Contractors in the Gig Economy – Supreme Court Ruling

November 3, 2023

The Supreme Court delivered its decision in the Domino’s Pizza delivery case and by a unanimous decision found that the delivery drivers were employees and PAYE should have been deducted on the payments made to the delivery drivers.

Although the Supreme Court decision has not changed tax law and was based on the particular circumstances of the case, it is a very important decision.  The Supreme Court set down five tests to determine whether a person is engaged under a contract of services (PAYE) or a contract for services (no PAYE).  The five tests are:

  1. Does the contract involve payment for the work undertaken?
  • Is the person agreeing to provide their own services or can they substitute a third party?
  • Does the employer exercise significant control over the worker?
  • If these three requirements are met, then one must consider if the contract between employer and worker, taking into account the fact pattern of the arrangement, is consistent with that of a contract of employment or some other form of contract.  There is a particular focus on whether the worker is working for themselves or working for the employer.
  • Is there anything in general legislation which would be relevant when determining whether the status is self-employment or employment?

Although the circumstances of the delivery driver case are particularly appropriate to the gig economy, the decision has wider implications for any business which engages with contractors.  Indeed, Revenue have advised that, following the Supreme Court Decision, employers should review their relationship with contractors / workers to determine whether PAYE should be operated on payments made.

This summary is intended as a general guide. No action should be taken without obtaining professional taxation advice. If you require any advice on the above, please do not hesitate to contact Purcell McQuillan Tax Partners Ltd on 01 668 2700 or email your usual PMQ contact.

Copyright © *2023 Purcell McQuillan Tax Partners Limited, All rights reserved