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Employee v Self Employed – Issues of Control, Tax, PRSI and Mutuality of Obligation

We are often asked to advise on whether a person is an employee (engaged under a “contract of services”) or self employed (engaged under a “contract for services”). The designation is important for a number of reasons including the entitlement of a person to claim employment rights and tax issues to name but a few. The Revenue Commissioners have produced a very useful code of practice on determining whether a person is an employee or self employed and the link is found hereThe recent case of John Doherty v Morris Oil Company Limited MN1815/2011, UD1768/2011, WT 699/2011 dealt with such a question. In this case the Employment Appeals Tribunal ruled that it did not have jurisdiction to hear the claim for unfair dismissal, minimum notice and working time as the claimant was held to be self employed or engaged under a contract for services.The Tribunal found as follows:1. Whereas the respondent did exercise some control over the claimant, it did not exercise the level of control normally exercised by an employer nor did the respondent exercise control over those matters that an employer normally exercises control over such as the actual days and times that the claimant worked and the amount of time the claimant spent working on the respondent’s business as opposed to the claimant’s own business. The control the respondent may have exercised over the appearance of the garage was consistent with the obligations that the respondent owed to the landlord. Likewise the control the respondent may have exercised over staff employed by the claimant was consistent with protecting the image of the garage and whereas the agreement between the parties required that the consent of the respondent be obtained by the claimant regarding hiring of staff the claimant in fact hired staff without obtaining the consent of the respondent.2. The claimant was in the enterprise on his own account in that if he carried out the work of the respondent’s business himself and employed as few people as possible to assist him he would retain more of the money paid to him by the respondent and the more oil he sold over and above a certain level the more money he was paid.3. The basic set amount of money paid to the claimant by the respondent each month was based on a sales figure of oil rather than on the number of hours that the claimant spent on the respondent’s business.4. The claimant charged and received VAT on all payments he received from the respondent.5. The claimant submitted self-employed returns to the Revenue.6. The claimant paid a self employed level of PRSI.7. The claimant did not get paid annual leave.8. The claimant was not required to carry out the work for the respondent himself but was free to employ others to do it and he was the registered employer of those others so employed.9. Regardless of whether the agreement between the parties contained a mutuality of obligations clause the garage was continuously open during the claimant’s tenure and the claimant appears to have been continuously there. However, when the claimant was present at the garage he would also be attending to his own car sales business and car wash business.

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