The Court of Appeal in the UK recently held that a dancer, who was dismissed by adult entertainment club Stringfellows, was an independent contractor as opposed to an employee and was therefore not entitled to pursue a claim for unfair dismissal.
Background
A dancer was dismissed by Stringfellows for alleged drug-taking and drug-dealing. In response, she brought an unfair dismissals claim. The law in the UK, like Ireland, provides that only employees can bring unfair dismissals claims.
Stringfellows argued that the dancer was not entitled to bring the claim because she was an independent contractor and that it was industry practice to engage dancers on a self-employed basis.
Working Relationship
The agreement between the dancer and the club stated that the dancer was self-employed. She was not required to work a set number of nights per week in the club but worked on a rota basis. She could dance at other establishments when she was not rostered to dance at the club. She was paid through a voucher system, whereby the customers used vouchers for tipping dancers and the club then converted the vouchers collected into money for the dancers. The dancer did not receive sick pay, holiday pay or any other benefits.
However, the club made certain deductions from the money she earned, including a commission fee, a tip out fee and house fines. In addition, she was not allowed to sub-contract her work. “House Rules” applied to the dancer, which included being required to give compulsory free dances and being fined for not doing so.
Tests Applied
In the first instance, the UK Employment Tribunal decided that she was an independent contractor. This was appealed by the dancer to the UK Employment Appeals Tribunal which decided that she was an employee. Stringfellows appealed this decision to the Court of Appeal and it was decided that she was an independent contractor. The Court of Appeal noted that the status of a worker is determined by an assessment of all the relevant facts. It is not enough to rely upon what is expressed in an agreement. In particular, it noted that the club did not pay the dancer. She was paid by the customers. She took the risk that she could be out of pocket after the club’s deductions were made from the money she earned. This element of financial risk and the fact that she did not receive any sick pay, holiday pay or benefits, indicated that she was self-employed.
The law in Ireland is similar to the law in the UK regarding the tests used to determine the status of a worker. This case serves as a reminder that it is not enough for employers to rely on the status given to a worker in an agreement. There are many tests to determine if a worker is an employee and the Courts and Tribunals will examine in detail the working relationship between the parties when applying these tests. It is important for employers to understand whether a worker is an employee as this will have legal and tax implications.
Contributed by Catherine O’Flynn and Ciara Ruane.
