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Revenue has low tolerance for pseudo contractors

Almost 40% of Irish employers are finding it difficult to get employees back to the office, an Eversheds Sutherland survey has found.

The vast majority (80%) of HR and employment professionals say that they have a hybrid model in place: a quarter are in the office one to two days a week, almost half (46%) are in three to four days, while fewer than one in ten are back to the office four days or more each week.

Only one in five have a ‘mainly remote workforce’.

ES partner and head of employment law Julie Galbraith said: “There have been many changes in the world of work and employment legislation over the last 12 months.

“Amid the WRC’s published code of practice on requesting remote and flexible working, we have seen a change in remote versus ‘in office’ working over the last six months and a significant increase in return to the office policies."

Disciplinary action

“Many companies require two or more days in the office now and are actively enforcing this with disciplinary action for non-attendance, signalling another shift in the balance of power that employees have enjoyed in recent years,” she commented.

HR and employment professionals surveyed say that the biggest challenges facing their organisations are managing performance (63%) followed by sick leave or capability challenges, and employee retention or engagement (both at 17%).

Mandatory retirement ages are easier for a company to defend if they are close to state pension age, the Eversheds Sutherland employment-law seminar also heard.

The event (23 October) heard that flexible and remote working permissions depend on work requirements, as shown in various WRC decisions such as the recent TikTok case that upheld an employer call back to the office.

However, some employment lawyers in Britain were wary of WRC decisions and regarded it as a ‘bizarre jungle’ where anything could happen, the seminar heard, in a discussion about the recent order that Twitter pay over €550,000 compensation to a former senior executive.

The WRC had “huge jurisdiction” and can make massive awards that judges couldn’t make, the seminar heard.

The legal basis for employment of contractors had changed radically the past decade, the Evershed Sutherland lawyers also said.

Controlled relationship

Revenue takes a very set view on contractors in the workplace and how they should be compensated, and has published an updated code of practice on the use of contractors.

If workers are supplying regular, consistent services, in a controlled relationship, then they must be classed as employees.

The recent Revenue Commissioners v Karshan (Midlands) Ltd t/a Domino's Pizza is very significant in that the Supreme Court rarely adjudicates on employment law.

The ruling, which examined in detail the distinction between employees and the self-employed, carried a lot of power, the ES lawyers said.

However, decisions that involved the Department of Social Protection could be even more weighty than those with Revenue, the seminar heard.

Revenue decisions go back four years at most, while DSP rulings will apply from the outset of employment.

Anyone showing up regularly for work, without flexibility, and wearing a staff uniform, is an employee.

An employee was like an elephant, the seminar heard, you knew one when you saw one.

Status of workers

“Many businesses in Ireland have used contractors for many years and may not realise that this could be a significant problem for them.

“We see very low tolerance now with Revenue, the Department of Social Protection, and the WRC. Even if a contractor provides services for a small number of hours a week, they could be deemed to be a part-time employee,” said Julie Galbraith.

Other key findings from the ES survey include:

• Half of respondents do not enforce a mandatory retirement age,
• 92% permit their employees to use AI, yet only almost a third are using AI in recruitment and performance-management processes.