Richard Grogan: Sad reality is some workers have no employment rights
Employment law solicitor Richard Grogan considers the need for new legislation to address the gig economy.
By structuring a contract in a particular way, a business can avoid giving an employee any employment law rights.
At first sight, this may sound strange. However, the recent case of Karshan Midlands Limited trading as Domino’s Pizza and the Revenue Commissioners appears, at first sight, to have embedded the test of “mutuality of obligations” as the test for whether an individual is or is not an employee.
The test on mutuality of obligations, as set out in that decision, is that there must be a mutual obligation on a business to provide work and on the individual to perform that work for the relationship of employer and employee to arise.
In the gig economy, the contracts provide that neither the business must provide work nor does the individual have to accept the work offered. There are some conditions, of course.
One of these is that there can be no penalty on the individual if they say they do not want to accept any particular piece of work. Equally, it is not simply a matter of writing a contract on that basis. The courts will look through the contract to see how it operated in practice. In particular, they will look to see whether it is one where the employee could refuse work.
This recent Court of Appeal decision has in Ireland applied the law as it currently is. Despite the government’s previous statements that it intends to tackle this issue of the gig economy, nothing, in reality, has been done. So what is the position now for gig workers?
The sad reality is that gig workers have no employment rights whatsoever. These individuals have no protection against harassment. They have no right to sue for outstanding wages in the Workplace Relations Commission. They have no rights to Sunday premiums, holidays nor public holiday rights.
They will also be excluded from the legislation on sick pay and pensions as they will not be employees.
They have no rights under anti-competition law to organise. While this has been ignored by the government in meetings with gig workers, the law still states that they cannot organise. For example, if they attempted to organise a strike that would breach anti-competition law and they would be open to prosecution. The European Commission is due to address this but has not done so as yet.
One of the most damning issues around gig workers is the fact that they are not covered by the National Minimum Wage Act. They, therefore, have no certainty of getting even the minimum wage when working. In the case before the Court of Appeal, the individuals did receive a guaranteed payment for every hour worked but this was less than the national minimum wage.
There are legitimate cases where individuals are self-employed contractors. However, our legislation makes no differential between those in a position of significant bargaining power and those who are not in that position. Can this be addressed? The answer is quite simply yes.
Despite how it is often portrayed, gig workers do not just refer to those delivering pizzas. It covers a far broader spectrum of workers in various parts of our economy. It is becoming prevalent in the construction industry and I have even seen it argued in the case of cleaners.
A total re-write of our laws on self-employed contractors would be a major legislative endeavour. So is there any quick fix? The issue could simply be addressed by providing that unless a person earns in excess of twice the national minimum wage or a sectoral employment order note then for all purposes they could be treated as employees.
The alternative is to introduce, as they have in the UK, an intermediate category of individuals. These, in the UK, are termed “workers” rather than “employees”. The UK decisions have awarded these workers rights to minimum rates of pay, holidays and sick pay.
They still have no rights if dismissed or subject to harassment but they are given at least some minimum protections. In other EU countries, courts have determined that gig workers, especially those in the delivery industry, are employees.
The Court of Appeal decision, while given under tax laws, effectively also covers the issue under employment law also. So gig workers have no employment rights.
The government now has a choice. That choice is either to accept this ruling which has clearly set out the roadmap for a business to successfully engage individuals but with no employment rights or to act now to amend the legislation.
Where a business can legitimately and legally avoid creating employment rights they also avoid any obligation to pay employers’ PRSI. This gives them a competitive advantage over businesses which take on individuals as employees.
There is now a choice. Do we want to see more individuals being engaged as self-employed contractors with no employment law rights, or do we as a country restrict the use of self-employed contractor positions to those in highly or more highly-paid positions?