The legal rights of the employed and the self-employed are very different. It is only employees who can bring claims for unfair dismissal, claim redundancy payments and have the protection of the various Employment Acts. Self-employed people have none of these rights.
The answer will usually lie in the contract under which the work is carried out.
There are three elements which must be present in any employment contract. All of these must be present or it will not be a contract of employment. They are:
- the contract must impose an obligation on a person to provide work personally;
- there must be a mutuality of obligation between the employer and the employee; and
- the employee must expressly or impliedly agree to be subject to the control of the employer.
Obligation to provide work personally
If the contract allows for the work to be carried out by anyone, or by a person to be decided by the worker, it is unlikely to be a contract of employment. There must be a personal obligation by the employee to work personally for the employer if there is to be a contract of employment.
Mutuality of obligations
The second element that must be present in any employment contract is for both the employer and the employee to have legal obligations to each other. There must be an obligation on the employee to work and an obligation on the employer to pay for that work.
If there is no obligation for the employee to work and no obligation for the employer to offer work, such as where there are periods in the contract where there is no work to do and a retainer is not paid, there will be no contract of employment.
The third element requires that ultimate authority over the employee is the employer and that the employee is subject to the employer’s orders and directions.
This may require careful examination of all the circumstances of the employment, but relevant aspects are likely to include:
- how the person carrying out the work is paid;
- whether the worker provides his own equipment;
- whether he is subject to the employer’s disciplinary and grievance procedures;
- receipt of sick pay or contractual holiday pay;
- provision of benefits traditionally associated with employment, such as pension or health plans;
- whether there are restrictions on working for others.
Some contracts stipulate that workers are not employees and are self-employed.
However, such clauses are not by themselves decisive. Courts will look at all of the circumstances of a relationship to determine its true nature and will readily go behind what the parties have labelled a relationship to be. Labels will only be decisive to ‘tip the scales’, when all other factors relevant to deciding one way or another are evenly balanced.