Anthony Fay

A 1980s brick phone wouldn’t cut the mustard now in the high-octane environment of the corporate world. Contracts of employment are no different and need to keep pace with legislative changes, otherwise there could be severe consequences, including fines, compensation awards, reputational damage and even criminal sanctions.

A prime example is the Transparent and Predictable Working Conditions Regulations which recently transposed an EU directive into Irish law. This legislation places greater responsibilities on employers in terms of providing more detailed terms of employment to employees within five days of starting a job, imposes strict rules on probationary periods and limits the restriction of parallel employment (i.e. having a second job).

2024 is already proving to be a seminal year with minimum wage increases, a hard focus on bogus self-employment arrangements and the imminent right to request remote working (on foot of the freshly inked code of practice submitted to the Irish government for consideration).

The courts, both domestically and in other jurisdictions, have also been a hive of activity in the gig economy age. The Revenue Commissioners v Karshan (Midlands) Ltd trading as Domino’s Pizza was a landmark Supreme Court decision in Ireland delivered last October. The court unanimously held that drivers working for Domino’s Pizza were employees (as opposed to independent contractors) for tax purposes. The Superior Court in this very comprehensive and erudite judgement applied a filter test to determine whether there was a contract of employment in existence.

The Supreme Court noted in particular the working arrangements between the parties, and that the drivers worked from the defendant’s premises, wearing their uniforms and delivering in accordance with the manager’s directions. The driver’s remuneration was fixed at a per-pizza delivery rate. The drivers were controlled by Karshan and brought little by way of personal investment with very limited opportunity to increase their profitability.

However, legal outcomes can be fact-specific. For example, a month later the UK Supreme Court in the case of Independent Workers Union of Great Britain (IWGB) v Central Arbitration Committee unanimously held that riders for Deliveroo were not employees!

The reasons included that the riders were free to reject offers of work, had a broad power to appoint a substitute rider and to undertake work for competitors. Other material differences between the two cases included that the UK decision was concerned with collective bargaining and trade union rights. This perennial issue of differentiating between a contract of services (i.e. an employee) and a contract for services (i.e. self-employed) will no doubt run with the IWGB stating that they were considering their options under international law.

The above case law will have wider ramifications beyond the gig economy for misclassified workers, which potentially could affect consultants, contractors, freelancers, platform workers and service providers. 2023 was by all accounts a busy year for HR departments, in-house counsel, employment lawyers and tax advisers poring over such contracts to determine, in particular, whether it was necessary to regularise matters.

Side letters also grabbed the public’s attention at the early stages of the ongoing RTÉ controversy (although likely related to a client contractor scenario). An employer or client may sometimes furnish these letters by way of commitment or comfort to an employee or contractor respectively.

A side letter should ideally be scrutinised as rigorously as an employment contract. For instance, would the provider be at ease that this side letter could be legally enforceable for example as a separate and/or collateral agreement? An employer could otherwise find themselves defending a breach of contract/quasi-contract claim before the courts. Courtroom litigation can be a more complex and expensive forum, as opposed to the Workplace Relations Commission, to resolve a dispute.

An employer should also be prudent even in verbal communications. There is precedent, wherein the High Court held that a prospective employer owed a duty of care to avoid making a negligent representation or misstatement in the pre-contractual negotiation stages which had the effect of inducing a prospective employee to act to their detriment. The underlying message is clear: don’t make empty promises!

Businesses already face significant recruitment challenges in the context of an Irish economy operating at full employment.

The enterprise committee of the Oireachtas received presentations last month from various stakeholders including Siptu and Social Justice Ireland on platform work issues in Ireland. EU27 is also advancing the Platform Work Directive, which if fully adopted, will be a new regime to improve working conditions for platform workers. These include each member state will establish a legal presumption of employment to be triggered when facts indicating control and direction are found, measures to address false self-employment and the first ever EU legislation to regulate algorithmic management within the workplace.

The key takeaway here is that employers need to be alert to the potential pitfalls of the ever evolving employer-employee relationship. To piggyback on the dialogue of a 90s cult film: choose a written contract, choose an employee handbook, choose a social media policy, choose hybrid working… choose a tripartite agreement… choose a barter account… choose wisely!

• Anthony Fay is principal of Anthony Fay & Co Solicitors in Dublin.