Case Studies » Social Insurance » Insurability of Employment - from 2016 Annual Report (ref: 2016/32)

Background: The worker had requested a decision as to his insurability status after his employment with the company ceased. The nature of the employment was investigated and a Social Welfare Inspector reported the details of his interviews with the worker and the sole trader who had engaged his services. The Deciding Officer noted disagreement between the parties in regard to holiday/sick pay, hours worked, control/direction/dismissal and whether personal service was required. He regarded the provision of labour only and the payment of a fixed monthly wage to be significant factors. He concluded that the worker had been employed under a contract of service and was insurable, therefore, under the Social Welfare Acts for all benefits and pensions at PRSI Class A where his weekly earnings exceeded the statutory threshold (€38.00 per week). The sole trader made an appeal, submitting that he had taken the worker on as a contractor and not as an employee.

Oral hearing: The appellant trader attended, as well as the worker, the Social Welfare Inspector and the Deciding Officer at the request of the Appeals Officer. Details of the investigation and decision were outlined.

The appellant confirmed that he was a sole trader, trading as a consulting company which provided services to industry. He accepted that the worker had been paid a fixed monthly rate but asserted that he came and went as he pleased and did not hold to fixed hours. He stated that he had always identified the worker as a contractor when making introductions. He advised that he had taken him on to do sales and marketing and the agreement had been to pay him a specified amount per month plus a 10% commission on sales. He pointed out that the worker did not have a Personal Public Service (PPS) number or an Irish bank account and had wanted to be paid in cash, and he asserted that he had been reluctant to register for tax purposes.

The worker advised that he had been engaged as an employee in the United Kingdom and worked for some ten years prior to meeting the appellant who had offered him a position. He stated that he had understood his role would be that of an office manager while the appellant generated work and expanded the operation. He reported that when one of the office staff was out sick he had opened and closed the premises and he denied that he had worked from home. He accepted that he had been paid in cash and was informed that he was being treated as a contractor. He pointed out the he was still resident in Ireland and had obtained employment following his departure from the business. He conceded that he had only made contact with Revenue and the Department of Social Protection following his departure from the company. He clarified details of payments received and advised that no commission was paid as he had not sold anything.

The appellant trader asserted that he had been clear in outlining the terms of the contract, advising that the worker would not be paying PRSI and would be responsible for his own tax affairs. He referred to the worker’s failure to obtain a PPS number when he came to Ireland to work and submitted that this was the first thing he should have done had he regarded himself as an employee. He stated that he saw nothing unusual in continuing to pay the worker in cash as he had believed that he had been paying a contractor and he stated that he had retained proof of payments. He made reference to the word ‘dismissal’, and stated that he took this to mean the same as termination of contract.

Consideration: The Appeals Officer made reference to the Code of Practice for determining the Employment and Self-Employment status of Individuals, drawn up in 2001 and updated in 2007 and again in 2010. In this case, it was noted that the worker had been paid a fixed monthly rate and that he had provided labour in return for payment. The Officer was satisfied that a mutuality of obligation existed whereby the appellant trader offered work to the worker who agreed to provide the service in return for payment. It was noted that there was a dispute as to the actual working hours but the evidence indicated that the worker did at least work regular core hours. The Officer did not accept the contention that he came and went as he pleased.

The Appeals Officer noted the appellant’s assertion that the worker did not have a PPS number or an Irish bank account but had wanted to be paid in cash and had been reluctant to register for tax purposes. The Officer accepted this as relevant but noted that it was not determinative of the issue. The Officer did not accept the appellant’s explanation that the word ‘dismissal’ could have been used loosely to mean termination of contract. While the worker had not requested a P60 or a P45 on leaving the business, he had approached the local Intreo Office of the Department of Social Protection and sought to rectify his PRSI status. It was noted also that the worker had a history of insurable employment and considered it significant that he had taken up insurable employment following his departure from the company.

The Appeals Officer considered that the worker had not been exposed to financial risk by having to bear the cost of making good faulty or substandard work carried out under the contract, and it was noted that he had received a fixed regular rate of pay. The worker had not assumed responsibility for investment and management in the enterprise and had not had the opportunity to profit from sound management in the scheduling and performance of engagements and tasks. The Officer noted that the evidence was that the worker had been working on his own initiative and had some control over what was done and how. The Officer regarded these factors as being consistent with a managerial position within the business.

The Appeals Officer noted that the contract had been between the appellant trader and the worker and that the worker was not free to hire other people to do, or assist in, the work which it had been agreed would be undertaken. It was noted that the materials for the job, in this case a laptop, had been provided by the appellant trader, that the work was done at the appellant trader’s business premises, and that the worker did not have public liability insurance and that this did not arise as he was working on the trader’s premises. The Appeals Officer concluded that the worker was employed under a contract of service by the nominated company and was therefore insurable under the Social Welfare Acts for all benefits and pensions at PRSI Class A where the weekly earnings exceeded the threshold.

Outcome: Appeal disallowed.