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Your work questions answered: I was obligated to become a sole trader in a long-term job - what recourse is there for me?

A series where we ask experts in all aspects of workplace engagement to give us their views and solutions on issues driving conflict or upset for employees

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Jack White
Wed Jun 19 2024 - 13:00

Having gained experience post-crash, amid the embargo on recruitment in the public service, it was a welcome relief to be offered contract work, even if it meant I had to become a sole trader.

Following a decade as a sole trader in public service, contracting in the same role, it was evident that no staff contracts were being offered to any contractors, and nervousness that the contracts would be queried began to bubble up.

Contractors including me lost their basic work privileges (such as certain email addresses) first – then, ultimately, their contracts, livelihoods and careers.

I found myself out of work with no redundancy, no recourse, and no class A PRSI contributions.

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Are there European laws that should have been implemented that would have resulted in justified roles being offered to contractors – thereby safeguarding employment rights and future career/retirement privileges?

Is there likely to be any recourse for those whose lives have been so drastically affected?

To answer this query, we asked experts in human resources and employment law for their perspectives.

A sole trader or contractor has no employment rights, but as far as Revenue is concerned, would be expected to have several clients and not just be working exclusively for one, says independent HR consultant and workplace investigator Michelle Halloran, of Halloran HR Resolutions.

A sole trader working full time (35 to 40 hours a week) for just one client would be considered an “irregular arrangement” – something which was historically not uncommon, though considered unethical.

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“I would not approve of that practice. They weren’t breaking the law doing it, but it shouldn’t be happening so much now because it’s not best practice,” she says, adding that some employers benefited from irregular arrangements by not having to pay PRSI.

Halloran describes the arrangement as “unethical”, saying the employer concerned should have either handed out employment contracts, or terminated the contracts altogether, and much sooner.

Workers don’t necessarily know that they’re losing out on all of the benefits that we get under our PRSI

—  Michelle Halloran, Halloran HR Resolutions

If this occurred within the last six months, the reader might have a case at the Workplace Relations Commission (WRC) to seek redress on the basis that they were de facto an employee if they were “under the control of one employer for a long period of time”, she says.

“If it’s historic, there’s nothing they can do now,” she adds.

Halloran advises sole traders offered contracts with full-time hours to insist on a temporary employment contract with an end date.

[ Media employers urged to review workers’ status amid new Revenue guidance ]

“It’s not fair, because workers don’t necessarily know that they’re losing out on all of the benefits that we get under our PRSI, and they’re not protected by any employment legislation if they’re not an employee,” she says.

As they cannot keep someone on successive temporary contracts for more than four years, employers must then decide to end the arrangement or offer permanent employment, she says.

Employment status is currently a big talking point, thanks in large part to the landmark Supreme Court ruling last year involving Dominos delivery drivers who were deemed employees and not contractors, says Anne O’Connell, principal of employment law firm AOC Solicitors.

O’Connell said the ruling on the case has provided a five-step test which should be the first port of call for those questioning their working arrangements.

Although their options may be hampered by the general WRC six-month time limit if they do believe they should be deemed employees following the five-step test, extensions up to 12 months may be granted.

This is only possible where the complainant has demonstrated “reasonable cause” for the delay, but “ignorance of the law is not an excuse”, she says.

[ Delivery riders could be classed as employees under new EU rules ]

A complaint to the WRC concerning redundancy payments has a longer time limit of 12 months, typically the only limit longer than six months, which can be extended to 24 months.

There may be other options available based on information not provided, she says, such as taking a breach of contract claim or wrongful termination case, claiming annual leave entitlements through the courts, or seeking assistance from the Department of Social Protection’s Scope Section, but it might be best to seek legal advice as a first port of call.

If you have a work-related questions you’d like to ask our team of experts, from how to deal with difficult colleagues and big workloads to career progression, you can submit your question in the form below

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