Contract of service or for services?

Supreme Court December 1997


  • The taxpayer was employed by the company to provide demonstration services for the company's products at various supermarkets. The written contract of engagement was for a duration of one year after which it was to be renewed.
  • The taxpayer was not subject to direct supervision but she was required to abide by directions and regulations in the supermarket. She was not paid for holidays or sick leave and she was free to refuse work. She could not engage people to work for her except in exceptional circumstances and even then only with the approval of the company.
  • The decision of the Circuit Court in the Cronin case held that an individual similarly employed to provide services was not an employee under the terms of the Unfair Dismissals Act.


  • Is the taxpayer an employee of the company or an independent contractor?


The Supreme Court ruled

  • That the High Court was correct in ruling that the taxpayer was employed under a contract of service i.e. was an employee.
  • Applying the control, integration, economic reality and entrepreneurial tests from a number of cases the court came to the conclusion that the decision should stand. Despite the terms of the contract, the Appeals Officer was correct in his consideration of the actual substance of the transactions rather than the legal form of the contract i.e. the facts and realities underlying the written agreement indicated that the taxpayer was actually an employee.
  • "It is, accordingly, clear that, while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself. The degree of control exercised over how much work is to be performed, although a factor to be taken into account, is not decisive. The inference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment, where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependant on the efficiency with which it is conducted by him or her."

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