In October of 2023 the Supreme Court found that delivery drivers for Karshan Midlands Ltd Trading As Dominos Pizza (Domino’s) are employees and not independent contractors, as the company asserted. This arose because of a dispute that Domino’s had with the Revenue Commissioner. For the tax period of 2010-2011 Domino’s delivery drivers asserted that they were employees and should be taxed as such while Domino’s contended that they were they were independent contractors.
In 2018 the Tax Appeals Commission ruled that the delivery drivers should be counted as PAYE (Pay As You Earn) employees rather than independent contractors. This decision was upheld by the High Court but overturned by the Court of Appeal. On 20 October, the Supreme Court overturned the Court of Appeal. Domino’s argued that for a contract to be one of employment rather than services, the contract must contain the essential element that “there be an ongoing reciprocal commitment extending into the future to provide and perform work on the part of the employer and worker respectively”. The Court said that while this was often an indication, it was not definitive. The Court pointed out that there are five questions that should be looked at when determining if a contract is for employment rather than services. First, does the contract include an exchange of money/renumeration for work conducted? Second, if the answer is yes, is the worker agreeing to provide services, rather than those of a third party? Third, if yes does the employer exercise sufficient control over the employee to the extent it is capable of being an employment agreement? Fourth, if all the three previous requirements are met, one must determine whether, ‘the arrangements point to the putative employee working for themselves or for the putative employer’ considering the specific factual matrix. And finally, whether there is anything in any relevant legislative regime which would require the court to adjust any of the prior questions. The Court concluded by stating that the provided evidence showed that Domino’s had ‘close control’ over the delivery drivers when they were at work. The court did acknowledge that there were aspects that were consistent with the drivers being independent contractors, but they stated that due to the majority of the facts the Revenue Commissioner was entitled to conclude that they were ‘carrying on Karshan’s business rather than their own.’
This decision has potential implications for all employees who are employed under similar contracts. This judgement potentially means that these types of workers could be entitled to greater rights than they currently possess. For instance, workers may now be able to argue that they are entitled to things like holiday pay. However, it should be noted that not everyone is certain that this judgement will successfully be used to give these workers greater rights. A member of the Employment Law Association of Ireland committee told the Irish Times that, “it could be that while the result is that more casual workers find themselves being considered employees for tax purposes, they still might not gain the protections of employment legislation.” While this judgement is a step forward, it remains to be seen what the actual effects of this judgement will be moving forward.
For the full judgement in The Revenue Commissioners V Karshan Midlands Ltd T/A Dominos Pizza click here https://www.courts.ie/acc/alfresco/e4ee7c3d-0e02-4a33-82b7-26458d895138/2023_IESC_24.pdf/pdf#view=fitH