The Revenue Commissioners v Karshan (Midlands) Ltd T/A Dominos Pizza

JudgeMr. Justice Brian Murray
Judgment Date20 October 2023
Neutral Citation[2023] IESC 24
CourtSupreme Court
Docket NumberSupreme Court Appeal Number: S:AP:IE:2022:000109
The Revenue Commissioners
Karshan (Midlands) Ltd T/A Domino's Pizza

[2023] IESC 24

O'Donnell CJ

Dunne J

Baker J

Woulfe J

Hogan J

Murray J

Collins J

Supreme Court Appeal Number: S:AP:IE:2022:000109



Case stated – Contracts for services – Contracts of service – Appellant appealing against the decision of the Court of Appeal that the Commissioner erred in determining that drivers were employees of the respondent – Whether drivers were employees of the respondent

Facts: The respondent, Karshan (Midlands) Ltd (Karshan), contended that drivers who provided delivery services for Karshan’s pizza business were engaged as independent contractors under contracts for services, while the appellant, the Revenue Commissioners (Revenue), argued that they were employees retained under contracts of service. The Tax Appeals Commission (TAC) decided that the drivers were employees of Karshan, and the High Court (before which the matter came on an appeal by case stated from the TAC) determined that the Commissioner was entitled to so conclude: [2019] IEHC 894. A majority of the Court of Appeal allowed an appeal against that finding, deciding that the Commissioner erred in determining that the drivers were employees of Karshan: [2022] IECA 124. The Supreme Court granted leave to appeal that decision: [2022] IESCDET 121. The case stated presented the following questions: (1) whether the Commissioner was correct in law in her interpretation and application of the concept of mutuality of obligation; (2) whether she was correct in law to determine that it was not necessary to consider whether the umbrella contract contained mutuality of obligation; (3) whether she was correct in law in the interpretation and application of the concept of ‘integration’; (4) whether she was correct in law in the interpretation and application of the concept of ‘substitution’; (5) whether she erred in law and acted in breach of natural and constitutional justice in having regard to authorities which were decided after the appeal hearing was completed in July 2016 and in failing to invite the parties to address her in relation to those authorities; (6) whether she erred in law in having regard to United Kingdom/English authorities which were based on a different statutory regime, namely, s. 230 of the Employment Rights Act 1996 and in particular, the reference therein to an intermediate category of ‘worker’ as defined per that legislation; (7) whether she erred in law in determining that she was not bound by a previous decision of the Social Welfare Appeal’s Office dated 19 August 2008 and when finding that the Social Welfare Appeals Office and the Tax Appeals Commission are different adjudication bodies subject to different statutory schemes, and whether she erred in law in failing to give any or adequate weight to the said previous decision; (8) whether she erred in law by failing to give proper weight to the actual terms and conditions of the express agreement as between the appellant and the drivers; and (9) whether she erred in law in her findings in respect of the manner in which rosters were set, requests to drivers to fold boxes, the nature of the ordering system, the nature of substitution, sanction for unreliability, payment of an hourly rate, clocking-in, nature of prohibition of work for others and opportunity to make profit.

Held by Murray J that questions 2 and 4 in the case stated should be answered in the affirmative, while questions 6, 8 and 9 should be answered in the negative. He held that question 1 should be responded to on the basis that the Commissioner’s interpretation of mutuality of obligation was incorrect insofar as she viewed it as a sine qua non of the employment relationship that there be an ongoing or continuous obligation on Karshan to provide and for the drivers to perform work, but that her findings as to whether there was an agreement between Karshan and the drivers when the former rostered the latter whereby Karshan had to pay the drivers the branding fee for the rostered period, and the drivers had to attend for that purpose, were correct. He held that question 3 should be answered in the affirmative insofar as the Commissioner concluded that the extent to which the activities of the drivers comprised an important part of Karshan’s business were relevant to the issue before the Commissioner. Questions 5 and 7 were not the subject of any argument before the court and, subject to any further submissions of the parties, he would not propose that they be answered.

Murray J allowed the appeal.

Appeal allowed.

Judgment of Mr. Justice Brian Murray delivered on the 20 th of October 2023



- 4 -

This appeal

- 4 -

The legislation

- 5 -

The overarching contract

- 6 -

The facts

- 8 -


- 10 -

The legal context

- 10 -

Readymix and Market Investigations

- 14 -

‘Mutuality of obligation’: some general observations

- 18 -

‘Mutuality of obligation’: the early cases

- 19 -

Henry Denny and Castleisland Cattle Breeding Society

- 24 -

‘Mutuality of obligation’ in the Irish courts

- 28 -

The later English cases

- 30 -

Some conclusions from the English cases

- 38 -


- 43 -

The Commissioner's analysis

- 43 -

The High Court Judgment

- 47 -

The Court of Appeal: majority judgments

- 50 -

Whelan J.'s dissent

- 57 -


- 60 -

Karshan's theory of mutuality

- 60 -

The requirement of continuity

- 62 -

The ‘forward looking’ element

- 65 -

The obligation to provide work

- 66 -

‘Mutuality of obligation’: conclusions

- 67 -

The ‘test’

- 69 -

Does the contract involve the exchange of wage or other remuneration for work?

- 71 -

Has the worker agreed to provide their services to the employer personally?

- 72 -


- 73 -

All the circumstances of the employment

- 75 -

The legislative context

- 80 -

The correct approach

- 80 -


- 8 -

The consideration, personal service and control

- 81 -

All the circumstances of the employment

- 82 -

The extent of the contractual obligation assumed by the drivers

- 83 -

Some observations

- 87 -


- 88 -


- 90 -

This appeal

. The distinction between those working relationships governed by contracts of employment and those in which the worker 2 is providing their services as an independent contractor is central to much of the labour legislation enacted since the middle of the twentieth century. It is also relevant to the scope of some social insurance and social security provisions, as well as to the tax treatment of the worker's earnings. Because legislation rarely identifies how one of these contractual formations is to be distinguished from the other, the courts have developed a series of ‘tests’ to that end. Reflecting changes in economic and social conditions, the evolving nature of working arrangements, and the increasingly complex legal regimes in which they operate, these tests have developed from a base that was directed to the extent to which the employer controlled the operations of the worker, to a focus upon whether the worker was providing their labour by way of their own enterprise, to an examination of the degree to which the worker and their labour were integrated into the employer's business, culminating in various different formulations that sought, in one way or another, to combine some or all of the foregoing.


. Central to the resolution of this appeal is the question of how these various approaches to the identification of an employment relationship should apply to those engaged in non-continuous, occasional, or intermittent work involving no ongoing obligation on the part of the employer to provide work, or on the worker to accept it when offered. This has become an increasingly prevalent form of labour. However, a consideration of many of the legal authorities considered in the course of this judgment demonstrates that it is far from being a new one.


. That notwithstanding, from the early nineteen eighties courts in the United Kingdom have, in a sequence of cases involving so-called casual workers, posited as a prerequisite to the relationship of employer and employee a requirement that the employer and worker owe each other certain ‘mutual obligations.’ Of course, every contract involves ‘mutual obligations’,

but it has been suggested that some of these cases have interpreted this requirement as imposing as a sine qua non of the employment relationship an ongoing obligation of some kind on the employer to provide, and on the worker to perform, work. By definition, many arrangements pursuant to which such workers are called upon to work as and when the employer decides, and/or according to which (at least in theory) the worker can agree or not agree to do that work as they see fit, do not involve the exchange of mutual obligations for future performance envisaged by this interpretation of these cases

. Decisions of various tribunals and of the High Court in this jurisdiction have adopted such a test. While all of the parties to this case appear to have, for this reason, accepted a version of a requirement of mutual obligations of this kind, they differed as to what precisely its constituents were, and as to whether what they respectively contended the requirement entailed was established on the facts of this case. Thus arises the question of whether this requirement properly forms part of Irish law and, if so, how it should be interpreted and applied.


. The issue presents itself here in the context of...

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    • 2 April 2024 yet to be handed down. Following the Irish Supreme Court decision in Revenue Commissioners v Karshan (Midlands) Ltd t/a Domino's Pizza [2023] IESC 24 on the employment status of delivery drivers for tax purposes last year, the Revenue Commissioners confirmed that it, along with the Depar......

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