Business Plus

Editor’s Note


Ireland’s judiciary is expanding at a fast clip, but income opportunit­ies for the freelance cyclists who deliver their meals in redbrick Dublin 6 may have diminished. Through 2023, justice minister Helen McEntee has appointed 24 new judges, augmenting the previous total of 175, with another 20 new positions promised in future years. However, the problem with judges, especially in the higher courts, is that they interpret the law differentl­y.

A good example is the protracted case involving the Revenue Commission­ers and Karshan Midlands Ltd, a successful Domino’s Pizza franchisee. Revenue decided that Karshan’s delivery drivers were employees, even though the company went to some lengths to distinguis­h the drivers as independen­t contractor­s. Karshan challenged Revenue at the Tax Appeals Commission and in the High Court and lost both times. The company had better luck in the Court of Appeal, but recently this issue, which commenced in 2014, concluded with a 7-0 Revenue victory in the Supreme Court.

With a related Karshan company paying €20m dividends to shareholde­rs last year, affording the back taxes won’t be an issue for the pizza business. However, it will be an irritation. Karshan’s arrangemen­t with casual workers was determined by employment tax rules as the company understood them in 2010 and 2011. Two esteemed Court of Appeal judges agreed with this interpreta­tion in 2022, but it turns out that Justices Haughton and Costello erred in law, according to seven of their more senior colleagues.

The ‘master and servant’ issue has engaged judges since Victorian times; one precedent cited by Justice Mahon in the Supreme Court ruling dated from 1880. In a 50,000-word judgment — half the size of a paperback blockbuste­r — the judge endeavoure­d to bring some clarity to the ‘contact of service’ v. ‘contract for services’ and ‘mutuality of obligation’ issues. Unfortunat­ely for gig economy employers, and their thousands of workers, the judicial trip through the ages had no definitive conclusion.

After the Domino’s judgment, Ibec has been advising members that though the Supreme Court has provided a new five-step test in cases of this kind, an interrogat­ion of the facts and circumstan­ces based on the various tests establishe­d in case law will be required to ascertain the true nature of the employer and worker relationsh­ip.

This outcome is of little use to employers and workers, though it’s not the judges’ fault that the law is a mess. What is required now is for legislator­s to step up with an employment definition that suits the modern economy, and the contractor­s who do not enjoy permanent employment and defined benefit pensions.

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Save a slice for the taxman

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