Part 2: Supreme Court Delivers Test For Determining Employment Status

Published date06 November 2023
Subject MatterEmployment and HR, Contract of Employment, Employee Rights/ Labour Relations
Law FirmWilliam Fry
AuthorMs Catherine O'Flynn and Nuala Clayton

In this Part 2 of our two-part series on the judgment in The Revenue Commissioners v Karshan Midlands Ltd t/a Dominos Pizza [2023] IESC 2, we examine the five questions posed in the judgment of Murray J and look at how these questions were answered on the facts of this case.

The analysis of the Supreme Court offers useful guidance for anyone engaging workers in Ireland to classify their workers correctly and, in turn, may help to avoid the legal and tax consequences of misclassifying the contractual relationship.


In Part 1 of this series, we discussed the landmark decision of the Supreme Court in The Revenue Commissioners v Karshan Midlands Ltd t/a Dominos Pizza [2023] IESC 24.

In short, the respondent, Karshan Limited (Karshan), argued that delivery drivers were independent contractors, whereas the appellant, the Revenue Commissioners, argued these workers were, in fact, employees.

The Supreme Court held that delivery drivers were to be treated as employees and not independent contractors for the purpose of the Taxes Consolidation Act 1997 (the Act). In delivering a unanimous judgment for the Supreme Court, Murray J set out five questions to be considered when seeking to determine whether a worker is an employee engaged under a contract of service or whether they are an independent contractor engaged under a contract for service.

The Five Questions

When seeking to determine if a contract is one of service (i.e. an employment relationship) or a contract for service (i.e. an independent contractor arrangement), the Supreme Court held that this determination should be resolved by having regard to established case law and to five questions.

These five questions have been set out below, along with an overview of how the Supreme Court answered these questions on the facts of this case.

The first three questions are to be viewed as a filter; if any of them is answered negatively, there cannot be a contract of employment. If the first three questions are answered affirmatively, questions four and five must then be considered to determine if a contract of employment exists.

1. Does the contract involve the exchange of wages or other remuneration for work?

The Supreme Court held that there were binding legal relations between Karshan and the delivery drivers that involved the exchange of consideration in return for labour. This is characteristic of an employment agreement.

2. If so, is the agreement one pursuant to which the worker is agreeing to...

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