An Employee or Not?

The age old question of employment status has come into sharp focus once again with the recent determination of the Workplace Relations Commission holding that an au pair is an employee and therefore entitled to all of the rights and entitlements that go along with that title. The case was brought on behalf of the au pair in question by the Migrant Rights Centre Ireland (“MRCI”).

The au pair in question is said to have been awarded €9,229 by the Workplace Relations Commission after the family she worked for was found to have breached employment laws.

The relevant decision however, is not available for review, as pursuant to the new system, all Adjudications are conducted in private, and as such it is not possible to give a view on what relevant factors in that case influenced the Adjudication Officer’s decision. We have contacted the MRCI in order to request a copy of the decision, but it has not been made available to us.

It is still however, an extremely relevant decision to be aware of, where over 20,000 Irish families currently have au pairs in the home.

Claims of this nature more frequently arise where individuals are retained by organisations as independent contractors; however they then seek to assert employee status by arguing that the reality of the relationship is that of a contract of service.

Status of Au Pairs

There is currently no legislation governing the work and conditions of au pairs. Many au pairs are considered not as employees, but rather as an arrangement through agencies for the purposes of learning about the host families culture and language.

Indeed, the status of the au pair programme as a cultural exchange was set out by the former Minister for Justice and Equality, Ms Frances Fitzgerald, in the Dail on May 27th, 2015:

"An au pair is an individual who wishes to improve his/her knowledge of the English language by undertaking an au pair arrangement through residing with a family whilst attending English language classes. An au pair arrangement is a private, voluntary, shared understanding between the parties concerned, namely a private household or sponsor family and a private individual. An au pair is regarded not as an employee but is received by a family and treated as a family member in exchange for certain services, such as a limited amount of light housework or baby-sitting. This activity is regarded as primarily cultural rather than economic and its main focus is the learning of English by the au pair. The Department of Jobs, Enterprise and Innovation does not issue employment permits to au pairs, child minders or domestic workers and accordingly, there is no immigration permission specifically assigned to these categories of activity. A non-EEA national who applied to do au pair work or for a visa on this basis would be refused. This does not prevent EU nationals the right to exercise free movement and engaging in this activity."

This however, does not mean that in reality, a particular au pair arrangement is not that of employer and employee.

If the au pair is an employee, then they are entitled to all of the rights and entitlements contained in employment legislation which have wide reaching implications, to include, a written statement of employment, minimum wage, payslips, tax, PRSI and USC must be deducted, annual leave and public holidays, redundancy entitlements, unfair dismissal rights, record keeping requirements, equal rights, maternity entitlements, the right not to be discriminated against, right to privacy, to be registered as an employee with Revenue, minimum notice, rest periods and maximum weekly working hours.

Tests to determine employment status

There are no definitive rules in statute, or in contract which can be relied upon to determine employment status.

However, it is clear from case law that the courts and employment fora will look past the label the parties themselves have given the contract and will consider all factors relating to the working relationship to ascertain its true nature. In this regard, Nolan J. comments in UK High Court decision of Hall v Lorimer [1994] S.T.C are useful: “the object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated… by viewing it from a distance, and making an informed, considered, qualitative appreciation of the whole.”

A number of tests have evolved through case law which can be used to determine the true status of the relationship. It would be reasonable to assume that these tests would also be applicable in the case of an au-pair.

These tests can be broadly summarised as follows:

1. Control test – Historically, the extent and degree of control, exercised by one party over the other in the performance of work was regarded as decisive. This test goes back to the old master/servant relationship. However, it is less decisive nowadays, in circumstances where it is far too simplistic a test to apply to senior staff with professional skills and qualifications.
2. Enterprise test – This test examines whether the person is performing services in a business on his or her own account and has an opportunity to make a profit. If so, then he or she will almost certainly be regarded as an independent contractor. It originated in the UK decision of Market Investigations V Minister for Social Welfare [1969] 2 Q.B. 173.
3. Mutuality of obligation – This test examines whether the employer is obliged to provide work for the employee and whether the employee is obliged to perform that work. It was considered recently in the case of Minister for Agriculture and Food v Barry [2008] IEHC 216; [2009] 1 I.R. 215.
4. Integration test – This involves an examination as to the extent to which an individual has been integrated into a workforce. The general position set down in Stevenson Jordan and Harrison Limited v MacDonald and Evans [1952] is that under a contract of service an individual is employed as part of the business whereas under a contract for service the individual is only an accessory to it.

Code of Practice for Determining Employment or Self Employment of an Individual (“the Determining Code”)

In 2007, an employment status group was set up to consider the possibility of defining “employee” status in legislation, based on previous court decisions. The group decided that such an approach was too inflexible and instead published the Determining Code, which was an amalgam of the various judicial tests set down previously.

While the Determining Code is certainly a helpful document, in the recent decision of the Employment Appeals Tribunal in McDonagh v Iarnrod Eireann [2015] ELR 21, the EAT concluded that the Determining Code is not a binding statement of law and the correct statement of law is as set out in the judgment of the Superior Courts.

Therefore, it is likely that the tests as outlined above and as set down by the Courts, would be the most influential factors in determining whether or not a person is an employee.

Code of Practice for Protecting Persons Employed in Other People’s Homes (“the Protection Code”)

The Protection Code is particularly applicable if an au pair is deemed to be an employee where it purports to set out certain employment rights and protections for persons employed in other persons homes and encourages good practice and compliance with the law in relation to those workers.

Protection Code is applicable to all persons employed in other people’s homes and relies on the definition of an employee as set out in the Determining Code, to ascertain if a person working in the home is an employee.

Theodore, the Protection Code is applicable to au-pairs, where they are found to be employees.

Am I in breach of the law if my au pair is found to be an employee?

As set out above, if an au pair is deemed to be an employee, they are entitled to the full host of rights and entitlements contained in employment legislation.

Of most importance from a practical perspective are likely to be the applicability of the Organisation of Working Time Act, 1997 which provides for annual leave, minimum rest and maximum working hours and minimum rates of pay pursuant to the National Minimum Wage Act, 2000 (“ the 2000 Act”).

The national minimum wage in force since January 1st 2016 are as follows:

• Experienced adult worker €9.15 per hour (was €8.65)
• Over 19 and in 2nd year of first job €8.24 (was €7.79)
• Over 18 and in first year of first job €7.32 ( was €6.92)
• Aged under 18 €6.41 (was €6.06)

(An experienced adult worker – for the purposes of the National Minimum Wage Act – is an employee who is not: under the age of 18 years, or in the first two years after the date of first employment over age 18, or a trainee undergoing a course that satisfies the conditions which are set out in S.I. No. 99 of 2000)

In accordance with the 2000 Act, an employer may make deductions from wages where an employee is provided with meals and/or lives in the place of employment as follows:

• Full board and lodging - €53.13 per week or €7.73 per day
• Full board only - €32.14 per week or €4.60 per day
• Lodgings only - €21.85 per week or €3.14 per day

Taking the above into consideration, many au pairs may be employed at a rate that is lower than minimum wage.

NERA have prepared a very useful summary in respect of the maximum amount of hours a domestic employee is entitled to work where they are in receipt of €150 per week. In this regard, it is noted that in the case of an experienced adult worker who lives in and receives meals, their permitted working hours are 23.6 hours per week.

Taking the above into consideration, there could be significant consequences, were an au pair to be determined to be an employee.

Conclusion

Based on the foregoing, it is likely that there is a high risk that au pairs are going to be deemed to be employees going forward.

Families with au pairs are encouraged to review their own arrangements in order to consider whether or not they may be exposed in terms of a complaint by their au pair to the WRC.