Employee v Self Employed – Employers Be Careful of Label!!

The recent May decision of A Therapist v Health Service Provider ADJ00024495 highlights some of the tests that determine whether someone is an employee or self employed.The difference is very important as the complainant or person making the complaint needs to be an employee in order to attract the protection of many employment law rights including a right to claim unfair dismissal or an entitlement to statutory redundancy.The Adjudicator in this case determined that the complainant was and always had been an employee of the Respondent or Health Service Despite the fact that the complainant was not paid through payroll but rather paid on an invoice submitted basis, it was determined on balance that the complainant was providing her services under a contract of service or employment relationship.It was noted that “the Complainant…..has clearly been at the beck and call of this one Master since 1996. Both parties agree that the complainant was engaged with a Contract of Employment in 1996. There was certainly a change to her job title and job description in 2000, which arose out of an eagerness (by the then Manager) to engage the complainant who had recently qualified in the area of Drama Therapist which the Respondent (Manager) was excited to explore and utilise in the workplace. I fully accept that there was no break in service and that the Complainant moved seamlessly from the position of carer to therapist within the workplace. I accept that the method of payment did change at that time. The reason for this has not been satisfactorily explained. I accept that the Complainant was not advised that this change in method of payment categorically meant that she was no longer a member of staff and that she was now a free agent to come and go as she liked and with the ability to pursue other Contract work of a similar nature. The Complainant spent the next 19 years under the control and direction of the Respondent and has in fact been an excellent and loyal employee who has gone the distance for both this service provider and those persons so provided“.The Adjudicator noted that the employee in this case was summarily dismissed or dismissed without notice and that the employer seemed to be trying to assert that the the employee was now self employed “to whom no particular contractual entitlements apply“. She further noted “I fundamentally disagree with the Respondent’s assessment of the facts and find that the Complainant was is and always has been an employee of the Respondent company”.The Adjudicator found that the employee’s role was made redundant and she was entitled to be paid her statutory redundancy payment pursuant to the Redundancy Payments Acts 1967 (as amended).Employers should also be aware that there may be serious tax implications if it is found that someone has been wrongly designated as self employed when the reality is that they are in fact an employee. The Workplace Relations Commission have power to liaise with Revenue and report any such issue. An employee could then be held liable for failure to pay income tax, PRSI etc as well as a potential plethora of claims in respect of employment rights such as holidays which an employee did not receive.Revenue have a useful Code of Practice in determining whether someone is an employee or self employed and a copy can be found here. Professional advice should always be sought in all cases.