Is This Ireland’s Uber Case? Contractor Misclassification in Ireland

The correct classification of gig workers has been a hot topic over the past few years.

From changes to IR35 legislation in the UK in 2021 to the proposed EU Directive on Platform Workers that’s set to come in early next year, we’ve heard plenty about how changing legislation could impact workers and the companies that engage them. 

And in Ireland, one case in particular has made headlines: last week, it was reported that the Supreme Court will hear a further appeal over whether food delivery drivers should be treated as employees or self-employed workers under tax and employment law.

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In this article, we’ll dive into the background of the case and provide some context as to how workers are typically classified in Ireland — and why it matters anyway. 

The background

The case revolves around a group of delivery drivers engaged by Karshan (Midlands) Ltd, trading as Domino’s Pizza. These workers were engaged more than ten years ago in 2010 and 2011.

Since then, the courts have gone back and forth on whether they should be classed as self-employed independent contractors, or as PAYE employees. 

A quick case timeline

This case has been ongoing for many years and involves several different decision-makers. Here’s a quick timeline of events to bring us up to date: 

2018: Tax Appeals Commissioner finds the workers are PAYE employees

The Tax Appeals Commissioner finds that the workers engaged by Karshan (Domino’s) are effectively employees, and should be treated as PAYE workers under tax law.

2020: Decision upheld by High Court

Karshan brings an appeal against the above ruling, but this is dismissed by the High Court.

The court finds that “the commissioner, on relying on English law on mutual obligation between worker and employer, did not go against Irish law but ‘rather recognised the necessity to adapt to modern means of engaging workers’”.

In other words, the High Court agrees with the Tax Appeals Commissioner that the workers should be classified as employees.

2022: Court of Appeal overturns decision

Karshan appeals the decision once again, and this time it works in their favour. A 2:1 Court of Appeal (CoA) decision overturns the High Court’s finding, saying that the court was in error. 

According to the CoA, there was no mutuality of obligation between Karshan and the drivers. The court also declares that the drivers were engaged under contracts for services as self-employed independent contractors in 2010 and 2011.


The current situation

Following the Court of Appeal decision, Revenue — the Irish government agency responsible for customs, excise and taxation — sought leave to bring a further appeal, this time to the Supreme Court. 

The Supreme Court is the highest court in Ireland, and only hears appeals in certain limited circumstances, which are set out in the Constitution.

In this case, Revenue argued that the appeal was necessary because several matters in the case had reached the threshold of ‘general public importance’ that allows the Supreme Court to hear an appeal.

These matters included the question of whether the principle of mutual obligation applies to umbrella company situations — a key question in the context of the growing gig economy in Ireland. 

Karshan (Domino’s) argued against Revenue’s leave-to-appeal application, saying that the CoA decision “concerns a discrete issue of tax law confined to the engagement of pizza delivery drivers over ten years ago”.

In other words, the case is not very important, and it was all a long time ago anyway. They also argued that the case was based on supposed factual errors made by the Court of Appeals, and that contesting these is not the Supreme Court’s job. 

Ultimately, the Supreme Court granted leave to appeal, agreeing with Revenue that there were a number of issues of general public importance involved in the case, particularly since many people are still engaged under similar structures in Ireland today.

The Supreme Court will hear a further appeal from Revenue, who will argue that the workers in question were in fact PAYE employees, as originally determined by the Tax Appeals Commissioner.

How are workers classified in Ireland?

In order to fully understand this case, it’s important to have an idea of how workers are typically classified in Ireland. This is set out in the Code of Practice on Determining Employment Status, a resource from Revenue that was originally prepared in 2001 and that has been updated to reflect new ways of engaging workers. 

This document includes lists of the characteristics that are usually shared by employees and by self-employed people. It also describes the various criteria or legal tests that should be considered when a worker’s employment status is in doubt. These are: 

  • Mutuality of obligation
  • Substitution 
  • The enterprise test 
  • Integration 
  • Control 

It’s important to note that none of these tests is enough on its own to determine whether a person is an employee or an independent worker. However, when considered together, they can be seen to paint a picture of the worker’s employment status. We’ll look at each test in more detail below. 

Mutuality of obligation

Mutuality of obligation is a situation where one party is obligated to provide work, and the other party is obligated to accept it. Employment relationships usually involve mutuality of obligation, but relationships between genuine independent contractors and their clients typically don’t. 

This principle is one of the most important factors in the Karshan case since the two sides are not agreed on whether there was mutuality of obligation between the company and the delivery drivers. 


When a worker has the right to substitution, they are allowed to send a substitute to complete the work if they are not available themselves. A worker having this right is a good indication that they are a genuine independent contractor or freelancer. 

The enterprise test

The enterprise test describes the question of whether (and to what extent) a worker is operating as a person in business on their own account. A genuine freelancer or independent contractor should be able to profit from their own efficiency and decision-making. 

They’re also at risk of losing money if something goes wrong. In an employment relationship, the employee usually makes the same amount of money no matter how efficiently they work — but they don’t run any risk of suffering a financial loss. 


How integral a worker is to a business can also provide an indication of their employment status. A worker that is deeply involved in the business is more likely to be an employee, while someone who performs work that is peripheral to the business’ main activity is more likely to be an independent worker. 


How much control the employer has over the worker is also an important factor to consider. An employer dictating when, where, and how the work should be completed could be indicative of an employment relationship. Independent workers are typically free to organise their work themselves. 


Why worker classification matters

There are three main areas where it becomes important to properly determine each worker’s employment status: 

  • Pay Related Social Insurance (PRSI) and social welfare benefits: Independent contractors pay PRSI at a different rate to employees, and they’re entitled to a smaller range of social welfare benefits. This is one reason it’s important to correctly determine whether workers are employed or self-employed. 
  • Tax treatment: Employees are usually taxed under the PAYE system, while self-employed people are responsible for filing tax returns and paying taxes themselves. Revenue is keen to understand which status workers hold so that they can be taxed correctly. 
  • Employment rights: Most statutory employment rights are only available to employees. This means that people who are incorrectly classified as self-employed could be missing out on important benefits like the right to minimum wage, mandatory work breaks, paid holidays and redundancy rights. 

How will the Supreme Court rule in this case?

As in many other places, the last decade has seen a huge boom in gig or platform workers in Ireland. As we’ve seen, this can create unique situations where determining whether or not a worker is an employee is more complicated than usual. 

Traditional lines between workers and employees have become blurred, and it’s not always clear what the relationship is — even to those involved. However, in Ireland, the official line is that a binary approach still applies in these cases: workers are either self-employed or employed, with no grey areas. This means that there will have to be a ruling one way or another on the Domino’s case. 

At this time, it’s impossible to say which way the Supreme Court will rule in this case — but we’ll keep you posted as we receive updates. 

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