Recently, there has been much talk about Domino’s Pizza and the Supreme Court, two institutions which rarely go hand in hand. Last month, however, the Supreme Court delivered a highly significant decision in relation to the employment classification of Domino’s delivery drivers. The decision has the potential to have implications for both companies and workers across Ireland.
The case concerned delivery drivers engaged under contracts in 2010 and 2011 by Karshan (Midlands) Ltd, trading as Domino’s Pizza. The drivers argued that they were employees for tax purposes and Karshan said they were independent contractors under “contracts for service”.
Under the contracts, described as ‘umbrella’ agreements, delivery drivers committed to confirm availability for work one week in advance and would then be rostered. There was no mutuality of obligation, i.e. the workers were not obliged to take shifts nor were Domino’s obliged to provide work, and this fact was relied on heavily by Karshan, as well as by the Court of Appeal who found in Karshan’s favour.
A 2018 decision of the Tax Appeals Commissioner stated that delivery drivers working for Karshan (Midlands) Ltd trading as Domino’s Pizza should be treated as PAYE employees rather than self-employed independent contractors. The decision of the Tax Appeals Commissioner was upheld by the High Court in 2019, before being overturned by the Court of Appeal in June 2022.
The decision of the Court of Appeal was appealed by the Revenue Commissioners to the Supreme Court which unanimously overturned that decision, stating that Domino’s delivery drivers were employees and not independent contractors, ending the long-running dispute over the matter.
In its decision the Supreme Court focused on whether the contract between the drivers and Dominos was a contract ‘for’ services or ‘of’ services. This distinction is an important one. A contract of services is indicative of an employment relationship, whereas a contract for services indicates that the workers are independent contractors.
The Supreme Court stated that, when determining whether a contract is for or of services, one must look at: whether the contract involves the exchange of wages or other remuneration for work?; if so, is the agreement one in which the worker is agreeing to provide their own services and not those of a third party to the employer?; and, then, does the employer exercise sufficient control over the employee to render the agreement one that is capable of being an employment agreement?
If these three conditions are met, then the decision maker must then look at the terms of the contract and the reality of the working arrangements to see whether these are consistent with a contract of employment.
In particular, the Supreme Court placed emphasis on the degree of control under which the work is performed. As, in this case, Domino’s controlled the main aspects of the delivery driver’s jobs, it was taken that the drivers were employees, despite the fact that the drivers were not obliged to work any specific hours or shifts offered by Domino’s. The Supreme Court also noted that the drivers are not obligated to be employees unless they chose to be.
The decision from the Supreme Court may have future consequences for workers across the country. While it is important to note that this was a tax case, it may have an impact on the classification of workers in relation to employment rights. Companies often use non-standard forms of employment, such as classifying workers as ‘independent contractors’, as a means to avoid having to pay workers statutory entitlements, such as annual leave.
The work arrangements at the centre of this case are, perhaps, representative of the growing prevalence of non-standard forms of employment relationships. The increase in such non-standard employment arrangements raises significant questions about the strength and suitability of employment legislation, designed with the traditional employment relationship in mind.
Tara Keogh & Mark O’Rourke – Features Team