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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Karshan (Midlands) Trading as Dominos Pizza v Revenue Commissioners [2019] IEHC 894 (20 December 2019)
URL: http://www.bailii.org/ie/cases/IEHC/2019/2019IEHC894.html
Cite as: [2019] IEHC 894
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THE HIGH COURT
[2019] IEHC 894
[2019 No. 31 R]
BETWEEN
KARSHAN (MIDLANDS) LIMITED TRADING AS DOMINOS PIZZA
PLAINTIFF
AND
REVENUE COMMISSIONERS
DEFENDANT
JUDGMENT of Mr. Justice Tony O’Connor delivered on the 20th day of December, 2019
Introduction
1. This is an appeal by way of case stated for the opinion of the High Court pursuant to s.
949AQ of the Taxes Consolidation Act 1997 (“TCA”). The appeal relates to a
determination of Tax Appeals Commissioner Gallagher (“the Commissioner”) dated 8th
October, 2018, which decided that pizza delivery drivers engaged by the appellant (“the
drivers”) worked during the relevant tax years of assessment (2010 and 2011) under
contracts of services and are taxable pursuant to schedule E of the TCA (“the
determination”). The appellant contends that the drivers operate under contracts for
services, are therefore self-employed, and taxable pursuant to schedule D of the TCA.
Contracts and performance
2. The determination noted facts admitted or proven which are included in the following
summary:-
(i) The written agreement between the appellant and each driver inter alia:-
a. Identified each driver retained by the appellant as an “independent
contractor”;
b. Stipulated that drivers were paid according to the number of deliveries
successfully undertaken;
c. Provided for payments by the appellant to drivers for brand promotion
through the wearing of branded clothing and or logos affixed temporarily to
vehicles used by drivers. Clothing and logos were provided by the appellant
to the drivers;
d. Required drivers to use their own cars and motor insurance. (The provision
made for drivers to rent cars was not operated);
e. Offered drivers appropriate business use insurance on a third party basis at a
pre-determined rate;
f. Did not warrant a minimum number of deliveries and drivers consequently
assumed financial risks and rewards “in keeping with all self-employed
individuals”;
g. Obliged drivers to provide invoices and maintain their own records;
h. Required drivers to maintain the confidentiality of trade information and
secrets of the appellant;
i. Allowed drivers to engage a substitute driver provided that substitute could
perform all contractual obligations of the driver to the appellant;
Page 2 ⇓
j. Did “not warrant or represent” that the appellant “will utilise” the services of
each driver “at all” while drivers had the right to notify the appellant of days
and times on which they were available;
k. Confirmed in the final clause of the contract that the driver undertook work
for the appellant “strictly as an independent contractor”.
(ii) All drivers were required to sign a document to confirm that the appellant “has no
responsibility or liability whatsoever for deducting and/or paying PRSI or tax” on
monies which the appellant paid for their work.
(iii) Drivers were required to pay a deposit for clothing provided by the appellant.
(iv) Rosters were drawn by a store manager of the appellant after drivers had filled out
“an availability sheet” approximately one week beforehand.
(v) The substitute, whether chosen by the drivers or the appellant, was paid by the
appellant.
(vi) The branded uniform of cap, shirt, jacket and name tag together with the black
trousers and black shoes were mandatory and subject to checks by managers of
the appellant.
(vii) Drivers had to use their own phones to contact customers if necessary.
(viii) Drivers were obliged to provide the appellant with certificates of business use
insurance.
(ix) The appellant ensured that drivers would only get two deliveries at a time and one
delivery if another driver was waiting.
(x) Some drivers were required to fold boxes while waiting for deliveries to be ready.
(xi) The appellant furnished prepaid invoices for signature by many drivers.
(xii) Drivers clocked in and clocked out on the appellant’s computerised system using
driver numbers resulting in the collating and maintenance of that information by
the appellant.
(xiii) Drivers were given a cash float which was returned at the end of each shift.
(xiv) A non-negotiable sum of €1.20 was paid to drivers per drop with an added 20c for
insurance and drivers were also paid €5.65 per hour in respect of brand
promotions.
Core issues
3. Counsel for the appellant ultimately contended that the Commissioner erred in law in her
interpretation and/or application of the following concepts:-
(i) Mutuality of obligations;
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(ii) Substitution;
(iii) Integration;
(iv) Terms of the contract, specifically that the Commissioner failed to give proper
weight to the actual terms of the contract.
The Court therefore proceeds to analyse the submissions made under each of those headings.
Jurisdiction of the High Court on an appeal by way of case stated
General
4. Kenny J. in Mara (Inspector of Taxes) v. Hummingbird Ltd [1982] ILRM 421 at p. 426
explained:-
“A case stated consists in part of findings on questions of primary fact, e.g. with
what intention did the taxpayers purchase the Baggot Street premises. These
findings on primary facts should not be set aside by the courts unless there was no
evidence whatever to support them. The commissioner then goes on in the case
stated to give his conclusions or inferences on these primary facts. These are
mixed questions of fact and law and the court should approach these in a different
way. If they are based on interpretation of documents, the court should reverse
them if they are incorrect for it is in as good a position to determine the meaning of
documents as is the commissioner. If the conclusions from the primary facts are
ones which no reasonable commissioner could draw, the court should set aside his
findings on the ground that he must be assumed to have misdirected himself as to
the law or made a mistake in reasoning. Finally, if his conclusions show that he has
adopted a wrong view of the law, they should be set aside. If however they are not
based on a mistaken view of the law or a wrong interpretation of documents, they
should not be set aside unless the inferences which he made from the primary facts
were ones that no reasonable commissioner could draw.”
5. Blayney J. in Ó Culachain v. McMullan Brothers Ltd [1995] 2 I.R. 217, cited by the
as follows at pp. 222-223:-
“(1) Findings of primary fact by the judge should not be disturbed unless there is no
evidence to support them.
(2) Inferences from primary facts are mixed questions of fact and law.
(3) If the judge’s conclusions show that he has adopted a wrong view of the law, they
should be set aside.
(4) If his conclusions are not based on a mistaken view of the law, they should not be
set aside unless the inferences which he drew were ones which no reasonable judge
could draw.
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(5) Some evidence will point to one conclusion, other evidence to the opposite: these
are essentially matters of degree and the judge’s conclusions should not be
disturbed (even if the court does not agree with them, for we are not retrying the
case) unless they are such that a reasonable judge could not have arrived at them
or they are based on a mistaken view of the law.”
6. Reference to “judge” in the above extract applies equally to the Tax Appeals
Commissioner.
Burden of proof
7. Substantive issues of fact described in the case stated are not disputed although the
interpretation of the umbrella contract provision for substitution looms. The appellant, as
the relevant taxpayer, bears the burden of establishing that the drivers were engaged
under a contract for services. An appeal by way of case stated is different from a
consultative case stated where a more expansive approach can be taken. In this appeal
the Court is restricted to identifying the law and applies a deference to the Commissioner
who has experience in determining facts with an eye to the applicable law. There was
indeed an intricate if not complex factual matrix with which the Commissioner grappled.
8. The determination explained the law which the Commissioner applied. Counsel for the
appellant through this case stated process sought to identify errors of law made by the
Commissioner. Under the heading “mutuality of obligations” and “integration”, the
submissions concerned the explanation and application of the law by the Commissioner.
On the other hand, the appellant confined its challenge under the “substitution” and
“terms of the written contract” to the application of the law by the Commissioner. In
other words, the appellant has the burden of specifying and establishing the errors of law
made in the Commissioner’s statement of the law for the concepts known as “mutuality of
obligations” and “integration”. The appellant then has the onus to establish that the
Commissioner misapplied the law specifically and in general, taking account of the four
above mentioned concepts.
Function of this court
9. Between the extreme examples of “contract of service” and “contract for services”
inevitably lies an intermediate range which may lead to different conclusions by those
applying the relevant legal principles. Therefore, special circumstances and an overview
of the factual position concern a forum of first instance rather than a court with a
jurisdiction that is inherently deferential to the fact finder.
10. The Commissioner heard evidence from nine witnesses including a number of drivers.
The Commissioner has the necessary skill and experience to elicit and determine all facts
that are relevant. There is no de novo appeal hearing.
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[2011] ICR 806, at para. 30, explained the function at an appeal tribunal which can equally apply
to this Court:-
“The reading of an employment tribunal decision must not, however, be so fussy
that it produces pernickety critiques. Over-analysis of the reasoning process; being
hypercritical of the way in which the decision is written; focussing too much on
particular passages or turns of phrase to the neglect of the decision read in the
round: these are all appellate weaknesses to avoid.”
12. In summary, the burden of proof on the appellant is indeed onerous. The structure of
this judgment is to explain impacting submissions made by the parties under a heading
for each of the concepts. Then the Court gives its reasons for its decision on specifics and
generally.
Mutuality of obligation
13. The appellant submits that mutuality of obligation is the sine qua non of an employment
relationship. There must be an obligation on the employer to give the employee work and
there must be an obligation on the employee to carry out the work for the employer. The
Commissioner held in this case that there was an overarching umbrella contract
supplemented by multiple individual contracts in respect of each assignment or roster of
work. The requirement of mutuality was satisfied in the individual contracts.
14. The principal case cited by the Commissioner was Weight Watchers (UK) Ltd v. Revenue
and Customs Commissioners [2011] UKUT 433 (TCC), [2011] All ER (D) 229 (Nov)
(“Weight Watchers”). It is worth summarising the facts to create context. “Leaders”
were engaged by Weight Watchers which is known to promote meetings of those wishing
to lose weight. Leaders were required to arrange and conduct those meetings. The
appellant (Weight Watchers) appealed determinations that the leaders were subject to
PAYE and a contribution similar to PRSI.
Appellant’s submissions
15. According to the appellant the “so-called supplemental multiple individual contracts … are
at the heart of the decision under appeal” in respect of each assignment or roster of work.
The appellant emphasises that clause 14 of the contract recognises the freedom of a
driver to work when he or she chooses. The Commissioner was incorrect in relying upon
English law and should have applied the law in Ireland as understood by the appellant.
The appellant challenges the findings in the following paragraphs:-
“82. In this appeal, the right of a driver to cancel a shift was qualified by the
requirement to engage a substitute, to provide advanced notification to the
appellant and to work out the remainder of the shifts in the series which had been
agreed.
83. I agree with the reasoning of Briggs J. in Weightwatchers (UK) Ltd and I conclude
that a contract which provides drivers with the right to cancel shifts at short notice
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does not relieve a driver of work related obligations in the manner contended for by
the appellant.
84. Thus I determine that the requirement of mutuality of obligation were satisfied in
the individual contracts entered into between the Appellant and the drivers, each
contract representing an assignment of work (comprising one or more shifts), and
that these obligations were not invalidated by clauses 12 and/or 14 of the written
agreement, and were not invalidated on any other basis.”
16. By relying on English cases, the appellant submits that the Commissioner failed to follow
Irish case law (discussed below) which “posits a strict view of mutuality that goes
significantly beyond the work/wage exchange and requires an ongoing reciprocal
commitment to provide and perform work on the part of the employer and employee
respectively.”
17. The appellant also focused on para. 49 of the determination:-
“Thus in the within appeal, the umbrella contract required a driver … to initiate an
agreement with the Appellant in relation to his availability for work …. Once the
Appellant rostered a driver for one or more shifts of work, there was a contract in
place, in respect of which the parties retained mutual obligations.”
to submit that the Commissioner was “legally incorrect” because the umbrella agreement
did not require a driver to initiate an agreement with the appellant.
(unreported, High Court, 16th November, 2016), where the contract in that case
committed the employer to “endeavour to maintain sufficient work for” the worker. There
the plaintiff claimed that he was an employee so that he could maintain a claim under the
unfair dismissals legislation. The appellant submits that such a clause is stronger for a
worker than exists in the contract before this Court. Ní Raifeartaigh J. found that there
was an absence of mutuality in McKayed and the appellant contends that a similar finding
should be made in this case. Thus, where the appellant specifically does not warrant or
represent that the appellant will utilise the services of the driver, the mutuality of
obligations cannot be found to exist.
19. The appellant argues that McKayed contained factual elements which pointed more
strongly towards employment than those in the current case and yet the court held that
there was no mutuality of obligation.
Revenue’s submissions
20. The defendant (“Revenue”) submits that the contractual relationship between the
appellant and the drivers as found by the Commissioner does indeed comprise a hybrid
contract consisting of an overarching umbrella contract supplemented by individual
contracts in respect of each assignment or roster of work.
Page 7 ⇓
21. The hybrid contract description appears in the judgment of Briggs J. in Weight Watchers,
and more particularly at para. 30:-
“… The third, hybrid, class consists of an over-arching contract in relation to certain
matters, supplemented by discrete contracts for each period of work. In this hybrid
class, it may be (and is, in the present case) sufficient if either the over-arching
contract or the discrete contracts are contracts of employment, provided that any
contract or contracts of employment thus identified sufficiently resolve the question
in dispute. Where, as here, the question is whether the PAYE regime and the
applicable [national insurance] regime apply to the work done by the leaders, it is
clearly sufficient if there is identified either a single over-arching contract of
employment or a series of discrete contracts of employment which, together, cover
all periods during which the leader’s work is carried out.”
22. Revenue notes clause 14 of the contract: “The Company … recognises the Contractor’s
right to make himself available on only certain days and certain times of his choosing.”
Revenue argues that this requires a driver to initiate an agreement with the appellant in
relation to his availability for work.
23. Revenue refers to the material fact as found by the Commissioner that the practice, in
relation to rostering of shifts, was that the drivers filled out an “availability sheet”
approximately one week prior to the drawing up of a roster. The roster was drawn by a
store manager based on the availability sheets. Thus, the Commissioner found that once
the appellant rostered a driver for one or more shifts, there was a contract containing
mutual obligations.
Minister for Agriculture v. Barry
24. Both parties cite the judgment of Edwards J. in Minister for Agriculture v. Barry
applicable law.
25. The ongoing saga of the temporary veterinary inspectors (“vets”) who worked at a meat
processing plant in Mitchelstown, Co. Cork, which closed in October 2004, is worth
outlining.
26. The vets lodged claims with the then Employment Appeals Tribunal (“EAT”) on 21st April,
2005, contending that they worked under a “contract of service” for the appellant Minister
(“the Minister”) and that they were entitled to redundancy payments. The Minister had
given directions that the vets could have their names placed on a maximum of four panels
(i.e. four meat plants) but could hold only one regular shift. The panels operated on the
basis of seniority, availability and suitability. Details of the functions, reporting structure,
equipment and materials provided by the Minister, hours of work, payment of PAYE and
PRSI, training and disciplinary proceedings, and annual leave entitlements were set out in
paras. 16 to 41 of the judgment of Edwards J.
Page 8 ⇓
27. The EAT decided to hear a preliminary point about whether the vets were employed under
a contract of service or a contract for services. Edwards J. found at para. 43 as follows:-
“In each instance it was incumbent on the tribunal to ask three questions. The first
question was whether the relationship between each respondent and the appellant
was subject to one contract, or more than one contract. The second question
involved the scope of each contract. The third question involved the nature of each
contract.
[44] As I have stated, there were various possibilities. It was, of course, possible
that each of the respondents, respectively, was employed under a single contract
which, upon a thorough examination of the circumstances, might fall to be
classified as either a contract of service or a contract for services. However,
another possibility was that on each occasion that the temporary veterinary
inspectors worked they entered a new contract, and these contracts, depending on
the circumstances, might fall to be classified as contract of service or contracts for
services. A third possibility is that on each occasion that the temporary veterinary
inspectors worked they entered a separate contract governing that particular
engagement, which might be either a contract of service or a contract for service,
but by virtue of a course of dealing over a lengthy period of time that course of
dealing became hardened or refined into an enforceable contract, a kind of
overarching master or umbrella contract, if you like, to offer and accept
employment, which master or umbrella contract might conceivably be either a
contract of service or a contract for services or perhaps a different type of contract
altogether. This notion of an umbrella contract, though controversial, has featured
in several English cases involving particular classes of workers, such as outworkers,
casual workers and piece workers: see, for example, Airfix Footwear Limited v.
Cope [1978] I.C.R. 1210 and Nethermere (St. Neots) Limited v. Gardiner
[1984] I.C.R. 612.”
28. Under the heading mutuality of obligation Edwards J. at para. 47 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.”
29. Edwards J. found that the vets “… were entitled to decline to work at the very least 16%
of the shifts offered to them without that refusal having any consequences for their
contracts” (para. 49) and that there was no commitment to “… work on an ongoing basis”
(para. 51) which led him to find that the determination by the EAT concerning the
mutuality of obligations was flawed. Edwards J. did not find that the vets worked
pursuant to a contract for services but rather found that the EAT was in error when
considering each question about which they should have asked themselves.
Page 9 ⇓
30. Following the order for remittal made by Edwards J., the EAT felt that it had been
instructed to change its original determination and found, in its second determination
dated 31st July, 2009, that the vets were engaged under a contract for services.
(unreported, High Court, Hedigan J., 9th February, 2011) led to the Supreme Court
(unreported, Supreme Court, 16th July, 2015). Charleton J., in the concluding paragraph
of his concurring judgment, explained:- “The case of whether the vets were employed by
the respondent Minister or were, instead, self employed persons doing shifts at the
Mitchelstown meat plant is a matter of fact for the [EAT] on a rehearing of the matter.”
(para. 17).
32. The saga continues because the subsequent ruling of the EAT is now the subject of further
High Court proceedings which were commenced by the issue of a special summons on
28th April, 2017, with record number 2017/199 SP.
33. The consideration of the claims made by the vets indicate some of the difficulties arising
in first instance applications of the law to facts established where there is a dispute about
whether workers have a contract of services or a contract for services. In truth, there is
no comprehensive statutory or common law definition of a “contract for services” or
“contract of service” even though those terms are regularly used. Those adjudicating at
first instance, whether a commissioner or court, may be tempted to adopt a box-ticking
exercise when considering if an appellant or claimant is an employee or not. In fact,
classification needs a careful and flexible understanding of relationships.
Substitution
34. Clause 12 of the agreement provided:-
“The Company accepts the Contractor’s right to engage a substitute delivery person
should the Contractor be unavailable at short notice. Such person must be capable
of performing the Contractor’s contractual obligations in all respects.”
35. The Commissioner found as a material fact that the substitution clause permitted drivers
to substitute another of the appellant’s drivers when they were unavailable and that the
substitute driver would be paid by the appellant in respect of that shift of work.
Appellant’s submissions
36. The appellant submits that the Commissioner wrongly concluded “that the drivers were
not genuinely entitled to sub-contract the performance of their duties” apparently “based
on two factors: first, that any replacement drivers were paid directly by the appellant and,
second, that such drivers had to be approved of by, and entered into a separate contract
with, the appellant.”
37. The appellant contends that there was no requirement to arrange for the work to be done
by another person. There was indeed a right of substitution but there was no obligation,
Page 10 ⇓
according to the appellant. This Court is only concerned with the application of the law
which concerns “substitution” and is not concerned with the findings of fact made by the
Commissioner.
38. The various judgments relied upon by the appellant:-
[1998] I.R. 34, (“Henry Denny”);
I.R. 150 (“Castleisland”);
[2006] ITR 63,
contemplate, according to the appellant, that the right (as opposed to the obligation) to
substitute a worker for oneself is at most indicative of the employment relationship.
39. The appellant contends that the distinction posited in Weight Watchers between two
distinctive forms of substitution is not recognised in Irish law. The appellant further
submits that the right of an employer to approve substitutes does not indicate an
employment relationship. The fact that the appellant exercised a significant measure of
control over the drivers’ choice of delegates is insufficient to indicate the existence of an
employment relationship, according to the appellant.
Revenue’s submissions
40. Revenue submits that in reality, the drivers did not have freedom to substitute but could
nominate a replacement approved by and paid for directly by the appellant.
41. Relying on Weight Watchers, Revenue contends that true substitution occurs when the
person (the driver in this appeal) is free to have the work performed by himself or by
some other person and that he (the driver) will be paid for the work. Critical, according
to Revenue, is the provision for payment to the replacement driver by the appellant.
42. Revenue distinguished the facts described in the judgment of the Supreme Court in
Castleisland where statutory regulations were found to have required approval. Revenue
also distinguishes Tierney where the applicant there was entitled to employ others to
assist in the post office business. In this appeal, the replacement of one driver for
another driver requires selection from a pool of drivers maintained by the appellant.
Integration
43. Integration is a concept which was described by Denning L.J. in Stevenson Jordan and
Harrison Ltd v. MacDonald and Evans [1952] 1 TLR 101 at p. 111 as follows:-
Page 11 ⇓
“One feature which seems to run through the instances is that, under a contract of
service, a man is employed as part of the business and his work is done as an
integral part of the business whereas under a contract for services, his work,
although done for the business is not integrated into it but is only accessory to it.”
(emphasis added.)
Appellant’s submissions
44. The appellant emphasises the integration test applied in Re Sunday Tribune Ltd
issue to be determined is whether the kind of work done by the drivers (i.e. pizza
deliveries) is integral to the business of the appellant. The integration test, according to
the appellant “is entirely different from a test of integration which merely asks whether
the work being performed was integral to the business” which “was erroneously applied”
by the Commissioner. The appellant submits that the drivers must be regarded as “only
accessory” to the business of the appellant. If the broader integration test had been
applied (i.e. did the drivers form part of the appellant’s organisation?) there should have
been a finding of contracts for services between the drivers and the appellant because the
drivers, as opposed to their work, were not integral to the business of the appellant.
Revenue’s submissions
45. Revenue submits that the drivers play a vital role and are essential components of the
appellant’s business. Revenue distinguishes the facts in Sunday Tribune on the basis that
each of the reporters there had different roles for the newspaper. In this appeal the
drivers are engaged under similar terms and conditions which fact supports the
integration of the drivers.
Terms of the contract
46. The Commissioner found the following facts:-
(i) Contrary to clause 4 of the contract, vehicles were not available to rent;
(ii) The appellant prepared invoices which the drivers signed;
(iii) Some drivers were asked to assemble boxes when time permitted.
47. The appellant argues that the Commissioner erred in law in failing to give proper weight
to the actual terms and conditions of the contract. The appellant submits that the
Commissioner erred in her statement at para. 155 of the determination: “[t]he law is
unambiguous as regards the minimal weight to be attached to the description of the
drivers in the written contracts as ‘independent contractors’.” The appellant argues that
the Commissioner effectively paid little or no attention to the wording used in the written
(alleged) umbrella contract.
48. Revenue refer to repeated judicial statements (Keane and Murphy JJ. In Henry Denny at
pp. 51 and 53 respectively, and Geoghegan J. in Castleisland at p. 161) to the effect that
Page 12 ⇓
the decisive factor is to look at how the contract is worked because wording is not
definitive of the nature of the work.
Conclusions
Mutuality
49. The description by the Commissioner about an obligation for drivers to initiate an
agreement should be taken in context. The Court understands that the initiation of the
relevant contract for each roster depended on a driver making himself available. The
Commissioner did not err in characterising the umbrella and hybrid agreements.
50. The Court is not persuaded that mutuality of obligations always requires an obligation to
provide work and to complete that work on an ongoing basis in the manner contended for
by the appellant. “Ongoing” does not necessarily connote immediate continuation or a
defined period of ongoing. There is no binding precedent to suggest that the ongoing
basis between the appellant and the drivers does not meet the criteria required. The
appellant bears the burden of establishing that the application of “ongoing” as found by
the Commissioner was an error of law. This case is concerned with whether the
Commissioner misstated or misunderstood the law about the mutuality of obligations.
The Commissioner, in relying upon Weight Watchers did not go against Irish law but
rather recognised the necessity to adapt to modern means of engaging workers. The
appellant agreed to provide work when the appellant needed the driver, who notified the
appellant about his or her availability. The Commissioner considered the facts and
applied her understanding of the law which the appellant has not established to have
been incorrect. The appellant has not discharged its burden to establish that the
Commissioner misunderstood or misapplied the law in Ireland concerning the concept of
mutuality.
51. The reference in Barry to the need for an ongoing series of mutual obligations should be
understood having regard to the claims in Barry which related to redundancy entitlements
that depended on length of service. Revenue correctly submits that hybrid contracts of
employment are relevant in tax or PRSI cases such as that now before the Court.
Undoubtedly, umbrella and hybrid contracts require more ongoing commitments in unfair
dismissal, redundancy and other labour rights cases due to the statutory triggers based
on defined periods of employment. The Commissioner took the facts into account when
applying the law which is admittedly difficult to summarise for all circumstances.
Mutuality of obligations can occur under an umbrella contract which is modified by the
operation of ongoing relationships that carry obligations for both sides of the contract of
employment.
52. The appellant sought to distinguish the findings in the judgments in Pimlico Plumbers Ltd
41, [2011] 4 All ER 745 that there were agreed number of hours despite the written
express terms to the contrary. Paragraphs 81 to 84 of the determination set out following
are logical and understandable:-
Page 13 ⇓
“81. While there are differences in Pimlico and in Autoclenz (i.e. the contract in Pimlico
specified a minimum number of hours to be worked while the contract in Autoclenz
did not actually reflect what was agreed between the parties) the reasoning in
these cases is of assistance insofar as it does not support the proposition that if
there is such a clause (i.e. a clause which provides that the provider of work has no
obligation to offer work and the putative recipient has no obligation to accept work)
that mutuality of obligation is absent.
82. In this appeal, the right of a driver to cancel a shift was qualified by the
requirement to engage a substitute, to provide advance notification to the Appellant
and to work out the remainder of the shifts in the series which had been agreed.
83. I agree with the reasoning of Briggs J. in Weight Watchers (UK) Ltd. and I conclude
that a contract which provides drivers with the right to cancel shifts at short notice
does not relieve a driver of work related obligations in the manner contended for by
the Appellant.
84. Thus I determine that the requirement of mutuality was satisfied in the individual
contracts entered into between the Appellant and the drivers, each contract
representing an assignment of work (comprising one or more shifts), and that these
obligations were not invalidated by clauses 12 and/or 14 of the written agreement,
and were not invalidated on any other basis.”
53. The written “umbrella” contract did indeed require a driver to initiate an agreement with
the appellant.
54. I cannot criticise the Commissioner’s findings that:
(i) A driver who wanted work had to put his name on the availability sheet;
(ii) Once rostered by the appellant, there was a contract which retained mutual
obligations.
55. In the circumstances the right to cancel a shift at short notice imposed obligations to
engage a substitute and to work out the remainder of the shifts in the series.
56. This scenario is different from the engagement of a self-employed tradesman or solicitor.
Drivers, unlike those service providers, work rosters and shifts. A self-employed plumber
may agree to service a boiler but the plumber has inherently tremendous latitude in that
task unlike the drivers who had ongoing obligations.
57. This Court has not been satisfied by the appellant that the Commissioner erred in the
determination under the heading mutuality of obligations.
Substitution
Page 14 ⇓
58. The reliance by the appellant on the Supreme Court judgment in Castleisland
conveniently overlooks the fact that the inclusion of terms requiring approval for
substitutes occurred in that social welfare appeal due to the necessity to comply with
statutory regulations for artificial inseminators. The appellant imposed the terms about
substitution.
59. The Commissioner determined that “[t]he absence of an ability to genuinely subcontract
is a factor which indicates that the drivers worked under contracts of service as opposed
to contracts for services.” The Commissioner did not err in applying the fact that drivers
did not hire assistants; rather one driver was replaced with another driver from the
appellant’s pool of drivers. The substitute was paid by the appellant. A substitute was
not a sub-contractor of the driver. Moreover, the driver and substitute left it to the
appellant to prepare invoices for them respectively.
60. This factor of substitution does not avail the appellant as is urged on its behalf. The
appellant has failed to satisfy this Court that the Commissioner erred in her application of
the law in this regard.
Integration
61. Paragraphs 120 to 125 of the determination contain a detailed consideration and
description of the appellant’s delivery service and elements of integration which point to
satisfying the integration test. The Commissioner cited Uber BV v. Aslam
drivers (which was upheld (2-1) in the Court of Appeal in Uber BV v. Aslam [2018] EWCA
Civ 2748, [2019] 3 All ER 498, on 19th December, 2018) in support of her conclusion that
the pizza delivery service is fundamental to the business “and is not merely accessory to
it.”
62. The Commissioner did not hear either side about whether Uber (the Court of Appeal
judgment was delivered after the date of her determination) could be distinguished. The
appellant submits that Uber relates to a category of “workers” which is an intermediate
category between “independent contractors” and “employees” provided for under s.
230(3)(b) of the UK Employment Rights Act 1996.
63. Despite the indignation expressed on behalf of the appellant, the distinction between a
“worker” and an “employee” in the UK legislation was not central to the reliance placed by
the Commissioner on Uber and the other UK judgements cited in the determination for
the integration and mutuality issues.
64. This case stated is not a judicial review of the procedures adopted by the Commissioner.
The Court repeats that the appellant bears the onus of satisfying this Court that the
Commissioner erred in her application of the law in relation to integration.
65. Having read paras. 120 to 125 of the determination with the objective of scrutinising the
submission that the Commissioner focussed only on the nature of the delivery business as
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opposed to the functions and obligations of the drivers, I conclude that the Commissioner
did have regard to the integration of the drivers into the business of the appellant. The
reasoning in the determination is not flawed; the Commissioner looked at many factors,
including the requirement for drivers to:-
(i) Wear uniforms and place logos on their cars;
(ii) Reassure customers that they were dealing with personnel of the appellant;
(iii) Maintain a coherent operation under the care of the appellant;
(iv) Take telephone orders from the appellant and not the customers of the appellant.
Written terms
66. Written terms in an umbrella agreement, which can be used piecemeal or in ways which
will suit the practicalities of those who engage and those who work, were interpreted by
the Commissioner at first instance with an eye on the reality of the relationships between
drivers and the appellant. The words of Keane J. in Henry Denny (p. 53) about the
written terms having “marginal” value echo in this regard. Moreover, Geoghegan J. in
Castleisland at p. 150 referred to the necessity to “…look at how the contract is worked
out in practice as mere wording cannot determine its nature”. In short, this Court sees
no real merit in the submissions made on behalf of the appellant under this heading. The
Commissioner found the facts, summarised her understanding of the law and applied
same without an error which has been established to the satisfaction of this Court.
Point not pursued
67. The Court appreciates the concession for the appellant that the decision of the Social
Welfare Appeals Office in August 2008 concerning a self-employed worker for a pizza
enterprise using the same trading name as that of the appellant has no effect or
relevance to the matters under consideration in this Court.
Order
68. Therefore, the Court will make an order to the effect that the Commissioner was correct
in law and I will hear counsel about the precise terms of the order for each question.
Result: Tax Appeals Commissioner correct in interpretation and application of four concepts when determining that appellant's drivers had contracts of service