Business and Company Law Assignment

Business and Company Law Assignment

By: Jason Kirwan C00198582

Submission Date: 16th January 2016

John is looking for advice as to whether he is working for the County News newspaper under a ‘contract of service’ or a ‘contract for service’. Tax, social welfare and almost all Irish employment statutes distinguish between an employee and an independent contractor. An employee works under a contract of service, while subcontracted or self employed workers perform duties under a contract for service. The main issues of John’s situation are as follows:

• John has been working as a sports photographer and journalist for the paper for two years. He is obliged to provide an article of 250 words per week on local matches. The County News provides him with computer, printer, paper and any other materials he needs, but he has no office or premises. He is paid monthly but he has to look after all his own tax matters.
• He is permitted to publish articles in other newspapers as long as he obtains prior approval from the editor of County News. The articles he produces for County News are sometimes used in other newspapers and he receives further payment from these newspapers.
• Every month he has to attend a meeting with other journalists at County News to discuss forthcoming events
• John was injured when he fell off a step ladder supplied to him by County News, while taking a photograph at a county final. He was absent from work for a couple of months because of this. He applied to County News for sick pay but was told by the newspaper that their sick pay scheme doesn’t apply to employees like him.
• While John was on sick leave, a notice went up in the canteen stating that all employees would receive a salary increase of 10% from the 1st December. John did not receive this increase in salary and he approached the editor of the newspaper about it, and he was told that he wasn’t entitled to the increase as it was only for persons working under a contract of service.

In order to answer the question of whether John is engaged in a contract of service or a contract for service, there are a number of questions that must be answered. While all of the following may not apply, an individual will generally be an employee if he/she:

• Is under control of another person, who decides when, where and the work is carried out
• Supplies labour only
• Received a fixed hourly/weekly/monthly wage
• Can’t subcontract the work to a third party
• Is supplied with equipment and tools to carry out the job by the employer
• Has no financial or personal risk involved in doing the job
• Doesn’t have any responsibility for investment and business management
• Works set hours
• Works for one person or one business
• Receives expense payments
• Is entitled to extra pay or time in lieu for overtime worked

The courts have also adopted a number of tests. They are:

• The control test
• The level of integration test
• The mixed test
• The fundamental Test

The control test was first established in Yewen v Noakes (1880). Its discovers how much control the employer has over the employee, in other words can the employer tell the employee what to do. In Roche v Kelly (1968) it was held that the plaintiff was not an employee of the defendant because the defendant didn’t have the right to interfere with how the plaintiff went about the job, even though he was building a shed for the defendant. In Hitchcock v Post Office (1980) it was held that the plaintiff was self employed as the defendant did not have enough control over him, the employer was only in control of the financial aspect and security of the post office.

The second test to be applied is the level of integration test. This test was first introduced in Stevenson, Jordan and Harrison Ltd v Macdonald and Evans Ltd (1952). It examines to what extent the employees work is integrated into the business, even though the employer might not exercise a detailed control over what he does. In Cassidy v Ministry of Health (1951) the plaintiff was suing the Ministry of Health after an operation performed by one of the doctors left him with stiff fingers. It was held that the doctor was an employee of the hospital and the Ministry was liable. In Whittaker v Minister of Pensions of National Insurance (1967), a circus performer broke her wrist after falling while performing her act. It was held that she was an integral part of the circus, and therefore was an employee for the purpose of claiming injury benefit.

The third test that that is performed is the mixed test. This test is more flexible than the previous tests and looks at all the factors in the employment relationship. This test was first developed in Ready Mixed Concrete v Minister for Pension and National Insurance (1968). The court had to decide whether the owner/driver of a concrete truck was an employee or sub-contracted. The court held that a contract of service exists if:

1. The worker provides his own work and skill for the employer in return for a wage or other remuneration.
2. He agrees that in the performance of this work he will be subject to the other party’s control to the extent that it makes the other party master. An independent contractor has more control over how, when and where he performs the work.
3. The other provisions of the contract are consistent with it being a contract of service. This aspect has led to a widening of the test in modern times, as nowadays employees have more perks and benefits than what was the case in previous years. Areas looked at under this heading are, sick leave, paid holidays, pension, trade union membership and staff discounts. (Byrne, 2011)

It was held that the the driver was a ‘small time business man’ so was working under a contract for service.

In Kirwan v Dart Industries Ltd and Leahy (1980) it was held by the Employment Appeals tribunal that Ms Kirwan was an employee of the Leahys but not of Dart Industries Ltd.

The fundamental test asks the question whether the person carrying out the work is performing them as a person in business on his or her own account. If the answer is yes then it is a contract for service, if the answer is no then it is a contract of service. This test was applied by the court in the case Minister for Agriculture and Food v Barry and others. The case concerned the employment status of five veterinary surgeons who worked for the Minister for Agriculture and Food (2008). When the plant they were working in closed down the vets claimed they were entitled to redundancy payments as employees. The court held that no mutuality of obligations existed and hence they were working under a contract for service as they were entitled to turn down up to 16% of the work provided.