There is anticipation over the impending decision in the Domino’s Pizza Supreme Court Case regarding Karshan (Midlands) trading as Dominos Pizza -v- Revenue Commissions.
It has the potential to settle the status of employee -v self employed contracts in Irish law which are widely used.
At the heart of the Domino’s Pizza Supreme Court Case lies the argument: Should Domino’s pizza delivery drivers be designated as employees of Domino’s, or should they be considered self-employed individuals providing pizza delivery services to the company?
This dispute originated when Karshan, operating as ‘Domino’s Pizza’, asserted that the drivers were working under contracts for services, thereby classifying them as self-employed individuals responsible for their own tax deductions, rather than as employees. Subsequently, a series of court cases unfolded in a concerted effort to definitively establish their true employment status.
While the case primarily stemmed from tax deductions, its repercussions reach well beyond the realm of taxation. Employees in Ireland enjoy a range of protections that self-employed individuals do not. Therefore, categorising drivers as self-employed could potentially diminish their employment rights.
The Legal Journey of the Case
- This case originated at the Tax Appeal Commission.
- The Tax Appeal Commission initially determined that Pizza Delivery Drivers were to be considered employees under Irish Employment Law, and therefore extended them full employment rights.
- Subsequently, the case was appealed to the High Court, which concurred with the classification of the drivers as employees.
- Following the High Court’s decision, the case was further appealed to the Court of Appeal.
- In Domino’s Pizza Supreme Court Case. The Court of Appeal reversed the High Court’s decision, ruling that pizza delivery drivers should be classified as self-employed independent contractors, a classification favourable to Domino’s as the employer.
- This determination was based on their finding of the absence of ‘Mutuality of Obligation,’ a concept we will explore below.
- Now on its final appeal, the case has reached the Supreme Court for resolution.
Issues arising in the Case
As this case has advanced through the legal system, it has raised several fundamental questions regarding the differentiation between employees and self-employed individuals within the framework of Irish law.
While it may appear somewhat trivial at first glance, this distinction carries significant implications, as it pertains to various worker classifications in Ireland. A Supreme Court ruling favouring the employer in this instance could potentially raise uncertainties about numerous existing contracts and potentially undermine employment safeguards for workers. Given these potential far-reaching repercussions for the Irish labour landscape, it is imperative to closely follow the developments in this case.
1. The Nature of Relationship between Domino’s and the Delivery Drivers
A pivotal issue in this case revolved around a specific contractual clause – the fourteenth clause. This clause explicitly states that Domino’s “does not warrant that it will utilise the driver’s services at all.” In essence, this language is designed to convey that the driver is offering a service, which the company can choose to use at its discretion, much like it would with any other service provider, such as its grocery supplier, for example. Consequently, a literal interpretation of the contract implies that Domino’s Pizza would not be obligated to provide any employment rights to the driver, as the relationship is characterised as a service provider-client arrangement rather than an employer-employee one.
The perspective taken by the Irish Court of Appeal, which deemed the drivers as service providers rather than employees, was based on a key principle in employment law: “mutuality of obligation.” This principle states that for an employment relationship to exist, there must be a mutual obligation between the employer and the employee. In this case, the court found that this did not exist for several reasons, including;
- No Obligation to Provide Work: Domino’s was not bound to offer work to the drivers regularly or consistently, even if the drivers made themselves available.
- No Obligation to Accept Work: The drivers were not obligated to accept every work opportunity offered by Domino’s. They had the freedom to decline offers without consequences.
- Freedom to Choose: Domino’s had the discretion to select any driver for a particular shift, demonstrating a lack of control typically associated with an employer-employee relationship.
- Refusal of Work Offers: The company could decline offers from individual drivers to work at any given time, further highlighting their independence.
Given these factors, the Court of Appeal concluded that the absence of mutual obligations and the level of independence and discretion exercised by Domino’s pointed toward a service provider relationship rather than an employer-employee one.
However, this approach faced significant criticism and scrutiny within the legal community. Many believed that the ruling failed to acknowledge the evolving nature of employment relationships in the modern gig economy, where work arrangements often lack clear-cut distinctions. In this era, many workers find themselves in more nuanced employment arrangements that don’t fit neatly into traditional categories.
It is also noteworthy that there are many other jobs which may not pass the strict test as set out by the Court of Appeal, and therefore could be affected by this decision. For example.
- Taxi Drivers
- Drivers for platforms like FreeNow, Uber, or Bolt operate flexibly, choosing when to accept or decline rides, challenging conventional employment categorization.
- Event Staff
- Workers providing services like security or stewarding for companies like Eventbrite or Venues like Croke Park face uncertainty due to the nature of their event-specific roles.
- Beauty and Wellness Professionals
- Hair Stylists, makeup artists, and massage therapists often work independently, managing their schedules and clients, prompting questions about their employment status with salons or businesses.
2. The Question of Right of Sub-Delegation
The second crucial aspect in the Domino’s Pizza supreme court case concerns the right of sub-delegation, also known as the right of substitution, which allows a worker to assign their tasks to another person. In traditional employment settings, employers focus on who performs the work, while in client-contractor relationships, the emphasis is on task completion.
For example, in a hospital, a nurse cannot delegate their responsibilities as their personal presence is vital. However, when a hospital hires a cleaning service, they are concerned with the task’s completion rather than the specific cleaner.
Including a substitution clause in a contract can affect its classification. If there’s a clear right of substitution, the contract may not be considered an employment contract, indicating a higher level of independence typically associated with self-employment.
In the case of Domino’s Pizza, their contract introduced an intriguing element by allowing drivers to engage substitute delivery persons if they were unavailable on short notice, as long as the substitute could fulfil the contractual obligations. This raises questions about the drivers’ employment status.
Notably, Domino’s imposed no specific restrictions on the choice of substitute, and prior approval was not required. The only requirement was that the substitute must be competent, which aligns with the concept of a suitable person often found in independent contractor agreements.
However, it is notable that there were questions about whether this contractual right was in fact enforceable and whether Domino’s allowed substitution in practice.
Analysis and Conclusion
The Domino’s pizza delivery drivers’ employment classification case is undeniably intricate.
It will be of importance as to what test the Supreme court apply as that test will then become the legal test for whether a self employed, or employee relationship exists.
Over the years various tests have been adopted. Revenue have published a 2021 Code of Practice on determining employment status.
It examines the following factors;
- What payment is applied and how it is treated.
- Whether tools or materials are supplied.
- How much opportunity for profit exists.
- Can the person sub-contract the work
- Exclusivity in relation to the services and provider.
These broadly follow examinations by the Courts. The Court of Appeal examined the contract and mutuality of obligations.
The Supreme Court determination is awaited.