ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00023430
Chief Sales and Marketing Officer
Complaint Reference No.
Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991
Date of Adjudication Hearing: 15/10/2019
Workplace Relations Commission Adjudication Officer: Ewa Sobanska
In accordance with Section 41 of the Workplace Relations Act, 2015 following the referral of the complaint to me by the Director General, I inquired into the complaint and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint.
The Complainant referred his claim to the Director General of the WRC on 30th July 2019 alleging that his employer has not paid him or paid him less than the amount due to him.
Summary of Complainant’s Case:
In his Complaint Form, the Complainant submitted that on 13th May 2019 the Respondent did not pay him €13,150 net in respect of unpaid wages and €2,500 in respect of annual leave.
The Complainant submits that he worked for the Respondent from 3rd September 2018 to 30th April 2019. He claims that he was only paid once between September and Christmas 2018 while others were being paid. In January 2019 he started to be paid €1,250 net a week but this ceased in February 2019.
The Complainant argues that he was out on sick leave for all of April 2019 due to work related stress. He claims that this was due, in part, to high intensity of meetings and out of hours emails during evenings and weekends.
The Complainant submits that he resigned with immediate effect on the 30th April 2019 due to non-payment.
The Complainant claims that he worked 40 hours a week but there were no stated, set hours. There were no records of his hours of work kept and he was flexible in regard of start/ finish times. He confirmed that there was no control over his working time and no approval was required if he was taking time off. He confirmed that he was not instructed as to how to do his job. He was paid travel and subsistence. He had a business card and work email address.
He issued no invoices and he claims that the Respondent dealt with his tax matters. He understood that he was an employee of the Respondent, although he did not receive a written contract.
Summary of Respondent’s Case:
The Respondent refutes the assertion that the Complainant was an employee of the Respondent.
The Respondent submits that the company is a start-up and was set up in January 2018. The Complainant joined on 3rd September 2018.
The Respondent argues that there were five shareholders, including the Complainant who held 22.5% of the shares. While the Complainant did not invest financially in the company, he was offered to join the company as a shareholder due to the experience he had in his field of expertise. This was valued at €100,000 at the time. The Respondent submits that all the shareholders are self-employed. The Respondent denied that there was an agreement in place that the Complainant was an employee of the Respondent. The Respondent argued that the shareholders were all equal and they all had an agreement that each would be paid €1,250 net weekly “if the money was there”. The Respondent exhibited a spreadsheet of payments made to all shareholders showing the same payments made to all. The Respondent also exhibited a spreadsheet of payments made to the Complainant showing the Complainant’s PRSI class as self-employed and no employer’s share of PRSI deducted.
The Respondent submits that the Complainant had resigned his position with immediate effect but remained a shareholder.
Findings and Conclusions:
The Complainant argued that the Respondent owes him €13,1500 net in respect of unpaid wages and €2,500 in respect of annual leave. The Respondent disputed the claim.
I have jurisdiction to investigate any complaint under the Payment of Wages Act, 1991 for a period of six months from the date of the referral of the complaint. The within complaint was referred to the WRC on 30th July 2019. Therefore, the cognisable period is from 31st January 2019 to 30th July 2019. The Complainant confirmed that he was out sick during the whole month of April 2019 and resigned his position on 30th April 2019. The parties confirmed that there was no sick pay scheme in place.
The parties exhibited spreadsheets of payments made to the Complainant. There was no dispute between the parties as to the payments made. I find that in the cognisable period from 31st January to 31st March 2019 the Complainant should have been paid some €10,000 net (8 weeks). The parties confirmed that he received a number of payments, totalling €10,850 net.
Accordingly, I find that in the cognisable period there was no outstanding payments due to the Complainant. It follows that the matter of underpayment in respect of wages as referred to the WRC is moot.
In regard of the Complainant’s assertion that he is owed €2,500 net (2 weeks’ pay) in respect of annual leave, for a breach of the Payment of Wages Act to occur the wages referenced in the claim must be properly payable. The issue, therefore, is whether, under Section 5(6) of the Act, the Complainant is entitled to the amount claimed as being ‘properly payable’, within the meaning of Section 5(6), as it constitutes ‘wages’, in accordance with the definition under Section 1.
The Complainant has not advanced any evidence to support his submission. The evidential burden on the Complainant requires such evidence to be adduced as is available to support a stateable case of non-compliance with a relevant provision of the Act. The Complainant did not offer any evidence to demonstrate his entitlement to annual leave, either statutory or contractual. There was no dispute that there was an agreement in place that the Complainant would be paid €1,250 net weekly in respect of his role within the Respondent organisation, albeit the Respondent argued that the agreement was for the payment “if money was there”. No evidence in respect of any contractual arrangement in respect of annual leave entitlement was offered at the hearing. Therefore, it appears to me that the Complainant is relying on a statutory entitlement to annual leave.
The entitlement to statutory annual leave derives from the Organisation of Working Time Act, 1997. The Act provides that a person must be an employee and therefore engaged on a "contract of service" within the meaning of the legislation in order to be entitled to the protections that are provided for in the Act. In this regard, I refer to the Interpretation Section which contain the following definitions:
“contract of employment” means
(a) a contract of service or apprenticeship, and
(b) any other contract whereby an individual agrees with another person, who is carrying on the business of an employment agency within the meaning of the Employment Agency Act 1971, and is acting in the course of that business, to do or perform personally any work or service for a third person (whether or not the third person is a party to the contract),
whether the contract is express or implied and if express, whether it is oral or in writing;
“employee” means a person of any age, who has entered into or works under (or, where the employment has ceased, entered into or worked under) a contract of employment and references, in relation to an employer, to an employee shall be construed as references to an employee employed by that employer; and for the purposes of this Act [and the Activities of Doctors in Training Regulations], a person holding office under, or in the service of, the State (including a civil servant within the meaning of the Civil Service Regulation Act 1956) shall be deemed to be an employee employed by the State or Government, as the case may be, and an officer or servant of a local authority for the purposes of the [Local Government Act 2001 (as amended by the Local Government Reform Act 2014)], or of a harbour authority, [the Health Service Executive] or [a member of staff of an education and training board] shall be deemed to be an employee employed by the authority, [the Executive] or [board], as the case may be;
“employer” means in relation to an employee, the person with whom the employee has entered into or for whom the employee works under (or, where the employment has ceased, entered into or worked under) a contract of employment, subject to the qualification that the person who under a contract of employment referred to in paragraph (b) of the definition of “contract of employment” is liable to pay the wages of the individual concerned in respect of the work or service concerned shall be deemed to be the individual's employer;
In order to decide whether the Complainant is properly entitled to statutory annual leave it is necessary to determine the nature of the employment relationship between the parties and decide whether the Complainant was engaged under a "contract ofservice" or a "contract forservice" by the Respondent.
It is common case that no written contract existed between the parties in respect of the arrangements entered into. Therefore, I have considered the totality of the relationship between the parties.
The case law in relation to the employment status has developed over the years and a number of tests have been applied by the courts in order to determine the employment relationship. The High Court in The Minister for Agriculture and Food v John Barry & Ors  IEHC 216 made clear that all of the tests are potential aids for identifying the nature of the working relationship and no single test is definitive.
I note that in the case of McAuliffe v Minister for Social Welfare  ELR 239 Barr J. said it was not possible to devise any hard and fast rule as to what constitutes a contract of service.
The Tribunals are required to look at totality of relationship between the parties and each case must be considered on its particular merits. Accordingly, it is necessary to consider the evidence as presented under a series of tests as set out in the varying court cases that have dealt with this issue.
As it proved very difficult to extract any detailed evidence from the parties, the below is based on the limited information available.
Mutuality of obligation
The mutuality of obligation has often been referred to as the irreducible minimum requirement which must be present before a contract of employment can be held to exist. In order for a contract of service to exist there must be mutual obligation on the employer to provide work for the employee and on the employee to perform work for the employer. There is an ongoing duty to provide work and one to accept work.
In High Court case Minister for Agriculture and Food v Barry & Ors IEHC 43 the mutuality of obligation test was endorsed by Edwards J. when he stated “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”.
There was no evidence proffered to demonstrate that the Respondent undertook to provide the Complainant with work and that the Complainant undertook to personally perform that work in consideration of remuneration. The Complainant argued that he did work some 40 hours a week for the Respondent. However, it is unclear as to what exactly his duties were. His evidence suggests that he made the decision as to when, where and how was his role executed. While he referred to a large volume of meetings, emails etc. there was no suggestion put forward that these were arranged for him by the Respondent. Rather, it appears that it was his responsibility to organise same as part of his role he undertook as a shareholder in exchange for his expertise. The Complainant confirmed that he was not precluded from working for other businesses, albeit he argued that he did not do so. The Complainant confirmed that he did not have to report when he was or wasn’t in the office, he did not have to request take time off etc.
On this basis I am not satisfied that there was mutuality of obligation in this instance.
The Control Test
The test was applied by the High Court in Minister for Industry & Commerce v Elizabeth Healy  IR 545 and by the Supreme Court in Roche v Kelly and Co Ltd.  IR 100 where Walsh J held that in master-servant relationship the master must have right to tell servant what to do and how to do it, whether or not he exercises that right. Traditionally the control test involved ascertaining the extent to which the employer could direct the operation and determine how it was to be done and when it was to be done. It has, however, diminished in significance over time. As was pointed out by Walsh J in Roche v Kelly  IR 100 it is the right to control the work rather than the actual exercise of that right that matters. Ordinarily, the greater the level of skill required for the performance of the work in question, the less significant is control in determining whether the person performing the work is an employee, see Re Sunday Tribune Ltd.  IR505.
Moreover, the level of control, in some circumstances, can have more to do with the nature of the regulation of the particular industry than with the nature of the relationship, see Castleisland Cattle Breeding Society Ltd. V Minister for Social and Family Affairs 4 IR 150.
In the instant case, the Complainant exercised a high degree of initiative in the performance of his work. The Respondent exercised no day-to-day control over his work. The Complainant was not in a relationship of subordination with the Respondent. He was not reporting to a superior, he was not subjected to a performance review. His service was not subject to termination. Furthermore, I note that he was not required to clock in/out, there were no records of his hours of work kept and he was not obliged to inform the Respondent of his whereabouts. I find that the Respondent did not prescribe the way the Complainant should conduct his business.
On the balance of probability, I find that the Respondent did not decide the means employed by the Complainant in exercising his role. I find that there was no control exerted by the Respondent on the Complainant’s work. I find that the Complainant decided how, when and where the work was carried out.
The test was proposed in Stevenson Jordan & Harrison Ltd. v McDonald and Evans  1 TLR 101and applied by the High Court in Re Sunday Tribune Ltd. The question to answer is whether an employee is employed as part of the business and his work is an integral part of the business, or whether his work is not integrated into business but is only accessory to it.
The Complainant claims that his role was that of Sales Director or Chief Sales and Marketing Officer.
There is no doubt that the role would involve a strong relationship with the Respondent organisation. However, the Complainant confirmed that, while he had his own office and a company email account, he used his personal mobile number and a car to perform any duties which were associated with his role within the organisation. The Complainant was paid on foot of the agreement that €1,250 net would be paid to him weekly. Similar arrangement allegedly applied to all shareholders. From the evidence before me it appears that, while the Complainant did have a function related to sales and marketing, this function however, could be linked to the fact that, as part of the shareholding arrangement the Complainant agreed to provide his skills and expertise in that field in exchange for the shares.
The test is to assist to determine whether a person is in business on his own account. The Code of Practice for Determining Employment or Self-Employment Status of Individuals issued through the Department of Social Protection provides clarification of this issue. It states that: “An important consideration in this context, will be whether the person performing the work does so “as a person in business on their own account”.” Is the person a free agent with an economic independence of the person engaging the service?”
The Complainant confirmed that he was not precluded from supplying his services to others while engaged by the Respondent. I note the Complainant’s assertion that he worked exclusively for the Respondent. However, as he confirmed, there was nothing precluding him from entering into other engagements. The profit he derived from his work was therefore dependent on the efficiency with which he conducted his work. His economic independence depended on the level of activity he generated. Taxation / VAT
I note in the Henry Denny & Sons (Ireland) Ltd. v The Minister for Social Welfare thedemonstrator in question submitted invoices yet it was deemed that she was an employee. Similarly, in Re Sunday Tribune Ltd. Carroll J stated that a Complainant’s taxation status was not a determining factor in deciding if an employee/employer relationship exists.
There was a striking conflict of evidence between the parties as to the taxation status of the Complainant. The Complainant claimed that he was registered with the Revenue Commissioner as an employee of the Respondent. The Respondent, on the other hand argued that the Complainant was at all times treated as an S1 self-employed person. The Respondent exhibited Excel spreadsheet which it said was prepared by its accountant. The spreadsheet shows details of payments made to the Complainant and tax implication for 11 weeks of 2019. On the document the Complainant is classed as S1 and no Employer’s share of PRSI is shown. Regrettably, the accountant for the Respondent, who the Respondent claimed had prepared the document was not present at the hearing and I was unable to test the veracity of the document.
The Complainant relied on a copy of “Amended Tax Credit Certificate- 2019” a document he received from the Revenue Commissioner dated 1st February 2019 for the period 1st January to 31st December 2019. The document lists the Respondent in the table titled “Employer”.
In the absence of any robust evidence from either party, my conclusion on the preliminary matter is based on the limited information obtained from the parties. While it is difficult to comprehend that the parties entered into a complex agreement without some sort of legal document to outline the arrangements between them, neither party offered any such evidence to the Adjudication Officer.
Having considered the evidence, as presented at the hearing I find that, on balance the Complainant was not engaged under a contract of service. However, the arrangement in place conforms with a contract for service being in place. Therefore, the Complainant is not entitled to the protections of the Organisation of Working Time Act. It follows that the Complainant has no entitlement to statutory annual leave as provided by Section 19 of the Organisation of Working Time Act. Consequently, in line with Sullivan v Department of Education PW 2/1997 (reported at  E.L.R. 217), the Complainant is not properly entitled to the sum claimed.
Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act.
I find that this complaint is not well founded.
Dated: 18th December 2019
Workplace Relations Commission Adjudication Officer: Ewa Sobanska
Payment of wages - moot