In Bertrand Lacour v Ubiqube (Ireland) Limited (ADJ-00029227) the Workplace Relations Commission (“WRC”)…

In Bertrand Lacour v Ubiqube (Ireland) Limited (ADJ-00029227) the Workplace Relations Commission (“WRC”) heard a case under the Unfair Dismissals Acts 1977-2015 (the “Acts”). The Respondent disputed that the WRC had jurisdiction to hear the complaint as the Complainant was engaged under a contract for service through a limited company. A contract of service usually describes an employer-employee relationship, whereas a contract for service applies to a self-employed contractor, the latter not being entitled to protection under the Acts.

Facts: The Complainant worked as a Regional Sales Director for the Respondent and claimed he was unfairly dismissed on 2nd June 2020. The Complainant was initially employed under an employment contract governed by English law, which was terminated effective 17th March 2019.  The Complainant then signed a contract for service/contractor agreement with the Respondent described as a “Non-Exclusive Business Representative Agreement”. This agreement was governed by Irish law and was between the Respondent and a limited company called “Lynx 8 Limited”. The Complainant was a director of this limited company since it was established in 2010.

The Complainant submitted to the WRC that he was offered no alternative to continuing the business relationship other than under this contract for service. The arrangement was to accommodate the Respondent not having to set up a UK subsidiary. It was argued by the Complainant that his day-to-day activities did not change, he continued to use the Respondent’s HR website to log his holidays and he was expected to use the Respondent’s equipment and there was evidence of control submitted. The contract for service also contained the same notice period and the Complainant was expected to attend team events and calls with no right to substitution (i.e. someone else could not attend on his behalf). On 2nd June 2020 the Complainant received an email terminating the contract due to Covid-19. His IT access was cut-off that same day. The Complainant disputed that the contractor agreement represented the true nature of the relationship and that he was, in fact, an employee of the Respondent and was entitled to the protection of the Acts. The Complainant contended his dismissal was unfair as no substantive reason was given and the dismissal lacked “the most basic level of procedural fairness”.

Conversely, the Respondent submitted that it was the entity, Lynx 8 Limited, that became the business representative of the Respondent for certain purposes in March 2019. The signed agreement stated “this Agreement does not create and shall not be construed as creating an employer-employee relationship between Ubiqube and the Business Representative.” The Respondent also referred to the termination agreement signed by the Respondent and the Complainant in February 2019 which stated “this letter is to confirm that Ubiqube (Ireland) Limited and Bertrand Lacour (“Parties”) agree to terminate Employment Service Agreement signed by both parties on 5th of November 2018”. The Respondent argued that the Complainant was not dismissed as he was not an employee of the Respondent at the time and that the agreement with Lynx 8 Limited was terminated by giving 90 days’ notice as provided for in the agreement. The Respondent also argued that the WRC had no jurisdiction as the Complainant did not provide his services from within the State but was based in England. Finally, the Respondent referred to a letter received from solicitors acting for Lynx 8 Limited in respect of the termination which expressly refers to a contract for services between Lynx 8 Limited and the Respondent.

Decision: The Adjudicator considered the recent prominent Supreme Court decision in Karshan (Midlands) Ltd t/a Domino’s Pizza and the guidance outlined therein. This decision required the court to answer three initial questions in the affirmative, as a sort of filter, to determine whether a contract of service can exist before the court examines other relevant facts to ascertain the true nature of the relationship. The initial three questions are:

    1. Does the contract involve the exchange of a wage or other remuneration for work?
    2. If so, is the agreement one pursuant to which the worker is agreeing to provide their own services, and not those of a third party?
    3. If so, does the employer exercise sufficient control to render the agreement capable of being an employment agreement?

The Adjudicator was satisfied that a binding contractual relationship existed which involved the exchange of remuneration for work. Therefore, question one was answered in the affirmative. However, the Adjudicator was of the view that the services in question were provided by the third-party company, Lynx 8 Limited rather than personal service. While there were conflicting accounts, the Adjudicator believed on the balance of probabilities that it was the Complainant himself who initially floated the idea of working under a contract for service, knowing he was facing dismissal if this alternative was not accepted. The Adjudicator also had regard to the letter from solicitors acting for Lynx 8 Limited which referred to the arrangement as a contract for service. The agreement signed by the parties did not set out that the Complainant would provide his own services to the Respondent and the Adjudicator did not look behind the corporate veil of the limited company. As the second question was answered in the negative, the Adjudicator did not find it necessary to consider the control aspect outlined in question three or further examine the relationship between the parties. As the Complainant was not providing his own services, an employer-employee relationship could not exist. The Adjudicator specifically stated in his decision that he did not engage with further arguments put forward by the Respondent, e.g. that the Complainant worked outside of Ireland.

The Adjudicator, Breiffni O’Neill, held that he did not have jurisdiction to hear the complaint as he found the Complainant was not an employee of the Respondent and therefore was not covered by the Acts.

Takeaway for Employers: Employers should be cognisant of the Karshan (Midlands) Ltd t/a Domino’s Pizza decision and the implications for their business if they employ contractors to carry out work. Depending on the particular facts of the situation, there is a risk some contractors may be deemed to be employees with all the statutory protections afforded to employees under employment legislation. It would be prudent to review all current contractor agreements in light of the Karshan decision and consider the reality of the working relationship between the parties, having regard to the criteria outlined above. It is interesting to note that unlike the Department of Social Protection, the WRC will not lift the corporate veil when assessing the facts in respect of the Karshan 5 step test.

Link – https://www.workplacerelations.ie/en/cases/2024/june/adj-00029227.html

Authors – Tara Kelly and Anne O’Connell

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