Employed v Self-employed - The Barry Case Rumbles On
There has been a recent development in the long running legal case (John Barry and Others v The Minister for Agriculture and Food) in relation to the employment status of individuals. This case highlights the complex nature of working arrangements and the difficulty that sometimes arises in determining whether an individual should be treated as employed or self-employed, which can create a tax risk for employers.
The Employment Appeals Tribunal (EAT) has made a further decision in this case, this being their third decision at this stage.
This case involved five individuals engaged by the Minister for Agriculture and Food (the Minister) as Temporary Veterinary Inspectors (TVIs) who claimed that, as employees, they were entitled to statutory redundancy payments and minimum notice on the closure of the Galtee meat plant in Mitchelstown in 2004 where they had been working inspecting animals.
This case has had an extraordinary legal journey. In 2006, the EAT found in favour of the claimants i.e. that the TVIs were employees. That decision was appealed to the High Court, which returned it back to the EAT. The EAT subsequently concluded that the TVIs were not employees. The TVIs appealed this decision to the High Court, which found that that there was nothing in the additional evidence by the TVIs which was of such importance that no reasonable Tribunal, having heard it, would be entitled to conclude that the TVIs were engaged other than under a contractor arrangement. This decision was further appealed to the Supreme Court. The Supreme Court sent the case back to the EAT in 2016. In March 2017, the EAT decided that the TVIs were not employees as there was not sufficient mutuality of obligation. However, it appears that we have not heard the last of this case, as we understand that a challenge to this decision has been lodged in the High Court
This case highlights the complex nature of working arrangements and the difficulty that sometimes arises in determining whether an individual should be treated as employed or self-employed. Employers must be careful when engaging contractors and the onus is on the business engaging the individual to determine whether the individual should be treated as an employee or a self-employed contractor. Unfortunately, the terms “employed” and “self-employed” are not defined in law. In order to determine which category an individual should fall into, an employer must look at what he/she does, the way he/she does the work and the terms and conditions under which he/she is engaged, among other factors.
Over the past number of years there has been an increase in Revenue audits targeting this area. If, in the event of a Revenue audit, the Revenue treats an individual as being an employee rather than a self-employed contractor, then the business engaging the individual will be held liable to account for any shortfall of PAYE, PRSI and USC due. It is therefore advisable for employers to review all payments made to contractors to ensure that they are being dealt with correctly for PAYE, PRSI and USC purposes.
If you have any questions in relation to the above, or if you would like to discuss this topic further, please do not hesitate to contact a member of the Mazars employment tax team below: