson L.J. in Pimlico Plumbers observed at para 22;

“… in his classic exposition of the ingredients of a contract of service in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497, Mac[K]enna J added an important qualification. He said at p 515:

‘Freedom to do a job either by one's own hands or by another's is inconsistent with a contract of service, though a limited or occasional power of delegation may not be …'”

He cited Atiyah's Vicarious Liability in the Law of Torts (1^st edn., Butterworth, 1967), in which it was stated at p. 59 that “it seems reasonably clear that an essential feature of a contract of service is the performance of at least part of the work by the servant himself”. The decision of Barr J. in McAuliffe v. Minister for Social Welfare [1995] 2 I.R. 238 also supports MacKenna J.'s proposition.

172.     The appellant placed reliance on para. 76 of the determination which observed: -

“The appellant contended that the drivers had no obligations whatsoever as they could choose not to turn up for any shift, safe in the knowledge that no sanction will be imposed. However, the contract envisages cancellation ‘should the Contractor be unavailable at short notice', together with the requirement of advanced notification in accordance with Clause 14. Thus, the contract aims, to some extent, to regulate the circumstances of cancellation by a driver”

173.     At p. 40 of the transcript it is stated on behalf of Karshan -

“…Clause 12…doesn't impose any obligation on the contractors. On the contrary, it is saying that even should the contractor be unavailable and even if he is unavailable at short notice, the company accepts that he still has the right to engage a substitute delivery person. And of course, a fortiori, he has the same right if in fact he gives a longer notice period to the company.

So, whether he gives a short notice period or a long notice period makes no difference. He doesn't have any obligations in consequence of that. On the contrary, Clause 12 is giving him a right and an entitlement.”

174.     The analysis of the Commissioner, for instance at paras. 90 - 102, rejects the appellant's contentions as “incorrect”. The ambit of time encompassed by the words “at short notice” in Clause 12 is nowhere defined. The dominant feature of the contract was an obligation of personal performance by the driver. A driver's facility to appoint a substitute was confined to significantly limited circumstances: implicitly the substitute had to come from the ranks of Karshan drivers, in other words from those bound to Karshan by an identical suite of obligations as the overarching contract's words demonstrate, “such person must be capable of performing the contractor's contractual obligations in all respects” (Clause 12). Paras. 103-104 of the Determination correctly analyses the substitution issue.  In the words of Wilson L.J. in Pimlico Plumbers at para. 34;

“It was the converse of a situation in which the other party is uninterested in the identity of the substitute, provided only that the work gets done.”

175.     The scenario postulated at para. 76 of the determination as representing the position of the appellant before the Commissioner discloses a fundamental error at the heart of the appellant's position. Contrary to what is contended, once the drivers submitted their availability sheets and the rosters were furnished and circulated to them there was a binding individual contract between the parties and the ordinary rules of contract applied as between the drivers and the company. A gratuitous failure to turn up for work for a shift was a breach of contract. Whether or not a sanction would be imposed is wholly immaterial to the issue. It was in the hands of Karshan what stance to take in such circumstances. Substitution and cancellation are two distinct propositions. Insofar as para. 82 of the determination is criticised, a perusal of the determination in its entirety (particularly paras. 24, 90 and 38(b)) demonstrate, that the Commissioner was under no misapprehension as to the true meaning and operational effect of the key relevant clause, namely Clause 12, in the agreement.

176.     She correctly identified that a significant distinguishing factor from the Ready Mixed Concrete v. Minister for Pensions case (which has been long accepted as good law in this jurisdiction) was that in Ready Mixed the court had concluded that a driver was an independent contractor in circumstances where a clear substitution clause had provided that in the event the driver was unavailable he had a general entitlement to engage others to work for him in driving the vehicle and the person appointed by the driver would work for and be paid by the driver and not by the driver's employer.

177.     The facts in Castleisland are distinguishable. The individuals had been employed by the Department of Agriculture under contracts of service. Each was offered redundancy on negotiated optional terms. One option was six times the statutory redundancy entitlement on the basis of a severance. Another option provided for twice the statutory redundancy on the basis that they would thereafter be free to take other work and operate as independent contractors. The claimants in question had executed contracts for valuable consideration expressly stating that they were independent contractors. Conducting artificial insemination of animals in a context of preserving the health and welfare of the national herd in accordance with regulatory control and the terms of relevant statutory instruments cannot fairly be compared to the activity of delivering food from takeaways to customer's homes or places of work. Castleisland is distinguishable on its facts.

178.      Thus the factual matrix underpinning the Castleisland decision is fundamentally different. In the instant case overarching contracts were presented on a “take it or leave it” basis. There was no evidence that drivers or any driver the subject of the determination had hitherto worked as an employee of the appellant. In reality, drivers did not have the entitlement to substitute other drivers in their place such as to give rise to a subcontracting of the work in a manner inconsistent with the existence of a contract of employment.

179.     I am satisfied on its true construction that each driver assumed a personal obligation to carry out the work of delivering the take away food to customers both under the overarching agreement and by the terms of the individual contracts. Nowhere is there an unfettered right to substitute another person to do the work of driving characteristic of a contract for services. The tenor of Clauses 12 and 14 implicitly speak to the exceptionality of an exigency arising whereby a driver would become unavailable at short notice and what might ensue and is characteristic of employment contracts and not indicative of a contract for services.

180.     In general, a conditional right to substitute another to perform the activity in question may or may not be inconsistent with personal performance depending on the conditionality in question. Castleisland turns on its own facts given the statutory regime and regulatory requirements that obtained. The right to engage a substitute expressly provided for in Clause 12 was quite narrow. The substitute was drawn from the company's panel or bank of drivers: “such person must be capable of performing the contractor's contractual obligations in all respects” (emphasis added). This illustrates that there was no unfettered discretion to substitute at will. The entire tenor of Clause 12 speaks to its exceptionality; that it was capable of arising on an occasional basis and the substitution activity, albeit being possible, was not an obligation imposed on the driver. The company paid the substitute directly.

181.     Contrary to the contentions of the appellant all those factors are relevant, in particular the latter factor. An entitlement/right of substitution confined to a circumstance where the driver was unable to carry out the work at short notice on the facts of this case was consistent with personal performance. In practice, the absence of any express obligation to find a substitute coupled with an absence of opportunity for profit by sub-contracting which is characteristic with being in business on one's own account, supports the respondent's contention rather than that of the appellant.

182.     The trial judge recounted the objections on the part of the appellant with the determination of the Commissioner to rely on the reasoning of Briggs J. in Weight Watchers (UK) Limited and the assertions and contentions of both parties are set out in detail inter alia at paras. 15 and 21 of the judgment. He noted at para. 39: -

“The appellant contends that the distinction posited in Weight Watchers between two distinct forms of substitution is not recognised in Irish law. The appellant further submits that the right of an employer to approve substitutes does not indicate an employment relationship. The fact that the appellant exercised a significant measure of control of the drivers' choice of delegates is insufficient to indicate the existence of an employment relationship, according to the appellant.”

183.     It would have been preferable had the trial judge analysed the Weight Watchers decision with greater particularity, it is implicit from his judgment that he preferred the submissions of the Revenue Commissioners in relation to this issue including that in reality pizza drivers did not have freedom to substitute but rather could nominate a replacement approved by and paid directly by the company. That approach is entirely consistent with Ready Mixed as in Weight Watchers, the substitution clause in the overarching contract did not permit the driver to discharge his contractual obligations in relation to the delivery of a pizza by the provision of another driver's services.

184.     Despite the objections of the appellant, it did not identify any authority where, in the case of substitution, the fact that a substitute was not paid directly by the company was held not to be a relevant consideration in deciding status of the individual being substituted or in carrying out the multifactorial analysis as to whether a contract of service had come into existence between the parties. It is a material factor. In the ledger of indicia of factors, if payment for the substitute driver was not made to the driver being substituted in the first instance, it tends to suggest that the latter is an employee rather than an independent contractor.

185.     The actual operation of the individual contracts does not support the assertion that such a degree of independence and autonomy was vested in the driver. In practice, the right to substitute was very narrow and only arose in exceptional circumstances where the driver became “unavailable at short notice”. The evidence suggests that implicitly substitution had to be by another of the company's drivers who had already signed an overarching contract with the company since the substitute had to be capable of performing the contractual obligations “in all respects”. The substitution clause did not enable a driver in any circumstance to deliver the promised driving work by another person and get paid for it himself as would be characteristic of a contract for services. Instead where, implicitly for a good reason, the driver was “unavailable at short notice” to work a shift he had a qualified right not to work that shift and another person, identified either by himself or the company could do it, not as a delegate but under a replacement contract with the company for that specific shift. This accords with Weight Watchers analysis incl. paras. 32-34.

186.     A case such as Independent Workers Union of Great Britain v. Central Arbitration Committee (Roofoods trading as Deliveroo as an interested party) [2021] EWCA Civ 952 (“Deliveroo”) is wholly distinguishable concerning as it did provisions of the European Convention on Human Rights and issues around trade union recognition as well as payment for the substitute's shift directly to the unavailable driver - which do not arise in this case. Karshan sought to rely on its terms (p. 83 of transcript). I do not consider it to materially assist in resolving any issue in this appeal. Lest I am wrong, I would make the following observations. In that case the crafting of the substitution clause resulted in the negating of the necessary element of personal service; the crucial factor being that when a driver became unavailable he had total freedom to find a substitute driver and thereafter received the payment directly for the substitute's work from the company and in turn was free to deduct a percentage of that payment for himself (circa 15% - 20%) passing on the balance to the substitute. Thus, crucially, as in the Ready Mixed decision itself which is acknowledged to be good law in this jurisdiction, the Deliveroo driver was at liberty to send along another in substitution for himself and payments were made directly to the driver to be shared with the substitute factors which all pointed to substitution operating in the context of a contract for services in stark contrast to the position in this case. The decision merely reflects the independent contractor identified by Briggs J. in Weight Watchers at para 32 who delivers promised work via another person and gets paid for it himself - a scenario which has no application in the instant case.

187.     By contrast, in the instant case substitution was significantly fettered under the express language of the overarching agreement. The driver had to be “unavailable at short notice”. The word “unavailable” is telling, connoting as it does that the worker was not in a position to do the work as distinct from freely electing not to do it. The choice of substitution was very limited and the payment was always made directly to the substitute by the company. The exercise conferred no opportunity for profit on the driver as would be characteristic of an independent contractor.

188.     In contrast to the Deliveroo and Ready Mixed cases, drivers for the appellant did undertake to personally do the work or services in question. That obligation became binding and certain on each occasion when the roster was circulated. The lack of any contractual obligation on the part of a driver to find a substitute undermines the appellant's contentions.

189.     The judge observed at para. 37, “[t]his Court is only concerned with the application of the law which concerns “substitution” and is not concerned with the findings of fact made by the Commissioner.”  The High Court judge correctly concluded that:

“60. This factor of substitution does not avail the appellant as is urged on its behalf.  The appellant has failed to satisfy this Court that the Commissioner erred in her application of the law in this regard.”

Ground of appeal 5 - Contentions regarding natural and constitutional justice

190.     The appellant contends that the trial judge erred in concluding that the Appeals Commissioner did not err in law in having regard to UK/English authorities which were decided after the appeal hearing before the Appeals Commissioner was completed in July 2016, and in failing to invite the parties to address her in relation to those authorities. The error contended for is: -

“The High Court should have held that the approach adopted by the Appeal Commissioner in this regard was not consistent with natural and constitutional justice and, in particular, fails to respect the audi alteram partem principle.” (p. 7)

191.     This ground of appeal was not pursued to any extent at the hearing.

Ground of appeal 6 - The application of UK authorities

192.     The appellant contends that:-

“The High Court erred in concluding that the Appeal Commissioner did not err in law in having regard to United Kingdom/English authorities which are based on a different statutory regime, namely, s. 230 of the Employment Rights Act 1996 and… the…intermediate category of ‘worker' as defined per that legislation.” (p. 7)

193.     Reliance was placed in particular on s. 230(3) of the UK Employment Rights Act 1996. The judge reviewed the approach of the Commissioner to the authorities such as the English decision in Uber. I am satisfied the trial judge was correct in his view that the Commissioner was entitled to consider the Uber decision and the distinction in the UK Act was not central to the Commissioner's consideration in the context of mutuality and integration. She was demonstrably alive to the fact that a different statutory dispensation operates in England and Wales and in particular a distinction obtains between a “worker” and an “employee” under the UK statute as she expressly pointed out. The Uber decision was capable of providing assistance to the Commissioner. Some English decisions, such as that of Mr. Recorder Underhill in Byrne Bros (Formwork) Limited (No 5) v. Baird [2002] ICR 667, suggest that at least insofar as mutuality of obligation is concerned, the criteria relevant to assessing statutory “worker” status can be substantially similar to those for assessing whether a contract of service/employee status exists. It appears she considered Uber primarily in the context of the Integration Test which, it appears, is common to both statutory “workers” and employees.

194.     The analysis by the English court in Uber of various principles were relevant and worthy of consideration by the Commissioner in deciding whether the relationship was in essence to be located in the field of dependent work relationships or whether it was in essence a contract between two independent business undertakings. I am satisfied that the trial judge was correct in his assessment and the criticisms of the Commissioner in that regard are not well made. Uber BV is of limited legal relevance in Ireland for two reasons. Firstly, the decision was fact-specific and secondly, under Irish law there is no intermediate category of worker falling between an employee and an independent contractor. But, as the trial judge correctly observed, the Commissioner's consideration of aspects of the judgment was in the context of mutuality of obligation and integration. Her approach was comprehensive. She took no shortcuts and engaged in a comprehensive assessment of all relevant factors in deciding as to which side of the boundary this particular case lay.

195.     It would have been surprising in all the circumstances had the Commissioner omitted to consider the Uber decision. I reiterate that that case turned on its own particular facts. Reading the determination in its entirety, the High Court judge could be satisfied that the Commissioner was alive to the limitations of jurisprudence from England and Wales focused exclusively on statutory “workers” so found within the 1996 Act. That does not detract from the relevance of the said jurisprudence in the limited manner considered by the Commissioner in this instance as the trial judge correctly found.

196.     The appellant further contends that “decisions such as Uber, which have identified drivers to be workers - and not employees - pursuant to an entirely distinct statutory regime in English law cannot safely or appropriately be relied upon in determining employment status in this jurisdiction”. However, the relevant English jurisprudence she considered went well beyond a mere analysis of the English statutory regime and, as the trial judge correctly found, the Commissioner was entitled to have regard to same insofar as it was considered to be relevant. There was ample jurisprudence otherwise to support her conclusions and the trial judge was right not to interfere with it.

Ground of appeal 7 - Decision of the Social Welfare Appeals Office

197.     The appellant contends: -

“The High Court erred in holding that the Appeal Commissioner did not err in law in determining that she was not bound by a previous decision of the Social Welfare Appeals Office dated 19 August 2008 and when finding that the Social Welfare Appeals Office and the Tax Appeals Commission are different adjudication bodies subject to different statutory regimes, where she erred in law in failing to give any or adequate weight to the said previous decision as set out at pages 5 - 8 (paragraphs 11 - 20) of her determination”. (p. 8)

The error contended for is that “greater weight should have been afforded by the High Court to this pertinent factual context in the interests of legal consistency.” (p. 8)

198.     I am satisfied that this ground of appeal is unmeritorious and can be swiftly dealt with. The appellant had sought at the original hearing to rely on a decision of the Social Welfare Appeals Office made in August 2008 which concluded that an individual delivery driver for K & M Pizza Ltd. was to be regarded as an independent contractor for social welfare purposes.

199.     There was no evidence put before the Commissioner or the court as to the exact terms and conditions on foot of which the said individual operated as a delivery driver for K & M. Each of these cases is fact driven. It would be surprising to suggest that the Commissioner was bound in the context of tax by a decision of the Social Welfare Appeals Office concerning a pizza delivery driver in the context of welfare law unmoored from any facts and details of the actual terms and conditions on foot of which they were engaged to carry out driving in the first place. This ground of appeal is not maintainable.

Grounds of appeal 8 & 9 - Terms of express agreement

200.     Under these grounds of appeal, the appellant firstly contends that: -

“There are factual errors regarding substitution evident in the judgment, involving reliance on the Appeal Commissioner's determination, which are relevant to the question of deference.”

The appellant contends that there was no requirement under the overarching contract for a driver to engage a substitute from the appellant's pool of previously approved drivers, and that the trial judge and Commissioner erred in suggesting otherwise, at paras. 42, 52 and 55 and paras. 105 and 82 of the judgment and determination, respectively.

201.     These grounds require some analysis of the overarching contract. It is a question of nuance. The driver was not prohibited from suggesting a substitute driver. The driver was entitled to propose a substitute driver. The driver was not required to find the substitute driver. I am satisfied that the trial judge's and Commissioner's interpretation of the substitution clause was not a material error and did not affect the validity of her conclusions. Clause 12 states of such a substitute: “such person must be capable of performing the contractor's contractual obligations in all respects.” An individual could only be said with confidence to be “capable of performing” the said contractual obligations “in all respects” if they had entered into a binding agreement with the appellant in like terms to those entered into by the driver. The language in Clause 12 necessarily contemplates that the substitute will effectively be bound by all the obligations and duties arising under the overarching agreement. Since a stranger has no privity and would be oblivious to all of the obligations and since the substitution arises in the context of an exigency where a driver becomes “unavailable at short notice”, the most practical construction is the one deployed by the Commissioner and the High Court, namely that the replacement driver came from the pool of drivers maintained by the appellant.

202.     In light of Clause 12, the burden rested on the appellant to demonstrate at the hearing by adducing appropriate evidence that a driver was not entitled to select a substitute driver from the world at large to carry out driving duties. There is no record that such evidence was adduced. The burden did not rest with the Commissioner to call evidence. The burden rested with the company to demonstrate how substitution under the contract operated in practice. If they omitted to put before the Commissioner such evidence, she was perfectly entitled to rely on the evidence and terms of the overarching contract, as she did at para. 105 of her determination.

203.     Paragraph 55 of the trial judge's decision must be seen in context where elsewhere in his judgment (for instance paras. 35 and 60) the right of substitution was characterised as permissive in nature.

204.     The objections to the use of the word “required” in para. 82 of the determination is overstated when set against the determination as a whole, as for instance summarised in the High Court judgment at paras. 2(i), 2(v), 34, 35, 39, 40, 59. The appellant's criticisms of the of the trial judge's judgment in this regard are not made out.

205.     Secondly, the appellant asserts that the Appeals Commissioner failed to properly weigh the significance of Clauses 1 and 17; 2; 3; 5; 9; 12, and 14 of the overarching agreement. The Commissioner's detailed analysis of, inter alia, Autoclenz  properly engages with Clauses 1 and 17. The Determination is replete with comprehensive analysis of Clauses 12 and 14. As regards remuneration and Clause 3 it is fully addressed, including for example at para. 16 of the determination. As is demonstrated at paras. 12-24 inclusive above, the Overarching Agreement and its material terms were fully engaged with by the Commissioner and this ground of appeal is not made out.

Conclusion

206.     I am satisfied that as a matter of law the High Court judge was entitled to find that the Commissioner was correct in her interpretation and application of the mutuality of obligation principle along with the other constituent indicia of the contract of service including but not limited to integration and control. In light of the evidence and her findings, she was entitled to elect not to proceed to reach any conclusion on other issues including mutuality of obligation under the overarching contract. This did not preclude the judge from separately considering the issue of such mutuality of obligation within the overarching agreement.

207.     On a true construction of the facts in light of the evidence before the Appeals Commissioner as to how the arrangement between the parties operated in practice, the trial judge was entitled find as regards the individual contracts that the Commissioner had been correct to conclude there was indeed an “irreducible minimum” of continuing mutual obligation which, when combined with the other relevant factors such as control and integration, the operation of substitution and so forth was sufficient to establish that the relationship between the parties constituted a contract of service and the drivers were employees to the extent found by the Appeals Commissioner. This conclusion was arrived at wholly independently of whether the overarching contract in and of itself gave rise to a contract of employment.

208.     The Appeals Commissioner correctly analysed the inter-relationship arising in practice between the written overarching contract and the individual contracts between the parties. To work as a driver it was necessary to firstly sign the overarching contract. This offered the only gateway to an individual contract. The evidence was that all drivers signed the overarching agreement. The corollary is that the company relied on the panel of drivers who had executed the overarching agreement as the sole source of supply of drivers for its pizza delivery business.

209.     Ultimately, it is necessary to have regard to the jurisprudence in this jurisdiction including the Supreme Court decision in Denny & Sons (Ireland) Limited v. Minister for Social Welfare [1998] 1 IR 34 and Barry, as the High Court judge did. In light of those decisions, he was correct to find that there was evidence before the Appeals Commissioner which entitled her to reach her conclusions.

210.     Insofar as the element of control was concerned though in and of itself it was not determinative of status, it was a factor to be taken into consideration in analysing aspects of the contract such as the limitations on the right to substitute. The degree of control exercised by the company over the work done and the manner by which it was to be discharged by the drivers was significant and was indicative of integration of the drivers into the business enterprise in a manner consistent with the existence of a contract of service. Clause 11 is especially relevant in that regard.

211.     The analysis of the Appeals Commissioner of the integration test was heavily criticised by the appellant. True enough, the concept of “worker” within s. 230(3)(b) of the UK Employment Rights Act 1996 is not mirrored in any legislation in this jurisdiction. The Appeals Commissioner did not suggest that it was. She clearly indicates that the Act of 1996 under reference was “UK” legislation. As the High Court judge correctly found, the “worker”/“employee” dichotomy was not central to the focus of Commissioner's consideration of jurisprudence from England and Wales. He was correct in concluding that she did not err in her treatment of the said authorities. The use of the word “worker” by the Appeals Commissioner is unfairly characterised as reference to the English statute. The context demonstrates that this was not so.

212.     It follows that I very respectfully disagree with the analysis and conclusions in the majority judgments for the reasons stated above. I would have dismissed the appeal on all grounds.

Result:     Appeal Allowed