Hanley v. PBR Restaurants LTD trading as Fish Shack Café [2024] IEHC 662, a recent High Court case, has offered valuable guidance on several key employment law issues, including what a de novo hearing is and how it applies to the Labour Court, protected disclosures and the test for determining employment status. Background In 2020, Mr. Hanley filed a claim for unfair dismissal under the Unfair Dismissals Act 1977 (“UDA”) to the Workplace Relations Commission (“WRC”) against, his alleged former employer, PBR Restaurants LTD trading as Fish Shack Café (“PBR”). Mr. Hanley claimed that a breakdown in his relationship with management had resulted in a “sham redundancy.” During the WRC hearing, the Adjudication Officer (“AO”) raised concerns about Mr. Hanley’s employment status. Under the UDA, a claimant must have been an employee of the respondent employer for at least 12 months to qualify for the protections under the Act. PBR argued that Mr. Hanley could not be unfairly dismissed because he was not an employee, but self-employed. The AO applied the ‘mutuality of obligation’ test, which determines employment status based on whether the employer is obligated to provide work and the worker is obligated to perform it. The AO concluded that Mr. Hanley had “an obligation to provide work for others” and was therefore self-employed. Accordingly, he failed to meet the 12-month continuous service requirement under the UDA. The AO ruled that Mr. Hanley was not eligible to bring an unfair dismissal claim under the Act. Mr. Hanley appealed the WRC decision to the Labour Court. During the appeal, he sought to introduce new evidence, claiming that his dismissal by sham redundancy was linked to him making protected disclosures. However, the issue of protected disclosures had not been raised during the original WRC hearing. The Labour Court, citing the decision in Dawn Country Meats Ltd v. Hill (DWT 141/2012), held that it lacked jurisdiction to consider the new evidence related to protected disclosures, as it could not act as a court of first instance. The Labour Court noted that claims alleging penalisation for making a protected disclosure must be brought under the Protected Disclosures Act 2014 (2014 Act) to the WRC, and determined that Mr. Hanley’s attempt to introduce such a claim at this stage constituted an entirely new claim outside the scope of the existing unfair dismissal appeal. In addition, the Labour Court applied the ‘mutuality of obligation’ test and, like the WRC, found that Mr. Hanley was self-employed and therefore did not meet the 12-month service requirement under the UDA. Ultimately, the Labour Court ruled that Mr. Hanley’s claim was not well-founded and his appeal was dismissed. High Court Mr. Hanley appealed the Labour Court decision to the High Court. It is important to note, when a party appeals to the High Court, it does so on points of law only. Accordingly, the High Court does not engage in a re-hearing of the evidence. C Having heard legal submissions, The High Court will either affirm the Labour Court’s application of the law, thus approving their decision, or identify errors in the Labour Court’s application of the law and provide its legal interpretation. If the latter occurs, the case is returned to the Labour Court to reconsider its decision in light of the High Courts ruling. Mr. Hanley’s appeal contained two primary points:
- He should have been allowed to introduce new evidence at the Labour Court hearing concerning protected disclosures he made, to support his claim of unfair dismissal.
- The incorrect test was applied to determine whether he was an employee of PBR.
The High Court’s decision on both points will now be analysed and discussed.
- Protected Disclosures Point
The High Court divided the protected disclosures issue into two key questions:
- Was the Labour Court correct in relying on what was (and was not) raised during the original WRC hearing?
- Was the Labour Court correct in concluding that introducing the evidence of protected disclosures amounted to introducing a completely new claim based on separate legislation, making it fundamentally different from the original unfair dismissal claim lodged with the WRC?
In examining the Labour Court’s jurisdiction to consider new evidence not raised during the WRC hearing, the High Court referred to Section 44(1) of the Workplace Relations Act 2015 (the “2015 Act”) and the principle of a de novo hearing. Section 44(1) of the WRC Act states that the Labour Court must “give the parties to an appeal an opportunity to be heard by it and to present to it any evidence relevant to the appeal.” The High Court interpreted this provision as allowing the Labour Court to admit and consider new evidence relevant to the claim, even if it was not presented during the WRC hearing. In addition, the High Court highlighted that the Labour Court operates in accordance with rules established under subsections 20(5) and 20(6) of the Industrial Relations Act, 1946. At the time of Mr. Hanley’s appeal, the 2022 Labour Court Rules were in effect (since replaced by the 2024 Rules). Rule 43 of the 2022 Rules explicitly stated: “An appeal of an Adjudication Officer’s Decision shall be by way of a de novo hearing of the complaint(s) to which the appeal relates.” This rule affirms that any claim brought before the WRC, and appealed to the Labour Court must be reheard afresh/de novo, disregarding the findings of the WRC. In clarifying what constitutes a de novo hearing, the High Court referred to the Supreme Courts decision in Fitzgibbon v. The Law Society of Ireland [2015] 1 IR 516. In Fitzgibbon, it was established that a de novo hearing should consist of two key elements:
- It should not refer to the decision of the originating court/body (in this case, the WRC) .
- The appeals body (in this case, the Labour Court) must independently reach its own decision, based solely on the evidence presented during the appeal. Evidence from the original hearing is neither automatically admissible nor binding in the appeal.
The High Court ruled that the Labour Court’s refusal to permit Mr. Hanley to present evidence and arguments regarding protected disclosures was inconsistent with its obligations under Section 44(1) of the WRC Act and the established principles of de novo hearings as articulated by the Supreme Court. In answering the second point raised, the High Court also examined Section 47(1) of the WRC Act, which permits a party that did not participate in a WRC hearing to appeal the decision to the Labour Court. Such parties may present their case for the first time on appeal, albeit subject to a fine of €300. The High Court emphasised that it would be unjust and contrary to legislative intent for a party that participated in the WRC hearing to face greater limitations on presenting their case during an appeal than a party who did not attend. The High Court further deliberated on whether Mr. Hanley could introduce protected disclosures as a new ground for his unfair dismissal claim. It referred to Section 6(2) of the UDA which enumerates 20 specific circumstances constituting unfair dismissal, including dismissal for making a protected disclosure. The High Court noted that the WRC Complaint Form, required to initiate claims, does not allow applicants to specify grounds for unfair dismissal or lodge claims directly under Section 6 of the UDA. Instead, claims are filed under Section 8, which governs procedural aspects of unfair dismissal claims, such as timelines, roles of adjudication officers and tribunals, and appeal processes. Disagreeing with the Labour Court, the High Court determined that Mr. Hanley was not attempting to introduce a new claim under an alternative legal framework but was instead elaborating on his original unfair dismissal claim. The High Court concluded that Mr. Hanley was entitled to introduce additional grounds for his dismissal, including those related to protected disclosures, at the Labour Court hearing. As the Labour Court appeal was a de novo hearing, it should not have been constrained by the evidence or arguments presented at the WRC stage.
- The Employment Status Point
Mr. Hanley argued that the incorrect test was applied by the WRC and the Labour Court in determining his employment status. Mr. Hanley relied upon the recent landmark decision by the Supreme Court in Revenue Commissioners v Karshan (Midlands) Ltd t/a Domino’s Pizza [2023] IESC 24. In Karshan, the Supreme Court established a 5-step test that should be applied to determine the status of an employee:
- Does the contract involve the exchange of wages or other forms of remuneration in return for work performed?
- If so, does the agreement require the worker to personally provide their own services to the employer, rather than delegating the work to a third party?
- If so, does the employer exercise sufficient control over the worker to classify the agreement as one capable of being an employment contract?
- If these three criteria are satisfied, the decision-maker must assess whether the terms of the contract, when interpreted in light of the admissible factual context and the evidence of the working arrangements, align with a contract of employment or suggest another type of contractual relationship. Particular attention should be given to whether the worker operates as an independent entity or under the authority of the employer.
- Finally, consideration should be given to whether any specific legislative provisions require adjustments or additions to the analysis outlined above.
PBR counter argued that since the ‘mutuality of obligation’ test was the applicable test at the time the case lodged with the WRC, it is the test which applies to Mr. Hanley’s employment status. The High Court disagreed entirely with this position, stating that there is no authority for this view and that Mr. Hanley is entitled to the law being applied as it is currently set and not within a historic context. Ultimately, the High Court ruled that the ‘mutuality of obligation’ test should essentially be set aside and the test established in Karshan should instead be applied to assess Mr. Hanley’s employment status. Employer Spotlight De Novo Hearings and Protected Disclosures
- The High Court reaffirmed that Labour Court appeals are de novo hearings, requiring a fresh review of all evidence and arguments without being constrained by the findings or scope of the WRC hearing.
- The High Court ruled that the Labour Court erred in excluding Mr. Hanley’s evidence related to protected disclosures, as it was relevant to his unfair dismissal claim and did not introduce a separate legal framework.
- This decision highlights that claimants may expand on the grounds set out in their application form at both the WRC stage and again on appeal to the Labour Court, provided they remain within the scope of the initial dispute.
Employment Status Test
- The High Court reaffirmed that the ‘mutuality of obligation’ test for whether someone is an employee or not has been replaced with the 5-step test from Kashan
This article was co-written by Robin Hyde (Partner), Don McGann (Partner) and Stephen Barry (Pre-Trainee)
