Contracts of Employment

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LAW ASSIGNMENT OCTOBER 24TH 2011
Outline any facts of the case in which there are problems/issues. Tom has been a salaried employee under a Contract of Service. Tom wishes to change the basis of his working relationship with the firm. He wishes to continue to work for the firm but under a Contract for Services under which he will be employed as a self employed consultant. A major problem is the firm also wishes to introduce a clause into Tom’s Contract to prevent him from acting as a consultant to any other firm of civil engineering. The firm wishes to include a term in the Contract with Tom that will rquire him to obey all reasonable orders. He has not shared in the profits of the firm. The main problem is determining is Tom an employee or independent contractor. Decide the key Principals of Law Involved

The key principals of law involved is determining whether Tom is employed under a Contract of Service or under a Contract for Services. If Tom is an employee of Celtic Construction he will be under a Contract of Service. If Tom is not an employee of Celtic Construction Ltd he is under an independent contractor, which independent contractors are under a contract for services. There are important reasons for the distinction between an employee and independent contractor as many consequences must follow: 1. An employer is vicariously liable for the torts of an employee but not those of an independent contractor. 2. The employer owes a care of duty to an employee but not to an independent contractor. 3. Employees pay Income Tax under tax Schedule E, with deduction of Tax and PRSI at source, whereas the Independent Contractor is assessed under Tax Schedule D and makes his own Return. 4. Statutory rights are only given to employees e.g. only employees with a Contract of Service may claim under the Unfair Dismissals Act, 1977-2007, the Redundancy Payments Act 1967-2007. 5. When a Company is in receivership or liquidation, debts to employees are treated as preferential debts under Company Law and will be paid before some other debts (In re Sunday Tribune (In Liquidation) 1984 IRE. 6. In some circumstances only those under Contracts of Service are represented by Trade Unions.

Compare the Facts of the Case with Decided Cases; cite Relevant Case and Statue Law? A similar case to this is the Mahon v Henry Denny and Sons (Ireland) Ltd 1997 IRE. This case was to figure out was Mahon employed under a Contract of Service or under a Contract for Services. The Court made the distinction quite clear that Mahon was actually an employee rather than an independent contractor, even though she had signed a Contract previously. At the Supreme Court the Judge highlighted a number of important things: * The worker did not provide any independent input into her job. * The worker did not provide any equipment or investment. * The worker could not alter her level of earnings through improving efficiency of management. This case is similar to Tom and Celtic Construction and Co Ltd in that Tom did not provide his own equipment for doing the job. The firm still continued to provide him with an office computer to assist him at his work. Tom also could not alter his earnings like Mahon as the firm wished to introduce a clause unto Tom’s contract to prevent him from acting as a consultant to any other firm of civil engineering. In the Mahon v Henry Denny & Sons case the reality test was used as all the factors had to be considered in this case. Reach a Conclusion/Solution to the Problems /Issues

In this particular case I think a reality test would have to be done. In the reality test all factors must be considered equally and an overview must be taken. There are no particular list of factors that the Court must consider. However here are a list of factors that the Court may look at relating to Tom working for Celtic Construction and Co Ltd. * Method or payment of wages.

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