Striking the Right Chord: McGranaghan case changes the tune for gig workers

Introduction

Further to our previous Insight on the recent Supreme Court case of The Revenue Commissioners v Karshan Midlands Ltd T/A Dominos Pizza [2023] IESC 24 (Karshan), which looked at the criteria for determining employment status (see here), the issue has come before the Workplace Relations Commission (WRC) in the highly publicised matter of Matthew McGranaghan v MEPC Music Limited (ADJ-00037668). The WRC’s decision marks the first time it has applied the principles of the Supreme Court’s ruling in Karshan.

Background

The Complainant, Mr. Matthew McGranaghan, was a fiddler in the Respondent’s band, the Michael English Band. The Complainant had been performing with the band since 2014. On 22 September 2021, the Respondent emailed Mr. McGranaghan to confirm that his services would no longer be required, after he raised concerns about his employment status. The Complainant brought a number of complaints to the WRC alleging that he was an employee rather than a self-employed contractor. As a result, he contended that he had been unfairly dismissed and also raised issues regarding failure to provide core terms in writing, unpaid notice, unpaid work on a Sunday, annual leave, and public holiday entitlements. The Respondent claimed that the Complainant was a self-employed contractor and not an employee.

The distinction between an employee and an independent contractor is crucial in this case because it determines whether statutory protection applies to the Complainant and therefore, the jurisdiction of the WRC.

Decision

The WRC’s decision represents the initial application of the principles outlined in the Supreme Court’s decision in Karshan. The Adjudication Officer stated that the judgment provides an extensive review of the caselaw to date in the area of determination of employment status, and succinctly summarises it through the provision of a decision-making framework. The decision-making framework consists of five questions that should be considered to determine whether a contract is one of service (employee) or for service (self-employed contractor).

The Adjudication Officer, went on to consider this case in relation to the 5 tests under the framework suggested by the Supreme Court and found as follows: -

Question 1: Does the contract involve the exchange of a wage or other remuneration for work?

The Complainant did provide a personal service of being the fiddle player for the band in exchange for payment. The Complainant’s fee was a set amount for each gig/rehearsal in return for him providing his personal service and he was paid every Friday and on occasion for work in advance.

Question 2: Is the agreement one pursuant to which the worker is agreeing to provide their own services, and not those of a third party to the employer?

The Complainant provided his fiddle playing services for the band as the resident fiddle player and he would get 3-6 months’ notice of gigs in advance normally 3-4 times a week. In the very limited occasions, out of the 1,200-1,300 gigs he did, he was not available, a substitute was found to cover his fiddle playing for that specific gig. The substitute got paid directly. The substitution however was not considered as a regular option. It was an exception.

Question 3: Does the employer exercise sufficient control over the putative employee to render the agreement one that is capable of being an employment agreement?

It was determined that the Respondent had sufficient control over the Complainant. The Complainant had no flexibility as to when the work was performed as the gigs were scheduled months in advance, he was told what music to play, wore the band uniform and was instructed by the Company for all work-related matters.

Question 4: All the circumstances of the employment must then be considered: whether the terms of the contract between employer and worker interpreted in the light of the admissible factual matrix and having regard to the working arrangements between the parties as disclosed by the evidence, are consistent with a contract of employment, or with some other form of contract having regard, in particular, to whether the arrangements point to the putative employee working for themselves or for the putative employer.

When considering the evidence and circumstances of the case in practice, the Complainant was an employee. The facts of the case did not support the Complainant being self-employed.

Question 5: Finally, it should be determined whether there is anything in the particular legislative regime under consideration that requires the WRC Adjudication Officer to adjust or supplement any of the foregoing.

There was no particular legislation that required any adjustment to the above answers.

Conclusion

Based on the above test and based on all the evidence presented, the Adjudication Officer found that the Complainant met the definition of an “employee” on a Contract of Service as defined by Section 1 of the Minimum Notice and Terms of information Act 1973. Further, she found the Complainant’s dismissal had been unfair and awarded him six months’ salary, a sum of €26,880 for the breach of the Unfair Dismissals Act 1977.

The Adjudication Officer also awarded the Complainant compensation totalling €12,480 for breaches of employment rights under the Organisation of Working Time Act 1997 (for not receiving any paid holidays/annual leave or Public Holiday entitlements, or any compensation for working on Sundays), the Terms of Employment (Information) Act 1994 (for not receiving a statement in writing of the terms of his employment), and the Minimum Notice and Terms of Employment Act 1973 (for not receiving the statutory minimum period of notice on the termination of his employment). The Complainant was also awarded four weeks’ notice pay, €4,480, under the Payment of Wages Act 1997 (for not receiving the appropriate payment in lieu of notice on the termination of his employment).

In total, the Respondent was directed to pay the Complainant €43,840 on foot of his complaints.

Key Takeaways

This WRC case is a landmark decision that reinforces the importance of correctly classifying workers and protecting their rights, particularly in the gig economy. The ruling serves to underscore the importance of examining the actual working relationship rather than relying solely on contractual labels, and sets a precedent for future cases involving similar disputes. The ruling also has significant implications for the entertainment industry, where gig-based work is common.

It is crucial for businesses who work with independent contractors to review their existing agreements/arrangements to determine whether they are indeed independent contractors or more akin to employees.

The RDJ Employment and Tax Teams are available to provide expert advice in this regard should you have any questions.