Restatement of Labour Law in Europe Volume I: The Concept of Employee 9781509912445, 9781509912438, 9781509912414

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RESTATEMENT OF LABOUR LAW IN EUROPE The concept of ‘employee’ is arguably the most important one in labour law, defining, as it does, the scope of the discipline as a whole. This important new publication aims to develop a restatement of the concept of the employee in European labour law. The study identifies both problems and solutions that have emerged, clearly setting out comparisons between the different member states’ approaches. The country reports explore both ­statutes and case law, tracking their contribution to legal doctrine. The objective of the restatement is to increase knowledge and gain a better understanding of one of the most crucial aspects of European labour law.

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Restatement of Labour Law in Europe Volume I The Concept of Employee

Edited by

Bernd Waas and Guus Heerma van Voss

OXFORD AND PORTLAND, OREGON 2017

Hart Publishing An imprint of Bloomsbury Publishing Plc Hart Publishing Ltd Kemp House Chawley Park Cumnor Hill Oxford OX2 9PH UK

Bloomsbury Publishing Plc 50 Bedford Square London WC1B 3DP UK

www.hartpub.co.uk www.bloomsbury.com Published in North America (US and Canada) by Hart Publishing c/o International Specialized Book Services 920 NE 58th Avenue, Suite 300 Portland, OR 97213-3786 USA www.isbs.com HART PUBLISHING, the Hart/Stag logo, BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc First published 2017 © Bernd Waas and Guus Heerma van Voss 2017 Bernd Waas and Guus Heerma van Voss have asserted their right under the Copyright, Designs and Patents Act 1988 to be identified as Authors of this work. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. While every care has been taken to ensure the accuracy of this work, no responsibility for loss or damage occasioned to any person acting or refraining from action as a result of any statement in it can be accepted by the authors, editors or publishers. All UK Government legislation and other public sector information used in the work is Crown Copyright ©. All House of Lords and House of Commons information used in the work is Parliamentary Copyright ©. This information is reused under the terms of the Open Government Licence v3.0 (http://www. nationalarchives.gov.uk/doc/open-government-licence/version/3) except where otherwise stated. All Eur-lex material used in the work is © European Union, http://eur-lex.europa.eu/, 1998–2017. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. ISBN: HB: 978-1-50991-244-5 ePDF: 978-1-50991-241-4 ePub: 978-1-50991-242-1 Library of Congress Cataloging-in-Publication Data Names: Waas, Bernd, editor.  |  Voss, Guus Heerma van, editor. Title: Restatement of labour law in Europe : the concept of employee / Edited by Bernd Waas and Guus Heerma van Voss. Description: Portland, Oregon : Hart Publishing, 2017.  |  Includes bibliographical references and index.  |  Description based on print version record and CIP data provided by publisher; resource not viewed. Identifiers: LCCN 2017013598 (print)  |  LCCN 2017020854 (ebook)  |  ISBN 9781509912421 (Epub)  |  ISBN 9781509912445 (hardback : alk. paper) Subjects: LCSH: Labor laws and legislation—Europe. Classification: LCC KJC2855 (ebook)  |  LCC KJC2855 .R47 2017 (print)  |  DDC 344.401—dc23 LC record available at https://lccn.loc.gov/2017013598 Typeset by Compuscript Ltd, Shannon To find out more about our authors and books visit www.hartpublishing.co.uk. Here you will find extracts, author information, details of forthcoming events and the option to sign up for our newsletters. With financial support from the European Union

Acknowledgements First of all, thanks are due to the members of the European Labour Law Network for their ongoing and long term commitment. This first volume of the Restatement is the result of a joint effort by a unique group of labour law experts in Europe. The ideas offered and the comments made by the members helped immensely to set this project on its current trajectory. Moreover, I would like to express my very great appreciation to Effrosyni Bakirtzi and Dr Marta Otto for their valuable and constructive suggestions during the planning and development of the Restatement project and for their support with editing this book. Lukas Straub and Jan Rummel adjusted the text to the publisher’s house style. Hendric Stolzenberg joined the ­editing team late, but supported the project whole-heartedly. The proofreader, Niki Rodousakis did a really great job in terms of improving the language. I would like to extend my thanks to two former staff members: ­Christine Marburger played a crucial role in relaunching the Restatement project. Sylvia Wenzel, though not actively involved in the project, backed all ­ activities. My thanks also go to our project partners: the European Trade Union Confederation, the Confederation of German Employers’ Associations, the European Association of Labour Court Judges, the European Employment Lawyers Association and the European Foundation for the Improvement of Living and Working Conditions. Without the support provided by the European Commission, this volume would not have seen the light of day. I am grateful for their support and understanding. Last but certainly not least, thanks are due to Hart’s editing team around Tom Adams. We could not have hoped for better partners. Bernd Waas General Editor Frankfurt, May 2017

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Contents Acknowledgements����������������������������������������������������������������������������������� v List of Contributors��������������������������������������������������������������������������������� xi Introduction������������������������������������������������������������������������������������������� xxi Restatement Text��������������������������������������������������������������������������������� xxiii Comparative Overview����������������������������������������������������������������������� xxvii 1. The Concept of ‘Employee’: The Position in Austria������������������������� 1 Martin Risak and Robert Rebhahn 2. The Concept of ‘Employee’: The Position in Belgium��������������������� 23 Wilfried Rauws 3. The Concept of ‘Employee’: The Position in Bulgaria��������������������� 45 Krassimira Sredkova 4. The Concept of ‘Employee’: The Position in Croatia���������������������� 59 Ivana Grgurev 5. The Concept of ‘Employee’: The Position in Cyprus����������������������� 85 Nicos Trimikliniotis and Corina Demetriou 6. The Concept of ‘Employee’: The Position in the Czech Republic������������������������������������������������������������������� 113 Petr Hůrka 7. The Concept of ‘Employee’: The Position in Denmark����������������� 133 Jens Kristiansen 8. The Concept of ‘Employee’: The Position in Estonia�������������������� 149 Gaabriel Tavits 9. The Concept of ‘Employee’: The Position in Finland�������������������� 171 Matleena Engblom 10. The Concept of ‘Employee’: The Position in France���������������������� 197 Francis Kessler 11. The Concept of ‘Employee’: The Position in the Former Yugoslav Republic of Macedonia������������������������������������������������� 219 Todor Kalamatiev and Aleksandar Ristovski 12. The Concept of ‘Employee’: The Position in Germany������������������ 251 Bernd Waas

viii  Contents 13. The Concept of ‘Employee’: The Position in Greece��������������������� 275 Costas Papadimitriou 14. The Concept of ‘Employee’: The Position in Hungary������������������ 289 György Kiss 15. The Concept of ‘Employee’: The Position in Iceland��������������������� 309 Elín Blöndal and Inga Björg Hjaltadóttir 16

The Concept of ‘Employee’: The Position in Ireland��������������������� 329 Anthony Kerr

17. The Concept of ‘Employee’: The Position in Italy������������������������� 351 Edoardo Ales 18. The Concept of ‘Employee’: The Position in Latvia���������������������� 377 Kristīne Dupate 19. The Concept of ‘Employee’: The Position in Lithuania����������������� 391 Tomas Davulis 20. The Concept of ‘Employee’: The Position in Luxembourg����������������������������������������������������������������������������� 405 Jean-Luc Putz 21. The Concept of ‘Employee’: The Position in Malta����������������������� 435 Lorna Mifsud Cachia 22. The Concept of ‘Employee’: The Position in Montenegro������������� 459 Vesna Simovic-Zvicer 23. The Concept of ‘Employee’: The Position in the Netherlands������������������������������������������������������������������������ 477 Guus Heerma van Voss 24. The Concept of ‘Employee’: The Position in Norway������������������� 505 Helga Aune 25. The Concept of ‘Employee’: The Position in Poland��������������������� 525 Leszek Mitrus 26. The Concept of ‘Employee’: The Position in Portugal������������������������������������������������������������������������������������ 543 José João Abrantes and Rita Canas da Silva 27. The Concept of ‘Employee’: The Position in Romania������������������ 557 Raluca Dimitriu 28. The Concept of ‘Employee’: The Position in Russia���������������������� 577 Nikita Lyutov and Elena Gerasimova

Contents ix 29. The Concept of ‘Employee’: The Position in Serbia���������������������� 599 Senad Jašarević 30. The Concept of ‘Employee’: The Position in Slovakia������������������� 619 Robert Schronk 31. The Concept of ‘Employee’: The Position in Slovenia������������������� 641 Polonca Končar 32. The Concept of ‘Employee’: The Position in Spain����������������������� 657 Joaquín García Murcia and Iván Antonio Rodríguez Cardo 33. The Concept of ‘Employee’: The Position in Sweden�������������������� 677 Andreas Inghammar 34. The Concept of ‘Employee’: The Position in Switzerland�������������� 697 Wolfgang Portmann 35. The Concept of ‘Employee’: The Position in Turkey��������������������� 721 Kadriye Bakirci 36. The Concept of ‘Employee’: The Position in the UK��������������������� 747 Benjamin Jones and Jeremias Prassl Bibliography����������������������������������������������������������������������������������������� 771 Index����������������������������������������������������������������������������������������������������� 787

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List of Contributors José João Abrantes is Full Professor of Civil Law and Labour Law at the Faculty of Law and Pro-Rector of the NOVA University of Lisbon. He is a member of several legal associations and scientific networks and member of the editorial board of several legal journals. He is Vice-Chairman of the Portuguese Labour Law Association and Portuguese expert at ELLN— European Labour Law Network. He has authored more than 100 publications (books and articles) in several fields, namely labour law, social security law, civil law, constitutional law and fundamental rights. Edoardo Ales has been Full Professor of European, Comparative and Italian Labour and Social Security Law since 2002. He teaches at the University of Cassino and Southern Lazio, in Rome at LUISS—G. Carli and at the Vienna University of Economics and Business. Since 2006, he has been a member of the Scientific Committee and the national expert for Italy of the ELLN. He has published and edited several books on individual and collective labour law as well as health and safety law. He is the author of several essays on international and national labour and social security law journals. He is the co-editor of the Rivista del Diritto della Sicurezza Sociale. Helga Aune has been working as a lawyer and the National Leader of the Labour Law Department at PwC Lawfirm AS, Norway, since 2014. She completed her PhD and post-doctoral research at the Faculty of Law, ­University of Norway. She has published numerous articles on gender equality and non-discrimination issues. Aune has been a member of the ­European Commission Network of Legal Experts in the Field of Gender Equality since 2003 and a member of the European Commission Network of Legal Experts of the European Labour Law Network (ELLN) since 2007. In 2013, Aune was awarded the YS Equality Prize for her book on part-time work. Kadriye Bakirci is the Head of the Employment and Social Security Law Division at Hacettepe Law Faculty, Turkey. She completed her LLB, LLM and PhD degrees at Istanbul Law Faculty. She attended the Institute of Advanced Legal Studies; the London School of Economics and Political Science (Law Department); Cambridge, Stockholm and Columbia Law ­ ­Faculties as a v­ isiting scholar/fellow. She is a member of several legal and scientific networks and the national expert for Turkey of the European Labour Law Network (ELLN). Elín Blöndal holds a Cand Jur. Degree from the University of Iceland and a Master’s degree in Public International Law from the University of Leiden,

xii  List of Contributors Holland. She is (from 2013) Chief Legal Counsel at the University of Iceland and Judge at the Labour Court (on behalf of the Association of A ­ cademics), but has also worked as Professor and Chair of the Research Centre of Labour Law at Bifröst University, Head of the Labour Office at the Ministry of Social Affairs and Head of Office at the Parliamentary Ombudsman. Elín has been a member of e.g. the Governmental Committe of the European Social Charter as well as several European and national committees dealing with social and labour law issues. She has written several publications, especially in the field of labour law, gender equality and social human rights, and has frequently lead groups which have reviewed and made proposals for legislation in Iceland. Tomas Davulis is Professor of Labour Law and Head of the Department of Labour Law (the Institute for Labour Law) of the Vilnius ­University Faculty of Law. He is a member of various international networks (e.g., European Labour Law Network, European Network of Legal Experts in Gender Equality and Non-discrimination) as well as a m ­ ember of international and national scientific organisations (European Law A ­ ssociation, International Society for Labour Law and Social Security). At the national level, Tomas Davulis has been frequently appointed as a leader and member of various groups with the purpose of assessing and ameliorating domestic labour legislation (in particular, the Labour Code and transposing of legislation). Rita Canas da Silva has a PhD in Labour Law and is co-head of the Labour and Social Security Department of Sérvulo & Associados. She was Deputy to the Secretary of State of Employment (Ministry of Solidarity, Employment and Social Security) and Advisor to the Secretary of State of the Prime Minister. She is a guest Professor in several specialised university courses on employment and social security law and author of several publications in the field of labour and social security law. She is a member of the Portuguese Labour Law ­Association (APODIT—Associação Portuguesa de Direito do ­Trabalho) and a founding member of the Association of Young Labour Jurists (AJJ—Associação de Jovens Juslaboralistas) since 2013. Corina Demetriou has many years of experience in legal practice and legal research in the field of migration, fundamental and labour rights. Since 2007, she has been the national expert for Cyprus at the European N ­ etwork of Legal Experts in the Non-discrimination Field. Also, she was senior legal expert for fundamental rights for the RAXEN and FRALEX and co-authored the Reports of the Cypriot RAXEN and FRALEX team (2004– 2010). She has been the legal expert of the FRANET national team since 2014. She has produced numerous other reports and press articles on free movement, labour law migration, integration, asylum, rights of the child, trafficking, anti-racism and anti-discrimination.

List of Contributors xiii Raluca Dimitriu is Professor of Labour Law and PhD Coordinator within the Bucharest University of Economic ­Studies, Law Department. She is also a senior researcher in the Legal Research Institute of Romanian Academy and trainer for magistrates specialised in labour law—National Institute for Magistracy, Bucharest. Kristīne Dupate is Associate Professor at the University of Latvia, Faculty of Law Department of International and European Law. She is a member (national expert) of the Networks of Legal Experts for the EU Commission in the fields of gender equality, labour law and free movement of workers. She has participated in various research projects for international and EU institutions as a national expert. Kristīne Dupate is author of numerous publications on gender equality, non-discrimination and labour law. LL.Lic, Attorney-at-Law, Specialist Counsel Matleena Engblom is a ­Finnish labour law expert working for Eversheds Attorneys Ltd. She deals with ­different types of labour disputes and employment offence proceedings. She has worked as a researcher at the University of Turku, as an attorney, as a labour court clerk, as a lawyer for the Church, as a trade union lawyer, and as head of administration. She has published a book on employment contract terms and several articles in labour law reviews. Joaquín Garcia Murcia is Professor of Labour Law and Social Security of the Complutense University of Madrid. He co-authored reference books such as ‘Labour Law’, ‘Practical Treaty of Labour Law’, ‘Practical Treaty of Social Security Law’ and ‘Glossary of Employment and Labour Relations (Spain)’. He has published numerous papers in labour law and social security law journals, has conducted numerous research projects and has been mentor of numerous doctoral theses. He was Legal Adviser at the Spanish Constitutional Court. Elena Gerasimova heads the Department of Labour and Social Law at the National Research University Higher School of Economics (HSE) in ­Moscow. She also heads the NGO ‘Centre for Social and Labour Rights’ and is Chairman of the Lawyers for Labour Rights Association in Russia. She is Deputy Chair of the Public Council of the Labour and Social Welfare ­Ministry of the Russian Federation. She serves as an expert of the State Duma, of the Public Chamber of Russia and of the Russian President’s Council for the Development of Civil Society and Human Rights. She has co-authored draft labour legislation for the RF, works as an expert for Russian and international trade unions and organisations, and has participated in various research projects for national and international institutions as an expert. Ivana Grgurev is Associate Professor at the Chair of Labour Law and Social Security Law, Faculty of Law, University of Zagreb. She is a member (national expert) of the European Labour Law Network. She has published

xiv  List of Contributors several books and articles in the field of labour law (discrimination law, collective agreements, managerial contracts, etc.). Inga Björg Hjaltadottir, Attorney at Law, is an Icelandic labour law expert working at Reykjavik Law Firm. She deals with different types of labour disputes and employment offence proceedings. She has worked as a lecturer at Reykjavik University and Bifröst University and serves as a judge at the Icelandic Labour Court appointed to serve employer interests by the ­Iclendic Minister of Finance. (Skip the following?: Inga serves as a member of the board of Kvika banki, Carbon Recycling International and a member of the Audit Committee of the city of Reykjavik. Inga is chairman of the City of Reykjavik’s Remuneration Committee.) Petr Hurka is a labour law expert and Associate Professor at the Labour Law and Social Security Law Department of the Faculty of Law, Charles University in Prague. He presides over the Labour Law and Social S­ ecurity Law Committee of the Government Legislative Council, represents the Czech Republic in the European Labour Law Network, and is a member of the Czech Community for Labour Law and Social Security Law. Dr. Hurka acts as a mediator and arbitrator in collective labour law disputes, as well as a lecturer and consultant. Andreas Inghammar is Associate Professor of Business Law and Head of the Department of Business Law at the School of Economics and ­Management, Lund University, Sweden. He received his doctoral degree in Private Law at the Faculty of Law, Lund University. His research primarily covers comparative and national aspects of labour law, focusing on employment law and disability discrimination law, and most recently also the legal situation of migrant workers under international, EU and national provisions. Inghammar was a Visiting Professor at Pannasastra University of Cambodia during 2015/16 and was previously a visiting researcher at the University of Warwick, United Kingdom, and the Institute for Labour Law, University of Göttingen, Germany. Senad Jašarević graduated from the Faculty of Law in Novi Sad in 1986, where he currently holds the position of Full Professor, specialising in Labour Law and Social Security Law. He is Vice-president of the Serbian Association for Labour Law and Social Security. He is the author of numerous scientific and professional publications in the fields of labour and social security law. Benjamin Jones is a barrister of Gray’s Inn specialising in employment law and practising from Old Square Chambers in London. At the time of ­writing he was a retained lecturer in law at Pembroke College, University of Oxford, where he had previously completed his DPhil. He has contributed to various comparative legal research projects coordinated or funded by the

List of Contributors xv European Parliament, European Commission, and the International Labour ­Organisation, investigating a range of labour law and human rights issues. Todor Kalamatiev is Professor at the Ss. Cyril and Methodius University in Skopje. He is Head of the Department of Labour and Social Security Law at the Faculty of Law “Iustinianus Primus”, Skopje. He teaches Labour Law at the BA and PhD level and Social Security, European Labour Law, International Labour Law and Flexibility and Security of the Labour Market at the MA level. Anthony Kerr is Associate Professor at the Sutherland School of Law at University College Dublin where he is the Programme Director of the ­ Professional Diploma in Employment Law and the Associate Dean for ­ Graduate Studies. He is a graduate of the University of Dublin, the University of London and the Honourable Society of King’s Inns and was a Jean Monnet Fellow at the European University Institute. He is a member of the European Labour Law Network, an executive committee member of the International Society for Labour and Social Security Law and a national reporter for the International Labour Law Reports. Francis Kessler is Associate Professor at the Sorbonne Law School at ­University Paris where he teaches Social Security, Comparative and ­European Social Law. He founded and directs the Master 2 ‘droit de la protection sociale d’entreprise’, a programme on apprenticeship at the Sorbonne ­University. Francis Kessler is also Senior Counsel at Gide Loyrette Nouel AARPI in Paris. He works as an expert in different EU and Council of Europe projects and is a member of the European Labour Law Network (ELLN). György Kiss is Professor at the National University of Public Service, Dean of the Faculty of Public Administration; Professor at the University of Pecs, Faculty of Law, Department of Labour Law; Head of the Association of Labour Law in Hungary; Chair of MTA-PTE Research Group of Comparative and European Employment Policy and Labour Law. Polonca Končar is Professor of Labour Law, Labour International Law and EC Employment Law at the Faculty of Law of the University of ­Ljubljana, Slovenia. She is the former President of the European Committee of Social Rights. Končar was a member of the Executive Committee of the ­International Society for Labour and Social Security Law (Vice-President, 2003–2006). She was a national expert in the Free Movement of Workers Network and is a national expert and member of the Scientific Committee in the European Labour Law Network. Jens Kristiansen is Professor of Labour Law at the University of C ­ openhagen. He has published several books and articles on labour law and European labour law, among others.

xvi  List of Contributors Nikita Lyutov heads the Department of Labour and Social Law at the Kutafin Moscow State Law University (MSAL) and is Professor of Labour Law at the National Research University Higher School of Economics (HSE) in M ­ oscow. He is Deputy Chairman of the Lawyers for Labour Rights ­Association in Russia and is on the editorial boards of law journals in ­Belarus, Italy, and Russia. He was a visiting lecturer at Amsterdam ­University (UvA), Vilnius University in Lithuania and at the ADAPT ­Association for International and Comparative Studies in Labour and Industrial ­Relations in ­Modena, Italy, as well as at other international universities. He is a ­contributor to deliberations on Russian labour issues with the State Duma of the Russian Federation, the Ministry of Labour and Social Welfare, and with non-commercial organisations, and in this capacity has co-authored draft labour legislation for the RF. Lorna Mifsud Cachia is a practising lawyer in the litigation team of Dingli & Dingli Law Firm, Malta. She also collaborates with the European Union Law Department of the University of Malta where she acts as a visiting lecturer, supervisor for various dissertations in European Union law and examiner. Lorna Mifsud Cachia is a member of the Chamber of Advocates and a member of the European Labour Law Network. She has tried cases before the Industrial Tribunal in Malta and superior courts. Leszek Mitrus is Professor at the Chair of Labour Law and Social Policy, Jagiellonian University in Kraków, Poland. He is a member of the ­European Labour Law Network, and has authored around 100 publications on ­Polish, European and international labour law and social security law. Among these publications are books on the free movement of workers, EU directives on employment contracts and the influence of European labour law on the ­Polish legal system. He has co-authored commentaries to the Treaty on the Functioning of the European Union, the Charter of Fundamental Rights of the European Union and the Polish Labour Code. Costas Papadimitriou is a lawyer specialised in Labour Law and E ­ uropean Labour Law. He teaches and conducts research in those areas at the ­University of Athens. He is a member of the Department of Studies of the Greek Parliament (1994–2015). He is also a national expert for different institutions (European Labour Law Network, Free Movement of Workers Network, Odysseus Network). Wolfgang Portmann is Professor in Labour and Employment Law and in Private Law (University of Zurich), Vice Dean and Director of the Institute of Law (University of Zurich, 2010–2014), Chairman of the publishing board of the Swiss Journal for Labour and Employment Law and Unemployment Insurance (ARV), consultant in a law firm (Switzerland), member of the board of the Swiss Institute for Labour and Employment Law, of the

List of Contributors xvii Europe Institute in Zurich and of the Centre for Liechtenstein Law, as well as a member of the European Labour Law Network ELLN (representing Liechtenstein). Jeremias Prassl is an Associate Professor in the Faculty of Law at the University of Oxford, and a Fellow of Magdalen College. He was a Supernumerary Fellow of St. John’s College, Oxford (2011–14), and a Stipendiary Lecturer at Jesus College (2010–11). Jeremias has also held visiting research or lecturing positions at Columbia Law School, New York; Yale Law School; the Max Planck Institute, Hamburg; and University College, London. He teaches Constitutional Law and EU Law at Magdalen, as well as Labour Law and Corporate Law for the Faculty. In 2015, Jeremias received a British Academy Rising Star Engagement Award to further his work in European Employment Law. Jean-Luc Putz is working as a Judge at the Luxembourg District Court. He is teaching Labour Law at the University of Luxembourg and has published several texts and reference books on Luxembourg’s individual and collective labour law. Wilfried Rauws is Full Professor at the Free University of Brussels and PartTime Professor at the University of Maastricht for labour law and comparative labour law. Wilfried Rauws is Deputy Judge in the Court of Appeal of Antwerp and member of the editorial board of the main Flemish legal journals such as the Rechtskundig Weekblad (Weekly Journal of Law) and the Tijdschrift voor Privaatrecht (Journal of Private Law). Martin Risak is Associate Professor at the Department of Labour Law and Law of Social Security at the University of Vienna, Austria. He was ­Professor of Civil Law and Labour Law at the University of Passau, Germany (2008–2009), William Evans Visiting Fellow (2003), Marie Curie-Fellow (2010/2011) at the University of Otago, New Zealand and an associate with the international law firm CMS Reich-Rohrwig Hainz (1999–2000). Martin is a member of the editorial board of the (Austrian) Journal of Labour Law and Social Law and the national expert for Austria of the European Labour Law Network (ELLN). Aleksandar Ristovski, Ph.D is Assistant Professor at the Ss. Cyril and Methodius University in Skopje, Department of Labour and Social Security Law at the Faculty of Law “Iustinianus Primus”, Skopje. He teaches Labour Law at the BA and MA level. Iván Antonio Rodríguez Cardo is Full Professor of Labour Law at the ­University of Oviedo. He is a member of several legal associations and ­scientific networks. He was a former Vice-Dean at the Faculty of Law of the University of Oviedo and a researcher on numerous projects funded by the

xviii  List of Contributors Government of Spain and the European Union. He has published numerous papers in labour law and social security law journals. Robert Schronk, CSc., is Professor of Labour Law—Comenius University, Faculty of Law, Bratislava, Slovakia, where he lectures and holds seminars on Labour Law, International and European Labour Law. His area of research is International and European Labour Law, Individual Labour Relations, Dismissal Law, Working Time, Legal Liability in Labour Relations, and Collective Labour Law. He is a member of working groups and scientific boards, President of the Slovak Society for Labour Law and Social Security (2006–2010), member of the Accreditation Commission, advisory body of the Government of the Slovak Republic (2010—present). He has authored several publications on Slovak and European labour law. Vesna Simovic-Zvicer is currently working as Lecturer at the University of Montenegro (Labour Law, European Labour Law and Social Protection). She is a member of the Social Council of Montenegro. She is President of the Association of Labour Law and member of Board of the Association of Lawyers of Montenegro. Krassimira Sredkova is Professor of Labour Law and Social Security at Sofia University ‘St. Kliment Ochridski’. She is President of the Bulgarian Association of Labour Law and Social Security and Editor-in-Chief of the Journal ‘Contemporary Law’. She is also a member of the European Committee for Social Rights and of the International Association for Legislation and has authored 247 publications in the field of national, international, EU and comparative labour law and social security law. Gaabriel Tavits is University Professor and Researcher at the University of Tartu, Faculty of Law. His area of research is labour law and social security law (at European and international level). He has published articles on important labour law issues and flexible labour as well as European social security law. He is also a member of the European Labour Law Network. Nicos Trimikliniotis is Assοciate Professor, School of Social Sciences, ­University of Nicosia and the national expert for Cyprus for the European Labour Law Network. He heads the Cyprus team for the Fundamental Rights Agency of the EU. He is a sociologist and a practicing Barrister. He has conducted research on integration, citizenship, education, migration, gender, racism, free movement of workers, EU law, discrimination and labour law. His works include Mobile Commons, Migrant Digitalities and the Right to the City, Pivot, Palgrave Macmillan, 2015. Guus Heerma van Voss is Professor of Labour Law at Leiden University (the Netherlands) and State Councillor at the Advisory Division of the Council of State of the Netherlands. He worked at Tilburg and Maastricht ­University before becoming Full Professor in Leiden. He is also a

List of Contributors xix part-time Judge at the Court of Appeal of The Hague. In 2007, he cofounded the European Labour Law Network (together with Prof. Bernd Waas of F ­ rankfurt ­University) until 2015. In 2010, he received a doctorate honoris causa from the University of Miskolc (Hungary). Bernd Waas is Professor of Labour Law and Civil Law at the Goethe ­University of Frankfurt am Main, Germany. He is the author and co-author of several books on individual as well as collective labour law, and has written more than 100 articles on German, European and comparative labour and civil law. Bernd Waas is Coordinator of the European Labour Law Network which comprises labour law experts from 38 countries in Europe. He is a member of the Committee of Experts on the Application of ­Conventions and Recommendations (CEACR) of the ILO. He is also ­chairman of the German chapter of the International Society for Labour and Social Security Law.

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Introduction The European Labour Law Network was established in 2005. The network’s ‘inaugural meeting’ took place that same year in Hagen in ­ ­Westphalia. From the onset, the network consisted of professors and university lecturers and was gradually expanded. Today the network includes experts from EU Member States, as well as from many other European countries. The European Labour Law Network represents 38 countries in total. The European Labour Law Network has been the network of experts of the European Commission’s Directorate General for Employment, Social Affairs and Inclusion since 2008. In this capacity, the tasks of the network’s experts include informing the Commission about developments in the labour law of the Member States of the EU as well as of Iceland, Liechtenstein and Norway, and to meet the Commission’s specific information requirements. One important task consisted and continues to consist of bringing together those who are interested in the developments of labour law. To this end, the network organises annual seminars that discuss topics of shared interest. The range of topics spans from ‘labour law in the economic crisis’ to highlighting similarities and differences in new forms of employment in the era of increasing digitisation of the labour market. In addition to Commission staff members, national labour ministry and (European and national) social partner representatives, but also, eg, members of the organised judiciary and legal representatives participate in the network’s annual seminars. From the onset, the members of the network sought to contribute to the further fleshing-out of labour law comparison in Europe. The restatement of labour law in the US was an important inspirational source in this regard. The existing differences are obvious and do not need to be listed here in detail. We should keep in mind that the efforts in the US, albeit taking statespecific characteristics into consideration, focused on the labour law of one nation. Developing a restatement of labour law in Europe entails an area of law which, to a large extent, is regulated autonomously by the Member States and which has thus far only been harmonised to a limited degree. And yet: why not also attempt to develop a restatement of labour law in Europe with the objective of carving out possible similarities, but also scrutinising the existing differences? Initially, the available resources were insufficient to execute this plan: some attempts that were undertaken did not hit the target. Instead, it became increasingly clear how extensive the distance we sought to cover was and how rocky the road is, even if we aimed to focus only on specific areas

xxii  Introduction of labour law to gain a comprehensive overview of the current conditions in Europe. The network members’ enthusiasm speaks for itself when now, despite all the obstacles we faced, the initial results of our efforts to develop a restatement of labour law in Europe are presented here. We cannot praise the European Commission’s contribution to our endeavour enough. This project would never have been possible without the Commission’s generous material support. The project partners’ contributions can also not be ignored. The European social partners as well as Eurofound and associations of judges and employment lawyers created a ‘friendly habitat’. The project was only able to flourish in such an environment. A lot has been said and written about the significance of labour law comparisons in recent years and decades, and the related challenges have been repeatedly highlighted. This project is illustrative of these challenges. It starts with practical obstacles: labour law is often case law, but court decisions are not published in all countries, and courts in many countries do not offer insights into the motivations behind their decisions. There is more to it, however: in a project that covers completely different countries, the participants’ diverging preconceptions become even more obvious, something that cannot simply be played down. Linguistically, a ‘common denominator’ must be found to convey the results without distorting the underlying legal concepts. Establishing and ensuring comparability and coherence is crucial. Yet this must not result in a levelling of the differences. This book is the result of efforts to develop a restatement on an ­important—perhaps the most important—area of labour law: the concept of employee and of employer, that is, the concepts that define the scope of labour law. This publication aims to identify problem areas and highlight the solutions adopted in Member States as clearly as possible. The ensuing overview of law comparisons sharpens the reader’s eye. An in-depth understanding can be gleaned from the country reports, which not only present the respective statute and case laws, but also address the contribution to legal doctrine. The objective of the restatement is not to effect a harmonisation of labour law or even to contribute to such a harmonisation. It is actually far more modest: by providing insights on comparisons of labour laws—especially insights that reach beyond the circle of the Member States of the EU—we aim to increase knowledge and gain a better understanding thereof. If the reader can claim that this was achieved after completing this book, our project—despite all obstacles—will have succeeded. Frankfurt, March 2017 Bernd Waas, Coordinator of the European Labour Law Network

Restatement Text I.—1. The Contract of Employment 1. A ‘contract of employment’ is a contract that obliges one person (the employee) to perform work or services for another (the employer) while being subordinated to that party. 2. Often it is provided that the contract of employment or certain clauses thereof must be concluded in writing or are subject to other formal requirements. 3. It is often provided that the invalidity of the contract of employment or parts thereof does not affect the status of employee of the person concerned. 4. An ‘employment relationship’ is a legal relationship that covers the performance of work or services for another party which, without necessarily requiring the conclusion of a contract of employment, is in principle legally equated with a contract of employment under national law. I.—2. Definitions of ‘Employee’ and ‘Employer’ 1. An ‘employee’ is a person who either under a contract of employment or as a party to an employment relationship is obliged to perform work or services for another party, and is subordinated to that other party. 2. An ‘employer’ in relation to an employee or worker is any legal or natural person by whom the employee or worker is employed. I.—3. Sub-types of Employees/Workers 1. Typically, distinct groups of ‘employees’ exist to whom ­specific sets of rules apply. 2. Exceptionally, it is provided that a distinct legal category of ‘workers’ exists, who meet certain requirements to qualify as ‘employees’ under national law and consequently enjoy some of the rights that arise from labour law.

xxiv  Restatement Text I.—4. Subordination: Criteria and Indicators 1. To establish whether ‘subordination’ exists, the following ­criteria principally apply, either jointly or independently: work instructions, work control and integration. 2. Irrespective of these criteria, it is often provided that supplementary indicators must be used, which suggest the existence of a contract of employment or employment relationship. 3. Typically, mere ‘economic dependence’ (on the wages resulting from the work or services performed) per se is ­insufficient to justify qualification as a contract of employment or employment relationship. Typically, it is provided that when determining the existence of a contract of employment or an employment relationship, economic dependence in this sense partly counterbalances the lack of certain elements of what constitutes ‘subordination’. I.—5. The Principle of Primacy of Facts Typically, the determination of the existence of a contract of employment or employment relationship is guided by the facts (ie, what has been actually agreed and executed by the parties) and not by how the parties describe their relationship. I.—6. Qualification in Full 1. Typically, it is provided that a contract or legal relationship that meets the requirements of a contract of employment or an employment relationship must be regarded as qualifying as such a contract or legal relationship in toto, excluding the possibility of subjecting parts of the contract or legal relationship to rules other than those of labour law. 2. It is typically provided that contractual or non-contractual legal relationships between parties to a contract of employment or an employment relationship may exist that lie outside the scope of labour law. I.—7. Limits to the Freedom of Contract 1. Typically, it is provided that in the event that a contract qualifies as a contract of employment or as an employment relationship, the parties concerned may not alter the legal nature of the contract or legal relationship, even if they reach an agreement to this effect.

Restatement Text xxv 2. However, it is typically provided that the parties may enter into a contract of employment or an employment relationship, notwithstanding the fact that on the basis of an objective assessment, such contract or legal relationship does not qualify as a contract of employment or employment relationship under national law. I.—8.  Collective Bargaining, Established Custom and Practice 1. Typically, it is provided that the social partners are prevented from concluding collective agreements that independently fix the notions of ‘employee’ and/or ‘worker’ and of the ‘contract of employment’ and/or ‘employment relationship’. 2. It is typically provided that the notions of ‘employee’ and/or ‘worker’ and of the ‘contract of employment’ and/or ‘employment relationship’ cannot be modified by reference to established custom and practice in a specific branch or business. I.—9. Legal Presumptions and Shifting the Burden of Proof 1. Often, legal provisions exist that presume that either a contract of employment or an employment relationship exists or that such a contract or relationship does not exist if certain requirements are met. Such presumptions may be rebuttable as well as irrefutable. Often, general presumptions exist; often specific presumptions exist that either apply to specific groups of persons or to specific situations. 2. Exceptionally, rules are provided that ease the burden of proof if a person claims to be an employee or worker. I.—10. Specific Procedures Exceptionally, it is provided that an authoritative and, in particular, an administrative procedure be put in place, which the parties to a contract or legal relationship can use to bring about a binding or non-binding decision on the existence (or non-existence) of a contract of employment or employment relationship.

xxvi  Restatement Text I.—11. Extension of Rights/Persons Comparable to Employees 1. Exceptionally, it is provided that parts of labour law are applicable to persons who, under national law, do not qualify as employees or workers. In particular, a legal category of ‘employee-like persons’ exists (ie, persons who, because of their economic dependence, are regarded as being in need of particular legal protection). 2. Typically, the scope of equality and anti-discrimination law is extended to persons other than ‘employees’.

Comparative Overview* The following is an overview of the findings that can be drawn from the country reports. The differences in the regulatory models will come into view more clearly. I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A.  The Contract of Employment The term ‘contract of employment’ is statutorily defined in some countries only. In most, definitions of ‘contract of employment’ have been developed by the courts. i. Definitions The statutory definitions that exist in the different countries often seem similar. In some cases, the definitions are quite detailed and comprehensive, while in others, they are short and leave a lot of room for interpretation. a.  Statutory Definitions In Turkey, the Employment Act defines the ‘contract of employment’ as an agreement under which a natural person undertakes to carry out work for and under conditions of dependency on another party in exchange for the payment of a wage. A similar definition exists under the Obligations Act in Latvia. For historic reasons, two statutory definitions exist in Latvia. In Romania, according to the Labour Code, the contract of employment is ‘a contract according to which a natural person, referred to as an employee, performs work for and under the direction of an employer, a natural or a legal person, in exchange for remuneration referred to as salary’. In ­Portugal, the Labour Code defines an employment contract as an agreement ‘in which a natural person undertakes, in exchange for remuneration, to provide its activity to another or others, within an organisation and under their authority’. In Switzerland, the law sets forth the following definition: By means of an individual contract of employment, the employee undertakes to work in the service of the employer for a limited or unlimited period and the * 

This overview was composed by Bernd Waas.

xxviii  Comparative Overview employer undertakes to pay him a salary based on the amount of time he works (time wage) or the tasks he performs (piece work).

In the Netherlands, the law defines a contract of employment as a ‘contract whereby one part—the employee—undertakes to perform work in the service of the other party—the employer—for remuneration during a given period’. In some countries, statutory definitions are even more comprehensive. A case in point is Russia. According to the country’s Labour Code, an employment contract is an: [A]greement between an employer and an employee, according to which the employer obliges himself to provide the employee with work with a specific work function, to ensure the work conditions prescribed in the labour legislation as well as in other acts that contain labour law norms, collective agreements and accords, local normative acts and this agreement, to pay wages on time and in full, while the worker obliges himself to personally carry out the work function defined in this agreement in the interest and under the management and control of the employer, and to observe the internal work regulations adopted by the employer.

The term ‘work function’ is used to emphasise the distinct nature of the employment relationship compared to civil law relationships and, more generally, that the employment contract regulates the process of work itself rather than the outcome of work, as would be the case in civil law. Interestingly, a statutory definition also exists in the UK. This definition, however, is: [M]arked by somewhat of a paradox. On the one hand, the notion of the ‘contract of employment’ is explicitly defined in the leading statutes regulating both individual and collective employment or labour law. On the other hand, any discussion of the definition of the contract of employment will in reality consist ‘of a detailed examination of the common law of the contract of employment—an area where, despite the marginal impact of many statutory provisions, the legal ground rules are still the judge-made ones’.1

This might be true overall. Even if statutory definitions exist, the courts still play a decisive role when fixing the relevant criteria. b.  Judge-Made Definitions In most countries (Bulgaria, the Czech Republic, Cyprus, Denmark, the ­Former Yugoslav Republic of Macedonia, France, Greece, Hungary, ­Iceland, Ireland, Italy, Luxembourg, Montenegro, Norway, Serbia, Slovakia and Slovenia), no statutory definition of the term ‘contract of employment’ exists. Definitions have been developed by jurisprudence. In Germany, for 1  B Jones and J Prassl, p 747 citing M Freedland, The Contract of Employment (Oxford, Clarendon Press, 1976) 1.

Comparative Overview xxix instance, there is a judge-made definition based on doctrine. Accordingly, an employee is a person ‘who on the basis of a contract of private law is obliged to perform work in the service of another person’. Moreover, it is undisputed that, as is the case, for instance, in Luxembourg, a contract of employment is a sub-category of the so-called ‘service contract’, the latter being defined by statutory law. The position is similar in Greece. In Austria, according to case law, an employee is a person who is obliged by contract to perform, generally in person, a service for someone else in a relationship of personal dependency or personal subordination. In Sweden, the term ‘contract of employment’ has also been primarily developed in case law. According to the courts, a person is to be considered an employee if he or she, based on a contract, personally performs work for someone else, being instructed to do so by the other party to the contract (employer) in return for remuneration. In some of the countries in which judge-made notions exist, discussions have taken place on whether or not a statutory definition should be introduced. A discussion on the feasibility of a statutory definition took place in Sweden, for instance, but a government investigation revealed that such a definition was not necessary due to the lack of serious problems related to it. B.  Formal Requirements i.  The Existence of Formal Requirements In some countries (Bulgaria, Montenegro and Norway), a written form of the employment contract is required. In Hungary, for instance, a written form is prescribed by law. However, the employee may only claim invalidity on the grounds of failure to conclude the contract in writing within a period of 30 days from the day he or she commences work. In Lithuania, the contract of employment must also be concluded in writing. Moreover, it must be registered in a special record book within the company. In Romania, the requirement to conclude an employment contract in writing was introduced in 2011. Even when the parties are obliged to observe the written form, the legal consequences of failure to do so are limited. For instance, in ­Latvia, an employment contract must be concluded in writing. However, lack of a written form does not make the employment contract void; an oral employment contract has the same legal consequences as a written one if one of the parties has started to perform the agreed tasks. In Estonia, as a general rule, an employment contract is concluded in writing. An employment contract is also deemed to have been entered into when the employee commences work, which, under the given circumstances, is only expected to be carried out in exchange for remuneration. The position is similar in

xxx  Comparative Overview Croatia, ­Luxembourg, Norway, Poland, Russia, Slovakia, Slovenia and Turkey. In Serbia, the general rule is that an employment contract cannot be entered into by oral agreement. However, if the employee starts working for an employer based on an oral agreement with the employer, it ‘shall be deemed that the employee has entered into an employment relationship for an indefinite term on the day he/she has commenced work’. On the other hand, the very conclusion of a contract does not suffice to enter into an employment relationship. According to the Labour Code, the employee must also have commenced working. Should the employee fail to perform the work he or she is obliged to, the employment relationship shall be deemed as not having been entered into, despite the fact that an employment contract has been signed. ii.  The Non-existence of Formal Requirements In many countries (Cyprus, Denmark, Finland, France, Greece, Iceland, ­Ireland, Italy, Malta, Portugal and Switzerland), no formal requirements to conclude a contract of employment exist under statutory law. This means that a contract of employment can be based on a mere oral agreement between the parties concerned. In Austria, freedom of form is even considered a fundamental principle of employment contract law. In the UK, the law explicitly states that the contract can be ‘express or implied, and (if it is express) … oral or in writing’. Even if a written form is not required as a general rule, the law may subject certain types of contracts to a form requirement. A case in point is Spain: in principle, no written form is required. However, the Labour Code provides that certain contracts can only be concluded in writing. In Belgium, too, there is no general requirement for a written form for contracts of employment. Nevertheless, various employment contracts such as student employment contracts, replacement contracts, part-time contracts, contracts for the performance of temporary work and many others are subject to that requirement. Moreover, statutes are not the only source of form requirements. For instance, in Germany, no statutory form requirement applies to employment contracts. However, collective agreements often require a written form to be observed when concluding an employment contract. C.  Invalidity of the Contract In many countries (Estonia, the Former Yugoslav Republic of Macedonia, Greece, Romania, Switzerland and Turkey), specific rules apply if a contract of employment is legally flawed. Germany serves as a case in point.

Comparative Overview xxxi A contract of employment in Germany may either be void or v­ oidable. For instance, if the contract breaches the law or is contrary to public mores, it is void. However, in most cases, violations may lead to only parts of the contract being void. As a rule, and contrary to civil law, the contract of employment as such continues to exist while nullity of the contract is restricted to that part of the agreement that is in breach of the law. In Latvia, if an employment contract contains individual void conditions, the validity of the rest of the contract is not affected. The approach is similar in Austria, the Czech Republic, Finland, Greece, Norway, Portugal, Serbia, Slovakia and Turkey. Specific rules also apply in other respects. Again, the position in ­Germany is illustrative. If one of the parties was under a misapprehension when concluding the contract of employment, the declaration of intent and, as a consequence, the contract as such is voidable. Under general civil law, an admissible rescission leads to the ineffectiveness of the contract from the very beginning. However, according to the so-called doctrine of deficient employment relationships, if the parties to an employment contract have already started performing their duties under the respective contract, rescission is in principle only effective in future. The position is similar in Austria, Belgium, Italy and Portugal. In Croatia, with regard to work performed under a contract of employment that has been declared null and void, case law considers the work performed to be ‘de facto work’ and the individual who carried out the work is therefore entitled to the right to remuneration like any other employee. In Hungary, the contract of employment is deemed a so-called dare-facere contract. Consequently, and in accordance with general rules, the rights and obligations arising from or in connection with an invalid agreement are to be treated as having existed under a valid agreement. In France, the courts have ruled that if the parties cannot reciprocally restore their relationship of transaction due to the nature of those obligations, the value of the performance of each party and the advantage the other gained must be considered. Hence, an employee can request the employer to pay the remuneration corresponding to the work effectively delivered. In Luxembourg, an admissible rescission leads to the contract being ineffective from the very beginning. However, as it is impossible to undo a contract retroactively if the parties have already started implementing it, remuneration is due for the period already worked. In the UK, in case of a contract’s invalidity, work carried out under an ­illegal contract may give rise to a restitutionary claim, that is, to a claim for reasonable remuneration on a quantum meruit basis. In Spain, if the contract of employment is invalid, the Labour Code recognises the worker’s right to pay based on what he or she would have received if the contract had been valid. In Bulgaria, if a contract is found to be void, the legal consequences depend on the employee’s position. Where the employee has acted

xxxii  Comparative Overview in good faith upon the conclusion of the contract of employment, the relationship between the parties to the contract is the same as would be the case under a valid contract of employment. Where the employee has not acted in good faith, the general rules on the nullity of transactions apply. In Latvia, if the conclusion of an employment contract that is contrary to the law was initiated by the employer, the employer is obliged to conclude a new valid employment contract or, if this is not possible, to grant six months’ average pay in compensation. In Serbia, the Labour Code postulates that the parties will have to adapt their relationship to the relevant provisions in law (and the employment contract) from the commencement date of the employment relationship. On the one hand, this means that a salary and other benefits paid to the employee do not, in principle, need to be returned, and the employee will be entitled to any payments unduly withheld. On the other hand, if the employee was paid more than he or she was rightfully due to receive (ie, contrary to the existing public sector regulations), he or she will have to return the surplus. In the Netherlands, an illegal juridical act is principally void, but when the rule primarily serves to protect one of the parties, it is only voidable by that party or by the court upon that party’s request. In labour law, the employee is usually regarded as the party in need of protection. Consequently, an illegal juridical act becomes voidable. In Poland, an employment contract is neither automatically void, nor does a legal provision of ‘rescission’ of an employment contract exist. In certain cases, an employment contract can be terminated by an employer, with or without notice, depending on the situation. D.  The Employment Relationship i. Definitions In some countries, statutory definitions of ‘employment relationship’ exist. In others, no such definitions exist. The different positions taken by legislators may be purely ‘unintentional’, but may also reflect different views as to the importance of this concept. a.  The Existence of Statutory Definitions In some countries (Hungary, Montenegro, Poland and Russia), the term ‘employment relationship’ is statutorily defined. In Belgium, the legal definition of employment relationship is that of a contract between an employer who concludes an agreement with an employee to perform work under the supervision and authority of an employer in exchange for an agreed salary.

Comparative Overview xxxiii In the Former Yugoslav Republic of Macedonia, the employment relationship is defined as: [A]ny contractual relationship between the worker and the employer where the worker voluntarily takes part in the employer’s organised work process in exchange for a salary and other remuneration, personally and continuously carries out the work according to the instructions and under the supervision of the employer.

In Slovenia, according to the Employment Relationships Act, an: [E]mployment relationship is a relationship between a worker and an employer whereby the worker voluntarily integrates in the employer’s organised working process and in which he, in return for remuneration, continuously performs work in person according to the instructions and under the supervision of the employer.

In Croatia, according to the Labour Act, ‘an employment relationship is established by virtue of an employment contract’. In Turkey, according to the Employment Act, ‘the relationship established between the employee and the employer is called an employment relationship’. Notably, these laws use the terms ‘employment contract’ and ‘employment relationship’ interchangeably. However, the concept of ‘employment relationship’ is somewhat broader than that of ‘employment contract’, since various employee rights (severance pay, paid annual leave, etc) are calculated on the basis of the date on which the employee actually commenced working rather than the date of the formal conclusion of his or her contract. In Serbia, the law even differentiates between ‘employment’ and ‘employment relationship’. The term ‘employment’ covers a much broader scope than the term ‘employment relationship’, in that it includes both employed persons as well as other individuals who perform work for an employer on any other legal ground. In the Czech Republic, employment relationships are broadly defined in the Labour Code as legal relationships that arise from the performance of dependent work between an employee and an employer, as well as from a legal relationship of a collective nature related to the performance of dependent work. Apart from regular employment relationships, other basic employment relationships exist under which it is possible to perform dependent work; these include legal relationships established by agreements on work performed outside the scope of an employment relationship. In this case, legal relationships are not created upon the conclusion of a contract of employment; instead, they are established on the basis of an agreement to complete an assignment (based on which the employee may perform up to 300 hours of dependent work per year) and on the basis of an agreement to perform work (based on which the employee may perform work up to an average of one half of regular weekly working hours). These relationships differ substantially from regular employment relationships, as the

xxxiv  Comparative Overview ­ rotection of the employee is reduced. A similar regime applies in Slovakia, p where the legislator amended the law in 2013 to improve the protection of the workers concerned. b.  The Non-existence of Statutory Definitions In most countries (Austria, Bulgaria, Cyprus, Estonia, Greece, Iceland, ­Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Portugal, Serbia, Slovakia and Switzerland), no statutory ­definition of the term ‘employment relationship’ exists. The same is true in Germany. However, as is the case in many other countries (Greece and Portugal, for instance), there is widespread consensus that an employment relationship must, in principle, be based on a contract of employment (the so-called doctrine of contract). In Switzerland, according to the case law, the definition of the employment relationship derives directly from the definition of the contract of employment provided in the statute. In Romania, there is no statutory definition of ‘employment relationship’, though it is generally acknowledged that it is broader than the contract of employment. A special category of persons acting within an employment relationship without being employees as such are casual workers. II.  EMPLOYEE AND EMPLOYER

A. Employee The term ‘employee’ is defined by statute in only some countries. In many others, definitions of ‘employee’ were developed by the courts. i.  The Existence of Statutory Definitions In some countries (Belgium, Cyprus, the Czech Republic, Hungary, Ireland, Lithuania, Montenegro, Norway, Poland, Romania, Russia and Slovakia), statutory definitions of the term ‘employee’ exist. In Italy, the Civil Code sets forth a definition of employee (ie, an individual who performs work under the control and instructions of the employer, and receives a salary to perform these duties). The Civil Code also contains a definition of self-employed person (ie, an individual who performs his or her activities, mainly personally, without being under the control and instructions of an employer). In the UK, the law defines ‘employee’ as ‘an individual who has entered into or works under (or where employment has ceased, worked under) a contract of employment’. In Turkey, the Employment Act states that ‘a natural person who works under an employment contract is called an employee’. In Latvia, the basic definition

Comparative Overview xxxv of an employee is provided in the Labour Code, which stipulates that an employee is a natural person who, on the basis of an employment contract, performs work in exchange for remuneration under the supervision of an employer. Interestingly, the concept of ‘employee’ in Latvia is used not only within the meaning of the labour law, but also has a broader meaning. It primarily follows from the Constitution, with one provision stipulating: ‘Every employed person has the right to receive commensurate remuneration for work performed, which shall not be less than the minimum wage established by the State, and has the right to weekly holidays and paid annual leave.’ In Malta, according to the relevant law: [E]mployee means any person who has entered into or works under a contract of service, or any person who has undertaken personally to execute any work or service for, and under the immediate direction and control of another person, including an outworker, but excluding work or services performed in a professional capacity or as a contractor for another person when such work or service is not regulated by a specific contract of service.

Moreover, according to a specific legal act, a person is deemed an ‘employee’ if five out of eight criteria that are further described in the law are fulfilled. In this case, such a person literally becomes an employee ‘in substance and by definition’, and the employer is obliged to grant him or her all the rights and conditions of work that comparable employees would be granted. Hence, the employer is under an obligation to treat that particular person like he or she would other comparable employees. In Cyprus, in addition to the term ‘employee’, the term ‘worker’ appears in various laws. In general, however, workers enjoy the same rights as ‘employees’, particularly in terms of termination of the employment relationship. In Croatia, the terms ‘employee’ and ‘worker’ are considered to be synonymous. According to the Labour Act, the term ‘worker’ refers to an ‘employed natural person who performs certain tasks for an employer’. However, there are separate laws that explicitly exclude certain service providers from labour law protection. In Slovenia, for example, the term ‘worker’ is used as a uniform legal term that applies to all persons who are in an employment relationship on the basis of an employment contract. This term is also used in the Constitution. On the other hand, the term ‘employee’ is as a rule not used in legal texts. Similarly, in the Former Yugoslav Republic of Macedonia, the term ‘worker’ is the only term used that comprises all ‘employed persons’, ie, all natural persons who work under an employment relationship. In Poland, there is no linguistic distinction comparable to the English differentiation between ‘employee’ and ‘worker’. It is indisputable, however, that the notion used in the Labour Code and other statutory labour law provisions reflects the meaning of the term ‘employee’.

xxxvi  Comparative Overview ii.  The Non-existence of Statutory Definitions No statutory definition of the term ‘employee’ exists in Austria, Bulgaria, Denmark, Estonia, Finland, Greece, Iceland, the Netherlands, Portugal and Switzerland. In most countries (including, for instance, Spain and Switzerland), different notions exist in various areas of law. In Cyprus, different statutes and laws use their own definitions of ‘employee’. In Germany, the notion of ‘employment’ that applies in social security law differs from that used in employment law. In Latvia, the notion of ‘employee’ in social security law, like that in the Constitution, is considerably broader because it not only covers those persons employed on the basis of an employment (civil law) contract, but also those who work in the public sector and those who perform duties based on the provisions in law, but not necessarily under the supervision of anyone (for example, Members of Parliament). In Bulgaria, for the purposes of state social insurance, some other categories of workers are treated as equivalent to employees. In Romania, the Fiscal Code does not use the concept of employment contract, but that of dependent activity, which is defined as any activity carried out by a natural person in an employment relationship that generates income. A certain convergence is observable in some countries, however. In particular, in Sweden, building on a groundbreaking Supreme Court ruling in 1949, labour standards have developed on the basis of the idea of providing a coherent notion of the concept of ‘employee’. In some countries, slightly varying notions apply in different areas of labour law. This, for instance, is true in Austria and Germany, where the term ‘employee’ as used in the context of the Works Constitution differs slightly from the term that applies in individual employment law. In L ­ atvia, the definition of employee in health and safety legislation is broader than in other areas of labour law. In Poland, on the other hand, there is a universal definition of employee with the same meaning in all parts of its labour law. B. Employer There are different positions on the existence of the statutory notion of ‘employer’. Even if definitions exist, it seems that the notion ‘employer’ carries little weight, as definitions are typically derogatory in nature. i.  The Existence of Statutory Definitions Legal definitions of the term ‘employer’ exist in many countries (­Bulgaria, Croatia, the Czech Republic, the Former Yugoslav Republic of ­Macedonia,

Comparative Overview xxxvii Hungary, Ireland, Lithuania, Malta, Montenegro, Poland, R ­omania, ­Russia, Serbia, Slovakia, Slovenia, Turkey and the UK). However, ‘employer’ mostly has no independent meaning. These definitions usually refer to ‘employee’ or ‘contract of employment’. For instance, in Ireland, ‘employer’ is defined as ‘the person with whom the employee has entered into or who the employee works under (or, where employment has ceased, entered into or worked under) a contract of employment’. In Spain, the Labour Code defines ‘employer’ as every natural person or legal entity for whom an employee provides services. In Latvia, the Labour Code provides that: [W]ithin the meaning of this law, an employer refers to any natural or legal person or partnership with a legal capacity, who, on the basis of an employment contract, employs at least one employee or pays for the work performed by an employee.

In Cyprus, the following definition applies: ‘Employee’ is defined as any person who works for another either under a contract of service or under circumstances based on which the existence of a relationship of employee and employer may be concluded; and the term ‘employer’ shall be construed accordingly.

In Belgium, the employer is defined as a (natural or legal) person who, on the basis of an (employment) contract, engages another person, the employee, to work under his or her authority or subordination against the payment of a salary. Some laws also define employers as persons who employ ‘employee-like persons’, ie, employing such persons is equated with the employment of employees. Moreover, the legislator has recently created a new legal form of employment), the so-called ‘employers group’. On the basis of an ‘employers group’, two or more companies may temporarily and jointly recruit employees to work for each of them either alternately or simultaneously. In Sweden, the Co-determination Act broadens the concept of ‘employer’ (in terms of ‘employer responsibilities’) to also include those who, without employing them as employees, are hired for a position which is essentially similar to that of an employee. In Norway, where a statutory definition of ‘employer’ exists, the concept is understood to be a functional one. If there is uncertainty in terms of who should be considered the ‘employer’ of an ‘employee’, a comprehensive evaluation is carried out to determine who has performed the ‘employer functions’, eg, who instructed the employee, supervised the employee’s work, etc. Thus, a company that has performed employer functions can be considered the employer of the employee, even if the original employment contract was entered into with another employer. Moreover, more than one company/person can be considered the employer of the same employee, provided that both companies have performed employer functions.

xxxviii  Comparative Overview ii.  The Non-existence of Statutory Definitions In many countries (Austria, Denmark, Estonia, Greece, Iceland, ­Luxembourg, the Netherlands, Portugal and Sweden), no statutory definition of the term ‘employer’ exists. The courts mostly indirectly derive the definition of ‘employer’ from the term ‘employee’. According to the courts in G ­ ermany, ‘an employer is a person who employs at least one employee’. Every (natural or legal person) can qualify as an employer. On the other hand, a group of companies as such cannot be an employer since it lacks the quality of a legal entity. In Switzerland, too, according to the case law, the definition of this term stems from the definition of the contract of employment, which derives from the statute and, correspondingly, from the term ‘employee’. In Finland, there is no definition of ‘employer’ either. However, there is a special regulation on the representative of the employer in the Employment Contracts Act, according to which ‘the employer may assign another person to direct and supervise the work as the employer’s representative’. In some countries, the concept of ‘employer’ has been expanded by the courts—for instance, in Germany, where the (fairly old concept) of the socalled ‘indirect employer’ (or ‘indirect employment relationship’) applies. According to the courts, an ‘indirect employment relationship’ exists when an employee is employed by another person, who, for his or her part, is an employee of a third party (the entrepreneur), whereby the work is performed directly for the entrepreneur. It is assumed that such an ‘indirect employment relationship’ aims to establish the entrepreneur’s subsidiary liability with regard to the payment of wages in particular. In Luxembourg, the courts recently adopted the theory of ‘co-employment’, a judicial creation of the French courts. This liability is usually limited to the company or legal person qualifying as the ‘employer’. However, if the apparent employer is only an empty shell without any power of decision or autonomy, the dominant company can be sued as the joint debtor. In Denmark, the formal employer is the natural or legal person who has signed a contract with or entered into a relationship with the employee. Occasionally, there has been doubt as to whether the formal employer also needs to be the real employer. In Portugal, the notion of ‘employer’ is not defined by law, but its definition derives from the legal concept of ‘employment contract’ enshrined in the Labour Code. According to the Labour Code, an employment contract may be concluded with several employers if they belong to a group of enterprises or merge into a common organisational structure. In such a scenario, one of the employers shall be appointed to represent the others with regard to the performance of the contract; nonetheless, the employers remain jointly liable for the duties arising from the agreement. In France, in addition to co-employment, the law stipulates that in the case of so-called umbrella companies, two contracts are established: first, a service contract between the umbrella company and the customer company/client enterprise

Comparative Overview xxxix is concluded; and, second, a contract of employment (a temporary contract) between the independent contractor and the umbrella company is signed. The umbrella company is obliged to provide the employee with work. The latter has the competence, qualification and autonomy to identify clients and negotiate the performance of work tasks with them. In Italy, no statutory definition of the term ‘employer’ exists. More recently, the legislator has acknowledged some new forms of work. A so-called network contract was introduced that provides companies with a mechanism to bring about better cooperation. Specific rules apply to the secondment of workers linked to such network contracts. ‘Joint employership’ of workers hired within the framework of provisions defined by the network contract is permitted among companies that are part of that network. Finally, ‘joint hiring’ is admissible to a certain extent. In that case, employers are jointly and severally liable to fulfil the requirements of all labour and social security provisions that apply to regular employment relationships. It seems that in most countries, persons who are not party to the employment contract but could be regarded as ‘functional employers’ are hardly considered. In Austria, for instance, only the temporary work agency is seen as the employer. The user undertaking does, however, have certain employer-like statutory obligations. Nonetheless, the courts have not yet explored the modern notion of ‘employer’, especially when connected to new forms of employment. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  Distinct Groups of ‘Employees’ Typically, distinct groups of ‘employees’ exist, though how these groups are defined varies from one country to another. i.  Terminological Questions As was already indicated, there is no uniform terminology in the different countries as far as persons who form the subject of employment or labour law are concerned. In Sweden, for instance, no legal definition of ‘worker’ exists, even though the term ‘worker’ is commonly used to describe blue-collar employees. In Spain, labour law does not entail a differentiation of ‘workers’ and ‘employees’, and both terms can be used interchangeably. In Serbia, a category of ‘workers’ does not formally exist. However, while elaborating upon the protection of certain work categories, labour legislation uses the term ‘work engagement’ in addition to the alreadyknown term of employment relationship. The term ‘work engagement/ performance’ is considered to be broader than the term ‘employment

xl  Comparative Overview r­ elationship’ (a ­person engaged to perform work could, in some countries, be considered a ‘worker’). It seems that in most countries, the notion of ‘employee’ is fairly comprehensive. In the UK, whilst the workforce continues to be made up of many different types of personal work relationships, the question as to their legal classification continues to hinge on employee status (as well as the more recently introduced notion of ‘worker’). Similarly, in the ­Netherlands, the definition of employment is meant to be useful for every type of employee (and employer): the principle it builds on is that ‘one size fits all’. Nevertheless, in recent years, there has also been a tendency to differentiate and create deviating rules for specific groups of employees (as well as employers). In Slovenia, the term ‘worker’ is used as a uniform legal term that applies to all persons who are in an employment relationship on the basis of an employment contract. In accordance with this concept, home workers, ­teleworkers, persons employed by close relatives, temporary agency w ­ orkers, posted workers and workers in cooperatives may not be treated as sub-types of workers. They also conclude employment contracts which may contain special features, but all hold the status of ‘worker’. In the Former Yugoslav Republic of Macedonia, too, legislation stipulates a single and generic term, namely ‘worker’, which comprises all natural persons who have entered into an employment relationship on the basis of a contract of employment. The position is similar, for instance, in Hungary, Poland and Serbia. ii.  The Existence of ‘Sub-types’ In some countries, the labour market seems more fragmented. For instance, in Spain, the Labour Code includes a list of ‘employment relationships of a special nature’. Those employment relationships cover senior management, domestic servants, convicts in penitentiaries, professional athletes, artists involved in public performances, persons involved in trade operations on behalf of one or more entrepreneurs without assuming full risk (commercial employees/agents), persons with disabilities employed in special centres of employment, dockers, lawyers working for law firms, juveniles in detention centres and young medical doctors in their final training stage at public hospitals. Each ‘special relationship’ entails its own rules, but references to the Labour Code are frequent. a.  Blue-Collar and White-Collar Workers National systems differ as far as differentiation between blue-collar and white-collar workers is concerned. In Germany, the historical differentiation between blue-collar and white-collar workers has almost fully lost ­significance. The same applies in Belgium, where this distinction was ruled

Comparative Overview xli to be discriminatory by the Constitutional Court in 2011. In L ­ uxembourg, the differentiation between blue-collar and white-collar workers was replaced by a single social status. In Italy, too, the historical differentiation between blue-collar and white-collar workers has lost significance almost entirely. In Bulgaria, legislation uses the collective phrase ‘factory or office worker’. ‘Factory worker’ refers to a natural person who is primarily engaged in manual labour. An ‘office worker’ is considered a natural person who primarily performs intellectual activities. There is no difference in the legal ­status of these workers in practice. The same applies, for instance, in the Czech Republic and Latvia, which both do not distinguish between ‘white-collar workers’ and ‘blue-collar workers’. However, in many other countries, the classic dichotomy of blue-collar and white-collar workers is still relevant. A case in point is Sweden, where the application of collective agreements in major sectors still depends on the categorisation of blue-collar and white-collar workers. The differentiation also still exists in France and Greece. b.  ‘Managerial’ Employees In many countries (Austria, Belgium, Italy, Greece and Luxembourg), specific rules apply to ‘managerial’ employees, though the notion differs from one country to another. In Portugal, a so-called ‘temporary special arrangement’ may be applied to management or equivalent functions, directors or leadership positions that directly report to management, general directors or equivalent functions and secretariat positions of those posts, all of which are characterised by a special bond of trust between the parties. In Germany, the legal position of a managerial employee is determined by the fact that although he or she is personally dependent upon the employer, his or her tasks are characteristic of an employer’s tasks, such as workforce planning, recruitment and giving notice. In Switzerland, some specific judge-made rules apply to managerial employees. According to the case law, managerial employees may generally not claim payment or compensation time off for overtime work. In Sweden, ‘executives’ and persons in high managerial positions are explicitly excluded from the Employment Protection Act, even though they fall under the concept of ‘employee’. In Turkey, employees in high managerial positions are excluded from the job security provisions of the Employment Act. In Poland, managerial employees do not constitute a separate legal group with a comprehensive set of rights, but several Labour Code provisions have been expressly modified in respect to them. In France, there is a distinction between executives (cadres) and senior executives (cadres supérieurs) which is important in terms of working time, election of work representatives, ­collective bargaining and industrial tribunal rules. In Montenegro, on the other hand, managers have the status of ‘employee’.

xlii  Comparative Overview c.  Employees in the Public Sector In some countries, workers in the public sector are employees in the ‘­classical sense’, while in others, they form a distinct group. In Germany, the position of employees in the public sector does not, in principle, differ from that of employees who work in the private sector. However, collective agreements that apply to them regularly contain specific provisions. In Sweden, too, there are no major legal differences between public and private ­sector employees. Although additional provisions are applicable to public sector employees, they are also subject to ordinary labour legislation. In any event, labour law does not (any longer) include a specific sub-type of ‘public employee’. In France, on the other hand, contract employees who form part of the civil service are governed by public law. In Austria, too, the position of public sector employees differs significantly from that of employees in the private sector. As their employment relationship is regulated in detail by statutes, the room for contractual agreements is limited and there is virtually no room for collective bargaining. Similarly, in Hungary, specific provisions exist for employment relationships with public employers. The rules are generally stricter than for other employment relationships. Thus, in the collective agreement or in the contract of employment, no derogation from the regulations provided for in the Labour Code on the duration of the notice period and severance pay is permitted. In the Netherlands, the Civil Code contains a general exception of applicability to contracts of employment with public authorities. This implies that public authorities that conclude contracts of employment must specify their own rules for this category of employees. However, they can choose to apply the Civil Code or parts thereof. As is the case in Austria and G ­ ermany, for instance, civil servants enjoy a special statute under public law. However, a proposal has been initiated by Members of Parliament to amend this. According to the proposal, civil servants would conclude contracts of employment under civil law. d.  Employees in Church Service In many countries, specific rules apply to employees who are in the service of the church. In Montenegro, employees in church service also represent a distinct category. In principle, labour law fully applies to them. However, churches can determine specific loyalty duties due to their right to self-determination which is guaranteed under the Constitution. The position in Germany is similar. In Latvia, the courts have held that churches have discretion under labour law to request certain categories of employees to hold certain religious beliefs and to act in conformity with the ethos of

Comparative Overview xliii the given religious organisation. In Austria, employees in church service do not ­represent a distinct category, as (individual) employment law is fully applicable to them. However, co-determination at the workplace level is restricted, as those undertakings that directly serve confessional/religious purposes are considered ideological establishments. B.  ‘Workers’ as a Separate Category In the UK, in addition to the concept of ‘employee’, the law has increasingly provided a number of secondary gateways into (a smaller set of) basic employment rights, including, notably, the worker concept as laid down in the Employment Rights Act, which was introduced to broaden the scope of basic labour standards. ‘Worker’ means: [A]n individual who has entered into or works under … (a) a contract of employment, or (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.

In a few other countries, a separate category of ‘workers’ is also acknowledged. This is the case, to a certain extent, in Ireland. In Malta, the category of ‘workers’ exists in the area of industrial disputes (only). However, in most countries (Austria, Belgium, Croatia, the Czech ­Republic,  Denmark, Estonia, Finland, France, the Former Yugoslav Republic of Macedonia, Germany, Greece, Hungary, Iceland, Italy, ­ ­Latvia, ­Lithuania, Luxembourg, Montenegro, the Netherlands, Norway, Poland, Portugal, Russia, Slovakia and Switzerland), no separate category of ‘­workers’ exists. This means that in principle, no group of persons is acknowledged who would be entitled to certain employment rights, albeit not qualifying as employees. In Romania, specific categories of staff are considered in the law who are party to an employment relationship without being employees, such as clerical staff, casual workers, members of cooperatives or salaried lawyers. IV.  SUBORDINATION: CRITERIA AND INDICATORS

A. Subordination Typically, ‘subordination’ represents the key requirement when determining whether a legal relationship between two parties qualifies as an ‘employment relationship’.

xliv  Comparative Overview i.  The Relevance and Meaning of ‘Subordination’ In all countries, several criteria are applied when assessing a legal relationship. In the Czech Republic, for instance, the Labour Code describes four characteristics of dependent work: (1) subordination of the employee; (2) performance of work in the name of the employer; (3) performance of work in accordance with the employer’s instructions; and (4) personal performance of work by the employee. In Italy, the Civil Code recognises the following as the main elements of employment: (1) payment of a wage; (2) cooperation; (3) subordination (ie, subjection to the power of direction of the employer); and (4) dependency. However, the third element is the most characterising element of the employment relationship, identifying the employee’s duty to comply with the employer’s power of instruction. It represents the technical and functional integration of the employee into the productive and organisational structure of the entrepreneur, who exercises his or her directive power through orders, control and disciplinary sanctions. In light of the above, the Supreme Court has held that: [O]ne unfailing element of the employment relationship is subordination, intended as a lien of personal submission of the employee to the employer’s management power, which relates more to how the employee performs work rather than to the result of that work; on the contrary, the other elements of the employment relationship … are incidental. These factors should be taken into consideration as a whole and, in any case, in relation to subordination.

Indeed, it seems that subordination represents the key criterion in all countries, though its weight varies from one country to another. Apart from that, subordination is a concept that is understood differently from country to country. In Germany, a contract of employment is characterised by a relationship of personal dependency or subordination between the parties. According to the case law, the essential feature of employment is that the individual, the employee, is directed by another. Hence, the existence of work instructions is the main indicator of subordination. In Spain, subordination means functional dependence, ie, the employee’s integration in the company’s supervision, management, organisation and power. In Switzerland, the crucial criteria to assess whether the work being carried out is dependent work are integration in another’s organisational structure and subordination (in the sense of being subject to work instructions and work control). Subordination is also the key criterion in Bulgaria. An employee’s two major obligations under an employment relationship pursuant to the Labour Code are to perform the work that is the subject matter of the employment relationship and to observe the established work principles. Other specific provisions of the Labour Code highlight and specify the employee’s subordination under an employment relationship. Thus, the employee shall be required to: (1) carry out the lawful instructions of the employer; (2) observe the

Comparative Overview xlv i­nternal rules adopted in the enterprise; and (3) coordinate his or her work with the other employees in conformity with the employer’s instructions. In ­Luxembourg, on the other hand, integration is not typically referred to as a criterion defining an employment relationship. Court decisions use the concept of ‘legal subordination’ or ‘legal dependence’, referring to the employee’s obligation to execute orders, even if he or she does not receive any on a given day. In the UK, the contract of employment is typified by a range of qualities including subordination, business integration and mutuality of obligation. The greater the degree of control or superintendence, the greater the likelihood that the worker will be deemed an employee. However, there is no fixed extent to which control is required as it only exists within a broader matrix of relevant factors. Moreover, the courts have fleshed out the concept of ‘subordination’ differently when facing specific problems. A case in point is Poland. There, case law has introduced the concept of ‘autonomous subordination’. It refers to situations in which an employer determines the duration of working time and the tasks to be completed, but does not directly interfere in the employee’s mode of work performance. In other words, the employee is required to achieve the results requested by the employer, but has a relatively broad scope of discretion with regard to the method of work performance. In practice, this concept relates to employees with high-level skills or autonomy. ‘Control’ also plays a key role. In Italy and Russia, for example, it is part of the statutory definition of ‘employment contract’. The same is true in Malta. In Norway, it is taken into consideration when deciding whether a person is the (functional) employer of another person. In Switzerland, too, ‘control’ is an important factor when assessing whether the work being carried out is dependent work. In the UK, the greater the degree of control, the greater the likelihood that a person is considered to be an employee. In ­Austria, according to the case law, the notion of employee is interpreted as referring to a person who is in a position of ‘personal subordination’, ie, under the command, authority and control of another person. This is, for instance, the case if the employer can monitor the work flow on a virtual platform. Next to ‘subordination’ and ‘control’, the courts often refer to ‘integration’. In Germany, in addition to assessing the extent of another person’s power to direct, the courts often use the ‘integration test’ by asking whether a person forms part of the organisational structure of an undertaking. The question then is whether work is performed within the framework of an organisation that was constituted by another. In this context, one question occasionally asked by the courts is whether similar work is performed in the undertaking by persons who undoubtedly qualify as employees, and whether the employer generally does not differentiate between persons who are employees and the person whose legal qualification is being examined. In Spain, too, integration of the worker into the company (meaning, inter

xlvi  Comparative Overview alia, compliance with work schedules) is a relevant factor. In Slovenia, ‘­integration into the organised working process’ is one of the basic (­statutory) components of the employment contract. In the Former Yugoslav Republic of Macedonia, the law emphasises the following two criteria of subordination: the performance of work according to the instructions and under the supervision of the employer, and the participation of the worker in the employer’s organised work process. In Italy, as has already been mentioned, the Civil Code recognises three other elements of employment next to ‘subordination’: ‘payment of a wage’, ‘cooperation’ and ‘dependency’. While ‘dependency’ refers to the employee’s economic and social vulnerability in the sense that labour is a unique means for earning a living, ‘cooperation’ is a technical and organisational element of subordination that is recognised in the cooperation of the employee with other employees and the employer. ii.  The Need for an Overall Assessment In all countries, qualification of a relationship is far from clear-cut and requires comprehensive assessment. In Austria, Germany and ­Switzerland, the courts apply the so-called ‘typological method’ when determining whether a person is (sufficiently) subordinated in order to justify the relationship with another person being qualified as an employment relationship. The starting point of the legal analysis is that the term ‘employee’ refers to a mere ‘type’, meaning that all of the decisive criteria must not necessarily be met in individual cases. Nor is there a feature of dependent work that is not also occasionally found among self-employed persons. The courts even deny the possibility of fixing abstract criteria in advance that must be met in individual cases. Instead, various criteria are used indicating the existence of an employment relationship. The basis of the corresponding legal qualification of the contract is in any event an ‘evaluation of a general assessment’, meaning that the courts—when deciding individual cases—take a ‘holistic view’ in order to determine whether a person qualifies as an ‘employee’. The criteria for determining personal subordination vary from one case to another. Since the courts hold the view that the existence of an employment relationship is dependent on the ‘degree’ of personal subordination, the only thing that can safely be said is that the more far-reaching the power of one entity to direct a person, the more likely the contract with that person will be considered a contract of employment. Similarly, in Spain, there is no decisive criterion, and thus a comprehensive and holistic assessment of each individual case must be conducted. In Norway, the courts carry out a ‘discretionary overall assessment’ based on the relationship between the parties as a whole. In Greece, in ‘measuring’ whether a person is sufficiently subordinated to justify qualification of the relationship as one of employment, the courts apply the co-called ‘qualitative’ criterion. Accordingly, the courts put aside the quantity of the relevant

Comparative Overview xlvii criteria ascertained in each case and highlight the ‘qualitative’ element, that is, the quality of the worker’s engagement and dependence which ‘necessitate protection according to the rules of labour law’. This qualitative appreciation of the criteria may differ depending on the given case, and takes the type and nature of the work into account. It seems that in some countries, there is less leeway for the courts. For instance, in Sweden, a multi-factor test is applied by the courts, though a general assessment of all factors in the individual case is suggested in leading doctrines. B. Indicators In all countries, various indicators are used when determining whether a relationship between two parties qualifies as an employment relationship. In Sweden, the multi-factor-test that applies in this context comprises the following: a person is likely to be an employee if he or she is personally obliged to perform the work that is stated in either a (written or oral) contract or could be presumed by the parties to the contract; personally or practically personally performs the work; is at the disposal (of the employer) continuously for work arising within the business of the employer; the relationship between the parties has continuous or, in any event, a ‘lasting’ character; is prohibited under the contractual arrangement or as a consequence of the conditions of work (time or capacity for other work), from undertaking similar work on behalf of someone else; is, for the performance of the work, subject to the employer’s instructions or control in relation to how, where and when to carry out the work; must use the machinery, tools or material provided for by the other party (the employer); is compensated for direct expenses such as travel costs; is remunerated for the work effort, at least partially, through a guaranteed salary; or is economically and socially in a similar position as an employee. In Ireland, the government established the Employment Status Group in 2000, consisting of social partner representatives and representatives of various government departments, including the Revenue Commissioners. The Group issued a Code of Practice for Determining Employment or SelfEmployment Status of Individuals, which was later updated in 2007. The Code provides as follows: while all of the following factors may not apply, an individual would normally be an employee if he or she: (1) is under the control of another person who directs as to how, when and where the work is to be carried out; (2) supplies labour only; (3) receives a fixed hourly/ weekly/monthly wage; (4) cannot sub-contract the work; (5) does not supply materials for the job; (6) does not provide equipment other than the small tools of the trade; (7) is not exposed to personal financial risk in carrying out the work; (8) Does not assume any responsibility for investment

xlviii  Comparative Overview in and management of the business; (9) does not have the opportunity to profit from sound management in the scheduling of engagements or in the performance of tasks arising from the engagements; (10) works set hours or a given number of hours per week or month; (11) works for one person or for one business; (12) receives expense payments to cover subsistence and/or travel expenses; (13) is entitled to extra pay or time off for overtime. Additional factors are to be considered. While all of the following factors may not apply to the job, the Code provides that an individual would normally be self-employed if he or she: (1) owns his or her business; (2) is exposed to financial risk by having to bear the cost of making good faulty or substandard work carried out under the contract; (3) assumes responsibility for investment and management in the enterprise; (4) has the opportunity to profit from sound management in the scheduling and performance of engagements and tasks; (5) has control over what is done, how it is done, when and where it is done, and whether he or she does it personally; (6) is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken; (7) can provide the same services to more than one person or business at the same time; (8) provides the materials for the job; (9) provides the equipment and machinery necessary for the job other than the small tools of the trade or equipment which in an overall context would not be an indicator of a person in business on their own account; (10) has a fixed place of business where materials, equipment, etc can be stored; (11) costs and agrees a price for the job; (12) provides his or her own insurance coverage, eg, public liability coverage; and (13) controls the hours of work to fulfil the job obligations. In Germany, the courts apply a range of indicators for the existence of an employment relationship. Among these are periodic payments or otherwise, payments in kind, recognition of entitlements that are typical for an employment relationship, travel payments by the person requesting the work, granting of annual leave, payment of income tax and social security contributions, and keeping and retaining social documents at the place of work. An indication of an employment relationship may also be when a person places his or her entire working abilities at the disposal of another person, while any secondary activities are prohibited under the contract. Another indication may be the provision of tools or materials by the person requesting the work. Business registration, on the other hand, has not been considered to be of relevance by the courts. In Switzerland, the courts apply the following indicators: commitment to mandatory working hours and control thereof, allocation of a workplace in an enterprise; no bearing of a business risk; provision of tools and materials for work; fixed and/or periodic payments; an obligation to perform duties personally; payment or compensation for overtime; a commitment to a noncompetition clause or the prohibition of secondary employment; labelling of the agreement by the parties; payment of social security contributions

Comparative Overview xlix by an employer; qualification as an employment relationship according to social security and tax law; the person performing the work has no personal presence in the market; the taking of holidays; acting in a third party’s name and for a third account; full-time activity for part of the contract; the existence of a probation period; agreement on a long notice period or fixed-term work of at least one year; the way in which the contract is executed by the parties; subordination to persons who themselves work in the service of the employer (superiors); dependence on an external organisational structure (whereas self-employed persons have their own organisational structure). In Finland, the courts also apply a range of indicators. Among the questions asked are the following: who dictates when the work is performed, ie, the working hours? Who dictates where the work is done—in the premises of the employer or in a place the employee has chosen? Who owns the machines or equipment used to perform the work? Who owns the space where the work is done? Who dictates how the work is carried out/work methods? Who dictates who is in charge of supervising the work? Who observes the quality of the work performance? Who sets the objectives of the work? Is income tax withheld from the payment? Who is in charge of making social security payments, employment pension contributions and accident insurance? Who carries the financial risk of the business? In Turkey, the Obligations Act provides various indicators of subordinate employment: in principle, the work must be carried out personally by the worker; the worker shall use machinery, tools, technical equipment, facilities and vehicles provided by the employer; the worker is subject to obligations related to the work itself rather than the final result and provides the employer with the work rather than the result; the worker is prevented from performing paid work for someone else in the case of subordinate employment and specific work that is ‘in competition with his/her employer’. Other indicators relate to the form of payment and the bearing of financial risks. In Latvia, the Law on Personal Income Tax contains a list of indicators for the purpose of distinguishing between employed and self-employed persons. The indicators included in the tax law fully coincide with those the courts have defined in the case law on employment disputes. In Romania, until 2015, tax law stipulated the right of tax authorities to requalify a contract as one of employment on the identification of fixed criteria. This approach has recently been reversed: the Fiscal Code specifies the criteria for identifying independent work. C.  ‘Economic Dependence’ In no country does the qualification of a legal relationship seem to depend exclusively on ‘economic dependence’. To be more precise, in no country

l  Comparative Overview does ‘economic dependence’ seem to be able to substitute for a lack of dependence or subordination. That said, the weight of ‘economic dependence’ as a factor to be taken into account seems to vary from one country to another. In some countries (Croatia, Estonia, Lithuania, Montenegro and ­Romania), ‘economic dependence’ (as such) seems not to play any role when determining whether a relationship is an employment relationship. In France, the courts have explicitly ruled that the legal relationship of workers with the person for whom they work cannot be determined by their weakness or economic dependence, but only by a contract between the parties; the status of employee requires the existence of a legal relationship of subordination between the worker and the employer. In Russia, no case law exists on the economic dependence of the employee as an indicator of the existence of an employment relationship. This seems to be irrelevant for the courts from the point of view of qualifying the specific type of relationship. In some countries, however, ‘economic dependence’ does have a bearing. In Bulgaria, economic dependence of the person who provides labour services is one of the characteristic elements of the employment relationship. Consequently, such dependence is fundamental for determining the employee’s status. In the Czech Republic, the case law states that economic dependence is a common feature of dependent work and differentiates dependent work from other types of work. In Ireland, the overriding consideration will always be whether the individual performing the work or providing the service does so ‘as a person in business on their own account’. Consequently, the extent to which an individual has the opportunity to benefit financially from the work or to be exposed to financial risk or loss is paramount. In any event, ‘economic dependence’ is neither required in all countries nor in itself sufficient when determining ‘employee status’. In Sweden, even though ‘economic dependence’ is one of the more significant parameters for establishing whether an employment relationship exists, it does not suffice on its own to determine the existence of such a relationship. In Finland, the higher the economic dependence of a person on the employer, the more probable it is that an employment relationship exists. In Italy, economic dependence, generally speaking, does not play a crucial role in determining subordination, because this element may be present in certain self-employment relationships as well. This notwithstanding, the Constitutional Court has emphasised the condition of economic and social dependence of the employee to distinguish between subordination and self-employment. In Malta, economic dependence is one factor that must by law be taken into consideration for a self-employed person to be deemed employed, but it is by no means mandatory or, indeed, exclusive.

Comparative Overview li V.  THE PRINCIPLE OF PRIMACY OF FACTS

In (almost) all countries, the principle of ‘primacy of facts’ seems to apply, although, as is the case for instance in the Netherlands, it may be termed differently. In Poland, the Labour Code explicitly provides that an employment relationship shall be considered valid, regardless of the label the parties concluding the contract gave it. According to the law, it is not permissible to replace an employment contract with a civil law contract where the terms upon which the work to be provided derive from the provisions laid down in the Act. In Slovenia, too, the primacy of facts is laid down in the law. The Employment Relationships Act provides that if the components of an employment relationship exist, work may, in principle, not be performed on the basis of a civil law contract. In Turkey, the ‘primacy of facts’ is a general principle of contractual law. The Obligations Act provides that: [I]f a person performs work in a particular period that would only be performed in exchange for a wage and if that work is accepted by the employer, it is deemed that an individual employment contract has been concluded between them.

In France, acknowledgement of the principle by the courts resulted in ­franchise contracts being requalified as contracts of employment. In Italy, the Constitutional Court stressed that: [W]hen the concrete relationship and the modalities of work performance—eventually in contrast to the conditions agreed by the parties to the contract—are those typical of an employment relationship, only the latter can be the qualification of the contract.

In Germany, the principle of ‘primacy of facts’ is acknowledged in the sense that the ‘true nature’ of the contract, irrespective of its ‘labelling’ by the parties, is the determining factor when legally assessing the relationship between the parties. In the courts’ view, the basic idea of employment law as an instrument of protecting employees from the (usually economically more powerful) employer would be impaired if the latter could set aside this protection by simply using contractual language that points in the direction of a ‘free service contract’. In Russia, the principle of ‘primacy of facts’ has not been explicitly affirmed in law, but applies in practice. The exact content of the principle of ‘primacy of facts’ may vary from one country to another. In Malta, the law makes sufficiently clear that regardless of the form of the relationship between the principal and the service provider, if five out of the eight criteria fixed in the law are fulfilled, the relationship in question is one of employment. In Belgium, the principle of ‘primacy of facts’ applies in the sense that the qualification of the employment relationship by the parties prevails, except in cases in which the facts clearly preclude the qualification of the relationship by the parties. In the

lii  Comparative Overview UK, on the other hand, an express provision that a contract is a contract of employment cannot conclusively determine whether it is such a contract. The principle of ‘primacy of facts’ may also be more significant in one country than in another. In Belgium, for instance, although the principle is acknowledged, its significance is limited due to the application of some regulations on evidence. In the Former Yugoslav Republic of Macedonia, the labour law system does not contain provisions that can be considered as forming the basis for the principle of primacy of facts. According to case law, contracts for services are considered valid if they are concluded in accordance with the provisions of general contract law. Moreover, case law does not provide the possibility of bringing a legal dispute before the court to determine the legal status of the subject of the service contract, particularly when it effectively meets the ‘factual’ assumptions associated with an employment contract. VI.  QUALIFICATION IN FULL

A.  Comprehensive Qualification In most countries (Austria, Belgium, Croatia, Cyprus, Denmark, the ­Former Yugoslav Republic of Macedonia, Greece, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Montenegro, Norway, Poland, Portugal, ­Romania, Serbia, Spain and the UK), a contract between two parties can only either be a contract of employment or any other contract. In other words, there is no third option according to which only part of a contract can be qualified as a contract of employment. In Bulgaria, the Labour Code explicitly provides that relationships for the provision of labour services can only be employment relationships. It is prohibited to include rules that go beyond employment-related regulations in contracts of employment. According to the law, such rules will be null and void. In Turkey, there are no legal provisions on hybrid contracts. The solution suggested by the case law includes the following: if a hybrid contract resembles an employment contract, the regulations governing employment contracts shall govern the entire contract. In Switzerland, the courts have held that in the field of service contracts, so-called innominate contracts and mixed contracts are admissible. Thus, legal relationships which result in the dependence of one party and which do not qualify as a contract of employment as a whole are subject to specifically adapted legal consequences. Dependence must reach a significant degree of intensity to justify the application of certain protective employment law provisions.

Comparative Overview liii In Finland, the concept of hybrid or mixed-type employment contracts is recognised. This concept refers to a contract of employment that fulfils the elements of another type of contract as well. As a main rule, several different regulations can be applied to this relationship. B. Additional Contracts and the Existence of Non-contractual Legal Relationships In all countries, the parties to an employment contract are perfectly free to conclude an additional contract, which as such does not qualify as a contract of employment. The parties can conclude such a contract at any time. Apart from contractual relationships, non-contractual legal relationships between parties often exist. For instance, the parties may be liable under tort law in the event that damage is caused to the other party. However, the application of tort law may be restricted by the courts. A case in point is Germany, where the limitation of liability of employees as developed by the courts is not restricted to liability arising from the contract, but applies to liability under tort law as well. In the Czech Republic, other contractual relationships between the employee and the employer must take the existing employment relationship into consideration. That said, the so-called principle of subsidiarity applies. This means that the Civil Code always also applies to employment relationships if the provisions of the Labour Code themselves cannot be applied. In Romania, the parties may conclude additional contracts during the performance of the contract of employment if the conclusion of another contract does not lead to legal provisions being evaded. In Estonia, the courts have stated that agreements on non-competition clauses are considered independent contracts under civil law. In Hungary, the Labour Code itself has identified two agreements (‘non-competition agreements’ and so-called ‘study contracts’) that are closely linked to the employment relationship. These agreements are not regarded as contracts of employment, but are subject to different rules. VII.  LIMITS TO THE FREEDOM OF CONTRACT

A.  ‘Contract of Employment’ as a Mandatory Concept As the principle of ‘primacy of facts’ applies in (almost) all countries, it does not come as a surprise that freedom of contract is restricted in the sphere of employment law: the legal concept of ‘employee’ is mandatory and cannot be disposed of by the parties to the contract. If a person on the basis of

liv  Comparative Overview an objective legal assessment qualifies as an ‘employee’, the parties are not allowed to set this qualification aside by insisting that their contract is not a contract of employment. In Malta, if a contract is in fact an employment contract, it shall be deemed to be an employment contract, irrespective of how the parties have labelled the contract. In other words, even if the legal nature of the contract involves independent contractors, if five of the criteria listed in the Order are satisfied, the contract will be deemed one of employment. Furthermore, the law explicitly states that any conversion of a contract of employment or a contract of service into a contract for service shall not have any legal effect, unless it has been authorised by the so-called Director. On the other hand, parties are not prohibited from entering into a contract of employment or into an employment relationship, even if it does not objectively qualify as such. In the UK, the law generally does not permit parties to label their relationship in any legally determinative way. Furthermore, employment contracts are, at least at first glance, subject to strict statutory provisions designed to eliminate any attempts at contracting out. However, a significant exception to this general ban on contracting out can now be found in the Employment Rights Act, which, since an amendment in 2013, sets out the features of so-called ‘Employee Shareholder Status’. In Ireland, it is a standard provision in all employment rights legislation that a provision in an agreement (whether a contract of employment or not) shall be ‘void’ insofar as it purports to exclude or limit the application of, or is inconsistent with, any provision of the relevant Act. In the Former Yugoslav Republic of Macedonia, the parties enjoy considerable freedom of contract. Protection of workers is basically brought about by applying the general principles and provisions arising from the law on obligations. In this regard, the provisions that relate to the so-called ‘­apparent contract’ may be particularly important. In Sweden, as a general rule, before an employer who is bound by a collective agreement allows a person ‘to perform certain work on his behalf or in his business’ without that person being or becoming an employee of the given employer, the employer is required to initiate negotiations with the trade union if the work to be performed is long term or necessitates specific expertise. If the trade union concludes that such action may be violating the law, collective agreements or generally accepted practices, the trade union can prevent the employer from concluding such an ‘arrangement’. B.  Freedom to Enter into an Employment Relationship In most countries, if the parties choose a ‘contract of employment’ even though the contract on the basis of an objective assessment is a ‘free service contract’, the designation of the contract by the parties usually prevails. A case in point is Greece, where the principle of favourability leads to this

Comparative Overview lv result. In Russia, too, the parties to the employment contract cannot alter a contract’s legal nature by insisting that it is not a contract of employment. However, the opposite situation occurs quite frequently. Parties to a civil contract can agree to change its legal nature. Similarly, in Belgium, France, Italy or Serbia, the parties are free to enter into an employment contract even if it does not objectively qualify as one. In Austria, if the parties choose to conclude a contract of employment despite the absence of personal subordination, the provisions of labour law will apply, even if the essentials of an employment contract are not fulfilled. The contract is then not an employment contract in the legal sense, but another type of contract (often a free service contract) to which the parties agreed to apply labour law provisions. They can therefore mutually decide to withdraw from this practice, as labour law provisions are not applicable by law. In contrast, the courts in the Netherlands seem to be more hesitant to allow the parties to enter into a contract of employment, even if it does not objectively qualify as such. In Slovakia, according to the Labour Code, a business activity or another gainful activity based on a contractual relationship under civil or commercial law shall not be dependent work. Consequently, civil law (or commercial law) contracts do not qualify as employment relationships. The substance of the relationship, as opposed to the form of the contract, determines the legal nature of the contract. In Bulgaria, too, the parties cannot conclude a contract of employment where the subject matter of such a contract is not the provision of labour services, ie, it cannot be qualified as an employment contract. The same applies in Finland. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Collective Agreements In most countries, the legal concept of ‘employee’ is also mandatory in the sense that it cannot be disposed of by the parties to a collective ­bargaining agreement. In Sweden, too, the notion of ‘employee’ in relation to the most important legal provisions—the Employment Protection Act and the Co-determination Act—is mandatorily applied and as such is not open to modification in collective agreements. However, when ruling on cases involving the notion of ‘employment relationship’, the Labour Court has repeatedly taken note of regulations in collective agreements. In Belgium, the legal concept of ‘employee’ is also mandatory in the sense that it cannot be disposed of by the parties to a collective bargaining ­agreement. However, the trade unions and employers’ organisations represented in the joint committees at the level of industry can give recommendations to the King, who can determine specific criteria that lead to the

lvi  Comparative Overview conclusion that the legal subordination or authority required to establish an employment contract exists, or which create a presumption of the existence of an employment contract. In France, the social partners do not play a role in defining the notion of ‘employee’, with the exception of the entertainment industry and journalism. Apart from the question of admissibility, the social partners may not feel like amending existing notions. For instance, in the Former Yugoslav Republic of Macedonia, collective agreements are not particularly innovative in terms of defining the concept of ‘employee’ (ie, worker). They usually apply the definition of the term ‘employee’ (ie, worker) as stipulated in the Law on Employment Relationships. The same is true, for instance, in Serbia. In Denmark, in principle, it is left to the parties to a collective agreement to define the concept of ‘employee’ or ‘employment relationship’ as far as the working conditions laid down in the agreement are concerned. However, collective agreements do not in practice define the term ‘employee’. B.  Custom and Practice In most countries (Austria, Belgium, Bulgaria, Croatia, the Czech Republic, Denmark, Estonia, the Former Yugoslav Republic of Macedonia, Germany, Greece, Hungary, Ireland, Italy, Latvia, Luxembourg, Montenegro, the Netherlands, Norway, Poland, Portugal, Russia, Serbia, Slovakia, Spain, Switzerland, Turkey and the UK), deviations on the basis of custom and practice are not acknowledged. In Sweden, custom plays a special role with regard to the determination of a work relationship as an employment relationship, especially in connection with definitions included/covered in collective agreements. Established customs and provisions in collective agreements might influence the notion of employee and in court turn out to be decisive for the categorisation of a person’s status as an employee or a self-employed person. In Cyprus, collective agreements concluded on the basis of cooperation between the social partners are considered by the courts as setting norms, customs and practices. However, neither social dialogue mechanisms nor collective bargaining is particularly relevant for determining whether an ‘employment relationship’ or ‘employment contract’ exists. In Lithuania, too, deviations based on custom and practice are recognised. IX.  LEGAL PRESUMPTIONS AND SHIFTING THE BURDEN OF PROOF

A. Presumptions In many countries (Austria, Cyprus, the Czech Republic, Denmark, Finland, the Former Yugoslav Republic of Macedonia, Hungary, Iceland, Ireland,

Comparative Overview lvii Lithuania, Montenegro, Norway, Slovakia and the UK), no statutory presumptions with regard to the existence of an employment contract exist. In Poland, the courts expressly ruled that a certain provision in the Labour Code does not contain a presumption of the existence of an employment contract. In some countries, statutory presumptions exist. Some of these presumptions are general, while some are aimed at specific groups. i.  General Presumptions As far as general presumptions are concerned, the requirements that must be fulfilled in order to let the presumption kick in are set forth in more or less detail. In Malta, the law clearly states that in consideration of the employment status of any person who is usually self-employed and hence not considered an employee, it shall be presumed that an employment relationship exists, that the person for whom the service is provided is the employer and that the provisions of labour law apply if at least five criteria out of eight are fulfilled. The eight criteria are the following: (1) the employee depends on one single person for whom he or she provides the service for at least 75 per cent of his or her income over a period of one year; (2) he or she depends on the person for whom the service is provided to determine what work is to be done, and where and how the assigned work is to be carried out; (3) he or she performs the work using the equipment, tools or materials provided by the person for whom the service is provided; (4) he or she is subject to a working time schedule or minimum work periods established by the person for whom the service is provided; (5) he or she cannot sub-contract his or her work to other individuals to substitute himself or herself when carrying out work; (6) he or she is integrated into the structure of the production process, the work organisation or the company’s or other organisation’s hierarchy; (7) his or her activity is a core element in the organisation and pursuit of the objectives of the person for whom the service is provided; and (8) he or she carries out similar tasks for existing employees or, in the event that work is outsourced, he or she performs tasks similar to those formerly carried out by employees. Upon a written request, such a relationship may be exempt from being considered an employment relationship, but the presumption as such still might not be rebuttable. In Portugal, a legal presumption upon the conclusion of an employment agreement is foreseen in the Labour Code. According to this provision, the existence of an employment contract is presumed when in the relationship between the person who provides an activity and the other (or others) who benefit from it, two of the following elements can be ascertained: (1) the activity is carried out in a place that belongs to the beneficiary of the activity or in a place determined by him; (2) the equipment and working tools belong to the beneficiary of the activity; (3) the person who provides the

lviii  Comparative Overview activity complies with a specific start and end time as determined by the beneficiary; (4) an amount is paid to the provider within a certain period in return for the activity performed; (5) the provider performs management or leadership functions in the enterprise. In Croatia, according to the Labour Act, where a contract concluded between two parties exhibits clear features of an employment relationship due to the nature and type of work and the employer’s authority, it shall be deemed that an employment contract has been concluded with the employee, unless the employer is able to prove otherwise. This provision was found by the Constitutional Court to be in line with the Constitution. In Greece, a legal presumption concerning the status of the individual exists too. The presumption of self-employment was abolished in 2010 and the opposite presumption in favour of an employment relationship was introduced in an effort to fight bogus employment. In the event that the work is provided personally, solely or primarily for the same employer for nine consecutive months, it is presumed that the contract is an employment contract. It is a rebuttable presumption and the employer has the possibility to prove that the worker is not subject to his or her instructions concerning the workplace, time and manner of performance of work. Notably, economic dependence is also important as it constitutes one of the elements for establishing a presumption of an employment relationship. In the Netherlands, the Civil Code provides that a person who, for the benefit of another, performs work for remuneration for three consecutive months, weekly or for not less than 20 hours per month is presumed to perform such work pursuant to a contract of employment. Moreover, the Civil Code provides that: [W]here a contract of employment has lasted for at least three months, the contracted work in any month is presumed to amount to the average working period per month over the three preceding months.

In Spain, the Labour Code states that an employment contract shall be presumed to exist between anyone rendering a service on behalf of and within the scope of the organisation and management of another, and the person receiving it in exchange for compensation paid to the former. This presumption, which has a general scope and also applies in the field of social security and tax law, has proven to be extremely useful for classifying activities whose legal nature is ambiguous due to similar features with an employment relationship. In Estonia, there is a presumption of the existence of an employment contract. If a person performs work for another, which, under the circumstances, can be expected to be performed only in exchange for remuneration, it is presumed that an employment relationship exists. According to the case law, only in cases where it is evident that no employment contract exists and the employer did not prove otherwise does the court deem that no

Comparative Overview lix employment contract has been concluded. Similarly, in Switzerland, a contract of employment is deemed to have been concluded where the employer accepts the performance of work over a certain period in his service which, under the circumstances, could reasonably only be expected in exchange for a salary. In Turkey, according to the Obligations Act, if a person performs work over a particular period that would only be performed in exchange for a wage and if that work is accepted by the employer, it is deemed that an individual employment contract was concluded between them. Therefore, in the event of disputes relating to the existence of an employment relationship between a worker and an employer, the relationship is presumed to represent an employment relationship if all of the following indicators are present: (1) the work is performed for a continuous/particular period; (2) the work is performed in exchange for a wage; and (3) the work is accepted by the beneficiary. Moreover, the findings of labour inspectors on the legal relationship between the employer and the person working for him or her give rise to a rebuttable presumption. It is valid until it is rebutted by fact and law. In some cases, existing presumptions seem to be rather ‘weak’. In Russia, an amendment of the Labour Code in 2013 provides that in court cases on qualifying a relationship based on a civil law contract as an employment relationship, unavoidable doubts should be interpreted by the courts in favour of the existence of an employment relationship. However, though the courts do refer to the provisions mentioned in the Labour Code for this category of cases, they use it more as a citation of the law than as a base for decision-making in unclear cases. In Slovenia, in the event of a dispute on the existence of an employment relationship between the worker and the employer, it shall be presumed that an employment relationship exists if the components of an employment relationship are evident. This means that the labour courts have to take the basic components included in the definition of the employment relationship into consideration and interpret them when deciding individual cases. They are free to complete the components provided for in the definition of the employment relationship and include other components/criteria into their considerations when determining the existence of an employment relationship. In Luxembourg, no general presumption exists. However, according to various judgments, the existence of an employment contract in due form creates a rebuttable presumption. Indeed, many court decisions state that if a written employment contract exists, this creates the appearance of an employment relationship and it will thus be up to the employer to prove that it is fictitious. Moreover, some court decisions consider that specific types of work, such as cleaning services, are typically performed under an employment contract and that courts deduce that an employment contract exists from the type of work as such.

lx  Comparative Overview ii.  Specific Presumptions In some countries, specific presumptions apply. This is the case, for instance, in Belgium, where numerous legal presumptions exist, most of them aiming at fighting bogus self-employment. The legislature introduced legal presumptions in 1978 for certain working persons such as commercial travellers and students. These persons have been linked with the principal on the basis of a refutable presumption of the existence of an employment contract, unless the opposite is proven. Additional legislation entered into force in 2006, which is directly applicable in labour and social security matters. The Act emphasises that the parties are free to choose the nature of their ­relationship, but that if the actual performance of the contract clearly establishes factors that are incompatible with the qualification of the relationship by the parties, then a reclassification of the employment relationship must also be made in terms of the applicable social security scheme. In 2012, the law was amended and for the first time specific criteria were established, including a rebuttable presumption, for four branches of industry. The legal presumption is linked to specific criteria or evidence. If it appears that more than half of the following criteria are met, the relationship is presumed to be based on an employment contract: (1) absence of any financial or economic risk with respect to those activities; (2) absence of responsibility and decision-making regarding the financial resources of the company with respect to those carrying out the work; (3) absence of ­decision-making on the acquisition of the company with respect to those carrying out the work; (4) absence of decision-making power over the ­pricing policy of the company with respect to those carrying out the work, unless the prices are set by law; (5) absence of any obligation regarding the result of the agreed work; (6) guarantee of payment of a fixed fee, regardless of the operational results or the extent of the services provided by those carrying out the work; (7) working, but not as an employer who has personally and freely contracted employees or staff; (8) not appearing in public as an undertaking, or essentially working for one specific contractor; (9) working in rooms or buildings without being the owner or lessee, or working with equipment that is made available, funded or guaranteed by the contractor. In Italy, the law provides for a legal presumption to prevent the work performed by members of the employer’s family being subject to labour, social security and taxation schemes. According to the relevant provision, which applies to farming as well, the temporary services rendered by relatives and relatives-in-law until the fourth degree of kinship may not be considered as subordinate work if the services are rendered by way of moral obligation. In Greece, there are two specifically designated groups of persons who are legally deemed to be employed in a dependent way, irrespective of the specific features of their work performance: tourist guides and cinema and television technicians.

Comparative Overview lxi In France, various specific presumptions of employment and non-employment exist. For the purposes of protecting certain professions benefiting from a particular status, the Labour Code stipulates that these must be exercised within the framework of a contract of employment. This is the case for: (1) salespersons; (2) journalists; (3) performing artists; (4) m ­ odels; (5) home workers; (6) caretakers, employees of buildings, attendants and nursing assistants; (7) hosts and hostesses appointed to changing rooms and show programme sellers; and (8) some managers of businesses. On the other hand, according to labour law, natural persons registered in a given register (corporate and commercial register; transport company register for goods haulage/passenger transport) and executives registered in the Trade and Companies Register are presumed not to be bound to the client through an employment contract for the business activity covered by the relevant registration. However, this presumption can be rebutted and the existence of a contract of employment can be established when those persons engage in performances (directly or not) for a work provider under conditions that place them in a relationship of subordination similar to that which exists between the employee and its employer. B.  The Burden of Proof In most countries, there are no specific provisions on the burden of proof when it comes to determining whether an employment relationship exists between two parties. This means that there is neither a statutory easing of the burden of proof in favour of the employee nor a reversal of proof. In Germany, the former is discussed in legal literature, but such provisions do not yet exist. Court practise seems to be a different matter. In Turkey, for instance, an employee who claims that an employment relationship exists must prove that certain elements existed (eg, that work was performed for the beneficiary); the beneficiary of the work then bears the burden of proof that no employment relationship existed. In Estonia, according to the courts, it is for the employer to prove that no employment contract exists and that there was no intention of concluding one. When it is not evident from the circumstances of the case and the employer could not prove that the parties did not conclude an employment contract, the court will deem that an employment contract exists between the parties. X.  SPECIFIC PROCEDURES

In most countries (Cyprus, Denmark, Finland, the Former Yugoslav ­Republic of Macedonia, Greece, Hungary, Iceland, Lithuania, ­Luxembourg, ­Norway,

lxii  Comparative Overview Serbia, Slovakia, Slovenia, Switzerland and the UK), no specific procedures apply in the context of qualifying a relationship, but there are some countries in which such procedures do exist. In Italy, in order to help the parties avoid uncertainty that might lead to an incorrect qualification of their relationship, the so-called procedure of certification of labour contracts was introduced in 2003. This certification can be carried out (at the behest of both parties) either by labour authorities or by independent bodies, the latter being established, for example, by universities. As a consequence, the certification will produce a presumption of a proper qualification of the employment relationship (as employed, coordinated self-employed, self-employed or sub-contracting) to be used before the labour, health, social insurance and tax authorities in the event of an inspection. Only a court decision may revert that presumption. In Portugal, a special judicial procedure was introduced in 2013 to assess contracts (as service agreements or employment contracts). This judicial procedure is carried out ex officio. In Russia, in 2014, new procedures were introduced by the Labour Code for the requalification of civil law contracts. Recognition of an employment relationship can be determined: (1) by the contractor (employer) on the basis of a written application of the worker and/or on the basis of the decision of the State Labour Inspector, which has not been appealed in court; (2) by the court on the basis of the worker’s application directly to the court, or on the basis of an application of the State Labour Inspectorate or other bodies or officials authorised by the federal law. Another procedure is used on the basis of the Tax Code. In Belgium, for parties who seek legal certainty about the nature of their relationship, the Labour Relations Act allows them to request a ‘social ­ruling’ from an Administrative Commission within a year following the commencement of the self-employed relationship, which is valid for three years. This so-called ‘social ruling’ is based on a non-contentious proceeding and is only binding for the social security authorities. A special case is Malta, where a statutory presumption of e­ mployment applies. In this context, the so-called Director may be requested to exempt a particular relationship from the application of the presumption. ­Furthermore, the Director may authorise any application to convert a contract of employment into one of service and has the discretion to refuse such an application. In Bulgaria, where it is ascertained that labour services are provided in violation of the law, namely under an employment relationship, the existence of the employment relationship is declared by a decree issued by the Labour Inspectorate. In such cases, the existence of the employment relationship may be verified by all means of evidence. In Latvia, the State Labour Inspectorate has the right to inspect workplaces and to request the employer to conclude an employment contract with the individual found to be working for the employer without an employment contract. In Poland,

Comparative Overview lxiii too, a labour inspector can evaluate whether a civil law contract has been concluded where an employment contract should have been and, consequently, whether the employer has breached employee rights. In Turkey, too, labour and social security inspectors of the Ministry of Labour and Social Security have the authority to investigate the true nature of the employment relationship, either on their own initiative or following a complaint by an individual. In Romania, the tax authorities can requalify the contract as one of employment in accordance with the provisions of the Fiscal Code. Regardless of the title the parties chose for the contract, there is a set of criteria against which the contract is compared and may be determined as one of employment. One drawback is that these criteria are stipulated not by labour legislation, but by tax regulations. Moreover, the purpose of requalifying a contract under the Fiscal Code is not to protect the rights of the worker and to apply the provisions of the Labour Code, but rather to secure the retroactive pay of contributions that are due. In Ireland, there is no mechanism whereby the legal nature of an employment relationship can be ascertained in advance in any authoritative way. However, the existing Code of Practice suggests that if there is doubt as to whether an individual is employed under a contract of service (employee) or a contract for services (self-employed), tax or social security authorities should be contacted. Having established all of the relevant facts, a written decision on the employment status will then be issued. Yet, it is acknowledged by the Code that such a decision may not be accepted by the other party. Since 2014 in Estonia, an employer must register every employee in the employee register. Registration of an employee in the register automatically entails registration in the social security scheme (registration in the health insurance and unemployment insurance scheme). The objective behind the employee register is to prevent illegal employment and to ensure that the employer pays the employee the official wage and taxes. XI.  THE EXTENSION OF RIGHTS/PERSONS COMPARABLE TO EMPLOYEES

Only in a few countries does the notion of ‘employee-like’ person exist. However, there are countries that apply parts of their labour laws to persons other than ‘employees’ in particular cases. A.  ‘Employee-Like’ Persons Though in general no separate category of ‘workers’ is acknowledged in most countries, there are a few that recognise ‘employee-like’ persons.

lxiv  Comparative Overview i.  The Existence of ‘Employee-Like’ Persons In Germany, a category of workers exists who are neither ‘ordinary’ selfemployed workers nor employees. Persons belonging to this category are not personally dependent or subordinated, as is the case with employees, but are ‘economically dependent’ only. A legal definition of these so-called ‘­quasi-salaried workers’ can be found in the Act on Collective Bargaining Agreements. The requirements enumerated in this provision are: (1) ­economic dependence (as opposed to personal dependency or subordination); (2) the need for social protection; (3) work performed personally without the aid of subordinate employees; and (4) work is either performed for one person mainly or the worker relies on a single entity for more than half of his or her total income—the latter requirement must basically be understood as further substantiating economic dependence. Because quasisalaried workers are regarded as being entitled to specific legal protection, some elements of employment law are extended to them. It must be stressed, however, that only single rules and provisions of employment law are (by way of analogy) made applicable to quasi-salaried workers. In Austria, too, the category of ‘employee-like’ persons is acknowledged. However, the notion is different from that in Germany. The case law that interprets the core notion of ‘economic dependence’ is ambiguous. The criteria applied are that the work is performed for one or very few contracting parties, that there is a lack of relevant own operational resources, that there is also a lack of own employees, that the work is mostly performed personally, that restrictions to work for other parties apply and that there is dependence on the earnings for living. As is the case in Germany, only some provisions of labour law apply to employee-like persons, eg, those on the competence of the labour courts, agency work, employee liability and antidiscrimination. The courts also apply (a few) other provisions if they do not require personal subordination (eg, notice periods). Many important provisions of labour law are not applied to this group. In particular, collective labour laws (especially collective bargaining and workplace representation) do not extend to ‘employee-like’ persons. In Switzerland, ‘employee-like’ persons are acknowledged, too, as a specific judge-made category of workers between real self-employed persons and employees. The corresponding contracts are qualified as ‘mixed contracts’ (gemischte Verträge), containing elements of a service contract and a contract of employment. Courts decide which protective provisions from employment law are to be applied in any given case. In Spain, according to the law, economically dependent self-employed persons are individuals who perform an economic or professional activity, for profit, in a regular, personal, direct and predominant way for a natural person or legal entity (known as the client). The client must provide at least 75 per cent of the total income of the economically dependent self-employed

Comparative Overview lxv person. Labour law does not cover such workers, but certain protective rules apply to some extent. For example, these workers enjoy specific rights that are similar to employee rights, such as the interruption of activity for various reasons and annual leave of 18 days. Moreover, reasons for and consequences of the termination of their special contract with the client are regulated. B.  The Non-existence of ‘Employee-Like’ Persons In most countries, no category of ‘employee-like’ persons is acknowledged. Moreover, the concept meets with resistance in some countries. In ­Luxembourg, for instance, the idea of ‘economically dependent persons’ is considered to be artificial, since such persons are in a subordinated position and should thus be considered employees. Dependent self-employed persons are viewed as a means to bypass the law and not as a new category of working persons that should be recognised by law. Similarly, no ‘employee-like’ persons exist in Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Finland, the Former Yugoslav Republic of Macedonia, Greece, Iceland, Ireland, Latvia, Lithuania, Malta, M ­ ontenegro, Norway, Romania, Russia, Serbia and Slovakia. In Belgium, ‘employee-like’ persons are acknowledged for purposes of social security law (only). No ‘employee-like’ persons exist in Portugal. However, some rights are extended to ‘economically dependent’ persons. In the Netherlands, too, the concept of ‘employee-like’ persons is used in a sense that the application of labour law is, in some cases, extended by specific provisions to contracts other than contracts of employment. In France, ‘employee-like’ persons are not acknowledged. However, according to the Labour Code, some persons who head an enterprise may be covered by the regulations of the Code. The criteria are primarily economic: exclusive or quasi-exclusive activity for predominantly one company and prices imposed by this company. These provisions enable the application of the Labour Code in the absence of unambiguous subordination. In Sweden, the rights of employees—and employer duties—which generally apply under an employment contract can, to some extent, be extended to persons who are comparable to employees. This applies most significantly in three different situations. First, so-called dependent contractors under the Co-determination Act will in relation to the provisions of that specific legislation be considered employees. The importance of this category, it is argued, has decreased in light of the broadening of the notion of employee and the inclusion of these individuals under the concept of employment. Second, employer duties could, under the Health and Safety at Work Act, be extended to cover subcontractors, self-employed and other staff not employed by the employer. Third, employee rights can be extended to persons who are not regularly

lxvi  Comparative Overview employed, such as agency w ­ orkers as well as job applicants under the scope of anti-discrimination law. In Turkey, the Obligations Act has created two specific employment contracts oscillating between subordinate work and self-employment. These relate to home workers and travelling salespersons, both of whom work outside the traditional framework of an employment relationship, yet require protection nonetheless. In such cases, the status of employee-like persons does not depend on the existence of a legal relationship of subordination. Moreover, the right to organise in trade unions is statutorily extended to certain categories of self-employed persons. In Slovenia, legal categories of ‘employee-like’ persons are not recognised in labour law or doctrine. Nevertheless, a trend is evident that limited employment protection is being extended by respective acts to certain categories of persons who perform work but do not qualify as workers in an employment relationship. To be more precise, the Employment Relationships Act recognises the existence of ‘economically dependent persons’ who are legally defined as self-employed persons and perform work in person on the basis of a civil law contract, independently and for remuneration for a longer period of time, in circumstances of economic dependency and do not employ workers. ‘Economic dependency’ means that a person obtains ‘at least 80 per cent of his or her annual income from the same contracting party’. According to the Act, economically dependent persons enjoy limited labour law protection. In Poland, there is no general category of employeelike persons. However, there is currently a debate whether certain employee rights should be extended to civil law contractors. In Italy, a special legal regime applies to persons if at least two of the following conditions are met: (1) the relationship lasted for at least eight months out of the year; (2) the worker received more than 80 per cent of his or her income from this work relationship; (3) the position included a permanent workplace at the company’s premises. In Hungary, the legal status of employee-like persons is not regulated under the Labour Code. There was an attempt to regulate the legal status as ‘worker’ during the discussions on the current Labour Code, but the draft was rejected by both employers’ associations and trade unions. B.  Equality and Anti-discrimination Law In many countries, anti-discrimination law is extended to persons other than ‘employees’. In Portugal, with regard to economically dependent workers, the Labour Code states that the legal rules on personality rights, equality and non-discrimination (as well as occupational safety and health) shall apply to situations in which professional activity is performed by a person for another without legal subordination, where the provider should be ­ considered economically dependent from the activity’s beneficiary.

Comparative Overview lxvii In ­Austria, according to the Act on Equal Treatment, employees, home workers and employee-like persons lie within the scope of the application of the Act. In Germany, employees, trainees and ‘employee-like’ persons fall within the scope of application of the respective law. In Sweden, too, equal treatment legislation has broadened the concept of ‘employee’ in relation to discrimination. In Greece, all types of workers and self-employed persons fall within the scope of application of the law on discrimination on the grounds of sex. The law on discrimination on the grounds of racial or ethnic origin, religion or belief, disability, age or sexual orientation makes no distinction between categories of employment. It can therefore be concluded that all types of workers and self-employed persons are covered by the law. In Romania, all workers, including those who perform independent activities, benefit from the law on equal opportunities and equal treatment between women and men in employment relationships. In addition, the law on preventing and sanctioning all forms of discrimination ensures protection against discrimination for all categories of persons involved in a work relationship, regardless of the type of contract governing their activity. The terms used, such as ‘economic equality in matters of employment and profession’, are deliberately broad, so the protection provided by such normative acts is not limited in any way to the category of employees. In E ­ stonia, anti-discrimination law contains the notion of ‘employee’ in a different (broader) sense. It not only makes reference to the employment contract, but also to specific private law contracts. In Denmark, the Equal Treatment in Employment Act covers employees just like other employment laws. The personal coverage of this Act is, however, somewhat more comprehensive than might be the case in relation to most employment laws. In Serbia, the Act on Gender Equality provides protection for ‘employees’ and ‘other workers’. In Cyprus, the scope of anti-discrimination law applies to all sectors of private and public employment, self-employment and occupation, including contract work, self-employment and holding statutory office, but excludes military service. In the UK, the Equality Act is extended to so-called contract workers by a provision which stipulates that a principal may not discriminate against a contract worker. ‘Principal’ in this sense is a person who makes work available for an individual who is employed by another person and supplied by that other person in furtherance of a contract to which the principal is a party (whether or not that other person is a party to it). ‘Contract workers’ are individuals supplied to a principal in furtherance of a contract to which the principal is a party.

lxviii 

1 The Concept of ‘Employee’: The Position in Austria MARTIN RISAK AND ROBERT REBHAHN

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

I

N AUSTRIA, SECTION 1151 of the Civil Code (Allgemeines ­Bürgerliches Gesetzbuch (ABGB)) defines the employment contract (Dienstvertrag), but rather superficially: when a person commits himself or herself to perform services for another person for a certain period, he or she is considered to have concluded an employment contract. This type of contract differs from the contract for services (Werkvertrag) that is defined as a contract under which a person commits himself or herself to complete project work for remuneration. The law does not refer to the criterion of ‘personal subordination’ (persönliche Abhängigkeit), which plays a decisive role in practice when determining whether a contract is an employment contract. Though not stipulated in law, both the legal theory1 and the courts2 have unanimously for decades interpreted the notion of employee as a person obliged to perform work for another person in a state of ‘personal subordination’, ie, under the command, authority and control of another person and with resources that belong to the other, namely the employer.3

1  See, eg, W Brodil, M Risak and C Wolf, Arbeitsrecht in Grundzügen, 9th edn (Vienna, LexisNexis 2014) recital 42; G Löschnigg, Arbeitsrecht, 11th edn (Vienna, ÖGB Verlag, 2015) recital 4/004. 2  See Supreme Court of 29 September 1981–4 Ob 45/81, Arb 10.055 and others. 3  The concept of ‘personal subordination’ will be explained in more detail in section IV.A below.

2  Martin Risak and Robert Rebhahn Freedom of form is a fundamental principle of employment contract law. Hence, no statutory formal requirements exist for employment c­ ontracts.4 They can be concluded verbally or in writing or by implied consent. ­Numerous decisions of the Supreme Court hold that employees may have implicit ­contractual entitlements in case of long-standing employment p ­ erformance (Betriebsübung). Thus, employers who repeatedly grant b ­ enefits to employees without a contractual or statutory basis become obliged to continue granting such benefits on the basis of an implicit contractual a­ greement.5 The contracting parties can agree on the use of a particular form, in which case it will be presumed that the agreed form is a condition of validity if a dispute arises.6 However, the contracting parties can also depart from the agreed form, which is usually done implicitly by offering a change of contract without observing the form agreed upon.7 Therefore, contractual clauses that must be concluded in writing are of limited use in practice. ­Collective agreements (Kollektivertrag) and works agreements (Betriebsvereinbarung) may not provide for formal requirements for employment contracts. A contract of employment may either be void or voidable. For instance, if the contract breaches the law or is contrary to bonos mores (gute Sitten),8 it is void.9 The same applies if the contract deviates from the provisions of a collective agreement or works agreement to the detriment of the employee.10 However, in most cases, violations may only lead to parts of the contract being void. As a rule, the contract of employment as such remains in existence, while nullity of the contract is restricted to that part of the agreement violating the law.11 If one of the parties was under a misapprehension when

4  An exception to this general rule is apprenticeship contracts, which must be drawn up in writing (s 12 of the Vocational Training Act—Berufsausbildungsgesetz). In addition, some specific provisions in contracts of employment must also be concluded in writing, eg, an agreement to make a deposit as a security against future claims by the employer for damages (s 1 of the Provision of Security Act—Kautionsschutzgesetz), as well as for provisions obliging the employee to refund training costs in case of termination of the employment contract (s 2d of the Act to Adapt Employment Contract Law—Arbeitsvertragsrechts-­Anpassungsgesetz). Finally, an agreement by which employee inventions shall belong to the employer is only valid in written form (s 7 of the Patents Act—Patentgesetz). 5 See Supreme Court of 16 October 1979–4 Ob 17/79, Arb 9812. To prevent such an implicit agreement, the employer must explicitly state the discretionary character of the benefit granted or reserve the right to cease granting such benefits. 6  Civil Code, s 884. 7  See Supreme Court of 30 October 1990–8 Ob 661/90 for a lease contract. 8  The concept of bonos mores is part of the general fundamental principles of law. It is therefore the essence of all legal standards that are not expressly stated in a statute. The necessary precision only emerges with court practice. 9  See s 879(1) of the Civil Code: ‘Any contract that contravenes the law or bonos mores is void.’ 10 Only for collective agreements may the social partners agree that any deviation is ­prohibited; see Labour Constitution Act (Arbeitsverfassungsgesetz), s 3. 11  See Supreme Court of 23 November 1982–4 Ob 162/8, Arb 10.132 and of 1 December 1982–3 Ob 604/82.

The Concept of ‘Employee’: The Position in Austria 3 concluding the contract of employment, the declaration of intent and, as a consequence, the contract as such is voidable under certain circumstances (Anfechtung).12 In general, an admissible rescission leads to the ineffectiveness of the contract from its commencement. However, specific rules apply to contracts of employment. If the parties already started performing their duties under the contract, a rescission is in principle effective in the future only, the reason being that a complete reversal of the transactions would lead to major difficulties and might also collide with the need to protect employees. Therefore, as regards the past, the contract of employment is deemed to be effective.13 B.  The Employment Relationship: Basic Definition No statutory definition of the term ‘employment relationship’ (Arbeitsverhältnis) exists. In any event, an employment relationship must, in principle, be based on a contract of employment.14 In other words, the existence of an agreement between the parties is deemed to be indispensable for acknowledging the existence of an ‘employment relationship’ (and for qualifying a person as an ‘employee’).15 Accordingly, if the performance of services is not based on a contract, it is not deemed an employment relationship. For instance, civil servants (Beamte) work on the basis of an act of state under public law and are therefore not considered to be employees.16 In principle, the same applies to work performed by members of the family. Insofar as it does not exceed the extent that is normal for family relationships, family law applies to the work.17 A sui generis exception to the aforementioned rule introduces section 3(1) of the Act to Adapt Employment Contract Law,18 according to which when a business or part thereof is transferred to another owner, the latter assumes the rights and duties under the employment relationships existing at the time of transfer.19 12  See Civil Code, s 871: if the error (1) was caused by the other party, (2) due to the circumstances should have been noticed by the errant party or (3) it was cleared up in due time. 13  See Supreme Court of 27 November 1962–4 Ob 138/62, Arb 7665. 14  See section I.A above for the statutory definition. 15 See Supreme Court of 6 December 1955, 4 Ob 149/55, Arb 6348; R Rebhahn, in M Neumayr and GP Reissner (eds), Zeller Kommentar zum Arbeitsrecht, 2nd edn (Vienna, Manz, 2011) para 1151, recital 31. 16 However, those working for the state under a private law contract are employees ­(Vertragsbedienstete), although their employment relationship is governed by a special statute. 17 However, employment contracts between family members are possible, but in case of doubt, it is assumed that they are fulfilling their obligations resulting from family law. 18  Arbeitsvertragsrechts-Anpassungsgesetz (AVRAG). 19  This provision transposes Council Directive 2001/23/EC of 12 March 2001 into Austrian law, on the approximation of the laws of the Member States relating to the safeguarding of employee rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses [2001] OJ L 082, 16–20.

4  Martin Risak and Robert Rebhahn For the purposes of social security law, section 4(2) of the General Act on Social Insurance (Allgemeines Sozialversicherungsgesetz) provides a definition of the notion of ‘employee’ (Dienstnehmer). An employee is ‘any person who is employed for remuneration in a relationship of personal subordination and economic dependence’. This definition in social security law is not (fully) congruent with the definition in employment law, since an employment relationship does not have to be for remuneration, and economic dependence is not considered to be crucial for the existence of an employment relationship. The latter, however, is interpreted in a very narrow way, namely as working with the means of production of the other party, and is therefore of no relevance in practice. It should be mentioned that in general, protection afforded by/under social security law does not depend upon being an employee, as all self-employed persons are also covered by a statutory social security scheme. Tax law defines the employee in a similar manner as labour law, especially with regard to the criteria of subordination and integration.20 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition In Austria, there is no statutory definition of the term ‘employee’. A d ­ efinition based on case law exists though which, in turn, is largely based on ­Austrian doctrine.21 According to the case law, an employee is a person who is obliged by contract22 to perform, generally in person, a service for someone else in a relationship of personal dependence (persönliche Abhängigkeit) or personal subordination.23 The courts use a variety of indicators for the criterion of personal subordination, which in essence refers to the fact that the employee ‘sells’ his or her labour by subjecting himself or herself under the orders of another person that may ‘use’ him or her for his or her purposes.24 The main aspects of this limited personal freedom of the employee are the obligation to work at specified times and at a specified place, the right of the ­contractual partner to give orders, especially as regards time and place,

20 

See Income Tax Act (Einkommensteuergesetz), s 47. See Brodil, Risak and Wolf (n 1) recitals 41 f; or Rebhahn (n 15) para 1151, recital 55. 22  eg, civil servants are excluded from this definition as their position is regulated by public law and their relationship is not based on a contract. 23  See, eg Supreme Court of 29 September 1981–4 Ob 45/81, Arb 10.055; of 29 September 1981–4 Ob 45/81, Arb 10055; of 13 January 1988–14 ObA 46/87, Arb 10697; and of 29 September 2014–8 ObA 58/14h. 24  See, eg Supreme Court of 4 July 2002–8 ObS 273/01g, SZ 2002/92; and of 30 October 2003–8 ObA 45/03f. 21 

The Concept of ‘Employee’: The Position in Austria 5 as well as the personal work-related behaviour and the integration in the partner’s operational organisation.25 Though the content of a legal term may vary from one legal provision to another, it is generally acknowledged that the term ‘employee’ represents a uniform notion in the sense that at its core, it applies to all parts of employment law. However, this ‘uniformity’ does not exclude the possibility of certain deviations like that provided under the Labour Constitution Act (Arbeitsverfassungsgesetz). The latter, for instance, explicitly states that managers are not deemed employees when it comes to co-determination at the company level.26 In addition, for the purposes of employee representation and co-determination (Betriebsverfassung), the focus is on integration in the establishment instead of the contract of employment,27 whereas workplace health and safety legislation extends to all persons who are active within the framework of an employment or training relationship.28 B.  Employer: Basic Definition There is no legal definition of the notion of ‘employer’. It is usually stated that for the purposes of contractual law, the employer is the ‘other party’ to the employment contract who can request and supervise the labour of the contracting partner.29 Every (natural or legal person) can qualify as an employer. On the other hand, a group of companies as such cannot be ‘the employer’, since it lacks the quality/status of a legal entity.30 Temporary agency work has been regulated by the Act on Temporary Agency Work (Arbeitskräfteüberlassungsgesetz) since 1988, which only considers the temporary work agency to be the employer, but establishes employer-like statutory obligations on the user (such as non-discrimination or contingent liability for wages). The judiciary has not yet explored the modern notion of ‘employer’, especially when connected to new forms of employment. They are not very widespread and are usually shaped along traditional lines, eg, in cases of joint employment, the ‘employers’ establish a new legal entity (a limited liability company, a registered association or a cooperative) that hires employees and assigns them to the ‘employers’. For the purposes of workplace co-determination, the employer is the person who is legally entitled to govern the workplace and is therefore the

25  See, eg Supreme Court of 29 September 1981–4 Ob 45/81, Arb 10055; of 13 January 1988–14 ObA 46/87, Arb 10.697; and of 26 April 2001–8 ObS 249/00a. 26  See Labour Constitution Act, s 36(2). 27  ibid s 36(1). 28  Work Place Health and Safety Act (ArbeitnehmerInnenschutzgesetz), s 2(1). 29  See Löschnigg (n 1) recital 4/047. 30  Supreme Court of 28 June 2000–9 Ob A 67/00v.

6  Martin Risak and Robert Rebhahn counterpart of the works council.31 This person is usually addressed as the proprietor (Betriebsinhaber), which emphasises that a direct contractual relationship is not necessary, as in the case of temporary agency work. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-Types of Employees Austrian employees are divided into two main categories—blue-collar workers (Arbeiter) and white-collar workers (Angestellte)—and the distinction between the two categories has legal significance. In essence, the criteria applied to draw the line between the two categories of workers derive from the essential characteristics of the work performed, ie, manual work is predominantly blue collar and professional work is predominantly white collar.32 The Act on White Collar Workers (Angestelltengesetz) specifies that when the performance of primarily commercial or higher non-commercial functions or office work is involved, the employee is deemed to be a white-collar worker; if not, he or she will be considered a blue-collar worker.33 This distinction remains, though its implications have been moderated in the legislation in the last decades. The differences that remain are as follows and are usually disadvantageous for blue-collar workers: notice periods,34 ­different catalogues of grounds for summary dismissals35 and periods of continuation of pay in case of illness.36 Trade unions are still organised along the white-collar/blue-collar workers divide and different collective agreements are therefore applicable to these two groups of employees. ­Furthermore, the Labour Constitution Act37 provides for different bodies of representation at the business level if both groups consist of at least five persons and if they do not vote for a joint works council.

31 

See Labour Constitution Act, s 34. See M Drs, in Neumayr and Reissner (n 15) para 1, AngG recital 14. 33  Act on White Collar Workers, ss 1 f. 34  The statutory notice period for blue-collar workers is two weeks (which can be further reduced by collective or individual agreement): Industrial Code 1859 (Gewerbeordnung 1859), s 77. For white-collar workers, it is a minimum of six weeks and is extended according to years of service (Act on White Collar Workers, s 20). 35  See Industrial Code 1859, s 82; and Act on White Collar Workers, ss 25 f. Generally speaking, white-collar workers can be dismissed easier than blue-collar workers, eg, lack of trust generally constitutes a ground for a summary dismissal of a white-collar worker, whereas for a blue-collar worker, a summary dismissal must be based on a criminal offence. 36 See Act on the Continuation of Payment (Entgeltfortzahlungsgesetz), s 2; and Act on White Collar Workers, s 8. White-collar workers enjoy longer periods of continuation of payment due to a complicated system that usually restocks their contingent of sick leave faster than that of blue-collar workers. 37  See Labour Constitution Act, s 40(2) in conjunction with s 41(3). 32 

The Concept of ‘Employee’: The Position in Austria 7 In addition, the social security system still distinguishes between whitecollar and blue-­collar workers for access to invalidity pensions.38 Managerial employees (leitende Angestellte), ie, persons with a leading position in an enterprise but who are not the representatives of legal entities, comprise another separate group.39 Although they work in personal subordination, they perform duties that are typical of an employer, such as workforce planning, recruitment and giving notice. These managerial employees are therefore not represented by the works council as they are considered persons representing the employer in the workplace and are therefore the workforce’s adversary.40 Furthermore, the Working Time Act (Arbeitszeitgesetz) does not cover them because they are not deemed to be in need of protection like other employees.41 However, the definitions for these two exceptions are not identical—the Working Time Act, in principle, encompasses a wider group than the Labour Constitution Act. The position of public service employees differs significantly from that of employees in the private sector. As their employment relationship is governed in depth by statutes,42 the room for contractual agreements is limited and collective bargaining does not take place. Furthermore, special rules apply to special groups of white-collar workers (journalists,43 actors,44 employees in agricultural enterprises45 and pharmaceutical employees)46 as well as to blue-collar workers (eg, bakery workers47 or domestic workers),48 but the relevance of these special acts is ­diminishing

38 See General Act on Social Insurance (Allgemeines Sozialversicherungsgesetz), ss 254 f and 271 f. Skilled blue-collar workers are entitled to an invalidity pension if they are not able to work in their profession for health reasons, whereas unskilled blue-collar workers are only entitled if they can no longer be placed in the general labour market. All white-collar workers, by contrast, may only be referred to jobs in their last field of work, just like skilled blue-collar workers. 39  See Labour Constitution Act, s 36(1)3, where they are defined as persons with ‘significant influence on the management of the work place’. 40  As protection against dismissal is construed in Austria as a co-determination right of the works council and therefore as part of the Labour Constitution Act, managerial employees do not benefit from it. 41  Working Time Act, s 1(2)8. These persons are defined as persons ‘who have been entrusted with significant managerial tasks in their own responsibility’. 42  For federal public employees, the Act on Contractual Employees (Vertragsbedienstetengesetz) applies; for the nine federal states and the municipalities within them, autonomous state legislation applies. 43  Act on Journalists (Journalistengesetz). 44  Theatre Labour Act (Theaterarbeitsgesetz). 45  Estate Employees Act (Gutsangestelltengesetz). 46 According to the Salary Fund Act (Gehaltskassengesetz), all employers (owners of a ­pharmacy) are obliged to pay salary contributions into a central fund out of which pharmaceutical workers are then paid. Otherwise, pharmacists are subject to the provisions of the Act on White Collar Workers. 47  Bakery Workers’ Act (Bäckereiarbeitergesetz). 48  Domestic Employees’ Act (Hausangestelltengesetz).

8  Martin Risak and Robert Rebhahn and they often only cover some aspects of the employment relationship like wage determination or working time. Exceptions from the rules of co-determination (especially economic co-determination like the representation of employees in supervisory boards) exist for establishments in the field of politics, the media, education, churches, etc (so-called ideological enterprises—Tendenzbetriebe).49 Persons employed by churches do not represent a distinct category, as (individual) employment law is fully applicable to them. However, co-determination at the workplace level is restricted, as those undertakings that directly serve confessional/religious purposes are considered to be ideological establishments (see above).50 Teleworkers do not enjoy any special legal status, but as they work with visual display units, the relevant provisions of the Workplace Health and Safety Act (ArbeitnehmerInnenschutzgesetz) apply.51 Students and trainees are not considered a special legal category; however, if the purpose of their activities is learning and training, they do not qualify as employees and are not covered by labour law.52 The contractual relationship with apprentices is regulated by the Act on Vocational Training (Berufsausbildungsgesetz). Due to its dual character (training as well as employment), the freedom of the parties is restricted, especially when it comes to the assignment of work and the termination of the employment relationship. Since 1988, agency workers have been covered by a special act, the Act on Agency Work (Arbeitskräfteüberlassungsgesetz). This goes beyond the transposition of the Agency Work Directive 2008/104/EC and includes additional protective measures for this group of workers (eg, certain contractual clauses shifting risks to agency workers and deterring their mobility are prohibited). The Act in particular extends employer responsibilities beyond the contractual partner (the temporary work agency) to the user undertaking (workplace health and safety, non-discrimination and contingent liability for wages). However, athletes and persons employed by close relatives do not enjoy special status. The latter are considered to be employees if their activities go beyond what are considered customary family obligations. B.  The Establishment of a Specific Category of ‘Workers’ A category of ‘workers’ does not exist in Austria. 49 

Labour Constitution Act, ss 132 f. The Labour Constitution Act, regulating collective labour relations, only applies in principle and insofar as it is compatible with the special nature of the undertaking; See ibid s 132. 51  Sections 67 f of the Work Place Health and Safety Act transpose the Council Directive (EEC) 90/270 of 29 May 1990 on the minimum safety and health requirements for work with display screen equipment [1990] OJ L 156. 52  See Supreme Court of 29 January 2013–9 Ob A 150/12t, (2013) Zeitschrift für Arbeitsrecht und Sozialrecht (ZAS) 55 (K Körber-Risak). 50 

The Concept of ‘Employee’: The Position in Austria 9 IV.  SUBORDINATION: CRITERIA AND INDICATORS/ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration Though not legally mentioned, both prevailing legal theory and the courts characterise the employment relationship as a legal relationship in which a person is contractually obliged to work for another in a state of personal dependence or subordination. Performing work in a state of personal subordination means that work is being carried out under the command, authority and control of another person, and using resources belonging to another, namely, the employer.53 Personal subordination is considered a key criterion for qualification as an employee. However, the criteria of personal subordination are rather ‘flexible’, as the courts consider the notion of ‘employee’ as a mere ‘type’ (Typusbegriff). The latter implies that all decisive criteria must not ­necessarily be met in any given individual case, but rather that it suffices to demonstrate that the criteria characteristic of an employment contract (eg, integration into the employer’s business, little flexibility when it comes to working time and place of work, and the determination and monitoring of work-related behaviour) outweigh those that are atypical (eg, autonomy regarding working time, place of work and work routines, and the right to substitution).54 For example, the condition that the work is performed personally can also be met if the contract allows someone else to substitute the working person in very limited cases, provided that the other key criteria of personal subordination are fulfilled. The same applies to other elements of personal subordination, namely, integration into the employer’s organisation and submission to his or her orders. Thus, there are no rigid criteria in Austria for qualification as an employee, but—as the courts emphasise55—a holistic approach as well as a general assessment must be carried out, under which the absence of one criterion can be compensated by the prevalence of another. However, personal subordination is the main criterion for being considered an employee, which cannot be substituted. Accordingly, as a general rule, if there is no personal subordination, the person is not an employee. Personal subordination requires the employee to be integrated into the employer’s work organisation56 and to be subject to the employer’s power

53  See, eg Supreme Court of 29 September 1981–4 Ob 45/81, Arb 10.055; of 29 September 1981–4 Ob 45/81, Arb 10055; of 13 January 1988–14 ObA 46/87, Arb 10697; and Brodil, Risak and Wolf (n 1) recital 41. 54  Supreme Court of 19 December 2007–9 ObA 118/07d. 55 See, eg, Supreme Court of 5 July 2001–8 ObA 163/01f; of 30 October 2003–8 ObA 45/03f; and of 25 November 2003–8 ObA 44/03h. 56  Supreme Court of 19 May 1981–4 Ob 102/83.

10  Martin Risak and Robert Rebhahn to supervise the working person, especially with regard to location and time of work, and to the content of the job duties, as well as the personal behaviour when performing the work.57 Integration includes the authority to control the employee’s work performance, but also his or her behaviour in the workplace. The extent of the necessary authority to supervise may vary from case to case with respect to location, time, work content and/or workrelated personal behaviour. For instance, persons performing work outside the employer’s business premises (eg, salaried commercial representatives)58 are usually free to determine their sequence of work. Even so, they qualify as employees on the basis of their duties to report the work performed and the determination of their employer regarding the amount of working time. Telework, crowdwork or other forms of working from home59 may also entail considerable freedom with regard to organising working time, workflows and sometimes even the place of work. Nevertheless, these persons are to be qualified as employees if the employer determines the content of their work and work processes and/or if the employer has means of control, like monitoring the workflow on a virtual platform.60 Artists, doctors or other highly skilled professionals are usually not subject to instructions on how to perform their job as they are often best qualified to decide this on their own. However, they qualify as employees if the employer’s so-called ‘quiet authority’ (stille Autorität des Dienstgebers) exists, which implies that in conflict situations, the employer shall have the last word concerning the content of the work and work-related personal behaviour.61 Summing up, the degree of subordination required also depends on the characteristics of the work to be performed. As already mentioned, the overall assessment must lead to the conclusion that the features that are characteristic of personal subordination outweigh those indicating independence of the person delivering the services.62 In this context, the question may arise whether qualification as an ‘employment relationship’ can be avoided by providing detailed provisions on job content and working time in the contractual agreement. As the employment contract is defined as a contract under which the employee ‘sells’ his or her labour by giving the employer the authority to give directives concerning the employee’s personal work-related behaviour, a contract that does not include this authority cannot be qualified as an employment contract,

57 

Supreme Court of 30 October 2003–8 ObA 45/03f. commercial representatives are not considered to be employees and are covered by a special act, the Act on Commercial Agents (Handelsvertretergesetz). 59  See N Melzer-Azodanloo, Tele-Arbeitsrecht (Vienna, Linde, 2001). 60  See M Risak, ‘Crowdwork. Erste rechtliche Annäherungen an eine “neue” Arbeitsform’ (2015) ZAS 11. 61  See Supreme Court of 25 May 1987–83/08/0128. 62  See Supreme Court of 18 December 1979–4 Ob 124/89, Arb 9845. 58 Self-employed

The Concept of ‘Employee’: The Position in Austria 11 but rather as a free-service contract (freier Dienstvertrag) or a contract for ­services (Werkvertrag).63 In addition to assessing the extent of personal subordination, the ­Austrian courts often argue that instructions do not need to be given when the ­person concerned is part of the organisational structure and therefore limited in terms of his or her personal freedom. Integration in that sense is often referred to as ‘submission to working rules’ (Unterwerfung unter ­betriebliche Ordnungsvorschriften, eg, being subject to a shift schedule and pre-determined workflows).64 B. Indicators In the view of the courts, the essential feature of an employment relationship is the limitation of the personal freedom of the employee by subjecting himself or herself to the authority of the employer.65 Consequently, the right of the employer to give instructions concerning not only the content but also the conditions of the work, like place and time, as well as the employee’s personal behaviour is essential when distinguishing the employment contract from other forms of contract that also include the performance of services, such as free-service contracts (freier Dienstvertrag) and contracts for services (Werkverträge). Therefore, the fact that work must be carried out within specific hours or at an agreed place is usually decisive. The courts typically deny employee status if a person is essentially free in terms of his or her decision of when and/or where to perform work. Flexible working time (Gleitzeit) is, of course, only one factor among others and does not per se impair the qualification of a contract as an employment contract, provided that the work has to be performed at an agreed place and under the control of the employer.66 As already mentioned above, the services to be performed under an employment contract do not necessarily have to be carried out in person. According to section 1153 of the Civil Code, the party under a duty of service must—if the contract or circumstances do not state otherwise—render the services in person. The parties to the contract are free to provide otherwise. Still, the fact that the work is to be performed in person is a strong ­indication for an

63 The free-service contract is a contract for the performance of a continuing obligation lacking ‘personal dependence’, whereas the contract for services obliges the person to provide a one-time service. See the landmark case of the Supreme Court of 3 July 1956–4 Ob 67/56. 64  C Kietaibl, Arbeitsrecht I, 8th edn (Vienna, New Academic Press, 2014) 25. 65  See, eg, Supreme Court of 29 September 1981–4 Ob 45/81, Arb 10.055; of 29 September 1981–4 Ob 45/81, Arb 10055; and of 13 January 1988–14 ObA 46/87, Arb 10697. 66  Section 4b of the Working Time Act (Arbeitszeitgesetz) even provides for such a model of scheduling working time by the employee.

12  Martin Risak and Robert Rebhahn employment contract. On the other hand, it is contraindicative if a person is allowed to delegate work freely, as this is incompatible with the notion of personal subordination. The courts usually determine limited rights of substitution (eg, if the employer’s consent is needed or if it is limited to exceptional cases, or if the potential group of people to replace the employee is limited) to be compatible with an employment relationship and extensive rights of substitution to do away with personal subordination.67 In addition to the indicators mentioned above, the courts have considered a number of ‘subsidiary or secondary indicators’. They are not decisive as such, but may—if present with others—be used to argue for or against an employment relationship. The duration and scope of the job duties are not decisive criteria, for example. An employment contract may also be concluded for a few hours only.68 On the other hand, the employment contract has to last for at least a certain period of time, but it is unclear whether a longer duration as such is really a decisive factor.69 As regards work duties, any task today can be performed on the basis of either an employment contract or a free-service contract. If the parties agree that the working person will only be paid for ‘completed work’, this excludes prima facie an employment contract.70 Still, if the work is performed under personal subordination, such an agreement on remuneration may be in breach of the minimum wage provisions in applicable collective agreements. The duty to provide work may be an additional, albeit not decisive argument for an employment relationship. However, as a general rule, the employer has no duty to provide work, except in cases where the employee needs the work to maintain his or her employee qualifications (such as a vascular surgeon). In any case, the employee may claim his or her wages if the employer does not provide him or her with work.71 If the necessary work equipment is provided by the contractual partner, this may also be an additional but not at all decisive argument (in combination with other arguments and criteria) to qualify as an employee. As a rule, the employer must provide all material and work equipment needed for the performance of the work—the extent to which this duty can be transferred to the employee via contract is unclear.72 In general, the courts tend

67 Supreme Court of 13 November 2003–8 Ob A 86/03k, Arb 12.379; and of 10 July 2008–8 ObA 55/07g. 68  Supreme Court of 6 September 1947–1 Ob 559/47. 69 See Risak (n 60) 17 for a discussion on crowdwork and whether a short duration of microtasks may preclude the existence of an employment relationship. 70  Or the other way round: monthly payment is an indicator for an employment relationship. See Supreme Court of 8 July 1999–8 ObA 26/99b, Arb 11.901. 71  Civil Code, s 1155. 72  See M Reiner, ‘Der OGH, das Arbeitsrecht und das Unternehmerrisiko: Ein erster Befund’ (2008) ZAS 30.

The Concept of ‘Employee’: The Position in Austria 13 to ­consider ‘unusual’ shifts of employer risks to be incompatible with an employment contract and therefore void.73 Periodic payments, usually taking into account the time worked, are characteristic of employment contracts, although the employment contract does not depend on any payments. An employee can also work without remuneration, though this must be explicitly agreed upon. If this is not the case, adequate remuneration must be paid.74 Payment in kind is neither a strong nor a weak indication for qualification as an employee. If the parties agree to apply labour law or the most important regulations (eg, the application of a collective agreement or granting of annual leave), this may lead to the contract being qualified as an employment contract, as the courts consider this a strong indication of the parties’ will to conclude an employment contract. On the other hand, the fact that the parties agreed on the contract not being an employment contract does not bear any weight, as the courts then ask whether the contract is actually performed in personal subordination or not.75 Only in cases of doubt may the parties’ qualification be decisive.76 The presence of financial risk is a strong indicator that the jobholder is self-employed and not an employee, especially when working under a contract for services (Werkvertrag): a contract for services is a contract under which someone (the service provider) commits himself or herself to perform specified work in exchange for remuneration. In other words, the contractor is responsible for successfully completing the assignment (rendering a specific service) or achieving a specific result.77 The main characteristic of a contract for services is therefore that it is results-oriented and that the service provider guarantees an outcome—if this is not achieved, no remuneration will be due, regardless of the reason for this circumstance. Usually, there is no personal duty to work and no integration into the organisation of the ordering party. Although the absence of financial risk is an important indicator of an employment relationship, the presence of financial risks (of any kind) never prevents the qualification of a person working as an employee if there is ‘personal subordination’. However, the shift of risk to the employee may not be in breach of mandatory law and may not lead to remuneration below the minimum wage. Yet, even if there is no breach of mandatory law, the transfer of risk to the employee may be in conflict with the bonos mores78 or the nature of the employment contract; the contractual transfer of risks would then be ruled void by the labour court.79 73 

See Supreme Court of 27 September 1989–9 ObA 218/89. Civil Code, s 1152. 75  See Supreme Court of 3 June 1986–14 Ob 79/86, Arb 10.529. 76  Supreme Court of 23 February 1965–4 Ob 19/65, Arb 8030. 77  Civil Code, s 1151; and Supreme Court of 19 June 1991–9 ObA 77/91, DRdA 1992/7. 78  Civil Code, s 879. 79  See Supreme Court of 27 September 1989–9 ObA 218/89. 74 

14  Martin Risak and Robert Rebhahn In Austria, persons working as independent contractors who regularly offer their services to the market must register a business (Gewerbe) with the business authorities. Some others, like health service providers, need authorisation from the relevant authorities. If a person holds such a ­business licence, it is a (weak) indication against an employment relationship, as is registration as an independent contractor with the social security ­authorities.80 These criteria will never be decisive, but are rather only used in cases of doubt. C.  The Relevance of ‘Economic Dependence’ Economic dependence entails two aspects that both offer an important underlying rationale to regulate the employment relationship. On the one hand, it refers to the fact that resources (eg, materials, machines or an organisation) are typically needed to perform the work and that employees usually depend on the employer to provide them. On the other hand, it implies dependence of the employee on ‘selling’ his or her labour in exchange for remuneration from the employment relationship to sustain his or her living. However, from a legal point of view, these two aspects of economic dependence do not play an important role.81 The second factor (dependence on the salary to earn a living) in particular is considered impractical, as the employer often has no means to ascertain whether his or her contractual partner actually has other sources of income or why he or she actually works. Therefore, only the way in which the work is actually performed— ie, in personal subordination—is decisive. This in practice means that a wealthy person may also be the employee of a not-so-wealthy employer or that the status of the employee does not change when he or she wins the lottery or inherits a fortune. However, the argument of an inherent imbalance of bargaining power is often used to legitimise protective labour law rules and sometimes also to invalidate particular clauses of an employment contract. Economic dependence may, however, lead to determination of employeelike status (Arbeitnehmerähnlichkeit) described below. V.  THE PRINCIPLE OF PRIMACY OF FACTS

Both the form and written content of the contract as well as the substance of the relationship are relevant for the legal classification of the relationship between the parties. However, if the practical implementation of the contract 80  81 

See Supreme Court of 23 May 1990–9 ObA 119/90. See Supreme Court of 13 October 1999–9 ObA 230/99k.

The Concept of ‘Employee’: The Position in Austria 15 differs with regard to the essential criteria (subordination), then it prevails over the (written) terms of the contract.82 The reasons for this are twofold: the parties—normally the (economically more powerful) employer—tried to purposely evade the protective provisions of labour law, even though labour in personal subordination is being exchanged for remuneration. In that case, the contract was mislabelled and included provisions that contravene labour law and collective agreements.83 On the other hand, even if one concedes that the original written contract reflected the parties’ will at the time of its conclusion, there is also the possibility that the parties altered the contract by mutually contravening practice.84 VI.  QUALIFICATION IN FULL

A contract between two parties can only be either a contract of employment or another type of contract. As a general principle, a contract is to be evaluated in full, which makes it impossible to qualify only part of the contract as an employment contract (eg, a certain number of hours or certain services) and other parts as another type of contract. However, an employee may also enter into another additional contractual relationship with his or her employer besides the employment contract. This must be explicit, as the default rule developed by the courts states that all contractual relationships between an employee and an employer are seen as a uniform contract and not as a multiplicity of contracts.85 However, if the parties agree to conclude different contracts and if these may exist on their own, it is possible to enter into another additional contractual relationship, as, for example, in the case of an employee selling insurance and being in charge of administration of the properties of his or her employer,86 or if the employee is renting a flat from his or her employer.87 Apart from contractual relationships, non-contractual legal ­relationships may often exist between the parties. For instance, the parties may be held liable under tort law in case of damage to the other party. Mitigation of

82 

See, eg, Supreme Court 26 July 2012–8 ObA 56/11k. demonstration non nocet’; see Supreme Court of 10 May 1989–9 ObA 115/89; and generally, inter alia, of 22 October 2014–1 Ob 126/14g; and of 19 August 2015–3 Ob 140/15g. 84  Supreme Court of 25 May 1994–9 ObA 76/94, RdW 1994, 359; of 23 March 2010–8 ObA 30/09h; and of 30 June 2010–9 ObA 61/09 z. See also M Risak, ‘Schriftformgebote im Arbeitsrecht’ (2013) ZAS 10. 85  Supreme Court of 29 September 1981–4 Ob 168/80, ZAS 1982/29 (T Mayer-Maly); of 18 January 1996–8 Ob A 312/95, RdW 1997, 33; and of 10 June 1998–9 Ob A 98/98x, Arb 11.736. 86  Supreme Court of 29 September 1981–4 Ob 168/80, ZAS 1982/29 (T Mayer-Maly). 87  Supreme Court of 18 October 1977–4 Ob 129/77, Arb 9606. 83  ‘Falsa

16  Martin Risak and Robert Rebhahn l­iability of employees as provided for in the Act on Employee Liability (Dienstnehmerhaftpflichtgesetz) and case law on the so-called liability for risks (Risikohaftung) of the employer88 is not restricted to liability arising from the contract, but also applies to liability under tort law. The employee is not liable at all if the damage is a result of an ‘excusable error’ (entschuldbare Fehlleistung—culpa levissima) and the courts can reduce the amount of damages to be paid by the employee in all other cases of negligence. There are several criteria for determining whether and to what extent an employee is liable: it is relevant whether the employee’s work can be expected to lead to damage (dangerous work), and his or her level of training and the payment he or she receives are taken into account.89 VII.  LIMITS TO THE FREEDOM OF CONTRACT

The legal concept of the ‘employment contract’ does not lie at the disposal of the parties. Consequently, if the criterion of personal subordination is met, the legal consequences take effect. As most of these are mandatory and cannot be disposed of by the parties to the contract, there is only limited room for them to manoeuvre when negotiating the employment contract. In addition, since most of the provisions entail relatively mandatory­ (relative zwingend) rules,90 they can only be altered to the advantage of the employee. The false labelling of a contract results in the adjustment of the conditions of the contract (eg, remuneration) ex post facto.91 The employee can invoke his or her ‘real’ status, even if he or she agreed to or even initiated the false labelling himself or herself.92 Consequently, the employee—unlike the employer, who, for example, has to pay the forgone higher wage due to collective agreements, vacancy, sick pay, etc—does not bear any risk. In a similar vein, false labelling under social security law leads to an adjustment of social insurance ex post facto. The employee again bears no risk (no obligation to pay outstanding insurance contributions exists); the employer, on the other hand, must pay all insurance contributions (including those usually paid by the employee) and an administrative fine.93 Likewise, false

88 

Civil Code, s 1014 per analogiam. Act on Employee Liability, s 3. 90  For example, the continuation of payment in case of sickness/accident and other personal reasons, protection against dismissal and anti-discrimination provisions, as well as minimum wages in collective agreements. 91  See M Risak, ‘Arbeitsrechtliche Folgen des falschen Status eines Mitarbeiters bzw einer Mitarbeiterin’ (2012) ZAS 131. 92  Supreme Court of 11 October 2007–8 ObA 49/07z. 93  Supreme Court of 15 November 2001–8 ObA 63/01z. See also C Kietaibl, ‘Sozialversicherungsrechtliche Rückabwicklung bei aufgedeckter Scheinselbständigkeit’ (2006) ZAS 26. 89 

The Concept of ‘Employee’: The Position in Austria 17 labelling under tax law leads to an adjustment of the tax ex post facto. The employer can, however, deduct tax differences from the employee’s wage,94 but has to still pay a penalty for the late payment of taxes.95 In the opposite case, ie, if the parties choose to conclude a contract of employment despite the absence of personal subordination, the provisions of labour law will apply, even if the essentials of an employment contract are not fulfilled. The contract is then not an employment contract in the legal sense, but another type of contract (often a free-service contract) to which the parties agreed to apply labour law provisions. They can therefore mutually agree to withdraw from this practice, as labour law provisions are not applicable by law. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners As the employment relationship is a legal concept and the social partners are not legally empowered to decide which contracts qualify as employment contracts or not, social dialogue mechanisms and collective bargaining do not play any role in Austria with regard to defining the notion of ‘employee’. The employment relationship is only defined by case law based on the above-described legal concept of the employment contract. However, the social partners play an indirect role: the panels of the courts for labour law and social security law are partly composed of social partner representatives96 and can therefore influence court decisions to a certain extent. The social partners also manage the social security institutions97 and are thus also able to influence who qualifies as an employee under social security law. However, they are subject to the review of the Administrative Courts in this regard.98 The social partners or works councils can also bring forward a claim to ascertain the employee status of a certain number of workers,99 but this rarely occurs in practice. In Austria, collective agreements can only be concluded for employees.100 It is not possible to conclude collective agreements for non-employees (or for economically dependent employees). The same applies for works ­agreements 94 

Income Tax Act, ss 78, 83. Federal Fiscal Act (Bundesabgabenordnung), s 217. 96  Act on the Labour and Social Courts (Arbeits- und Sozialgerichtsgesetz), s 11. 97  General Social Security Act, s 426. 98  ibid s 414. 99  Act on the Labour and Social Courts, s 54. 100  Labour Constitution Act, s 1. 95 

18  Martin Risak and Robert Rebhahn (Betriebsvereinbarungen), ie, agreements between the works council and the employer, and generally for worker representation at the workplace level: the works council only represents employees, and only employees are entitled to elect the council and to be elected as worker representatives.101 The statutory representation of workers, the Chamber of Labour ­(Kammer für Arbeiter und Angestellte), represents not only employees at the national level but also economically dependent persons working under a free-service contract as defined in section 4(4) of the General Act on Social Insurance.102 This group of persons differs from ‘employee-like persons’ described below in section XI, to whom some acts of labour legislation are applicable. B.  Custom and Practice Deviations on the basis of custom and practice are not acknowledged in Austria. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions There are no presumptions as regards the employee status that the claimant could invoke. B.  The Burden of Proof Specific provisions regarding the burden of proof do not exist in Austrian labour law. Accordingly, it is basically up to the employee to prove that the requirements of an employment relationship have been met. In practice, this implies producing extensive evidence of having been subjected to the instructions of another person. The mere fact that a service as such is usually rendered by personally subordinated employees or that an employee is integrated into the organisation of his or her contractual partner is considered

101 

ibid s 36(1). of Labour Act (Arbeiterkammergesetz), s 10(1)7. Section 4(4) of the General Act on Social Security defines free-service workers as persons working under a free-service contract for remuneration, performing their services essentially in person and not having their own means of production available. In any case, also excluded are those working for private individuals and those holding a business licence. 102  Chamber

The Concept of ‘Employee’: The Position in Austria 19 in the overall assessment of the arguments for and against an employment relationship, but does not shift the burden of proof.103 X.  SPECIFIC PROCEDURES

In labour law cases, the courts have no power to investigate the real nature of the relationship ex officio. The party claiming that a contract of employment exists has to state and prove the facts leading to that assertion.104 Questions of fact can be reviewed once before a court of appeals,105 while questions of law can be reviewed twice (before a Court of Appeals and, if they are questions of law of fundamental importance, by the Supreme Court).106 In social security and tax law cases, the regulation is different. The administrative bodies and, in the case of appeal, subsequent competent courts have to investigate all the relevant facts of the case (the principle of ex ­officio investigations—Grundsatz der Amtswegigkeit). In social security law cases, the decision can first be reviewed by the Federal Ministry for Labour, Social and Consumer Affairs (Bundesministerium für Arbeit, ­ Soziales und Konsumentenschutz)107 and subsequently by the Federal Administrative Court (Bundesverwaltungsgericht)108 and the Administrative Court (Verwaltungsgerichtshof). As a general rule, an authority cannot ascertain the legal nature of a contract in advance. Furthermore, decisions in a social security and labour law procedure regarding the same case are not binding between the courts and administrative bodies if they deal with different questions of law (eg, the payment of social security contributions and the question of the applicability of a collective agreement). If they are so-called preliminary questions, the courts or administrative bodies may decide on them as long as they are not decided by a court/administrative body. The binding effect of such decisions is very much disputed.109 Labour inspectors do not play an important role in ascertaining the status of employee in practice, as they only monitor compliance with employee health and safety provisions and working time laws.110

103 

See especially Rebhahn (n 15) para 1151, ABGB recital 7.

104 ibid. 105 

Code of Civil Procedure, ss 461 f; and Act on Labour and Social Courts, s 44. Code of Civil Procedure, s 502 f. 107  General Social Insurance Act, s 412. 108  ibid s 414. 109 See A Klauser and G Kodek, in A Klauser and G Kodek (eds), JN-ZPO, 17th edn (Vienna, Manz, 2012) para 190, ZPO recital 3. 110  Act on the Labour Inspectorates, s 3. 106 

20  Martin Risak and Robert Rebhahn XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons Austrian law recognises a category of economically dependent persons: so-called ‘employee-like persons’ (arbeitnehmerähnliche Personen). Some legislation applies to employee-like persons and provides a definition which, however, is always the same.111 These statutes also apply to persons who perform work/services by order of and on account of another person without being in an employment relationship, but who may be considered employee-like due to their economic dependence. The Austrian definition does not expressly require the need for social protection. The case law that interprets the core notion of ‘economic dependence’ is ambiguous.112 The criteria applied are the work performed for one or very few contracting parties, the lack of relevant own operating resources as well as of own employees and the fact that the work is mostly performed personally by the employee-like person, restrictions to work for other parties and dependence on the earnings for living.113 Only some provisions of labour law apply to employee-like persons, eg, those on the competence of the labour courts,114 agency work,115 employee liability116 and anti-discrimination.117 The courts also apply (a few) other provisions if they do not require personal subordination (eg, notice periods).118 Therefore, many important provisions of labour law are not applied to this group—eg, dismissal protection, paid holidays or sick leave payment—as they require full employee status. Collective labour laws (especially collective bargaining and workplace representation) also do not extend to employee-like persons. Home work is a form of sub-contracting that was widely used during the process of industrialisation and even before then, but also later in times of economic crisis: work was contracted by a central agent to sub-contractors who completed the work in off-site facilities, either in their own homes or in workshops with multiple crafts(wo)men. This form of work has been regulated by statute in Austria since 1918, which was one of the first 111  Act on Agency Work (Arbeitskräfteüberlassungsgesetz), s 3; Labour and Social Courts Act, s 51; Equal Treatment Act (Gleichbehandlungsgesetz), ss 1(3)2 and 16(3)2; and ­Employees’ Liability Act, s 1. 112 See generally T Radner, in W Mazal and M Risak (eds), Das Arbeitsrecht, 24th edn (Vienna, LexisNexis, 2014) III/91. 113  See, eg, Supreme Court of 6 April 1976–4 Ob 25/76, Arb 9466 (leaseholder of a service station); and of 11 May 1988–9 ObA 165/89, DRdA 1990/37 (legal consultant). 114  Labour and Social Courts Act, s 51(3)2. 115  Act on Agency Work, s 3. 116  Employees’ Liability Act, s 1(2). 117  Equal Treatment Act, ss 1(3)2 and 16(3)2. 118  Supreme Court of 29 January 2010–1 Ob 190/09m, wbl 2010, 300.

The Concept of ‘Employee’: The Position in Austria 21 s­ ocio-political acts of the new Austrian Republic after the First World War. Today, the Act on Home Work 1960 (Heimarbeitsgesetz) applies in this regard, although only in relation to those persons who—without having a business licence—work (manually) from their home or a place of work of their choosing;119 therefore, teleworkers are not included as they mostly carry out some type of office work. They are not considered employees,120 but are granted similar protection, such as paid time off on public holidays, annual leave, sick leave pay, holiday and Christmas bonuses, as well as severance payments. They are covered by a special minimum wage system (home work tariffs—Heimarbeitstarife)121 regulated by a government agency (Federal Conciliation Agency—Bundeseinigungsamt);122 they are also subject to co-determination of the works council.123 Home workers are also represented in the Chamber of Labour.124 B.  Equality and Anti-discrimination Law According to section 1(3)1 and 1(3)2 as well as section 16(3)1 and 16(3)2 of the Act on Equal Treatment (Gleichbehandlungsgesetz), employees, home workers and employee-like persons lie within the scope of application of the Act.125 On the other hand, some categories are excluded from the personal scope of application of this law (section 1(2) of the Act on Equal Treatment) for different reasons: the Federal Act of Equal Treatment applies as lex specialis to federal employees. In the case of agricultural workers and employees of the federal states and municipalities, the competence to regulate is not federal, but lies with the federal states. They are thus covered by the relevant state legislation. 119  Section 2 of the Act on Home Work mentions ‘the production, processing or packaging of goods’. As the criteria for employee-like persons often apply, home workers usually also fall under this scope of protection. 120  Landmark decision of the Supreme Court of 6 April 1954–4 Ob 5/54. 121  Act on Home Work, s 34. 122  This Agency is staffed by the social administration and social partners. 123  Labour Constitution Act, s 36(1). 124  Chamber of Labour Act, s 10(1)6. 125  This Act transposes Council Directive (EC) 2000/78 of 27 November 2000 ­establishing a general framework for equal treatment in employment and occupation [2000] OJ L 30, Council Directive (EC) 2000/43 of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin [2000] OJ L 180 and Directive (EC) 2006/54 of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast) [2006] OJ L 204, and closely follows the concept and even the wording of these Directives. It prohibits direct and indirect discrimination based on the grounds of sex, religion or belief, sexual orientation, ethnic origin and age of the employee. Discrimination based on the grounds of disability is dealt with in the Act on the Employment of Persons with Disabilities (Behinderteneinstellungsgesetz).

22 

2 The Concept of ‘Employee’: The Position in Belgium WILFRIED RAUWS

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

A

LEGAL DEFINITION of ‘employment relationship’ exists in ­Belgium. According to Article 328 of the Labour Relations Act of 27 December 2006,1 the employment relationship (arbeidsrelatie, relation de travail) covers a formal agreement on the performance of work by a party in the capacity of either employee or self-employed worker. This division remains the main distinguishing criterion for employment relationships and is based on the legal subordination between the principal and the person performing the work.2 The legal concepts of ‘employee’ (werknemer, salarié) and ‘independent worker’ (zelfstandige, indépendant) are defined in line with this distinction. An ‘employee’ is a person who concludes a contract to perform work in exchange for the payment of a wage, under the authority of the other party, the employer.3 An ‘independent worker’ is a natural person who exercises a professional activity outside the authority of the employer and who is not bound by a ‘statute’. This refers to public sector workers who do not conclude an employment contract, but work under an administrative appointment and are subject to administrative laws.4

1  The Labour Relations Act is the common name for lawyers of c XIII Nature of the working relationships, in Programme Law (I) of 27 December 2006 (Titel XIII Aard van de arbeidsrelaties, Programmawet (I), Titre XIII—Nature des relations de travail, Loi-programme (I)). 2  Explanatory Memorandum Labour Relations Act, Parliamentary Documents, Chamber of Representatives, 2006–07, No 51-2773, 208–09. 3  Labour Relations Act, art 328, 5, a). 4  Explanatory Memorandum Labour Relations Act No 51-2773, 208.

24  Wilfried Rauws In Belgium, the ‘employment relationship’ is usually synonymous with ‘employment contract’, on condition that the principal exercises authority.5 Belgian labour law is similar to the concept of ‘employee relationship’ in EU law on the free movement of workers.6 The legal definition of employment relationship is that of (1) a contract between an employer (werkgever, employeur) who concludes an agreement (overeenkomst, contrat), (2) to perform labour (arbeid, travail) by an employee, (3) under the supervision and authority of an employer (relationship of subordination—gezag, subordination), (4) in exchange for an agreed salary (loon, rémunération). This definition is established in statutory acts7 and in case law.8 The employment contract is a contract under which a person (the employee) undertakes to work, in exchange for a salary, for another person (the employer) and to do so under the employer’s authority. Therefore, the four key elements of an employment contract are: the contract, the work, the salary and the employer’s authority.9 The basic principles for the validity of any contract also apply to the contract of employment. According to statutory law, no formal requirements exist for concluding a contract of employment. This implies that in principle, a contract of employment can be based on a mere oral agreement between the two parties. However, such contracts are undermined by numerous legal exceptions. Employment contracts that must be concluded in writing are: student employment contracts, replacement contracts, part-time contracts, contracts for the performance of temporary work, contracts for temporary agency workers, contracts for professional athletes, contracts for domestic workers, contracts for teleworkers, employment contracts for foreigners, employment contracts for seafarers and employment contracts for fishermen at sea.

5 

See n 3. C-66/85 Lawrie-Blum v Land Baden-Württemberg [1986] ECR 2121; Case C-256/01 Allonby v Accrington & Rossendale College [2004] ECR I-873. See also C Barnard, The ­Substantive Law of the EU: The Four Freedoms (Oxford, Oxford University Press, 2007) 287: ‘a worker is in a relationship based on subordination where the individual is under the control of the employer’. 7  Articles 2, 3, 5 and 119.1 of the Employment Contracts Act of 3 July 1978 (Wet van 3 juli 1978 betreffende de arbeidsovereenkomsten, Loi du 3 juillet 1978 relative aux contrats de travail); art 2 of the Employment Contract Act for Athletes of 24 February 1978 (Wet van 24 februari 1978 betreffende de arbeidsovereenkomst voor betaalde sportbeoefenaars. Loi du 24 février 1978 relative au contrat de travail du sportif rémunéré). 8  Cour de Cassation, 12 March 1979, Arresten van het Hof van Cassatie, 1978–79, 813; Cour de Cassation, 18 October 2010, Rechtskundig Weekblad 2010–11, 1651; Cour de Cassation, 6 2010, Rechtskundig Weekblad 2011–12, 614; Cour de Cassation, 7 March 2011, Rechtskundig Weekblad 2011–12, 1808; Cour de Cassation, 26 March 2013, Rechtskundig Weekblad 2013–14, 1062; Cour de Cassation, 10 March 2014, Rechtskundig Weekblad 2014– 15, 305. 9  Employment Contracts Act, arts 2, 3, 4, 5 and 119.1. 6 Case

The Concept of ‘Employee’: The Position in Belgium 25 Certain clauses in employment contracts must be concluded in writing: the clause for a fixed-term contract or for a contract for a specific assignment,10 the non-competition clause, and a training clause on the reimbursement of part of an expensive training programme in case of early termination of the employment contract by the employee. When a written document is required, it must—depending on the location of the employer’s operational headquarters—be made available in French, Dutch or German. When an employee is required to perform work in a foreign country for a period that exceeds one month, the employer must to notify the employee either in writing (document) or electronically, prior to his or her departure, indicating the duration of the work performed abroad, the currency used to pay the worker’s remuneration, the potential benefits of working abroad and, where appropriate, the employee’s repatriation conditions.11 A contract of employment may either be void or voidable. If the employment contract breaches labour laws or violates the provisions of a collective bargaining agreement (collectieve arbeidsovereenkomst, convention collective de travail), the employment contract is voidable insofar as the infringement prejudices the employee’s rights.12 In most cases, violations may lead to only parts or specific provisions of the employment contract being void. Specific rules apply to contracts of employment. According to several legal provisions in labour laws, the nullity of the employment contract cannot affect the protective rights of workers as established in specific labour laws.13 Rules of general contract law14 may lead to a voidable or void employment contract. If one of the parties was under a misconception when concluding an employment contract, the contract as such is voidable. If the (employment) contract breaches the law of public order or is contrary to public mores, it is void.

10 The obligation to conclude an employment contract does not apply to contracts concluded for a certain period of time or for a specific assignment in factories and for categories of workers determined in a collective bargaining agreement that is declared generally binding by the King: Employment Contracts Act, art 9(3). This applies to harbour workers and support staff in hotels, restaurants and cafes. 11  The Employment Contracts Act Art 20bis, introduced as an implementation of Council Directive (EEC) 91/533 on the employer’s obligation to inform employees of the conditions applicable to the contract [1991] OJ L 288. 12  Employment Contracts Act, art 6; Collective Bargaining Agreement Act of 5 December 1968 (Wet betreffende de collectieve arbeidsovereenkomsten en de paritaire comités. Loi sur les conventions collectives et les commissions paritaires), art 11. 13  Labour Act of 16 March 1971 (Arbeidswet. Loi sur le travail), art 5; Act of 12 April 1965 on the protection of remuneration (Wet betreffende de bescherming van het loon der werknemers. Loi concernant la protection de la rémunération des travailleurs), art 47. 14  Civil Code, arts 1108 ff.

26  Wilfried Rauws If the employee already started performing the work specified in the employment contract, a rescission is in principle effective for the future only. The reason for this is that the performed work cannot retroactively be undone and that a complete reversal of the transactions would collide with the employee’s legal protection. As regards the past, the employment contract is deemed to have been effective.15 B.  Employment Relationship: Basic Definition An ‘employment relationship’ with legal subordination can either be based on a contract or an administrative appointment of civil servants (­ ambtenaar, fonctionnaire), who are bound by public law relationships.16 The ­definition of a self-employed worker is a negative legal definition. Self-employed workers are defined as natural persons who work outside a relationship of subordination in exchange for remuneration.17 In the private sector, an employment relationship must, in principle, be based on a contract of employment. The employment contract is a reciprocal agreement, which forms the legal basis for the exchange of work for pay. In principle, an employment relationship can only result from a contractual agreement and the consent of both parties. A contract is required to conclude an employment relationship. The freedom to conclude contracts is a fundamental principle of Belgian law. The legal restrictions to the freedom of contract are based on the idea of remedying the imparity between the employer and the employee. Belgian labour law rejects the idea that the employment relationship is based on a contract, but on the integration of the worker in an organisation. This doctrine, however, is contrary to the fixed case law of the Cour de Cassation. There are some specificities in labour law (a and b): (a) According to an industry-wide Collective Bargaining Agreement (CBA) No 32bis, concluded in the National Labour Council (Nationale Arbeidsraad, Conseil national du travail) on 7 June 1985, the transfer of an enterprise (overdracht van onderneming, transfer d’entreprise) or part thereof results in the automatic transfer of the individual employment contracts of the employees working for the transferred undertaking. CBA No 32bis was concluded to transpose EU Directive 2001/23 of 12 March 2001 on the harmonisation of employee rights in cases

15  See W Rauws, Civielrechtelijke beëindigingswijzen van de arbeidsovereenkomst: ­nietigheid, ontbinding en overmacht (Antwerp, Kluwer, 1987) 66–91. 16  Ambtenaren, fonctionnaires. 17  Labour Relations Act, art 328.

The Concept of ‘Employee’: The Position in Belgium 27 of transfers of undertaking. CBA No 32bis provides special protection for the transferred employees. If an undertaking or part thereof passes to another owner based on a legal transaction, the latter assumes the rights and duties under the employment contracts that exist at the time of transfer. An exception is made with regard to employee rights that relate to pension schemes and invalidity provisions, which are complementary to the benefits within the framework of the official social security system. The automatic transfer of the employment contract in case of a transfer of undertaking depends on the employee’s decision to not object to the transfer.18 (b) In Belgium, temporary agency work (uitzendarbeid, travail intérimaire) is regulated by the Act of 24 July 1987 on Temporary Agency Work. In principle, temporary agency work is not permissible. It is only legally permissible if the work provided by the temporary agency can only be used for the performance of ‘temporary work’ as defined by the Act. If the agency operates outside the scope of this Act, penal sanctions will be applied and the temporary agency’s licence may be suspended or withdrawn. Temporary work is strictly defined in the Act. It is an activity that consists of: (i) the replacement of a permanent worker, for example, in case of sickness, holiday or maternity leave; (ii) support in case of a temporary increase in workload due, for example, to an increase in orders; (iii) enabling exceptional work caused, for example, by an accident, or the creation of a new department for which the employer has not yet been able to engage permanent staff, or similar; (iv) artistic performances, which are delivered against payment for the benefit of an occasional employer or user; (v) in the case of temporary workers who are assigned to a user undertaking to fill a vacant position, with the intention of offering the temporary worker a permanent job following the period of the temporary worker’s posting. In cases of temporary agency work outside the narrow limits of the Temporary Agency Work Act, both the temporary agency and the user undertaking will be fined and the temporary agency’s licence may be withdrawn. In terms of civil law, the employment contract between the temporary agency worker and the temporary agency is void, and the work relationship between the

18 

See Case C-132/91, 138/91, 139/91 Katsikas v Konstantinidis [1992] ECR I-6577.

28  Wilfried Rauws temporary agency worker and the user undertaking is legally deemed to be a binding employment contract for an indefinite period.19 The definition of an employment relationship is related to the general, albeit not uniform, definition of ‘employee’: ‘a person who, by virtue of a contract of employment, is obliged to perform services for and under the direction of another person, the employer, in exchange for remuneration’.20 However, the statutory definition of the term ‘employment relationship’ may vary in specific acts. The statutory definition of the term ‘employment relationship’ depends on the given statutory act. The status of ‘employee’ is strictly related to labour law. Nevertheless, specific definitions exist for persons who perform work and who are neither employees nor independent workers. One major difference is that ‘employee’ is defined more broadly in specific labour acts and social security acts in the sense that some persons who perform services in exchange for remuneration under the direction of another person, but without a contract of employment—for example, civil servants—are legally considered to be employees and are therefore covered by specific labour law or social security acts. This concerns, in particular, so-called ‘employee-like persons’ in the specific meaning of Belgian law. Social security for employees (sociale zekerheid voor werknemers, ­sécurité sociale pour salariés) applies to employees and employers who have concluded an employment contract (Article 1 of the Act of 27 June 1969). However, the social security scheme for employees is also applicable to a large range of ‘employee-like persons’, such as: (i)

persons whose main activity in exchange for remuneration entails the day-to-day management of non-profit associations and organisations that do not perform industrial or commercial transactions and who do not require their members to provide materials to their members; (ii) persons who work in a place of their choosing on terms similar to those of a contract of employment and who work with raw materials and half-finished products, and work alone or with the help of maximum four assistants; (iii) persons who transport goods as instructed by a company using vehicles which they do not own or which were purchased by the entrepreneur; (iv) persons who transport people for a company by means of vehicles which they do not own or which were purchased by the entrepreneur;

19  Temporary Agency Work Act of 24 July 1987 (Wet betreffende de tijdelijke arbeid, de uitzendarbeid, en het ter beschikking stellen van werknemers ten behoeve van gebruikers. Loi sur le travail temporaire, le travail intérimaire et la mise de travailleurs à la disposition d'utilisateurs), art 31. 20  Labour Relations Act, art 328.

The Concept of ‘Employee’: The Position in Belgium 29 (v)

taxi drivers and taxi operators that employ them, with the exception of: taxi drivers who have been issued a permit from the competent authorities to operate a taxi service and who own the vehicle they use for work, or who benefit from a financing agreement that is not sponsored or guaranteed by the entrepreneur; (vi) artists; (vii) researchers with a doctoral scholarship; (viii) doctors in specialist training. Article 31 of the Code on Income Taxes21 stipulates: ‘The salary of workers is defined as the remuneration an employee receives for work performed in the service of an employer.’ This notion of ‘employee’ is broader than that linked to an employment contract because it also includes civil servants, ie, all persons who work under the authority of another. Some labour laws do not limit the scope of the definition of ‘employer’ and ‘employee’, but actually extend the personal scope of labour law: For the purposes of this Act shall be treated as (1) workers: students and persons who, other than pursuant to a contract of employment, perform work for wages under the direction of another person; (2) employers: those who employ persons referred to under 1.22

In other words, civil servants in a public law relationship fall within the personal scope of these laws. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition As mentioned above, a statutory definition of the term ‘employee’ exists. An employee, in principle, is a person who concludes a contract to perform work in exchange for remuneration under the authority of another party, the employer.23 This definition emphasises that an employee is directed by another as regards his or her performance of tasks. In other words, the employee is subordinated to another, ie, the employer. The jurisprudential definition of employee is fully in line with the statutory definition.24

21  ‘Wetboek van de Inkomstenbelastingen 1992’/‘Code des impôts sur les revenus 1992’ of 10 April 1992. 22  Act on the Protection of Remuneration, art 1; Labour Act, art 1; Health and Safety Act of 4 August 1996 (Wet betreffende het welzijn van de werknemers bij de uitvoering van hun werk. Loi relative au bien-être des travailleurs lors de l'exécution de leur travail), art 2. 23  Labour Relations Act, art 328, 5, a). 24  See Cour de Cassation, 12 March 1979, Arresten van het Hof van Cassatie, 1978–79, 813; Cour de Cassation, 16 October 1987, Arresten van het Hof van Cassatie, 1987–88, no 96.

30  Wilfried Rauws Nevertheless, the content of the legal term ‘employee’ can vary from one legal provision to another. Yet the definition entails the basic notion of ‘employee’. The Labour Relations Act of 27 December 2006 determines criteria for the subordination under which the employee works. The general criteria for determining the existence or absence of an authoritative relationship are: (i)

the will of the parties as expressed in the contract, as the contract is implemented in accordance with Article 331 of the Labour Relations Act;25 (ii) the freedom of organisation of working time; (iii) the freedom of organisation of work; and (iv) the possibility of hierarchical control. The Labour Relations Act states that the obligations inherent in the exercise of a profession and imposed by legislation cannot be taken into consideration to assess the legal nature of an employment relationship.26 The Labour Relations Act stipulates that the following elements cannot, on their own, be used to determine the existence of an employment relationship: (i) (ii) (iii) (iv) (v)

title of the agreement; registration of the worker in the social security scheme; registration in the Database for Enterprises; value added tax registration; and the manner in which revenues are declared to the tax authorities.27

The legal concept of ‘employee’ is defined more broadly in some labour acts in the sense that some persons who perform services in exchange for remuneration under the direction of another person, but without a contract of employment—for example, civil servants—are legally considered to be employees and are therefore covered by the specific labour acts, notwithstanding the fact that they have not concluded an employment contract.28 B.  Employer: Basic Definition In law, the employer is described as a (natural or legal) person who, on the basis of an (employment) contract, engages another person, the employee, 25  Article 331 of the Labour Relations Act provides: ‘Without the violation of public order, public morality and mandatory laws, the parties freely choose the nature of their employment relationship, whereas the performance of the agreement must correspond to the nature of the employment relationship. Priority should be given to the qualification of the work relationship as evidenced by the performance of the contract if the execution of the contract excludes the legal qualification chosen by the parties.’ 26  ibid art 333(2). 27  ibid art 333(3). 28  See section XI.A below.

The Concept of ‘Employee’: The Position in Belgium 31 to work under his or her authority or subordination against the payment of a salary.29 Some laws also define employers as persons who employ ‘employee-like persons’,30 ie, employing such persons is equated with the employment of employees. The legislator has recently created a new legal form of employment (in effect as of 30 June 2016):31 the ‘employers group’. On the basis of an ‘employers group’, two or more companies may temporarily and jointly recruit employees to work for each of them either alternately or simultaneously. This form of employment is sometimes also referred to as ‘co-­sourcing’ or ‘sharing of workers’. The employee only concludes one employment contract with the employers group, namely with the ‘legal employer’. The employers group may put employees at the disposal of companies that are part of the group. As employers groups constitute a derogation from the Belgian labour legislation on the posting of employees,32 employers who want to establish an employers group need prior authorisation from the Federal Ministry of Employment to post workers within the employers group. The employers group shall be established as an economic partnership or a non-profit association, and the provision of workers to member firms shall be the group’s sole corporate purpose. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Various sub-types of employees exist to which specific rules apply. The historical differentiation between blue-collar workers (arbeider, ouvrier, Arbeiter) and white-collar employees (bediende, employé, Angestellte) has lost significance. The classic legal distinction in Belgian labour law is that between ‘blue-collar workers’ and ‘white-collar employees’. Their legal protection differs—the legal protection for white-collar employees is higher

29 

Labour Relations Act, art 328, 5, a). sections II.A and XI.A below; Act on the Protection of Remuneration, art 1; Labour Act, art 1; Health and Safety Act, art 2; Work Rules Law of 8 April 1965 (Wet tot instelling van de arbeidsreglementen. Loi instituant les règlements de travail), art 1; Collective Bargaining Agreement Law of 5 December 1968, art 1; Holidays Act of 4 January 1974 (Wet betreffende de feestdagen. Loi relative aux jours fériés), art 1; Social Documents Act of 23 October 1978, art 1; Flemish Language Decree of 19 July 1973, art 1; Foreign Employees Labour Act of 30 April 1999 (Wet betreffende de tewerkstelling van buitenlandse werknemers. Loi relative à l'occupation des travailleurs étrangers), art 3; Political Holiday Act of 19 July 1976, art 1. 31  Act of 12 August 2000 on social, budgetary and other provisions (Wet van 12 augustus 2000 houdende sociale, budgettaire en andere bepalingen, Loi portant du 12 août 2000 des dispositions sociales, budgétaires et diverses), arts 186–93. 32  Temporary Agency Work Act. 30  See

32  Wilfried Rauws than that of blue-collar workers. However, this distinction was ruled to be discriminatory by the Constitutional Court on 7 July 2011.33 The Law of 26 December 2013 on the introduction of a single status between workers and employees with reference to notice periods and the socalled ‘carenz day’34 abolished the major differences in legal protection for white-collar and blue-collar workers by amending the Employment Contracts Act of 3 July 1978.35 The notion of middle managers (cadres) is rarely mentioned in Belgian employment law, except in legislation on works councils and in some collective agreements. In the legislation on works councils, middle managers belong to the category just below managers, which is a restricted category including only the two highest management levels in a company’s structure. The category of managerial employees still bears significance, for instance, with reference to the non-competition clause in the employment contract36 and the functioning of the works council. Managerial employees may not serve as employee representatives in the works council, but can be part of the employer’s delegation in the works council.37 Public employers employ both civil servants under a public law relationship and employees under an employment contract. The position of employees in public service does not, in principle, differ from that of employees who work in the private sector. However, collective bargaining agreements that are applicable in the private sector apply neither to civil servants nor to employees who have concluded an employment contract with a public employer.38 Various sub-groups of employees exist which are defined by their occupation. Specific rules apply to other existing sub-groups of employees, such as commercial travellers (handelsvertegenwoordiger, représentant de commerce) (see point (a) in the list below), students (student, étudiant),39 temporary agency workers (uitzendwerknemer, intérimaire), domestic servants (dienstbode, domestique),40 home workers (huisarbeider, travailleur à domicile)41 and teleworkers (telewerker, télétravailleur),42 as well as professional athletes (betaalde sportbeoefenaar, sportif rémunéré) (see point

33 Constitutional Court, No 125/2011, 7 July 2011, Rechtskundig Weekblad 2011–12, 1230, case note S Verstraelen. 34  The so-called ‘carenz day’ or ‘waiting day’ was the first non-refundable day of sick leave for blue-collar workers only. 35  Moniteur belge, 31 December 2013. 36  Employment Contracts Act, art 86. 37  Act of 20 September 1948 on the Organisation of the Economy, art 16. 38  Collective Bargaining Agreement Act, art 2(3). 39  Employment Contracts Act, arts 120–30ter. 40  ibid arts 108–18. 41  ibid art 119.1–119.12. 42  The Collective Bargaining Agreement No 85, concluded in the National Labour Council on 9 November 2005, and extended by Royal Decree of 13 June 2005, Moniteur belge, 5 September 2005, transposing the European Framework Agreement of 16 July 2002.

The Concept of ‘Employee’: The Position in Belgium 33 (b) below). Specific legal regulations also exist for seafarers,43 fishermen44 and apprentices or trainees (see point (c) below): (a) Commercial travellers are generally white-collar employees who identify and visit clients with the aim of negotiating and conducting ‘business’ on behalf of and in the name of one or more employers.45 The Employment Contracts Act of 1978 lays down explicit rules on the following important aspects: the payment of commission, the indemnity of eviction and the covenant of non-competition and arbitration. (b) In order to qualify as a ‘professional’, an athlete must earn an annual salary exceeding €9,600.46 The aim of the Act of 24 February 1978 is to give professional athletes more freedom by imposing a maximum term (a definite period) for contracts and allowing for the termination of contracts concluded for an indefinite period by simply giving notice. (c) Apprentices or trainees are not considered to be employees.47 They are, however, partially covered by labour protection laws for employees.48

B.  The Establishment of a Specific Category of ‘Workers’ Sub-categories of blue-collar ‘workers’ are rare in Belgium. One exception is domestic workers, who are considered an individual category of blue-collar workers who perform manual labour. The employment contract for domestic workers is an agreement under which the worker undertakes to perform tasks under the authority of an employer and against remuneration. These are typically household tasks and serve the everyday needs of the employer or his or her family.49 IV.  SUBORDINATION: CRITERIA AND INDICATORS/ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The legal distinction between employees and self-employed persons is based on the possibility or right of the principal to give instructions on how labour 43 

Act of 3 June 2007. Act of 3 May 2003. 45  Employment Contracts Act, arts 4 and 87–107. 46  For the period of 1 July 2015 until 30 June 2016. The minimum salary is determined every year. 47  Law of 19 July 1983 on Apprentices, art 4; Programme Law of 2 August 2002, art 104. 48 Legal regulations on the protection of work: Act on the Protection of Remuneration, art 1; Labour Act, art 1; Health and Safety Act, art 2; Work Rules Law, art 1; Collective Bargaining Agreement Law, art 1; Holidays Act, art 1; Social Documents Act, art 1. 49  Employment Contracts Law of 3 July 1978, art 5. 44 

34  Wilfried Rauws should be performed by the worker. In other words, the distinctive criterion is the authority of the principal to determine the performance of work. In this regard, it is crucial to determine whether and to what extent a person is subjected to another person’s power to direct, a power whose scope may vary depending on whether it encompasses work content, the mode of performance of work, working hours, the work period and the place of work. The extent to which a person forms part of the work organisation of another is not important. The Labour Relations Law states some general criteria on legal subordination.50 As this legal distinction is not always clear when examining the facts, there is a lot of case law on how to determine the real nature of the employment relationship, ie, whether it is based on a contract with an employee or with an independent worker. One important change was introduced in the Cour de Cassation’s case law following its decision of 23 December 2002.51 Previously, more importance was attached to the primacy of facts. Since this court decision of 23 December 2002,52 the approach has changed substantially. The case examined a contract which the parties qualified as a contract to provide work as an independent contractor (contrat d’entreprise). The qualification of the parties of the employment relationship usually prevails, unless the facts clearly contradict and exclude this qualification of the parties. In practice, this implies that the qualification of an independent working relationship can only be overruled by a judge in the event that there is unambiguous evidence that the ‘contractor’ is working under the authority of the principal. The case law of the Belgian Cour de Cassation was confirmed by the legislator in 2006 with the Labour Relations Act of 27 December 2006.53

50 

See section II.A above. de Cassation, 23 December 2002, Journal des tribunaux du travail 2003, 271; Cour de Cassation, 1 December 2008, Journal des tribunaux du travail 2009, 372. See also the comments of W Rauws, ‘De kwalificatie van de (arbeids) overeenkomst’ (2006) Journal des tribunaux du travail 93–101. 52  It is not possible to provide a good summary of the facts, because the Court de Cassation gives guidelines to the lower courts based on the facts of each case. Relevant facts include permission of the working party to have his or her own clients, which used not to be the case, as it was expected that the individual would be working between eight and nine hours a day (ie, the worker would not have time to work for other clients), that the principal fixed the prices clients were charged, that the party that works does not have independent management or ownership of a business, that the tools and materials used to perform the work are provided by the principal, or that the principal generally carries the burden of economic or financial risk of exploitation and if the activity is terminated when the principal ceases to use the other party’s services. Below, please find the full text of the ruling of the Belgian Cour de Cassation in French: No S.01.0169.F R. P. 53 See the general criterion in art 333(1) of the Labour Relations Act: the will of the parties as expressed in their contract. Priority should be given to what the actual execution of the agreement entails if this excludes the legal qualification chosen by the parties. 51 Cour

The Concept of ‘Employee’: The Position in Belgium 35 The statutory distinction may be legally clear, but it is very difficult to apply to the individual factors of an employment relationship. Substantive case law is available on the specific division between employees and ­independent (self-employed) workers. B. Indicators In the view of the Cour de Cassation, the essential feature of an employment contract is that an individual, the employee, is directed by another. Hence, the existence of work instructions is the key element of subordination. However, work instructions as such cannot be a sufficient factor to justify qualifying a relationship as one of employment, since a self-employed person can also be the addressee of instructions.54 Labour courts use/have used various elements, on their own or in combination with others, to determine the existence of an employment contract, including: the existence of a non-competition clause, exclusive employment, work schedules, the organisation of the activity, the compensation method, periodic payments or other forms of pay, payments in kind, irregularity of working hours, place of employment, provision of tools/materials by the person requesting the work, etc.55 The Cour de Cassation has ruled that when the person who carries out the work performs the contract in collaboration with staff hired by him or her and paid by him or her, and when the performance of the agreement results in the exploitation of an own undertaking, the agreement to perform work is not considered to be an employment contract.56 Under Belgian law, work that is performed under an employment contract must necessarily be carried out in person because the employment contract is an intuïtu personae contract. If a person is allowed to delegate work to family members, for instance, the contract cannot be qualified as an ­employment contract.57

54 

Cour de Cassation, 20 March 2006, Journal des tribunaux du travail 2006, 276. de Cassation, 7 May 1979, Arresten Hof van Cassatie 1978–79, 1059; Cour de Cassation, 2 April 1979, Journal des tribunaux du travail 1980, 78; Cour de Cassation, 2 December 1985, Rechtskundig Weekblad 1985–86, 2915; Cour de Cassation, 2 November 1992, Rechtskundig Weekblad 1992–93, 959; Cour de Cassation, 19 April 1982, Rechtskundig Weekblad 1982–83, 2836; Cour de Cassation, 3 April 1995, Journal des tribunaux du travail 1996, 21. 56  Cour de Cassation, 23 October 1978, Rechtskundig Weekblad 1978–79, 1495. 57 See, eg, Labour Court of Brussels, 25 April 2001, Journal des tribunaux du travail 2001, 446. 55  Cour

36  Wilfried Rauws C.  The Relevance of ‘Economic Dependence’ The Cour de Cassation does not deem ‘economic dependence’ to be a requirement, nor is it in itself sufficient to determine ‘employee status’. However, criteria of economic dependence can, under certain conditions, create presumptions for the existence of an employment contract.58 V.  THE PRINCIPLE OF PRIMACY OF FACTS

In Belgium, the principle of ‘primacy of facts’ applies in the sense that the qualification of the employment relationship by the parties prevails, except in cases in which the facts clearly preclude the qualification of the relationship by the parties.59 The regulations on evidence complicate the matter further, as they are based on civil law rules. With the exception of Article 12 of the Employment Contracts Act, labour law on evidence does not deviate from the general principles of contract law. Article 12 stipulates that in the absence of a written contract, the evidence brought forward by witnesses is accepted, regardless of the substance of the dispute. Yet Article 12 of the Employment Contracts Act does not affect the primacy of a written form of the employment contract or of a service contract, as stipulated in Article 1341 of the Civil Code.60 In principle, one cannot use witnesses or factual presumptions to prove that no employment contract exists, nor do statements by witnesses or factual presumptions prevail over the content of the Employment Contracts Act. Ultimately, the labour courts have competence to decide.61 In addition, parties who have concluded an agreement in writing must respect the probative value of written documents in accordance with Articles 1319, 1320 and 1322 of the Civil Code. Hence, the principle of the so-called ‘primacy of facts’ does not play a fundamental role in Belgian labour law.

58 

See section IX.A below. Labour Relations Act, art 331; Cour de Cassation, 23 December 2002, Journal des tribunaux du travail 2003, 271; Cour de Cassation, 9 June 2008, Journal des tribunaux du travail 2008, 380; Cour de Cassation, 10 June 2013, Journal des tribunaux du travail 2013, 380. 60  Cour de Cassation, 10 January 1994, Arresten Hof van Cassatie 1994, 16; C Wantiez, ‘Droit du travail et qualification conventionnelle’ (1991) Journal des tribunaux du travail 441–42; J Petit, Sociaal procesrecht (Bruges, Die Keure, 2000) 427; K Nevens, ‘Schijnzelfstandigen in het offensief’, Rechtskundig Weekblad 2004–05, 1204–06. 61 Labour Court of Ghent, 12 January 2007, Rechtskundig Weekblad 2008–09, 373; D Mougenot, ‘La preuve en matière civile. Chronique de jurisprudence 2002–2010’ (2011) Journal des Tribunaux 597. 59 

The Concept of ‘Employee’: The Position in Belgium 37 VI.  QUALIFICATION IN FULL

A contract between two parties can either only be a contract of employment or any other contract. There is no third option according to which only part of a contract can be qualified as a contract of employment. On the other hand, an employee and an employer are perfectly free to conclude an additional contract, which as such does not qualify as a contract of employment. Such contracts can be concluded at any time. In practice, contracts between the employer and employee other than for employment exist quite often. For instance, the employer may rent an apartment to the employee within the framework of an employment relationship. Apart from contractual relationships, non-contractual legal relationships often exist between the parties. For instance, the parties may be liable under tort law in case they damage the other party. Article 18 of the Employment Contracts Act alleviates the liability of employees, which arises from the contract, but also applies to liability under tort law. VII.  LIMITS TO THE FREEDOM OF CONTRACT

The legal concept of ‘employee’ is mandatory and cannot, in principle, be disposed of by the parties to the contract. However, according to Belgian employment law, the qualification of the employment relationship by the parties prevails, except in cases in which the facts clearly contradict and exclude the qualification of the parties.62 According to the general criterion in Article 333, § 1 of the Labour Relations Act of 27 December 2006, the will of the parties as expressed in the contract represents the starting point for the legal assessment of the employment relationship. Priority should be given to what the actual performance of the agreement entails if the legal qualification chosen by the parties is excluded, for instance, due to the legal subordination. This rule is applicable if the parties have qualified their relationship as a service agreement for a self-employed person. However, in case the parties choose to conclude a ‘contract of employment’, this qualification prevails, unless the performance of the contract excludes the principal from giving instructions.

62 

See sections IV.A and IX.A below.

38  Wilfried Rauws VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The legal concept of ‘employee’ is also mandatory in the sense that it cannot be disposed of by the parties to a collective bargaining agreement. But the trade unions (vakbonden, syndicats) and the employers organisations (werkgeversorganisaties, organisations d’employeurs) represented in the joint committees (paritair comité, commission paritaire) at the level of industry may give advice to the King, who can determine specific criteria that lead to the conclusion that legal subordination or authority required for establishing an employment contract exists, or that create a presumption of the existence of an employment contract.63 The social partners use this prerogative in practice to identify employment relationships in the branch of agriculture.64 B.  Custom and Practice Deviations on the basis of custom (gewoonte, l’usage) and practice are not acknowledged in Belgium. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions In labour law, numerous legal presumptions (wettelijke vermoedens, présomptions légales) exist, mainly due to the effort to fight bogus selfemployment (schijnzelfstandigen, faux indépendants). Legislature introduced legal presumptions in 1978 for certain working persons such as commercial travellers and students.65 They have been linked with the principal on the basis of a refutable presumption of the existence of an employment contract, unless the opposite is proven. A similar refutable presumption was introduced in 1980 for pharmacists who work in publicly accessible pharmacies, ie, in cases where the pharmacist is not the owner or tenant of the pharmacy.66 Employment contract law creates an 63 

Labour Relations Act, arts 335 and 337/2 para 3; see section IX.A below. Royal Decree 20 June 2013 implementing certain provisions of the Programme Law (I) of 27 December 2006 as regards the nature of employment relationships in agriculture. 65  Employment Contracts Act, arts 4 and 121. 66  ibid, art 3. 64  See

The Concept of ‘Employee’: The Position in Belgium 39 i­rrefutable presumption of additional work that is performed under an agreement when the person who performs work is already linked with the principal through an employment contract.67 A temporary agency worker is considered to have irrefutably concluded an employment contract with the temporary employment agency.68 These presumptions are included in employment contract acts. If a person is considered an employee, he or she also falls under the scope of social security laws. Additional legislation entered into force with the introduction of the Labour Relations Act, established by the Programme Law of 27 December 2006. This Law is directly applicable in labour law and social security law.69 The text of the Labour Relations Act, introduced by the Programme Law of 27 December 2006,70 emphasises that the parties are free to choose the nature of their employment relationship, but that if the actual performance of the contract clearly establishes factors that are incompatible with the qualification of the relationship by the parties, then a reclassification of the employment relationship must also be made in terms of the applicable social security scheme.71 The original Labour Relations Act72 included a general principle of requalification on the basis of the general criteria established by the Act, but also the possibility of more specific rules and, if necessary, based on specific criteria of a legal or socio-economic nature that had been established for a specific industry, occupation or categories of occupations. Article 334, § 3 of the Labour Relations Act provides the possibility of introducing specific criteria by Royal Decree that contain socio-economic elements.73 These ­criteria may not deviate from the general ones.74

67 

ibid, art 5bis. Temporary Agency Work, arts 7 and 8. 69 Labour Relations Act, art 328; Cour de Cassation, 6 December 2010, Rechtskundig Weekblad 2011–12, 1495. 70  Articles 331 and 332. 71  See section II.A above. The four general criteria enforced by art 333(1) of the Labour Relations Act to determine the nature of an employment relationship are: (1) the nature of the agreement as explicitly chosen by its parties; (2) the freedom to organise working time; (3) the freedom to organise the agreed work; and (4) the possibility of hierarchical supervision. 72  The Labour Relations Law excludes the application of the statutory presumption on ‘family employment relationships’. This concept refers to the working relationship between blood relatives of the third degree and between legal cohabitants, and the employment relationships between a company and a natural person, in which case the natural person is a blood relative of the third degree or legally resides with the individual who on his or her own or jointly with the cohabitant owns more than 50 per cent of the shares of the said company. 73 Such as the absence of responsibility and decision-making regarding the financial resources of the company with respect to those carrying out the work, the guarantee of payment of a fixed fee, a personal and substantial investment in the undertaking and the personal and substantial participation in the benefits and losses of the undertaking, the possibility of hiring employees, and working in premises and with equipment which are in his or her own possession: Labour Relations Act, art 334(2) and (3). 74  ibid art 334(2). 68 

40  Wilfried Rauws The Law of 25 August 2012 amended the Labour Relations Act and for the first time established specific criteria, including a rebuttable presumption, for four branches of industry. The legal presumption earmarks four industrial branches: (i)

the construction/building industry and activities referred to as ‘works of construction’ or equivalent activities;75 (ii) activities consisting of all types of monitoring and/or surveillance services; (iii) the transport of goods and/or persons on behalf of third parties, with the exception of ambulance services and the transport of persons with disabilities; (iv) activities covered by the Joint Committee for Cleaning (if not already referred to under point (i)). This list of four branches of industry may later be extended to other industries by Royal Decree.76 The legal presumption is linked to specific criteria or evidence. If it appears that more than half of the following criteria are met, the employment relationship is presumed to be based on an employment contract. It covers the following nine criteria or evidence: (i)

the absence of any financial or economic risk with respect to those activities; (ii) the absence of responsibility and decision-making regarding the financial resources of the company with respect to those carrying out the work; (iii) the absence of decision-making on the acquisition of the company with respect to those carrying out the work; (iv) the absence of decision-making power over the pricing policy of the company with respect to those carrying out the work, unless the prices are set by law; (v) the absence of any obligation regarding the result of the agreed work; (vi) the guarantee of payment of a fixed fee, regardless of the operational results or the extent of the services provided by those carrying out the work;

75  This includes the following activities or work: the supply or attachment to a building of installations for central heating or air conditioning, plumbing installations, electrical installations with certain exceptions, electric bell systems, fire alarms, burglar alarms, home phones, installations of storage, fan air fresheners in a kitchen or bathroom, attaching shutters or blinds to the exterior of a building, etc. This legal phrase also includes the supply and installation of walls or floors and any work relating to the attachment, repair, maintenance and cleaning of products linked to the previously mentioned works of construction. 76  Labour Relations Act, arts 334 and 335.

The Concept of ‘Employee’: The Position in Belgium 41 (vii)

working, but not as an employer who has personally and freely ­contracted employees or staff; (viii) not appearing in public as an undertaking, or essentially working for one specific contractor; (ix) working in rooms or buildings without being the owner or lessee, or working with equipment that is made available, funded or guaranteed by the contractor. The King may specify criteria for other branches of industry and may replace or supplement the nine mentioned criteria.77 The King has also issued a Royal Decree for agriculture.78 The Law of 25 August 2012 explicitly mentions that the presumption is a rebuttable presumption.79 The presumption may be rebutted ‘by all legal means, including on the basis of the general criteria in this Act’.80 The party seeking to initiate the possibility to rebut the statutory presumption must specify the actual execution of the cooperation and will also be able to fall back on the four general criteria used in the original Labour Relations Act. This remains relatively vague; hence, the amendment will certainly not put an end to all disputes or to the legal uncertainty on the true nature of the employment relationship. With respect to the qualification of employment relationships, the new Act has complicated the issue further. Adapting the rules of the game with respect to existing relationships and contracts raises questions. Applying different rules depending on which industry the person is active in and including criteria deemed relevant in one industry but not in another in order to assess the exact nature of a relationship will undoubtedly give rise to many questions and interesting case law in the future. B.  The Burden of Proof No specific provisions on the burden of proof (bewijslast, charge de preuve) exist in the legislation. In principle, it is up to the employee to prove that the requirements of an employment contract or of an employment relationship are being met. In practice, this leads to the need to produce evidence of having been subjected to the instructions of another person. However, legislation on the employment relationship and the legal presumptions81 alleviates the burden of proof for the employee substantially. 77  Labour Relations Act, art 337/2(3); Explanatory Memorandum Law 25 August 2012, Parliamentary Documents, Chamber of Representatives, 2011–12, No 53-2319, 208–09. 78  See n 64. 79  Labour Relations Act, art 337/2(1). 80  ibid art 337/2(2). 81  See section IX.A above.

42  Wilfried Rauws X.  SPECIFIC PROCEDURES

For parties who seek legal certainty about the nature of their relationship, the Labour Relations Act allows them to request a ‘social ruling’ from an Administrative Commission before or within a year following the start of the self-employed relationship, which is valid for three years.82 The ­Commission was set up by a Royal Decree of 11 February 2013.83 It is now possible to obtain legal certainty with respect to the nature of a relationship through a social ruling. The ‘social ruling’ (sociale ruling, ruling social) is a non-contentious proceeding and is only binding for the social security authorities. The Administrative Commission qualifies the relationship as a relationship with a self-employed person—for instance, the social security authorities may not at a later point defend the position that the employment relationship is in fact based on an employment contract and claim higher social security contributions for employees. Besides this anticipative administrative procedure, legal certainty in the event of disputes on the qualification of the employment relationship shall be derived from court decisions, mainly from the labour courts. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons The most significant extension is that the legal concept of ‘employee’ is defined more broadly in some labour acts, in the sense that some persons who perform services in exchange for remuneration under the direction of another person, but without having concluded a contract of employment— for example, civil servants—are legally considered to be employees and are therefore covered by the specific labour law.84 Labour law regulations do not always correspond to specific Belgian social security schemes. The general criterion for submission of salaried persons to the social security scheme is the employment contract. For the sake of social protection, the social security scheme for employees has been extended to workers who are not linked to an employer through an employment contract, but who work under conditions that are similar to

82 

The Programme Law of 27 December 2006, Title XIII, ‘Nature of the Labour Relationship’. Moniteur belge, 21 February 2013. 84  Act on the Protection of Remuneration, art 1; Labour Act, art 1; Health and Safety Act, art 2; Work Rules Law, art 1; Collective Bargaining Agreement Law, art 1; Holidays Act, art 1; Social Documents Act, art 1; Flemish Language Decree, art 1; Foreign Employees Labour Act, art 3; Political Holiday Act, art 1. See section I.B above. 83 

The Concept of ‘Employee’: The Position in Belgium 43 those of ‘employee-like’ persons.85 In Belgium, ‘employee-like’ persons are defined in some social security statutory acts as self-employed workers who are economically dependent on their principal, but are not integrated in his or her operational organisation. This category, for example, includes specific researchers with a doctoral scholarship, artists, lorry drivers and taxi drivers.86 The concept of ‘employee-like’ persons is very similar in Belgian social security law as in German law, which defines ‘employee-like’ persons as formally independent contractors without subordination, but who are characterised by a position of economic dependence. These employee-like persons remain employees, ie, they fall within the scope of labour laws, collective labour law rights and health and safety rules. Contrary to the extension of the personal scope of the legislation to nonemployees is the non-submission of specific categories of employees to the social security scheme for employees. Even when an employment contract exists, some categories of employees are simply not subject to the general social security scheme for employees, such as: (i)

employees who perform a social cultural activity for a maximum of 25 days per year; (ii) employees who work a maximum of four hours a day and not more than 24 hours a week for one or more employers (to fulfil the needs of the home of the family of the employer); (iii) students87 who work under an employment contract for other students for a maximum of 50 working days per year, during the months of July, August and September.

B.  Equality and Anti-discrimination Law According to Article 4 of the General Act on Non-discrimination of 10 May 2007,88 employees, self-employed persons, civil servants and trainees are within the area of application of the Act. This of course includes ‘employeelike persons’.89

85 

See section I.B above. Social Security Act of 27 June 1969 (Wet tot herziening van de besluitwet van 28 ­december 1944 betreffende de maatschappelijke zekerheid der arbeiders. Loi révisant l’arrêté-loi du 28 décembre 1944 concernant la sécurité sociale des travailleurs), art 154(1); and arts 3 and 3bis of the executing Royal Decree of 28 November 1969. 87 However, a solidarity contribution of 5 per cent at the expense of the employer and 2.5 per cent at the expense of the student is due. 88  The General Act on Non-discrimination of 10 May 2007 (Wet ter bestrijding van bepaalde vormen van discriminatie. Loi tendant à lutter contre certaines formes de discrimination). 89 ‘Employee-like persons’ are important in Belgian social security law. See section XI.A above. 86 

44 

3 The Concept of ‘Employee’: The Position in Bulgaria KRASSIMIRA SREDKOVA

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HE CONTRACT OF employment is the main1 instrument for establishing individual employment relationships in Bulgaria. The term ‘contract of employment’ is often synonymous with ‘employment relationship’ in the legal theory and even in legislation There is no legal definition of the concept ‘contract of employment’. This concept has been introduced into legal theory on the basis of an analysis of the legislation in force and is firmly established in the case law. The authors who have primarily contributed to the development of the theory on the contract of employment and its analysis as a foundation for the occurrence of employment relationships in Bulgarian legal literature are Professor Iliya Yanulov,2 Professor Lyubomir Radoilski,3 Professor Vassil Mrachkov,4 ­Professor Kruger Milovanov5 and Professor Atanas Vassilev.6

1  Besides the contract of employment, an employment relationship can also be established on the basis of a competitive examination for recruitment or an election process. 2  И Янулов, Трудово право и социално законодателство: Част първа (Държавно висше училище за финансови и административни науки—София, 1946) 171–86; И Янулов Трудово право (2. изд. УП, 1948) 127–52, 157–65, 180–82, 270–74. 3  Л Радоилски, Трудово право на Народна република България (Наука и изкуство, 1957) 237–84. 4  В Мръчков, in В Мръчков К Средкова, А Василев. Коментар на Кодекса на труда (11. изд. Сиби, 2013) 208–88, 326–28; B Мръчков, Трудово право (9. изд., Сиби, 2015) 200–21. 5  Кр Милованов, Трудов договор (сключване, изменение, прекратяване (2. изд., Труд и право, 2008) 17–112. 6 A Василев, Трудово право (Бургаски свободен университет, 1997) 130–60.

46  Krassimira Sredkova The contract of employment is an agreement concluded between a natural person who provides labour services (an employee) and another natural person, legal entity or unincorporated entity (an employer), according to which the provider of labour services agrees to perform a given type of work under the employer’s direction, and the employer agrees to provide the conditions necessary for the performance of the given work and to pay the employee remuneration for labour in accordance with the labour law, the relevant collective agreement and the agreement between the parties.7 The contract of employment is a bilateral agreement. According to the provision of Article 61 of the Labour Code (LC), a declaration of the will of both parties—the employee and the employer—is necessary to conclude a contract of employment. The contract of employment is a commutative agreement. This means that the benefits it bestows are known at the time of its conclusion—the performance of a given type of work in return for a specified remuneration. This follows from the provision of Article 66(1) LC, which specifies the minimum required contents of the contract of employment. It includes the place of work; the designation of the employee’s post and the nature of the work; the date of the contract’s conclusion and the work start date; the duration of the employment contract; the level of basic and extended paid annual leave and of additional paid annual leave; equal length of the period of notice to be observed by both parties upon termination of the employment contract; basic and supplementary labour remuneration of a permanent nature, as well as the frequency of pay; and duration of the working day or week. Other terms relating to the provision of labour services which are not ­regulated by mandatory provisions of the law may also be agreed in the employment contract, as well as terms that are more favourable for the ­ employee than those established in the collective agreement (Article 61(2) LC). The contract of employment is a formal agreement. According to Article 63(1) LC, it shall be concluded in written form. This is a requirement for its validity. The grounds and procedure for the voidance of the contract of employment are laid down in Article 74 LC. A contract of employment is void when it is in conflict with the law or with a collective agreement or circumvents these. The invalidity of the contract is declared by the court. It can also be declared by the Labour Inspectorate when the requirements related to the minimum admissible age for recruitment to work are not met. The contract of employment is void from the moment that the judgment

7 K Средкова, Трудово право на Република България. Лекции. Индивидуално трудово правоотношение., (Университетско издателство ‘Св. Климент Охридски’, 1997) 60; K Средкова, Трудово право. Специална част. Дял І. Индивидуално трудово право (Университетско издателство ‘Св. Климент Охридски’, 2011) 59–62.

The Concept of ‘Employee’: The Position in Bulgaria 47 declaring its invalidity is issued. The employment relationship is deemed to be terminated from that point onwards. The regulation of the relationship between the parties from the time of the conclusion of the contract of employment until it is declared void depends on the employee’s conduct at its ­conclusion.8 Where the employee has acted in good faith upon the conclusion of the contract of employment, the relationship between the parties to the contract shall be regulated in the same manner as in a valid contract of employment. Where the employee has acted in bad faith, the general rules on the nullity of transactions laid down in the Obligations and Contracts Act 1950 shall apply. As mentioned above (see n 1), besides the contract of employment, employment relationships can also be established through a competitive examination for recruitment or an election process. The competitive examination for recruitment to establish an employment relationship is regulated in Articles 89–97 LC.9 It is based on an assessment of whether the applicants’ professional competences for a given position comply with the post’s requirements. This assessment is carried out by a committee appointed by the employer. The employment relationship with the individual selected by the assessment committee starts with the announcement of the committee’s decision. A competitive examination for recruitment can be held for any post in the public and private sector, with the exception of posts that can only be held following an election process. Posts based on a competitive examination are specified by a law, an act of the Council of Ministers, of a minister or head of another central government department or by the employer. Posts based on an election process are also specified by a law, by an act of the Council of Ministers or in a statute. These are usually management positions. The election process is regulated in Articles 83−88 LC.10 This involves a special procedure for a preliminary assessment of the candidates’ professional and personal competences for the given post. This assessment is carried out by the election body in accordance with a procedure laid down in the legislative acts. The employment relationship with the elected individual is established from the time that he or she is declared to be elected. B.  Employment Relationship: Basic Definition Bulgarian legislation does not contain a legal definition of the term ‘employment relationship’. The legislator uses the term ‘employment relationship’ 8 

Article 75 LC. K Средкова, Трудово право (2011) 89–99; B Мръчков, Коментар (2013) 286–98; B Мръчков, Трудово право (2015) 274–83. 10  See K Средкова, ‘Трудово правоотношение въз основа на избор: възникване и прекратяване’ in Правна закрила на труда (Профиздат, 1988) 47–52; К Средкова, Трудово право (n 7) 86–92; B Мръчков, Коментар (n 4) 275–285; B Мръчков, Трудово право (n 4) 284–290. 9  See

48  Krassimira Sredkova as described in Article 1(2) LC, which states: ‘Relationships related to the provision of labour services shall be arranged as employment relationships only.’ This implies that an employment relationship is a legal relationship covering the provision of labour services. Legal theory defines the employment relationship as a: [L]egal relationship, regulated by labour law provisions. It is established as a result or on the occasion of the provision of labour services by an employee to an employer, it specifies the conditions for the use of the labour services and gives rise to the rights and obligations related to this use, and the individual and collective protection and self-protection within the limits of the law.11

Another definition states: The individual employment relationship is a relationship regulated by the law that arises between a natural person who provides labour services, referred to as an employee, and another natural person, legal entity or a division thereof, as well as any other organised or economically independent entity, referred to as an employer, under which the employee shall provide his or her labour services to the employer for the performance of a given type of work while observing the established work principles, and in return, the employer shall pay the employee remuneration for labour and provide him/her with the conditions necessary for the performance of the work.12

These definitions have been adopted in administrative practice and in the case law. The subject matter of the employment relationship is the provision of labour services, ie, labour. It determines the dependent nature of labour under an employment relationship. By making his or her labour services available to the employer for temporary use, its owner—the employee—also places himself or herself in a dependent position vis-a-vis the employer. The employee does so in exchange for the payment of labour remuneration. This means that work performed under an employment relationship is always provided in exchange for corresponding compensation. This is explicitly stated in Article 242 LC. The employment relationship is a strictly personal legal relationship—the rights and obligations it encompasses are of a strictly personal nature.13 Any transfer or rejection thereof shall be void.14 We can draw the general conclusion that the defining characteristics of the employment relationship are as follows: 1. Obligations of the employee: a. to perform a certain type of work; b. to observe the work discipline. Мръчков, Трудово право (n 4) 102. Средкова, Трудово право (2011) (n 7) 17. 13  Article 8(4), first sentence LC. 14  Article 8(4), second sentence LC. 11 B

12 K

The Concept of ‘Employee’: The Position in Bulgaria 49 2. Obligations of the employer: a. to provide the conditions necessary for the performance of the ­specified work; b. to pay labour remuneration to the employee. This conclusion is drawn from the provision of Article 124 LC that states: Under the employment relationship, the factory or office worker is required to perform the work he or she has agreed to carry out and to observe the established work principles, and the employer is required to provide conditions to the factory or office worker to be able to perform the work and to pay the factory or office worker labour remuneration for the work he or she has carried out.

The case law supports this conclusion as well.15 The courts confirm that Article 124 LC sets out the major elements that define an employment relationship. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition In Bulgarian legislation, there is no legal definition of the party to the employment relationship who provides labour services. The legislation refers to this party as ‘factory or office worker’. The concept for this particular party was developed by legal theory. It refers to a natural person—a party to the employment relationship—who provides his or her labour services to another person or unincorporated entity (employer) in exchange for labour remuneration.16 The employee is always a natural person. He or she is the proprietor of the labour services, which he or she provides to the employer. The concept ‘factory or office worker’ (employee) applies to the entire Bulgarian legislation and to all legal areas. Labour legislation has established the same regulation on the status of the employee for all economic sectors and on ownership of the means of production for carrying out the work under the employment relationship. Some specific rights and obligations were established for individual categories of employees in special laws—eg, the Higher Education Act and the Health Act; however, they have no influence on the general concept.

15  Dec. of 6 January 2015 on administrative case N 3572 of 2013, Sofia District Court; Dec. of 1 December 2014 on administrative case N 16763 of 2014, Sofia District Court; Dec. of 11 February 2015 on administrative case N 836 of 2014 of Administrative Court— Veliko Tarnovo. 16 See Средкова, Трудово право (2011) (n 7) 30; Мръчков, Коментар (n 4) 19–20; Мръчков, Трудово право (n 4) 145–46.

50  Krassimira Sredkova B.  Employer: Basic Definition Bulgarian legislation includes a legal definition of the notion of ‘employer’. It is defined in § 1, item 1 of the Supplementary Provisions of the Labour Code (hereinafter SPLC) and reads as follows: An ‘employer’ shall be any natural person, legal entity or division thereof, as well as any other organisationally and economically autonomous entity (enterprise, office, organisation, cooperative, farm, establishment, household, association, etc), which independently hires employees under employment relationships.

This definition is the same for all legal areas.17 Therefore, the characteristics that define the employer are as follows: 1. A natural person, legal entity or unincorporated entity. The unincorporated entity needs to be an organisationally and economically distinct entity. 2. Independent hiring of employees under an employment relationship. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees In Bulgaria, there are no distinct categories of employees. Article 1(1) LC establishes the same legal regime for all natural persons who provide labour services under an employment relationship. Legislation may establish special rules for some categories of employees; however, these rules do not relate to their particular capacity, but to the work performed. As a term, legislation uses the collective phrase ‘factory or office worker’. ‘Factory worker’ refers to a natural person who is primarily engaged in manual labour—bricklayers, cleaners, etc. An ‘office worker’ is considered a natural person who primarily performs intellectual activities—teachers, accountants, etc. There is no difference in the legal status of these workers in practice; differences only emerge in the systems to determine wage. The wage of office workers and of the majority of factory workers is determined based on time, ie, the duration of work, expressed in working hours. The wage for certain categories of factory workers can also be based on labour intensity, expressed in units produced (work norm). For the purposes of state social insurance, some other categories of workers are treated as equivalent to employees—they are insured against all insurable social risks, including occupational risks, and the social insurance

17  See generally К Средкова, Трудово право (2011)(n 7) 41–44; B Мръчков, Коментар (n 4) 20–21; B Мръчков, Трудово право (n 4) 182–95.

The Concept of ‘Employee’: The Position in Bulgaria 51 contributions are divided between the insured individual and the insurer.18 These categories of workers are laid down in Article 4(1), items 5–10 of the Social Insurance Code. They are as follows: 1. Cooperative members who perform work and receive remuneration at the cooperative. 2. Managers and supervisors of commercial companies and individual traders and related sectors, members of boards of directors, management and supervisory boards and controllers of commercial companies, trustees in bankruptcy cases and liquidators, as well as contractors who manage unincorporated associations. 3. Persons who perform work in an elective office without having concluded an employment relationship, as well as ministers holding a spiritual title from the Bulgarian Orthodox Church and other registered denominations under the Religious Denominations Act. 4. Postgraduates who receive remuneration under a training agreement to acquire a specialist, listed in the list of specialists, defined in the procedure under the Health Act. 5. Junior judge and junior prosecutor candidates under the Judiciary Act.

B.  The Establishment of a Specific Category of ‘Workers’ See section III.A above. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The subordination of the natural person while providing labour services is one of the main characteristics of the employment relationship. It determines the dependent nature of the labour under an employment relationship. This has been consistently recognised in the legal doctrine19 and in the case law20 on the basis of current labour law.

18 See K Средкова, Осигурително право (4. изд. Сиби, 2012) 219–21; B Мръчков, Осигурително право (6. изд. Сиби, 2014) 123–24. 19 See Л Радоилски, Трудово право (n 3) 176–81; B Василев, Трудово право (n 6) 112–20; K Средкова, Трудово право (2011) (n 7) 17–18; B Мръчков, Коментар (n 4) 25–28. 20  Dec. N 1553 of 1999, 4th C.d., Supreme Court of Cassation (hereinafter SCC)—SCC; N 1269 of 2011, 3rd C.d., SCC.

52  Krassimira Sredkova An employee’s two major obligations under an employment relationship pursuant to Article 124 LC are to perform the work that is the subject ­matter of the employment relationship and to observe the established work discipline. Other specific provisions of the Labour Code highlight and spe­ cify the subordination of the employee under an employment relationship. Thus, the employee shall be required to: 1. carry out the lawful instructions of the employer21 —these instructions may comprise the working process, its organisation, technology and order, but not the personal conduct and life of the employee outside of the working process; 2. observe the internal rules adopted in the enterprise;22 3. coordinate his or her work with the other employees in conformity with the employer’s instructions.23 The employer also has certain obligations, demonstrating his or her authority to set regulations under the employment relationship. For example, the employer is required to: 1. provide the employee with a job description;24 2. give instructions on the procedure and manner of execution of the employment obligations and exercise of employment rights, including introducing the firm’s internal rules and the rules on health and safety at work to the employee.25 Courts assess these criteria on an individual case-by-case basis. Legal scholars have not critically evaluated these criteria; they are generally accepted. The employer has the right to impose disciplinary liability if the employee violates the work discipline.26 Including an employee in the work collective will not be compulsory for the existence of an employment relationship. Such a legal relationship may also be established with only one employee, eg, a home worker. B. Indicators Work instructions, integration or work control are not indicators for identifying an employment relationship; they are consequences of the existence of an employment relationship.27 21 

Article 126, item 7 LC. Article 126, item 10 LC. 23  Article 126, item 11 LC. 24  Article 127(1), item 4 LC. 25  Article 127(1), item 5 LC. 26 C ІХ, s ІІІ LC. 27  See section IV.A above. 22 

The Concept of ‘Employee’: The Position in Bulgaria 53 C.  The Relevance of ‘Economic Dependence’ The economic dependence of the person who provides labour services (the employee) is another characteristic of the employment relationship. Such dependence is fundamental for determining the employee’s status. It is specified in the provision of Article 48(5) of the Constitution of the Republic of Bulgaria, which provides that: ‘Factory and office workers shall have the right to … a minimum labour remuneration, and to pay that is commensurate to the work performed.’ It is also specified in Article 242 LC, according to which ‘work shall be performed under an employment relationship for corresponding compensation’. On the other hand, among the employer’s main obligations under an employment relationship, Article 124 LC lays down the payment of remuneration for the work performed by the employee. The amount of remuneration shall be determined in accordance with the duration of work (determined by the amount of working hours) or the results of work (determined by the units produced—the labour norm). V.  THE PRINCIPLE OF PRIMACY OF FACTS

The determinant for qualifying a legal relationship as an employment relationship is not naming it as such, but its contents. Hence, when establishing that labour services are being provided under a given relationship without them having been arranged under an employment relationship as required by Article 1(2) LC, the Labour Inspectorate will declare the existence of an employment relationship. In such cases, the existence of the employment relationship may be further verified by all means of evidence.28 VI.  QUALIFICATION IN FULL

As already indicated (see section I.B above), pursuant to Article 1(2) LC, relationships for the provision of labour services shall only be regulated as employment relationships. It is prohibited to include rules that go beyond employment-related regulations in contracts of employment. Such rules shall be null and void pursuant to Article 74(1) LC as conflicting with the law—in this case, Article 1(2) LC. Relationships for rendering dependent work that are outside the scope of labour law in Bulgaria are prohibited pursuant to the repeatedly quoted rule of Article 1(2) LC. Depending on the type of relationship, tort law may be applied in case the other party is harmed.

28 

Article 405а LC. See section X below.

54  Krassimira Sredkova Bulgarian labour law does not exclude the possibility of concluding another contract between the parties to the employment relationship. This contract may first and foremost be related to employment. There are two types of contracts of employment for additional work under the employment relationship with the employer: 1. A contract of employment for additional work.29 Preconditions for entering into this type of contract are: a. the existence of a basic employment relationship between the same parties—the employee and the employer. The grounds for the occurrence of such a legal relationship are irrelevant—they apply to contracts of employment, competitive examinations and election processes; b. the performance of work different from that covered under the basic employment relationship; c. the performance of the contract outside the working hours specified in the basic employment relationship. 2. A contract of employment for internal substitution.30 This contract shall be performed during the working hours established in the basic employment relationship. Under this particular contract, the employee shall—in addition to performing his or her own work—perform the work of an employee who is temporarily absent from work. He or she shall be entitled to supplementary labour remuneration for this work. Aside from contracts of employment, any other types of contracts may be concluded between the employer and the employee under the conditions of the Obligations and Contracts Act—attainment of qualification, rent, donation, etc. Such contracts may not, however, be related to the provision of labour services. VII.  LIMITS TO THE FREEDOM OF CONTRACT

Parties to a contract of employment may not establish another legal relationship between themselves. This would be a violation of the fundamental rule of Article 1(2) LC. The Labour Inspectorate would declare the existence of an employment relationship in such cases, irrespective of what type of

29  Article 110 LC. See Д Анчев, ‘Различия в правата по основния трудов договор и трудовия договор за допълнителен труд’ (1995) Труд и право, issue 10; K Средкова, ‘Правни проблеми на допълнителния доброволен труд’ (1983) 5 Социалистическо право, 47–51; K Средкова, ‘Нови моменти в правната уредба на допълнителния труд’ (1986) issue 11, 40–49; К Средкова, Трудово право (2011) (n 7) 83–84; B Мръчков, Коментар (n 4) 357–58; B Мръчков, Трудово право (n 4) 243–45. 30 Article 259 LC. See K Средкова, ‘Трудово правоотношение за вътрешно заместване’ (1994) 1 Практическо право 15–19; Д Анчев, ‘Правна уредба на вътрешното заместване’ (2001) 9 Труд и право 18–20; B Мръчков, Коментар (n 4) 824–27.

The Concept of ‘Employee’: The Position in Bulgaria 55 legal relationship the parties to the contract have concluded (see section V above).31 The parties cannot conclude a contract of employment where the subject matter of such a contract is not the provision of labour services, ie, where it cannot be qualified as an employment contract. The parties to the employment relationship may not change the status of the employee in that particular capacity. It derives from his or her participation as a party to the employment relationship, ie, providing labour services in exchange for remuneration. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Bulgaria’s social partners are represented by the organisations of employees and of employers.32 The right of these parties to association within the scope of employment relationships in order to protect their common interests is laid down in Article 49 of the Constitution. The organisations of employees are their trade union organisations. Under Article 4(2) LC: Trade union organisations shall represent and protect factory and office workers’ interests before state bodies and employers in relation to issues of employment, social security and living standards through collective bargaining, participation in tripartite cooperation, organisation of strikes and other actions within the scope of law.

Employers have the right of association. Pursuant to Article 5(2) LC, ‘employers organisations … shall represent and protect their interests through collective bargaining, participation in tripartite cooperation, and through other actions within the law’. The involvement of social partners in regulating the employment relationship entails the conclusion of collective agreements.33 However, these cannot modify the concept of ‘employee’ or ‘employer’, as these concepts are established in or derived from the mandatory provisions of the law. According to Article 50 LC: (i)

The collective agreement shall regulate issues of employment and social insurance of employees, which are not regulated by mandatory provisions of the law. (ii) The collective agreement may not contain clauses that are less favourable to the factory and office workers than the provisions of law or of a collective agreement which is binding on the employer. 31 

Article 405а LC. See B Мръчков, Коментар (n 4) 102–40; B Мръчков, Трудово право (n 4) 757–803. 33  See B Мръчков, Коментар (n 4) 141–97; B Мръчков, Трудово право (n 4) 863–74. 32 

56  Krassimira Sredkova B.  Custom and Practice Custom and practice are not sources of labour law in Bulgaria. They have not contributed to the development of the concepts of the parties to the employment relationship other than those already established in the law— the employer and the factory or office worker. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions In Bulgarian law, there is no presumption of the existence of an employment relationship, either for the purposes of labour law or social insurance law. Within three days of concluding or modifying an employment contract and within seven days of its termination, the employer or an authorised person is required to send a notification of this to the relevant territorial directorate of the National Revenue Agency.34 Yet this notification is not a decisive factor for the existence of an employment contract. It is necessary for the social insurance scheme and for the commencement of the performance of the employment relationship—the employer may not allow the employee to begin work before providing him or her with the employment contract and the notification to the National Revenue Agency. B.  The Burden of Proof In Bulgarian legislation, there are no special rules on the burden of proof for the existence of an employment relationship. The common rule of procedural law is applied, which states that ‘each party shall be required to establish the facts upon which the demands or disapprovals thereof are founded’.35 X.  SPECIFIC PROCEDURES

Bulgarian labour legislation establishes one special procedure for declaring the existence of an employment relationship, which has repeatedly been mentioned above. It is regulated in Article 405a LC.36 34 

Article 2 LC. Civil Procedure Code, Art 154(1). 36  See B Мръчков, Коментар (n 4) 1166–71; B Мръчков, Трудово право (n 4) 966–70. 35 

The Concept of ‘Employee’: The Position in Bulgaria 57 Where it is ascertained that labour services are provided in violation of the requirement of Article 1(2) LC, namely under an employment relationship, the existence of the employment relationship is declared by a decree issued by the Labour Inspectorate. In such cases, the existence of the employment relationship may be verified by all means of evidence. The decree determines the commencement date of the formation of the employment relationship. Such a decree may also be issued upon the death of the employee that occurred prior to a verification of the violation. The relationship between the parties prior to the issuance of the decree are regulated under an effective employment contract if the employee has acted in good faith since beginning the work. On the basis of the decree, the Labour Inspectorate instructs the employer to offer the employee a contract of employment. The employment contract has to be concluded from the date of the establishment of the employment relationship as determined in the decree. If no such date has been determined, the employment contract must be concluded from the date of the issuance of the decree. In such cases where an employment contract is not concluded between the parties, the decree replaces the employment contract and the said contract is considered to be concluded for an indefinite duration for a five-day working week and an eight-hour working day. The employer may appeal the instruction to conclude an employment contract or the decree according to the procedure established by the Administrative Procedure Code before the administrative court exercising jurisdiction over the registered office or permanent address of the employer within 14 days after the said instruction or decree has been issued. An appeal does not stay the enforcement of the instruction. If the court revokes the appealed instruction, the employer may terminate the employment contract unilaterally without notice. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons In Bulgaria, there are no individuals who are treated as equivalent to employees under an employment relationship. B.  Equality and Anti-discrimination Law The principle of equality of citizens is set out in Article 6(2) of the Constitution, which states: All citizens shall be equal before the law. Neither abridgement of rights nor any privileges whatsoever shall be admissible on the basis of race, nationality, ethnic

58  Krassimira Sredkova identity, sex, origin, religion, education, convictions, political affiliation, personal and social status, or property status.

For employment relationships, this principle is explicitly set out in Article 8(3) LC. The provision states: In the course of exercise of labour rights and duties, direct or indirect discrimination on grounds of ethnicity, origin, gender, sexual orientation, race, skin color, age, political and religious convictions, affiliation to trade union and other public organisations and movements, family and property status, existence of mental or physical disabilities, as well as differences in the contract term and the duration of working time shall be prohibited.

The principles of equality and protection against discrimination are specified in the Protection against Discrimination Act. Pursuant to Article 4(1) of this Act: Any direct or indirect discrimination on grounds of gender, race, nationality, ethnicity, human genome, citizenship, origin, religion or belief, education, convictions, political affiliation, personal or social status, disability, age, sexual orientation, marital status, property status, or on any other grounds established by law or by an international treaty to which the Republic of Bulgaria is a party, shall be prohibited.

As provided in Article 3(1), the Protection against Discrimination Act shall apply to all natural persons legally residing in the Republic of Bulgaria. A special section in this law—Section I ‘Protection in Exercising the Right to Work’ in Chapter Two ‘Protection against Discrimination’—is devoted to employment relationships.37

37 For more details on the principles of equality and protection against discrimination and employment relationships, see Д Гочев, ‘Равенството пред закона и практиката на Конституционния съд’ (2001) 1 Права на човека 49–51; C Григоров, ‘Непряка дискриминация— нов момент в трудовото правоотношение’ (2001) 9 Труд и право. Месечен дайджест 11; B Мръчков, ‘Дискриминацията в трудовите отношения’ (2001) 6 Общество и право 17; B Мръчков, Коментар (n 4) 90–96; B Мръчков, Трудово право (n 4) 69–75; Европейско и национално антидискриминационно регулиране. АПОИ и ИПН при БАН (2003); И Стайков, ‘Дискриминация при прекратяване на трудовото правоотношение’ (2003) 6 Съвременно право 16–31; И Стайков, ‘Забраната за дискриминация в трудовите отношения и проблемът за равните възможности на жените и мъжете и на представителите на различни етнически групи’ (2005) 4 Административно правосъдие 31–52; Дискриминация в труда: Дискриминация по пол, възраст и етническа принадлежност. Национално изследване: България. Ред. К. Владимирова ЛаПиСио (2004); А Картуш, и др, Равенство на жените и мъжете в България, Австрия и Европейския съюз. Анализ на избрани правни области (Българска академия на науките, 2004); B Петров, in Юбилеен сборник в чест на проф. Живко Сталев (Сиби, 2005) 327–42.

4 The Concept of ‘Employee’: The Position in Croatia IVANA GRGUREV

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

I

N CROATIA, THE lex generalis of contracts of employment (ugovori o radu) and employment relationships (radni odnosi) is the Labour Act of 2014.1 According to Article 10(1) of the Labour Act, ‘an employment relationship is established by virtue of an employment contract’. There is no statutory definition of ‘contract of employment’,2 but a provision on the mandatory content of a written employment contract3 exists, which states that the written employment contract must contain information on: (i) the identities of the parties, their residence and registered place of business; (ii) the place of work—where there is no fixed or primary place of work, the contract must specify that the work is to be performed at various places; (iii) the title, nature or category of work for which the employee is employed or a brief specification or description of the work; (iv) the date of commencement of employment; (v) in the case of a fixed-term employment contract, its expected duration; (vi) the duration of paid annual leave the employee is entitled to or, if this cannot be specified at the time the contract is concluded or the letter of engagement is issued, the procedure to allocate and determine the amount of annual leave; 1 

Labour Act (Official Gazette No 93/2014). The concept of employment contract based on case law is explained in section IV below. 3  Labour Act, art 15. 2 

60  Ivana Grgurev (vii)

the length of the periods of notice to be observed by the employee and the employer or, where this cannot be specified at the time the contract is concluded or the letter of engagement is issued, the procedure for determining the period of notice; (viii) the basic salary, bonuses and intervals at which the employee will receive the remuneration he or she is entitled to; (ix) the duration of a regular work day or week.4 The Labour Act of 2014 also regulates the written form of employment contracts and the consequences for the contracting parties if they fail to conclude such a contract in writing. As a general rule, the employment contract must be concluded in writing; failure to comply with this regulation does not result in the invalidity of such a contract.5 In that case, the employer is obliged to deliver a letter of engagement to the employee prior to the commencement of work.6 Furthermore, there is an irrebuttable presumption of an employment contract of indefinite duration when the employer fails to conclude an employment contract in writing with the employee or when the employer fails to deliver the letter of engagement to the employee prior to the commencement of work.7 The Labour Act of 2014 does not regulate cases in which the contract of employment is null or void. However, pursuant to the Act, if there are ­lacunae iuris in the Labour Act on issues related to the conclusion, validity and termination of an employment contract, the general provisions of civil law apply.8 Article 323 of the Civil Obligations Act stipulates the consequences of any civil law contract that is void. According to this provision, whatever work has been performed on the basis of a contract that has been declared void must be compensated, and if this is not possible or if it is contrary to the nature of the performance of the work, adequate ­monetary compensation shall be paid in the amount generally applicable at the time the court issues its ruling. As regards work performed under a contract of employment that has been declared null and void, the case law c­ onsiders the work performed as ‘de facto work’ and the individual who carried out the work is therefore entitled to the right to remuneration like regular ­employees. ­Persons who have performed de facto work have the right to compensation for their work, excluding other payments related exclusively

4  According to art 15(2) of the Labour Act, information on the duration of annual leave, the notice period, the basic salary and the duration of the regular work day or week may be specified in the employment contract in the form of a reference to the relevant laws, other regulations or administrative provisions, a collective agreement or work regulations governing those particular issues. 5  Labour Act, art 14(2). 6  ibid art 14(3). 7  ibid art 14(4). 8  ibid art 8(4).

The Concept of ‘Employee’: The Position in Croatia 61 to the ­employment relationship, such as the reimbursement of meal allowances, paid annual leave and social security contributions.9 B.  The Employment Relationship: Basic Definition In Croatia, as already mentioned above, ‘an employment relationship is established by virtue of an employment contract’.10 However, the rights of employees are not solely regulated by their employment contract, but by other sources of law as well (in most cases, collective agreements or work regulations). The basic protection of employees is guaranteed by the mandatory provisions of the Labour Act.11 The key elements of an employment relationship are not statutorily defined, but can be inferred from the provision on fundamental obligations and rights arising from an employment relationship, namely Article 7 of the Labour Act of 2014.12 Pursuant to that Act, personal work performance (‘the employee shall perform the work’), subordination (‘the employee shall perform the work according to the instructions of the employer’)13 9  Supreme Court of the Republic of Croatia Rev 1687/1999, 5 July 2000; County Court of Zagreb Gžr-6237/08, 15 September 2009; County Court of Varaždin, Gž-56/06, 24 January 2005 and Gž-378/09, 7 April 2009. As regards the rights of persons who have performed de facto work to reimbursement of commuting expenses and meal allowances, there is no consensus among the different courts. Contrary to the above-mentioned case law of the Supreme Court of Croatia and the County Courts of Varaždin and Zagreb, the Constitutional Court’s case law presents a different view. The Constitutional Court has not found that the decision of the County Court that such persons are entitled to the reimbursement of their commuting expenses and meal allowances is contrary to art 14(2) of the Constitution (which guarantees equality of all before the law), and therefore confirmed the rights of de facto workers to the reimbursement of their commuting expenses and meal allowances. Constitutional Court, U-III-2661/2006, 5 November 2007, U-III-3118/2006, 5 November 2007 and U-III-1058/2006, 5 November 2007. 10  Labour Act, art 10(1). 11  Such as provisions on limitations of working time (arts 61–62), rest periods (arts 73–75), the minimum duration of annual leave (art 77), right to adequate remuneration (art 90(3)) etc. 12  ‘(1) The employer shall ensure work for an employed employee and pay remuneration for the work performed, and the employee shall perform the work according to the instructions of the employer in line with the nature and type of work. (2) The employer shall be entitled to determine the place and manner of performance of work, and shall respect the employee’s rights and dignity. (3) The employer shall ensure safe working conditions with no detrimental effects to the health of the employee in accordance with a special law and other regulations. (4) Any direct or indirect discrimination in the area of labour and working conditions is prohibited, including the selection criteria and requirements for employment, advancement in employment, professional guidance, education, training and retraining in accordance with this Act and special laws and regulations. (5) The employer shall protect the employee’s dignity at work if there is any incidence of detrimental conduct that contradicts this Act and special legal provisions on the part of the superiors, co-workers and persons with whom the employee is in contact on a regular basis while performing his tasks.’ 13  ‘Taking into account the essential characteristics of the employment contract, one can conclude that an employee performs work for an employer personally and that subordination is explicitly stated, because he or she is obliged to work in accordance with the instructions and under the supervision of the employer.’ Administrative Court of Zagreb, UsI-3764/12-7, 28 March 2013.

62  Ivana Grgurev and remuneration (‘the employer shall … pay remuneration for the work performed’)14 represent the key characteristics of an employment relationship. Apart from this, one can conclude from the provision that an employment relationship is not simply a relationship in which an employer uses the workforce to earn a profit and an employee works for salary wage, but that it is also a relationship of cooperation. The employer therefore needs to guarantee health and safety at work and a working environment free from discrimination to his or her employees.15 Voluntariness, ie, the freedom of the employee to choose his or her employer, is a precondition for a contract of employment to be considered valid.16 However, it can be temporarily suspended in the event of a transfer of the employment relationship in a business transfer. In that case, there is an automatic transfer of the employment relationship, which means that the employee is not asked to accept the employment relationship with a new employer prior to the transfer. It does not mean that the employee is obliged to continue his or her employment relationship with the transferee. The employee has the right to terminate the employment relationship because he or she is free to choose his or her employer and cannot be required to work for an employer whom he or she has not freely chosen.17 It is worth mentioning that the employer must consult the works council before taking any decision on a transfer of undertaking, businesses or parts of undertaking or business, as well as the transfer of employment contracts to a new employer, and the transfer’s impact on the employees.18 If no works council has been established at the employer, the employer must consult a trade union representative.19 Furthermore, the transferor employer is obliged to notify the works council and all workers affected by the transfer in writing about the transfer of the undertaking, business or part of the undertaking or business to a new employer in good time and prior to the date of the transfer.20

14 High Administrative Court Us-9532/2010-4, 4 October 2012; High Administrative Court Us-1040/2010-6, 11 November 2012; High Administrative Court, Us-11361/2020-4, 24 October 2012; High Administrative Court, Us-9532/2010-4, 4 October 2012; A ­ dministrative Court in Zagreb, UsI-1814/12-8, 28 October 2012; High Administrative Court, Us-12797/20116, 8 May 2014. 15  See paras 3, 4 and 5 of the above-cited art 7. See generally A Ravnić, Osnove radnog prava—domaćeg, usporednog i međunarodnog (Zagreb, Pravni fakultet u Zagrebu, 2004) 135–37. 16  Article 279(1) of the Civil Obligations Act states: ‘If a party or a third person used an unlawful threat causing justified fear in the other party and thus inducing it to conclude a contract, the other party may apply for annulment of the contract.’ On the other hand, a contract is void if it is concluded as a result of the use of force towards a party (Civil Obligations Act, art 279(3)). 17  See Cases C-132/91, 138/91 and 139/91 Katsikas v Konstantinidis [1992] ECR I-6577. 18  Labour Act, art 150(3)(3), read together with art 137. 19  ibid art 153(3). 20  ibid art 137(6).

The Concept of ‘Employee’: The Position in Croatia 63 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition Prior to analysing the notion of ‘employee’ in Croatian law, it is important to look at the issue from a terminology/linguistic aspect. After the Socialist era, when the Labour Act of 1995 was being drafted, there was strong reluctance against using the terminology of the Socialist period. Therefore, the term ‘employee’ was ascribed to the weaker party in the employment contract (in order to avoid using the term ‘worker’, which seemed to be a relic of a bygone era). In 2001, when a coalition of six political parties headed by a left-wing party won the parliamentary elections, the term ‘worker’ was reintroduced into the Labour Act.21 Since quite a number of laws and autonomous sources of law had been adopted in the meantime in which the term ‘employee’ was used, both terms became equally accepted in legal terms. Accordingly, pursuant to Article 4(1) of the Labour Act of 2014, the term ‘worker’ (employee, staff member, labourer, officer, clerk and similar— hereinafter ‘the worker’) refers to an ‘employed natural person who performs certain tasks for an employer’.22 This provision shows that the terms ‘employee’ and ‘worker’ are ­considered to be synonymous in Croatian law. Apart from the Labour Act of 2014, other acts define the notion of employee and employer in the context of specific areas of law, but do not generally add much to either of the notions introduced in the Labour Act. In fact, the wording of the definitions provided therein is either virtually the same as the wording in the respective provisions of the Labour Act (see, for instance, the Maternity and Parental Benefits Act and the Act on Safety and Health at Work)23 or explicitly refers to the Labour Act and the notion of ‘employee’ introduced therein (see, for instance, the Income Tax Act).24 However, it is worth mentioning that there are separate acts that expressis verbis exclude certain service providers from labour law protection. In other words, these acts clearly state that certain service providers are not considered to be employees. For instance, according to Article 30 of the Crafts 21 

2001 Amendment to the Labour Act (Official Gazette No 17/2001). previous Labour Act of 2009 (as amended in 2011) contained a similar clarification in art 2. 23  Article 6 of the Maternity and Parental Benefits Act (85/2008, 110/2008, 34/2011, 54/2013, 152/2013, 152/2014) defines the concepts of ‘employment’, ‘self-employment’, ­ ‘pregnant employee’, ‘employee who has recently given birth’ and ‘employee who is nursing’. Apart from this Act, art 3 of the Act on Health and Safety at Work (Official Gazette Nos 71/2014, 118/2014, 154/2014) defines the concepts of ‘employer’, ‘employee’, ‘pregnant employee’, ‘employee who has recently given birth’ and ‘employee who is nursing’. 24  Article 14(4) of the Income Tax Act (Official Gazette Nos 177/2004, 73/2008, 80/2010, 114/2011, 22/2012, 144/2012, 43/2013, 120/2013, 148/2013, 83/2014, 143/2014). 22  The

64  Ivana Grgurev Act,25 the members of a craftsman’s household (spouse, children and other relatives who live in the same household, earn income and spend it together) may provide the craftsman assistance which, however, does not imply the obligation of actual employment. Similarly, care-givers of war veterans are not considered civil servants,26 and some unemployed persons can conclude contracts for vocational training without establishing an employment relationship with the employer according to the Employment Promotion Act of 2012.27 Interestingly, there was a case of a priest who claimed that he was an employee of the Diocese and was therefore entitled to a salary, but the ­Constitutional Court ruled that priests are not employees because they do not conclude employment contracts. Therefore, they are not entitled to ­salary, but receive compensation for their work based on the Code of Canon Law of 1983 (Codex Iuris Canonici).28 B.  Employer: Basic Definition Article 4(2) of the Labour Act of 2014 contains the basic definition of the term ‘employer’. An employer is defined as ‘a natural or legal person employing an employee for whom the employee performs certain tasks’.

25  The Crafts Act (Official Gazette No 143/2013) regulates, among other things, the rights and obligations of craftsmen. A craftsman is a natural person who performs one or more activities (ie, economic activities that are performed independently and permanently with the objective of generating profit in the field of production, traffic or services) in his or her own name and on his or her own account, who can employ other persons to carry out such activities (art 4 read together with art 2 of the Crafts Act). 26  See also section III.A below. 27 Article 6(1) read together with art 2(1) of the Employment Promotion Act (Official Gazette Nos 57/2012 and 120/2012). Persons who conclude contract for vocational training without establishing an employment relationship are still protected by the health and safety legislation and by some provisions of the Labour Act—namely, the provisions of the Labour Act on the conclusion of an employment contract, wage, wage compensation and termination of the employment contract are not applied to the contract for vocational training without establishing an employment relationship. All other provisions of the Labour Act are applied (art 8(1)). 28 Constitutional Court of the Republic of Croatia, U-III-2997/2003, 4 March 2004. The Constitutional Court followed in the footsteps of the regular courts. Thus, the Supreme Court found that priests receive compensation for masses, weddings and funerals from congregation members. These contributions are used towards the performance of the priests’ duties and any remainder must be used for the maintenance of the church and for charity. There is no obligation of the church to pay the priests salaries since they are remunerated for their work by the members of their congregation. Supreme Court of the Republic of Croatia, VSRH Revr 205/2003, 23 April 2003. The Code of Canon Law is available at: www.katehetski-­ nadbiskupija-split.net//wp-content/uploads/2015/01/Codex_juris_canonici_Zakonik_­ kanonskog_prava.pdf.

The Concept of ‘Employee’: The Position in Croatia 65 Notably, definitions of the same term exist in other legal instruments, such as the Maritime Code,29 which in Article 5(35) defines an employer as a person who has concluded an employment contract with a seafarer. Such definitions do not, however, add any substantial elements to the concept of employer introduced in the Labour Act. As a general rule, a group of companies cannot be an employer. In this context, it is worth mentioning that pursuant to Article 10(3) of the Labour Act: [W]here the employer has no need for the work performed by a specific employee, he may temporarily post that employee to an associated company within the meaning of specific provisions on companies, for a maximum period of six consecutive months on the basis of an agreement between the associated employers and the written consent of the employee.30

In relation to the employee, the associated employer is only considered his or her employer within the context of occupational health and safety requirements. In other words, the associated employer is obliged to apply the Labour Act provisions and other laws and regulations governing the safety and protection of health at work.31 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Under Croatian law, various sub-types of employees can be distinguished according to their occupation, to which—albeit to differing extents— specific rules apply. Thus, the employment relationship of civil servants is regulated by the Civil Servants Act.32 This form of relationship is considered a specific type of employment relationship. According to Article 52 of this Act, selected candidates are admitted to the civil service by means of a ­resolution issued by the chief executive of the relevant state body. This resolution is followed by a resolution on the assignment to a post. Although these resolutions—contrary to employment contracts—are in ­formal terms unilateral decisions, it is established in legal doctrine that all key characteristics of an employment relationship can be found in the legal

29  Maritime Code (Official Gazette Nos 181/2004, 76/2007, 146/2008, 61/2011, 56/2013, 26/2015). 30  Labour Act, art 10(3). 31  ibid art 10(7). 32 Official Gazette Nos 92/2005, 142/2006, 77/2007, 107/2007, 27/2008, 34/2011, 49/2011, 150/2011, 34/2012, 49/2012, 37/2013, 38/2013, 1/2015.

66  Ivana Grgurev relationship between the state and civil servants (personal work ­performance, remuneration and subordination).33 As regards the specific nature of the employment of a ship’s crew, a ­separate registration procedure of their employment contracts exists.34 The content of employment contracts of home workers is, in turn, more specific. Accordingly, apart from the mandatory content of all employment contracts, a number of specific clauses must be included in contracts with home workers (such as information on working hours; the required machinery, tools and equipment the employer is obliged to provide, install and maintain; compensation of other costs incurred by the employee in relation to the performance of work; and the provision of education and training).35 The position of employees in the public sector is covered in separate laws, such as the Act on Elementary and High School Education36 and the Act on Scientific Activity and Higher Education,37 which regulate the employment of teachers and which, according to the established line of judicial decisions, must be adhered to in order to guarantee/acquire the status of employee. Thus, for instance, the Supreme Court ruled that a teacher who had several successive contracts for services should not be considered an employee since she had not been employed in line with the separate Act that stipulates the procedure for the employment of teachers.38 The Theatre Act39 regulates the employment relationship of artists employed in public theatres.40 They are regularly employed as fixed-term

33  See Ž Potočnjak, Radni odnosi državnih službenika (Pravni fakultet Sveučilišta u Zagrebu, 2013) 11–18. 34  Based on art 14(7) of the Labour Act, the Minister of Labour adopted regulations on the registration procedure and the content of the registry of employment contracts for seafarers and employees on board seagoing fishing vessels (Official Gazette No 32/2015). Furthermore, as regards the specificities of their working time, these are regulated in arts 8–9 of the regulations on the conditions and method of supervising and performing other tasks on ships aimed at ensuring safe navigation and protection of the sea from pollution (Official Gazette No 125/2005, 126/2008, 34/2011, 155/2013). There is a set of laws and bylaws regulating the working time of other employees who perform mobile transport activities. See, eg, the Act on Working Time, compulsory rest periods of mobile employees and recording devices in road transport (Official Gazette Nos 75/2013 and 36/2015), regulations on the working time of crew members (Official Gazette No 57/2013) or regulations on the working time of executive employees in railway transport (Official Gazette Nos 105/2008, 33/2013, 82/2013). 35  Labour Act, art 17. 36  Act on Elementary and High School Education (Official Gazette Nos 87/2008, 86/2009, 92/2010, 105/2010, 90/2011, 5/2012, 16/2012, 86/2012, 94/2013, 152/2014). 37 Act on Scientific Activity and Higher Education (Official Gazette Nos 123/2003, 198/2003, 105/2004, 174/2004, 2/2007, 47/2007, 45/2009, 63/2011, 94/2013, 139/2013, 101/2014, 60/2015). 38  It requires, among other things, publicly advertised vacant posts. Supreme Court of the Republic of Croatia, Revr 1050/10-2, 1 September 2010. 39  Theatre Act (Official Gazette Nos 71/2006, 121/2013, 26/2014). 40  ibid arts 41–43.

The Concept of ‘Employee’: The Position in Croatia 67 employees, but directors of theatres are obliged to offer them employment contracts of indefinite duration if they have been working for the theatre for 16 years (ballet and other dancers) or for 20 years (other artists).41 ­Auditions and the one-year probation period for theatre artists are also regulated in the Theatre Act.42 Journalists can be either employees or self-employed persons (Article 2 of the Media Act).43 There are separate acts that stipulate the mandatory full-time employment of members of the board of directors in companies operating in specific sectors (such as insurance companies, banks, leasing companies, pension funds and the stock market).44 One can conclude that they must be fulltime employees in order to be fully committed to their companies (and to the clients of the companies) because they deal with their clients’ money.45 Members of the board of directors in companies that do not operate in the sectors mentioned above are free to regulate their contractual relationship with the company. As regards their contracts, pursuant to established case law: ‘The company and the member of the board of directors may regulate their contractual relationship as they see fit. They may conclude an employment contract or a contract for services or some other contract.’46 ­Notably, when members of the board of directors are employees, Article 4(4) of the Labour Act of 2014 applies. According to Article 4(4), the provisions of the Labour Act on fixed-term employment contracts, the termination of employment contracts, periods of notice and severance pay shall not apply to members of the board of directors. This provision was introduced in the Labour Act because it was established that the protection of members of the board of directors in the event of the termination of the employment contract is not the same as the protection provided to subordinated ­employees. For instance, the justified discharge of a member of the board of directors as laid down in the Companies Act47 is not necessarily a justified ground for the dismissal of an employee. In other words, the provisions of the 41 

ibid arts 41(2) and 43(2). ibid arts 41(4) and 42(3). 43  Media Act (Official Gazette Nos 59/2004, 84/2011, 81/2013). See more on the case law of the employment of journalists in sections IV.A and VII. 44  Articles 420(4) and 422(4) of the Insurance Act (Official Gazette No 30/2015); art 37 of the Act on Credit Institutions (Official Gazette Nos 159/2013, 19/2015); art 33(4) of the Leasing Act (Official Gazette No 141(2013); art 31(4) of the Act on Mandatory Pension Funds (Official Gazette No 19/2014); art 42(4) of the Act on Voluntary Pension Funds (Official Gazette No 1972014); arts 21(4), 286(2) and 599 of the Act on Capital Market (Official Gazette Nos 88/2008, 246/2008, 74/2009, 54/203, 18/2015). 45 In my opinion, this could have been achieved by non-competition clauses instead of demanding full-time mandatory employment. For further details, see I Grgurev, Pravna priroda i sadržaj menadžerskih ugovora (Zagreb, Radno pravo, 2011) 18. 46  Supreme Court of the Republic of Croatia, Revr 609/2007-2, 24 October 2007. 47  Companies Act (Official Gazette Nos 111/1993, 34/1999, 121/1999, 52/2000, 118/2003, 103/2007, 146/2008, 137/2009, 121/2011, 111/2012, 68/2013, 110/2015). 42 

68  Ivana Grgurev Companies Act enable the supervisory board to remove a member of the board of directors from his or her post based on the decision of a general meeting of shareholders if there is an important reason to remove/recall the respective member.48 It is even easier to do so in a limited liability company because, as a rule, members of such a company can remove members of the board of directors from their post at any time and there is no need for the existence of an important reason for removal.49 Such a removal, although in line with the Companies Act, would be considered unfair dismissal based on the Labour Act in the case of a lack of justified grounds for dismissal as provided for in the Labour Act.50 Unfairly dismissed employees have the right to reinstatement.51 The question this raises is how a member of the board of directors can be reinstated when his or her removal from his or her post was in line with the Companies Act. In order to prevent such contradictory situations from arising, the application of the provisions of the Labour Act on terminations of the employment contract of members of the board of directors is excluded. Care-givers for Croatia’s war veterans enjoy certain rights similar to those employees are entitled to, but neither the provisions of the Civil Servants Act nor the provisions of the respective collective agreements apply to care-givers.52 According to the Act on the Entitlements of War Veterans and members of their families53 and the regulations on the appointment, method and procedure of exercising the rights of care-givers of disabled war veterans, war veterans as a rule may put forth the names of persons they would like to select as their care-giver and may unilaterally opt for another ­care-giver without providing any justified grounds for their d ­ ecision.54 Care-givers are appointed for either a definite or indefinite duration55 and are entitled to a salary (ie, even if they take sick leave),56 pension insurance, health insurance and dependency allowances.57 One example is the case of

48 

Companies Act, art 244(2). ibid art 424(1). However, based on certain articles/Memoranda of Association (društveni ugovor), it is possible to specify the existence of important reasons as a precondition for the removal of members of the board of directors of a limited liability company from his or her post (Companies Act, art 424(4)). 50  Labour Act, arts 115 and 116. 51  ibid art 124(1) states: ‘Where the court establishes that a dismissal was unfair and that the employment relationship was not terminated, it shall instruct the employer to reinstate the employee.’ 52  Article 19 of the Regulation on the appointment, method and procedure of exercising the rights of care givers of disabled war veterans (Official Gazette No 43/2005). 53 Official Gazette Nos 174/2004, 92/2005, 2/2007, 107/2007, 65/2009, 137/2009, 146/2010. 55/2011, 140/2012, 33/2013, 148/2013, 92/2014. 54  Regulation on the appointment, method and procedure of exercising the rights of care givers of disabled war veterans, arts 9(1) and 20. 55  ibid art 15(3). 56  ibid art 24. 57  ibid art 18. 49 

The Concept of ‘Employee’: The Position in Croatia 69 a care-giver of a Croatian war veteran who had to give up her care-giver status due to pregnancy and maternity leave.58 She claimed protection as a pregnant employee, invoking the provisions of the Labour Act that prohibit the dismissal of pregnant employees. The Constitutional Court found the judgment of the Administrative Court, which confirmed the decision of the administrative bodies on the termination of the employee’s care-giver status, to be in line with the Constitution. The fact that the war veteran, who the employee had cared for prior to her maternity leave, withheld his consent to keep her as his care-giver was considered a relevant/decisive factor for terminating the employee’s care-giver status. Interestingly, in his dissenting opinion, one of the judges of the Constitutional Court, Potočnjak, stated that the termination of the care-giver status in this case was contrary to several provisions of the Constitution, inter alia those guaranteeing the right of employees and their family members to social security and social insurance,59 and special protection provided by the state to the family,60 as well as provisions according to which the state must protect mothers, children and youth, and must provide social, cultural, educational, material and other conditions promoting the achievement of the right to a normal life.61 In his opinion, care-givers should be considered employees. Unfortunately, the Constitutional Court disregarded the fact that the termination of the care-giver status on account of pregnancy can only affect women and therefore constitutes direct discrimination on the grounds of sex.62 Retired persons can be both employees and pension beneficiaries simultaneously, but they can only work part-time (more precisely, they are allowed to work up to half of their previous full-time working hours).63 Interestingly, this only became a possibility at the beginning of 2014, along with the amendment of the Pension Insurance Act.64 Previously, pensioners who wanted to work and to receive their pension were either engaged in ­undeclared work65 or worked in disguised employment.66

58 

Constitutional Court of the Republic of Croatia, U-III-1338/2004, 21 March 2007. Constitution of the Republic of Croatia, art 56. 60  ibid art 61. 61  ibid art 62. 62 In that context, see the case law of the CJEU on the termination of the employment relationship due to pregnancy. See, eg, Case C-232/09 Dita Danosa v LKB Lizings SIA [2010] ECR I-11405. 63  Article 37(6) of the Pension Insurance Act (Official Gazette Nos 157/2013, 151/2014, 33/2015). 64  Article 11 of the Amendment to the Pension Insurance Act (Official Gazette No 151/2014). 65  ‘Rad i umirovljenici: Na crno ili nikako’ [‘Work and Pensioners: Undeclared Work or No Work at All’] www.banka.hr/hrvatska/rad-i-umirovljenici-na-crno-ili-nikako. See also www.poslovni. hr/hrvatska/dosad-1384-umirovljenika-iskoristilo-mogucnost-rada-uz-mirovinu-291020. 66  See www.mirovinsko.hr/default.aspx?id=2258. See also a case on the work performed by a retired person who had concluded a contract for services: Supreme Court of Croatia, Revr 797/2010, 26 November 2011. 59 

70  Ivana Grgurev Apart from apprentices (employees who are employed for the first time in an occupation for which they received training), who are protected by legislation like any other employee (with certain specificities),67 there is also the possibility of non-remunerated traineeships. Such trainees gain the necessary work experience to perform jobs in a specific occupation.68 They are protected by legislation, but the provisions of the Labour Act on concluding an employment contract, remuneration and compensation, and termination of the employment contract do not apply to them.69 There is also a ­specific category of persons who conduct vocational training without concluding an employment relationship. Such vocational training is a form of an active policy measure targeted at unemployed persons (those who have been unemployed for more than 30 days) with less than a year of work experience in the profession for which they received education to ensure their entry into the labour market.70 Occupational health and safety legislation and the majority of provisions of the Labour Act apply to their contracts. Only those provisions of the Labour Act on concluding an employment contract, remuneration and compensation as well as on the termination of the employment contract do not apply to their contracts (as is the case for non-remunerated traineeships). Unlike non-remunerated traineeships, the work performed by persons who conduct vocational training without having concluded an employment relationship is remunerated, but instead of a salary, they are entitled to unemployment benefits.71 Full-time students who find work through the student services of universities are not considered employees; they conclude contracts for services.72 Temporary agency workers (assigned workers) are considered workers employed by the agency which assigns them to a user undertaking.73 They can either be fixed-term workers or workers with an open-ended employment 67  They can be temporarily assigned to another employer (Labour Act, art 56(2)) and their contract of employment can be terminated by ordinary dismissal if they do not pass the qualification examination (Labour Act, art 58(3)). 68  Article 59(1) of the Labour Act states: ‘Where a qualification examination or work experience is stipulated by laws and regulations as a prerequisite for the performance of job duties within a certain occupation, the employer may request a person who has completed training for the given occupation to participate in professional training without concluding an employment relationship with him (non-remunerated traineeship).’ 69  ibid art 59(4). 70  Article 6(19) read together with art 2(1)(1) of the Employment Promotion Act (Official Gazette Nos 57/2012 and 120/2012). 71  Persons who conduct vocational training without having concluded an employment relationship as a form of an active employment policy measure receive HRK 2,400.00 (€315) net of unemployment benefits (art 1 of the decision on unemployment benefits for persons that the Croatian employment institute deems to be engaged in vocational training without concluding an employment relationship (Official Gazette Nos 12/2014, 134/2014)). 72 Article 5 of the Regulation on Employment Mediation of Full-Time Students (Official Gazette Nos 16/1996, 125/1997, 123/2003, 37/2006, 59/2007, 30/2008). 73  Labour Act, art 44(2).

The Concept of ‘Employee’: The Position in Croatia 71 contract. If they conclude an employment contract of indefinite d ­ uration (which is extremely rare in practice), they are entitled to remuneration, even in periods between assignments, ie, even when they are not assigned to a user undertaking.74 If there is no collective agreement providing for less favourable working conditions for agency workers, remuneration and other working conditions (working time, breaks and rest periods, safety and work protection measures, protection of pregnant workers, parents, adoptive parents and youth, as well as non-discrimination) applicable to agency workers may not be lower or less favourable compared to the remuneration or working conditions applicable to employees directly employed by the user undertaking to perform the same tasks than would be applicable to the agency worker should he or she have concluded an employment contract with the user undertaking.75 The voucher system was introduced in the agricultural sector in 2012 to facilitate the employment of seasonal workers in agriculture on a discontinuous/intermittent basis. According to the Employment Promotion Act of 2012,76 by purchasing a voucher, an employer of seasonal workers in agriculture pays social insurance contributions daily in advance (Article 9(1)). Employment contracts for seasonal work in agriculture on a discontinuous/intermittent basis must be concluded before the worker commences working by accepting the voucher. This voucher must be registered in the form of a contract. The content of this contract is regulated by the Regulation on the Content and Form of the Contract for Seasonal Work in ­Agriculture77 and cannot be modified by agreement between the contracting parties. Seasonal workers in agriculture may be employed up to 90 days within a calendar year and the work can be performed with interruptions, ie, this 90-day period does not have to be continuous. Youth, persons on maternity or parental leave, already employed or self-employed persons, persons with non-standard fixed-term employment contracts concluded for permanent seasonal jobs, persons with a disability and certain persons insured under the extended pension insurance scheme cannot be employed through ­vouchers.78 Such workers are protected by legislation on ­occupational health and safety at work and by the Labour Act ‘in an appropriate ­manner’.79 This means that Labour Act provisions on working time and rest periods apply to them as they do to other employees.

74 

ibid art 46(3), read together with art 95(5). ibid art 46(5) and 46(6). 76  Official Gazette Nos 57/2012 and 120/2012. 77  Official Gazette No 64/2012. 78  Article 10(5), read together with art 2(1)(4) of the Employment Promotion Act. 79  Employment Promotion Act, art 11(1). 75 

72  Ivana Grgurev Although there is a possibility for professional athletes to conclude contracts of employment with a sports club, they are, as a rule, self-employed persons who conclude a so-called contract of professional play.80 Instead of defining the status of athletes and their rights and obligations, the Sports Act leaves it to the National Sports Federation to take decisions on such matters (Article 8(3)), which, until recently, opted for the status of self-employment for athletes.81 Employees employed by close relatives (family workers living in the same household with the employer) are protected by employment ­ protection ­legislation, but the provisions of the Labour Act on the maximum ­duration of weekly working time, night work and daily or weekly rest do not apply to their employment relationship, provided that they have agreed to ­autonomous decision-making power in that respect with the employer.82 Apart from the fact that employees of a particular religion or faith can be employed for certain jobs,83 which will not be considered discrimination (in line with Article 4(2) of the Framework Directive 2000/78/EC),84 there are no specific provisions for employees of churches. An interesting case was dealt with by the Constitutional Court on the dismissal of a catechist when the bishop revoked his missio canonica (a precondition to work as a catechist) after the catechist remarried. His first marriage had been a

80  Article 8 of the Sports Act (Official Gazette Nos 71/2006, 150/2008, 124/2010, 124/2011, 86/2012, 94/2013, 85/2015). 81 Compare, for instance, art 4(1) of the abolished 2003 Croatian Football Federation ­Regulation on the Status of Players, as amended in 2004, 2005, 2006 and 2010 (Pravilnik o statusu igrača) and art 39(1) of the 2015 Regulations on the Status of Players and Registrations (Pravilnik o statusu igrača i registracijama). Previously, only foreign athletes could exceptionally conclude fixed-term employment contracts. All others concluded contracts of professional play and were thus not protected by labour law. See V Smokvina, ‘New Issues in the Labour Relationships in Professional Football: Social Dialogue, Implementation of the First Autonomous Agreement in Croatia and Serbia and the New Sports Labour Cases’ (2015) 15(3–4) International Sports Law Journal 159, 165. According to art 39(1) the 2015 Croatian Football Federation Regulations on the Status of Players, professional football players can conclude one of the following contracts with a sports club: a contract of professional play, a contract of employment or a scholarship contract. 82  Labour Act, art 88(3). 83  Such as teachers at Catholic universities and catechists: arts 805 and 810(1) of the Codex Iuris Canonici www.katehetski-nadbiskupija-split.net//wp-content/uploads/2015/01/Codex_ juris_canonici_Zakonik_kanonskog_prava.pdf; and art 3(1) of the Act on Confirmation of Agreement between Sancta Sedes and the Republic of Croatia on cooperation in the area of education and culture (Official Gazette—International Agreements No 2/1997). Article 3(1) states that Catholic catechism can be taught by qualified catechists who are deemed appropriate according to the church’s authorities and who meet other requirements of the respective provisions of the legislation of the Republic of Croatia. 84  Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for the equal treatment in employment and occupation [2000] OJ L 303, 2 December, 16–22; art 9(1)(5) of the Anti-discrimination Act (Official Gazette Nos 85/2008 and 112/2012).

The Concept of ‘Employee’: The Position in Croatia 73 church marriage; later he divorced and remarried, ie, he concluded a civil marriage.85 The bishop found that the catechist had violated canon law by concluding a civil marriage while he was still married (his first marriage had not been terminated in accordance with the rules of canon law) and the bishop therefore revoked the catechist’s canon mandate. Consequently, the employer (a public school)86 terminated the catechist’s employment contract by extraordinary dismissal. The catechist claimed that his right to marry (Article 12 of the ECHR) and to work (Article 54(1) of the Constitution) had been violated. The Constitutional Court did not conclude that these rights had been violated. The catechist had remarried without obstacle, hence his right to marry had not been violated. When deciding whether the catechist’s right to work had been violated, the Constitutional Court took the fact that he lacked the precondition to work as a catechist into account as well as the fact that the employer had tried to find another job for him, but could not find an adequate post. Hence, the Court did not determine that the claimant’s right to work had been violated. According to the Constitutional Court, the: [E]mployment relationship of the catechist is a sui generis employment relationship—in order to teach Catholic catechism, the teachers must be deemed suitable by the church authority, and must possess a document of canonical mandate—a cancellation of this document means the loss of the right to teach Catholic catechism.

It is worth mentioning that no distinction is made between blue-collar and white-collar workers in Croatia, ie, they are not recognised as separate categories of employees and employment protection legislation treats both equally.87 B.  The Establishment of a Specific Category of ‘Workers’ ‘Workers’ do not constitute a separate category in Croatia. There have been no initiatives to date to regulate this issue.

85 

Constitutional Court U-III-702/2009, 22 May 2013. on the Act on Confirmation of Agreement between Sancta Sedes and the Republic of Croatia on cooperation in the area of education and culture (Official Gazette—International Agreements No 2/1997), the Republic of Croatia is obliged to guarantee the teaching of Catholic catechism in all public elementary and secondary schools as an elective course (art 2(1)). 87  See Ravnić (n 14) 145. 86  Based

74  Ivana Grgurev IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration There are a number of cases of disguised employment and established case law on this issue.88 In most cases, employers try to avoid their employment protection duty stipulated in the legislation by concluding contracts for services (referred to as Werkvertrag in Germany and Austria).89 An important feature of a contract for services is the supply of the final (specified) result of work to the requesting party and not the function of work itself (which is a feature of the employment contract).90 In addition to this: There are essential differences between the contract of employment and the contract for services arising from the rights and obligations of the contracting parties. Accordingly, one should decide which contract is appropriate. The key elements of an employment contract are that the work is carried out under the direction of the employer; the work is performed at the employer’s premises91 and during the working time defined by the employer. On the other hand, the key elements of a contract for services are that the final work result defined in the contract is the subject of the contract; a contractor works independently; the working time is defined by the contractor; the contractor works on his or her account; the contractor bears the business risks; and the subject of the contract is a single performance of work.92

When the Municipal Labour Court of Zagreb considered the c­ ontractual relationship between a journalist and her publisher, it added another ­distinction between a contract for services and an employment contract.

88 See Report of the Labour Inspectorate, Zagreb, February 2015, www.mrms.hr, which emphasises/illustrates that there are cases of disguised employment, especially in the hospitality sector and in the trade and construction sectors. Interestingly, labour inspectors found considerably fewer cases of undeclared work compared to previous years. According to them, this is the result of measures against undeclared work introduced in 2014. 89  Under a contract for services, the contractor undertakes to carry out certain work, such as to make or repair an item or to produce a physical or intellectual piece of work etc in exchange for a price that the ordering party pledges to pay (Civil Obligations Act, art 590 (Official Gazette Nos 35/2005, 41/2008, 125/2011)). As a legislative measure meant to reduce disguised employment; since 2003, even when a contract for services is concluded, the employer is required to pay social security contributions (Act on Contributions for Mandatory Insurance (Official Gazette No 147/2002, 177/2004); today, the Act on Contributions applies (Official Gazette Nos 84/2008, 152/2008, 94/2009, 18/2011, 22/2012, 144/2012, 148/2013, 41/2014, 143/2014)). Previously, there was no such obligation. Evasion of social security contributions was the reason why contracts for services were concluded as opposed to regular contracts of employment. 90  Administrative Court in Rijeka, UsI-1332/12-11, 18 June 2014. 91 Although there are exceptions to this rule, the Court has not mentioned any of them (eg, home workers do not work at the employer’s premises, but in their homes). 92  Administrative Court in Rijeka, UsI-802/12-10, 4 June 2012.

The Concept of ‘Employee’: The Position in Croatia 75 On the one hand, the subject of the contractual obligations specified in a contract for services needs to be described in precise terms (the final result of the work must be specified); on the other hand, this is not the case in a contract of employment because the employer provides instructions to the employee on how to perform the work.93 In the same case, the Court found the fact that the journalist had been part of the organisational structure of the undertaking where ‘she had assumed a permanent role’ to be relevant. This fact and other characteristics indicative of an employment relationship were taken into account when the Court evaluated the facts on whether the journalist had entered into an employment contract. In the same case, the fact that she paid taxes as a self-employed person was used as an argument that a contract for services had indeed been concluded. However, in the Court’s view, this was irrelevant, because it only indicated the relationship between the state and the claimant, not the relationship between the private parties (the claimant and the respondent).94 Conversely, the Supreme Court ruled that the parties had concluded ‘an atypical contract for services or more precisely, a copyright agreement’. Surprisingly, according to the Supreme Court, the journalist’s obligation to work in accordance with the instructions provided by the chief editor, the existence of provisions on working time in the contract and the fact that she had an office at the publisher’s premises did not suffice to determine that the contracting parties had concluded an employment contract.95 In the legal doctrine, apart from personal performance of work, remuneration and subordination,96 ‘professionalism’ is listed as a characteristic of an employment relationship. In earlier legal literature, ‘professionalism’ as a characteristic of certain employment relationships was defined as follows: the performance of work as a regular and primary profession, which one cannot be simultaneously performed with another regular and primary profession; the major part of the employee’s working capacity is devoted to his or her job; continuous work by which he or she earns an income that supports him or her and his or her family; the performance of work fully and permanently absorbs (in a relative sense) his or her professional activity.97 According to Potočnjak, ‘professionalism’ as a characteristic of an employment relationship is more visible in the public sector (in particular, in the work performed by civil servants) than in an employment relationship in

93 

Municipal Labour Court of Zagreb, 16 Pr-4561/12-31, 29 May 2013.

94 ibid. 95 

Supreme Court, Revr 1536/13-3, 9 June 2015. measurement of subordination can be found in the established case law. The courts only mention subordination of the employee to the instructions and supervision of the employer, without mentioning different degrees of subordination. See, eg, High Administrative Court of the Republic of Croatia, Us-12719/2011-8, 08 May 2014. 97  N Tintić, Radno i socijalno pravo Knjiga prva: Radni odnosi (I) (Zagreb, Pravni fakultet u Zagrebu, 1969) 370–72. 96  No

76  Ivana Grgurev the private sector.98 Apart from professionalism as a characteristic of certain employment relationships, ‘organisational involvement’ was mentioned in earlier legal doctrine as an element of certain employment relationships. This meant that an employee was involved in the organisational structure of an undertaking and was obliged to collaborate with other employees.99 An integration test has not been developed by the courts in Croatia, ie, one cannot find such a test in the established case law. B. Indicators The following more common indicators are found in the established case law to determine the existence of an employment relationship/contract: (i)

whether the work is performed as part of the employee’s regular activity100 or as a regular ancillary service to the employer’s registered activity;101 (ii) continuous work;102 (iii) whether the work is performed in the name of the employer and on his or her account rather than in the name of the contractor;103 (iv) whether the work is performed using the employer’s equipment;104 (v) subordination of a contractor to the instruction and supervision of the other contracting party;105 (vi) whether the working time is defined by the employer (‘the employee places his/her labour at the disposal of the employer during a defined working time’).106

98 Potočnjak

(n 32) 16–17. (n 97). Organisational involvement of the employee in the structure of the undertaking as a characteristic of employment relationship is also accepted in the recent legal literature. See S Laleta, Prestanak ugovora o radu (Zagreb, Pravni fakultet u Zagrebu, 2011) 6. 100  eg, where contractors are engaged as bricklayers and the other party to the contract is in the construction business: High Misdemeanour Court of the Republic of Croatia, Zagreb, No. Gž-2412/09, 30 November 2009. The same argument was used in the judgment of the Supreme Court of the Republic of Croatia, Revr 980/10-2, 20 October 2010: ‘The respondent was allowed to conclude successive contracts for services with the claimant because the claimant’s work was not directly related to carrying out permanent activities for which the respondent was registered.’ 101  High Administrative Court of the Republic of Croatia, Us-6270/11-4, 11 February 2015. 102 ibid. 103 ibid. 104  Misdemeanour Court, Rijeka, No G-1635/10-XI, 10 February 2011. 105  High Administrative Court of the Republic of Croatia, Us-12719/2011-8, 8 May 2014. 106  High Administrative Court of the Republic of Croatia, Us-12719/2011-8, 8 May 2014; Misdemeanour Court, Rijeka, No. G-1635/10-XI, 10 February 2011. High Administrative Court of the Republic of Croatia, Us-7099/2011-5, 13 February 2014. 99 Tintić

The Concept of ‘Employee’: The Position in Croatia 77 C.  The Relevance of ‘Economic Dependence’ Economic dependence is not taken into account by the courts when determining the existence of an employment relationship. It is only emphasised in the legal literature as being regularly present in an employment relationship and is deemed to be a reason why the employee is considered the weaker contracting party and, consequently, the reason why there is a need for employment protection legislation.107 V.  THE PRINCIPLE OF PRIMACY OF FACTS

As a general rule, the courts apply the principle of primacy of facts. Accordingly: [A]lthough the contracting parties named their contract a contract for services, the name of the contract [does] not change the essence of the relationship between the employer and the employee. A bogus contract for services is ineffective and a contract of employment will be considered to have been concluded between the contracting parties.108

VI.  QUALIFICATION IN FULL

In most cases, a contract is qualified as an employment contract or some other civil law contract. An exception to this rule is managerial contracts. ­According to the established case law, the latter are not contracts of ­employment109 and are therefore not based on the provisions of the Labour Act, but rather on the provisions of the Civil Obligations Act; furthermore, they share some features of contracts for services.110 In the view of the Supreme Court: [A] managerial contract is not a contract of employment, but a sui generis contract regulating the rights and obligations of a member of the board of directors. In legal doctrine, it is referred to as ‘a managerial contract’ or ‘a contract of service’ with characteristics of a contract for services. In the case law of the Supreme Court, one finds, however, the possibility of partial qualification as an

107  See more on economic dependence in I Grgurev, ‘Ugovor o radu’ in Z Potocnjak (ed), Radni odnosi u Republici Hrvatskoj (Zagreb, Organizator and Pravni fakultet u Zagrebu, 2007) 14. 108  The Decision of the Labour Inspectorate cited in the Judgement of the High Administrative Court of the Republic of Croatia Us-12797/2011-6, 8 May 2014. 109 Supreme Court of the Republic of Croatia, Revr-834/07, 22 October 2008. See also Supreme Court of the Republic of Croatia, Revr-666/04, 23 February 2005. 110  Supreme Court of the Republic of Croatia, Revr-2210/99, 22 December 1999.

78  Ivana Grgurev employment contract. Accordingly, in some cases, this contract has the characteristics of both an employment contract and a managerial contract. Such a contract has certain characteristics of an employment contract as well as of a managerial contract.111

Similarly: [T]his Court finds that the employment contract in question also contains elements of a managerial contract. The clause on severance pay should be considered part of the managerial contract. Therefore, instead of the Labour Act, the Civil Obligations Act shall apply to this part of the contract.112

A non-contractual legal relationship between the employer and employee exists if the rules are breached. According to the provisions of the Labour Act, the employee’s liability arising from the employment contract is minor. The employee is obliged to compensate the employer for any damage caused at the workplace or in relation to the work only if this damage has been caused either intentionally or due to gross negligence, but not if it has been caused by ordinary negligence.113 The employee’s liability is not weaker if it arises outside of his or her employment relationship. In that case, the provisions of the Civil Obligations Act apply. In other words, the employee must compensate the employer, even when that damage is caused by ordinary negligence.114 Under Croatian law, there are no obstacles for parties to a contract of employment to conclude an additional civil law contract. As mentioned above, members of the boards of directors may conclude so-called managerial contracts in addition to their employment contract.115 In general, it is not unusual for employees to conclude a contract for services with their employers if they need to perform additional work outside of their regular obligations or to conclude a copyright agreement, for instance. VII.  LIMITS TO THE FREEDOM OF CONTRACT

As a general rule, parties may not modify the legal nature of their employment contract due to the presumption of the existence of an employment relationship when a contract concluded by the employer with the employee has the features of an employment relationship due to the nature and type of work and the employer’s authority (see section IX.A below). The parties are free to regulate their obligations, which must be in ­compliance with the Constitution of the Republic of Croatia, mandatory 111 

Supreme Court of the Republic of Croatia, Rev 947/01-2. Supreme Court of the Republic of Croatia, Revr 550/2006-2. See also Supreme Court of the Republic of Croatia, Revr 680/05-2. 113  Labour Act, art 107(1). 114  Ordinary negligence is presumed (Civil Obligations Act, art 1045(2)). 115  Supreme Court of the Republic of Croatia, Revr 551/2011-2, 30 May 2012. 112 

The Concept of ‘Employee’: The Position in Croatia 79 laws and social morality.116 For instance, it would be contrary to mandatory laws to conclude a contract of employment with a person who is 15 or younger, or a person who is older than 15 but under 18 and who is subject to compulsory schooling (Article 19 of the Labour Act), or with an illegal migrant worker (Article 73 of the Aliens Act).117 Apart from the general civil law restrictions mentioned above, there are no obstacles for parties to any civil law contract to agree on the applicability of employment protection legislation to their relationship as lex contractus. An employee cannot agree to the non-application of employment protection legislation and thus waive his or her status as an employee. This would contravene the mandatory provision of the Labour Act.118 However, in the established case law based on the provisions of the Labour Act119 and the Media Act,120 the members of the board of directors and journalists, respectively, can decide to conclude either an employment contract or a civil law contract (a managerial contract/contract for services). Instead of evaluating the key elements of contracts, the courts place emphasis on their freedom of contract and give that factor priority over the need to protect the weaker contracting party.121 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

Since the legal concept of ‘employee’ is regulated in the mandatory provisions of the Labour Act, it cannot be subject to the disposal of the parties to a collective agreement. The same applies to custom and practice. Deviations on the basis of the latter are not recognised in Croatia. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions Pursuant to Article 10 (2) of the Labour Act of 2014: [W]here an assignment contract concluded between the employer and employee exhibits clear features of an employment relationship due to the nature and type 116 

Civil Obligations Act, art 2. Aliens Act (Official Gazette Nos 130/2011 and 74/2013). 118  Labour Act, art 10(2), read together with Civil Obligations Act, art 2. 119  ibid art 4(3). See more in section III.A above. 120  Article 2 of the Media Act stipulates that a journalist can be employed either by a publisher or as a self-employed worker. See more in section IV.A above. 121 See, eg, judgment of the Supreme Court, Revr 1536/13-3, 9 June 2015 and Supreme Court, Revr 609/2007-2, 24 October 2007. 117 

80  Ivana Grgurev of work and the employer’s authority, it shall be deemed that an employment contract has been concluded with the employee, unless the employer is able to prove otherwise.

The constitutionality of this rebuttable presumption was questioned before the Constitutional Court of the Republic of Croatia.122 The procedure was initiated by a Croatian newspaper publisher, who claimed that this provision was contrary to Article 49(1) of the Constitution, which guarantees freedom of entrepreneurship.123 According to the initiator of the proceedings, an obligation to conclude employment contracts contravenes the freedom of entrepreneurship because employment contracts raise the costs of labour. The Constitutional Court holds the view that freedom of entrepreneurship is not unconditional. Consequently, if there is a legitimate aim and the means for achieving it are proportionate, the legislator is allowed to limit the freedoms and rights guaranteed by the Constitution. Furthermore, as the Court emphasised, Croatia is a welfare state124 and social justice is considered one of the highest values of the constitutional order of the Republic of Croatia.125 To this end, there is a need to limit entrepreneurial freedom to concluding contracts that protect the weaker contracting party in the employment contract, ie, the employee. According to the Constitutional Court: It would be wrong to interpret the twin constitutional principles of free market and free enterprise as being possible only if there is absolute freedom of contract in the sphere of employment, i.e. if there is a total lack of statutory regulation when it comes to the conclusion of employment contracts.126

The Labour Act contains another irrebuttable legal presumption. Pursuant to Article 14(4): [W]here an employer fails to conclude a written employment contract with an employee or fails to deliver the letter of engagement to the employee prior to the commencement of employment, it shall be deemed that the employer entered into an employment contract of indefinite duration with the employee.127

B.  The Burden of Proof In employment-related disputes, the burden of proof in principle lies with the person claiming the violation of his or her rights arising from the 122 The Constitutional Court of the Republic of Croatia, U-I-1706/2004, 30 December 2006. The subject of this procedure was art 8(2) of the Labour Act of 1995, which is now art 10(2) of the Labour Act of 2014. 123  ‘Free enterprise and free markets shall form the foundation of the economic system of the Republic of Croatia.’ 124  Constitution, art 1. 125  ibid art 3. 126  Constitutional Court of the Republic of Croatia, U-I-1706/2004, 30 December 2006. 127  Labour Act, art 14(4).

The Concept of ‘Employee’: The Position in Croatia 81 employment relationship or the person who has initiated the dispute resolution procedure.128 X.  SPECIFIC PROCEDURES

As certain social security rights are related to the employment status, the competent authorities are authorised to question this status. For instance, the Croatian Health Insurance Fund is authorised to initiate proceedings before a competent court to contest the existence of an employment contract.129 There have been cases of pregnant employees whose employment status was questioned because they are entitled to a salary compensation paid by the Croatian Health Insurance Fund if health problems related to pregnancy arise.130 In a recent case, the Constitutional Court of the Republic of Croatia131 had to answer the question whether the denial to a pregnant woman of the status of employment was in line with the principle of non-discrimination (Article 14 of the Constitution). The claimant contested the judgment of the Administrative Court that denied her employment status and consequently declined her request for the payment of salary compensation during sick leave as being discriminatory on the basis of gender. The Administrative Court followed in the footsteps of other tribunals in previous instances and found that the only purpose of her employment was to become a beneficiary of health insurance rights. It based its conclusion on the fact that the place of work was more than 360 kilometres away from her place of residence and the fact that her physician had recommended strict bed rest because in vitro fertilisation treatment had taken place 10 days before she concluded the contract of employment. Furthermore, she took sick leave citing pregnancy-related health problems a few weeks after concluding an employment contract of indefinite duration. The authorised physician stated in her medical opinion that the claimant was incapacitated for work for medical reasons at the time she entered into the employment relationship. Unfortunately, the Constitutional Court overlooked the fact

128 ibid art 135(1). The shifting of the burden of proof is only envisaged in antidiscrimination cases (Anti-discrimination Act, art 20(1)) and when an employee is victimised as a result of a report he or she has submitted to the competent authorities in good faith on the suspicion of employer corruption. Furthermore, when a dispute related to working time arises, the burden of proof lies with the employer if he or she has failed to keep records of the working time in line with the relevant provisions of the Labour Act (art 135(2) and (4)). 129 Articles 19 and 20 of the Regulation on the manner of the application and cancellation and achievement of the status of insured persons in mandatory health insurance (Official Gazette Nos 82/2014 and 17/2015). 130  Article 41(1) of the Mandatory Health Insurance Act (Official Gazette Nos 80/2013 and 137/2013) regulates the right to salary compensation from the Croatian Health Insurance Fund during sick leave. 131  Constitutional Court of the Republic of Croatia, U-III-1152/2013, 22 April 2015.

82  Ivana Grgurev that employers may not refuse to employ women due to pregnancy and they are not even allowed to request any information whatsoever about the employee’s pregnancy.132 The Court concluded that this was a case of false employment of a pregnant woman so that she could claim health insurance entitlements, and the fact she was denied employment status was not contrary to the principle of non-discrimination. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons A category of ‘employee-like persons’ does not exist in Croatia. There are no legislative initiatives regulating this issue. B.  Equality and Anti-Discrimination Law As regards grounds and areas of social life in relation to which it is p ­ rohibited to discriminate against persons, the non-discrimination principle in Croatia goes far beyond the guarantees provided in the EU anti-discrimination law. Although the 2008 Anti-discrimination Act prohibits discrimination based on a limited number of grounds (Article 1(1) of the 2008 Anti-­discrimination Act),133 there is a so-called open-ended clause (Article 14)134 in the Constitution of the Republic of Croatia, which prohibits discrimination on any ground. The areas of social life in which it is prohibited to discriminate against persons are regulated by Article 8 of the 2008 Anti-discrimination Act, which reads as follows: This Act shall apply to the conduct of all State bodies, local and regional government bodies, legal persons vested with public authority, and to the conduct of all legal and natural persons, especially in the following areas: (i)

Work and working conditions; access to self-employment and occupation, including selection criteria, recruitment and promotion conditions; access to all types of vocational guidance, vocational training, professional improvement and retraining;

132  Labour Act, art 30. See also the established case law of the CJEU on refusal to appoint a pregnant woman, eg, Case C-177/88 Dekker v Stichting (VJV-Centrum) Plus [1990] ECR I-3941 and Case C-207/98 Mahlburg v Land Mecklenburg-Vorpommern [2000] ECR I-549. 133  Anti-discrimination Act (Official Gazette Nos 85/2008 and 112/2012). Based on art 1(1) of this Act, it is prohibited to discriminate against persons on the grounds of race or ethnic origin or colour, gender, language, religion, political or other belief, national or social origin, property, trade union membership, education, social status, marital or family status, age, health condition, disability, genetic heritage, native identity, expression or sexual orientation. 134 Constitution of the Republic of Croatia (Official Gazette Nos 56/1990, 135/1997, 113/2000, 28/2001, 76/2010, 5/2014).

The Concept of ‘Employee’: The Position in Croatia 83 (ii) (iii)

Education, science and sports; Social security, including social welfare, pension and health insurance and unemployment insurance; (iv) Health protection; (v) Judiciary and administration; (vi) Housing; (vii) Public informing and the media; (viii) Access to goods and services and their provision; (ix) Membership and activities in trade unions, civil society organisations, political parties or any other organisations; (x) Access to participation in culture and the arts.

Taking only the legislative protection of victims of discrimination into account, one can conclude that they are provided a high level of protection of their rights, but the data (such as data on the gender pay gap)135 as well as the annual reports of the People’s Ombudsperson and specialised Ombudspersons (Gender Equality Ombudsperson; Ombudsperson for Persons with Disabilities)136 reveal discrimination in the labour market and that equality is an ideal which is difficult to achieve. The above-mentioned decisions of the Constitutional Court of Republic of Croatia on the termination of the care-giver status to a pregnant woman (see section III.A above) and the denial of employment status to a pregnant woman (see section X above) have certainly not contributed to the prohibition of discrimination in the labour market.

135 http://ec.europa.eu/eurostat/statistics-explained/index.php/Gender_pay_gap_statistics.

136 www.prs.hr/attachments/article/1492/Annual%20Report%202013.pdf; www.ombudsman. hr/attachments/article/517/Izvje%C5%A1%C4%87e%20pu%C4%8Dke%20pravobraniteljice% 20za%202014.%20godinu.pdf.

84 

5 The Concept of ‘Employee’: The Position in Cyprus NICOS TRIMIKLINIOTIS AND CORINA DEMETRIOU

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

C

YPRIOT LEGISLATION DOES not define the term ‘contract of employment’ (σύμβαση εργασίας); however, the Termination of Employment Law1 defines ‘employee’ (εργοδοτούμενος) as any ­person who works for another either under a contract of service (σύμβαση υπηρεσιών) or under circumstances from which the existence of a relationship of employee and employer (σχέση εργοδότη και εργοδοτούμενου) may be concluded. The term ‘contract of employment’in Cypriot law originally derives from common law contract principles. It was first developed as a distinct area of law with statutory interventions under British colonialism, but took its present form following Cypriot independence in 1960 with ­various statutory provisions that define a distinct area of law, labour or employment law.2 There are no formal requirements for a contract of employment to exist and the law will presume the existence of such a relationship where there is a contract (σύμβαση) or apprenticeship (μαθητεία), or where the circumstances Περί Τερματισμού της απασχόλησης Νόμος 24/1967, art 2. M Antoniou, Το Δίκαιο Τερματισμού της Απασχόλησης στην Κύπρο (Nicosia, Ομοσπονδία Εργοδοτών και Βιομηχάνων (ΟΕΒ), 2000); V Argyropoulou, ‘Εργατικό Δίκαιο’ in T-E Sinodinou (ed), Κυπριακό Ιδιωτικό Δίκαιο—Κατ άρθρο ερμηνεία—Νομολογία (Athens, Sakoulas, 2014) 551–679; C Christophi, ‘Labour Law’ in A Neocleous (ed), Introduction to Cyprus Law (Limassol, Neocleous & Co, 2000) 733–806, available at: www.neocleous.biz/en/ download/ebook/neobook.pdf; N Ktenas, ‘Employment’ in A Neocleous (ed), Introduction to Cyprus Law (Limassol, Neocleous & Co, 2010) 991–1017; P Polyviou, Η Σύμβαση Εργασίας (Nicosia, Polyviou and Chrysafinis, 2016); S Yiannakourou, Κυπριακό Εργατικό Δίκαιο (Athens, Nomiki Bibliothiki, 2016). 1 

2 See

86  Nicos Trimikliniotis and Corina Demetriou indicate an assumption of an employment relationship (σχέση εργασίας).3 Contracts of employment can be entered into orally or in writing. However, under the Provision of Information to the Employee by the Employer on the Conditions Applicable to the Contract or Employment Relationship Law of 2000, the employer is obliged to inform the employee in writing, within one month of the commencement of employment, of the essential terms of the contract of employment or employment relationship.4 This legal obligation imposed on employers only covers information relating to the basic terms of employment, such as the employee’s position or nature of his or her duties or his or her work, the date of commencement of the contract of employment or of the employment relationship, the duration of employment where the contract is for a fixed term, the duration of paid leave to which the employee is entitled, the manner and time of granting such leave, and the duration of the employee’s normal daily or weekly work. The legal obligation to provide this information, including any criminal offences relating to this particular law, lies entirely with the employer; if the employer is a company, then the company as a legal personality is legally responsible and not its directors or management.5 Cypriot employment law distinguishes between a contract of service and a contract of services. A ‘contract of service’ represents the f­oundation of the employment relationship and is governed by applicable statute law and well-established legal precedents. A ‘contract of services’ refers to the services of independent contractors and is governed by the principles of contract law. The above distinction is important mainly because of the obligations imposed on the employer.6 General principles of contract law apply, as codified under Cap 149.7 The basic English Law ­ contractual 3 

Tsapaco Catering Ltd v Republic of Cyprus (1995) 4 CLR 94. Ο Περί Ενημέρωσης του Εργοδοτουμένου από τον Εργοδότη για τους Όρους που διέπουν τη Σύμβαση ή τη Σχέση Εργασίας Νόμος του 2000 (100(I)/2000), as amended by Law 12(I)/2007. 5 See case of Αθανάσιος Πέτσος v Αρτοποιεία Πανίκος Κωνσταντινίδης & Υιοί Λτδ, Μαρίνος Κωνσταντινίδης, Λουκία Κωνσταντινίδη, Πανίκος Κωνσταντινίδης, Επαρχιακό Δικαστήριο Λευκωσίας (District Court of Nicosia), Case No 19260/15, 11 March 2016, per Judge Constantinidou, www.cylaw.org/cgi-bin/open.pl?file=apofaseised/poin/2016/1220160159.htm&qstring= 100%28I%29%20w%2F1%202000. 6 There are a number of statutory obligations that employers must comply with. Two ­important employer obligations when an employment relationship is established are: (1) the legal obligation of the employer to pay social insurance contributions in accordance with art 4 of the Law on Social Insurance of 2010 (59(I)/2010); and (2) the obligation of the employer and the corresponding right of the employee to compensation for unlawful dismissal, which arises following the completion of 26 weeks of continuous employment and under circumstances defined by statute (under the Law on Termination of Employment). 7  As for the capacity to conclude a contract, art 11 (2 of 7/56) provides that: ‘(1) Subject to the provisions of subsection (2), any person is competent to conclude a contract who (a) is of sound mind; and (b) is not disqualified from concluding a contract by any law. (2) The law in force in England relating to contracts to which a minor is a party shall apply to contracts to which a person who has not reached the age of eighteen is a party, provided that a married person shall not be deemed to be incompetent to conclude a contract merely because such a person has not attained the age of eighteen years.’ 4 

The Concept of ‘Employee’: The Position in Cyprus 87 ­ rinciples apply, ie, the essential elements for a valid contract such as p agreement between parties, clarity of purpose, clearly stated terms and consideration. Contract terms are usually contained in the following: (i) (ii) (iii) (iv) (v) (vi) (vii)

in a written contract or similar document, like a written statement of employment; in a verbal agreement; in an employee handbook or on a company notice board; in an offer letter from the employer; as required by law (eg, an employer must pay employees and pay contributions to national insurance schemes, paid leave etc); in collective agreements, negotiated agreements between employers and trade unions or staff associations; implied terms are automatically part of a contract, even if they are not written down.

The basic principles relating to void and voidable contracts apply. Article 10 of Cap 154, Part III ‘Of Contracts, Voidable Contracts and Void Agreements’, which sets out the basic principles of contracts in Cyprus, ­provides for ‘what agreements are contracts’ as follows: (1) All agreements are contracts if they are concluded with the free consent of parties competent to conclude a contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared void, and may, subject to the provisions of this Law, be made in writing, or verbally, or partly in writing and partly verbally, or may be implied from the conduct of the parties. (2) Nothing herein contained shall affect any law in force in Cyprus, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.

Article 56 (1) of Cap 149 deals with ‘agreements to do impossible act’ and declares that an agreement to do an impossible act is in itself void. Also, a contract to do an act that becomes impossible or unlawful later is void. Moreover, a contract to do an act which, after the contract is made, becomes impossible or, by reason of some event that the contractor could not prevent, becomes unlawful is void. If the contract of employment is void, it is invalid and there are hence no legal obligations to fulfil the terms of the contract. If a contract is inherently illegal/unlawful or has an illegal or unlawful purpose (eg, to commit a crime), it has no legal effect from the outset. In one relevant case, the contract of employment of a foreign basketball coach was rendered invalid due to the employer’s failure to obtain a valid work permit for the employee as required by law. As Judge Kranvis noted: Any agreement which is made in violation of the law is illegal and invalid, irrespective of the extent of participation of each of the contractual parties. The basic

88  Nicos Trimikliniotis and Corina Demetriou question is whether its implementation is contrary to public order, something that requires that a citizen cannot damage the common good or is contrary to the public interest.8

A contract may be rendered invalid if it does not fulfil the basic conditions of a legal contract, such as clarity on the tasks and/or remuneration, or where it is not clear who the employer or employee is. Generally, it can be rendered invalid if there is clarity in the contract of employment about the terms or conditions of employment. B.  Employment Relationship: Basic Definition There is no statutory definition of ‘employment relationship’ (σχέση εργασίας), nor does the Termination of Employment Law No 24 of 1967 define the notion of employment relationship as such. Article 2 defines the terms ‘employee’ and ‘employer’. The definition defines an employee as a person who works for another: [U]nder circumstances from which the existence of a relationship of employee and employer may be concluded.

In an influential case, Judge Loizos underlines the nature of this relationship as follows: ‘The employee-employer relationship has always been understood to be one of master and servant and the expression under circumstances from which its existence may be concluded.’9 Therefore, the employment relationship, as a matter of law, is decided by the courts from the facts of the particular case. The employment relationship is governed by contracts, whether private or collective, and thus contract law principles apply,10 supplemented by statutory rights and obligations, primarily to be found in the Termination of Employment Law No 24 of 1967, as amended.11

8  Gary Wayne White v Σωματείου Αθλητική Ένωσις Κίτιον (ΑΕΚ) Λάρνακας, μέσω του Γενικού, του Γραμματέα Ηλία Πιτσιλλίδη, 2. Σταύρου Ξενή, Πολιτική Έφεση Αρ 49/2006, 1 Α.Α.Δ. 742, 20 June 2007. 9  Christofides v Redundant Employees Fund, Case Stated No 149, 1 March 1978. The judgment was delivered in English by Judge Loizos. 10  Cypriot employment law consists of common law (ie, court decisions), originally derived from general contract principles, and statutes. The courts only have the power to interpret the law and not to rule contrary to any existing statute or to create new legislation. Article 29(1)(c) of the Termination of Employment Law No 24 of 1967 explicitly notes that the aforementioned statute repeals or restricts the provisions of the Law on Contracts, under Cap 149 or the principles of common law. 11  This law covers redundancy and the arbitrary dismissal of all employees, including public employees, and was enacted in an effort to transpose Recommendation 119 of June 1963 of the ILO.

The Concept of ‘Employee’: The Position in Cyprus 89 Council Directive 2001/23/EC on transfers of undertakings, businesses or parts of undertakings or businesses has purportedly been transposed in Cyprus. Cypriot law uses the same text used in the Directive to transpose Articles 1.1(a), 1.1(c) and 1.3. In Cypriot law, the term ‘seagoing vessels’ (Article 1.3 of the Directive) is not used; instead, the equivalent term ‘shipping vessels’ is used. The Cypriot law on transfers is the Law on Safeguarding and Securing the Rights of Employees in the Event of Transfers of Undertakings, Businesses, or Part of Businesses No 104(I) of 2000 (hereinafter ‘the Cypriot law’). Three cases have gone before the Supreme Court since it has entered into force: (i)

Loris Savvides v SSP Catering Cyprus, Redundancy Find and CTC-ARI Airports Ltd;12 (ii) CTC-ARI Airport Ltd v Charalambos Andreou, SSP Catering Cyprus Ltd. Redundancy Fund13 (factually along the same lines, but different in outcome); (iii) Giannoula Tomazou and others v Redundancy Fund.14 The law which purports to transpose Directive 2001/23/EC is the Law on Safeguarding and Securing the Rights of Employees in the Event of ­Transfers of Undertakings, Businesses, or Part of Businesses No 104(I) of 2000, as amended by Law No 39(I) of 2003. In fact, the Basic Law of 2000 was based on the two previous directives, 77/187/EEC and 98/50/EC, and consolidated under Directive 2001/23/EC.15 The Cypriot Law on Transfers of Undertakings applies to transfers to another employer of undertakings, businesses or parts of businesses as a result of a legal transfer or merger,16 including public and private enterprises engaged in economic activities, irrespective of whether they are profit-making or not. An administrative reorganisation of public authorities or the transfer of administrative functions between public administration authorities shall not be deemed a ‘transfer’ within the meaning of this law.17 12  Loris Savvides v SSP Catering Cyprus, Redundancy Find and CTC-ARI Airport Ltd Civil Appeal No 179/2009, 20 September 2012. 13  CTC-ARI Airport Ltd 1. Χαραλαμπου Ανδρεου, 2. SSSP Catering Cyprus Ltd, 3. Ταμείο Πλεονάζοντος Προσωπικού, Civil Appeal No 359/2009, 26 November 2014. 14  Civil Appeal Case No 11418, 16 July, 2003, 1 Α.Α.Δ. 1078. 15 The amendments introduced by Law No 39(I) of 2003 are trivial and concern the definition of the term ‘economic, technical and organisational reasons’; the determination of the competent court, which by virtue of art 8A is the Labour Disputes Court; and the manner of calculation of compensation due to the employee, which is introduced by art 10 of the amalgamated law. 16  Cypriot Law, art 3(1). 17  ibid art 3(3). The definitions contained in art 2.1 of the Directive are inserted verbatim into art 2 of the Cypriot Law. As for the term ‘employee’, this is described in the Cypriot Law as a person working for another person either under a contract of employment or apprenticeship, or under such circumstances that the existence of an employment relationship may be inferred. The Cypriot Law makes no mention of the excluded limitations set out in art 2.2

90  Nicos Trimikliniotis and Corina Demetriou Cyprus purported to transpose Directive 2008/104/EC with the Temporary Agency Work Law 174(I)/2012. Subsidiary legislation Κ.Δ.Π. 517/2012 regulates the terms and conditions for the granting of licences, certification and inspection of temporary agencies. Any legal or natural person who acts as a mediator for the employment of persons available for work, for the purpose of either direct or indirect pay/fee/material gain/other charges or without charge, needs to obtain a licence for the operation of such an establishment from the competent authority, which is the Director of the Department of Labour of the Ministry of Labour, Welfare and Social Insurance. There is no relevant case law in the Cypriot courts on the subject. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition The Termination of Employment Law No 24/1967, as amended, defines an employee as any person who works for another under a contract of service or of apprenticeship, or under circumstances from which an employment relationship may be inferred. The original statute of 1967 did not contain a definition of ‘employee’; however, a statutory definition of the term was inserted a year later in 1968 by the amending the legislation of the Termination of Employment Law18 and is defined as: [A]ny person who works for another person either under a contract of service or under circumstances from which the existence of a relationship of employee and employer may be concluded; and the term ‘employer’ shall be construed accordingly.

It is noteworthy that the term ‘employee’ as defined above primarily covers the private sector; the term ‘employer’ is defined on this basis. It is further clarified that the Government of the Republic shall also be considered an ‘employer’ for the purposes of the law.19 This presumably means that persons employed in the public sector are also employees, but specific constitutional and other legal provisions deal with public employees. Public employees, members of the armed forces and the police are ‘public officers’ as defined in Article 122 of the Constitution as: [T]he holder, whether substantive or temporary or acting, of a public office.

of the Directive. It may therefore be inferred that the Cypriot Law does not exclude from its scope any of the employment contracts or the employment relationships described in art 2.2 of the Directive. 18 

Law No 17/68. The Greek text reads as follows: ‘ο δε όρος ‘εργοδότης’ θα ερμηνεύηται αναλόγως και θα πε ριλαμβάνη την Κυβέρνησιν της Δημοκρατίας.’ 19 

The Concept of ‘Employee’: The Position in Cyprus 91 Also, section 2 of Law 1/90 on Public Service (as amended) stipulates that public employees lie within the scope of public law. Law 1/90 on Public Service and a number of other acts regulate all matters relating to employment. Actions or omissions by the employing public body are considered executive administrative acts whose legality may be contested before the Supreme Court on the basis of Article 146 of the Constitution. The Court of Industrial Disputes, which is generally the court responsible for resolving labour disputes, does not have any jurisdiction over public employees.20 Different statutes and laws also use their own definitions of ‘employee’. The Social Insurance Law uses the term μισθωτός, following the modern approach taken in Greece, ie, someone who is paid a wage/salary (μισθός) rather than the translation of the English εργοδοτούμενος, who is someone who is literally given work by the employer. The Law on Social Insurance defines the term ‘employee’ as any person ‘performing an insurable employment’.21 The same law provides that: The term ‘employee’ includes any person who works for another person either under a contract of service or apprenticeship, or under such circumstances from which the existence of a relationship of employer and employee may be deduced, and the term ‘employer’ shall be construed accordingly and shall include the Government of the Republic.22

The term ‘employee’ is found in different legislative measures where the legislator chose not to define it by reference to section 2 of Law 24/1967, but to reproduce in each instance the definition for the purposes of the act in question—for instance, Law 78(I)/2005, which establishes a general framework on informing and consulting employees, and Law 104(I)/2000, which provides for the safeguarding and protection of employee rights in the event of a transfer of undertakings, businesses or parts thereof. The definition here is the same as in section 2 of Law 24/1967.

20 See

Meliniotis v Municipality of Nicosia and Another (2003) 1ΑΑΔ 1067. on Social Insurance of 2010 (59(I)/2010), www.cylaw.org/nomoi/enop/nonind/2010_1_59/index.html. The relevant Greek text reads as follows: ‘μισθωτός» σημαίνει πρόσωπο που ασκεί οποιαδήποτε ασφαλιστέα απασχόληση καθοριζόμενη στο Μέρος Ι του Πρώτου Πίνακα, αλλά οι κληρικοί δεν θεωρούνται μισθωτοί για τους σκοπούς των περί Ετησίων Αδειών μετ’ Απολαβών Νόμων του 1967 έως 2005, των περί Τερματισμού Απασχόλησης Νόμων του 1967 έως (Αρ. 2) του 2003, όπως αυτοί εκάστοτε τροποποιούνται ή αντικαθίστανται, των περί Ανάπτυξης Ανθρώπινου Δυναμικού Νόμων του 1999 έως του 2007 και των περί Ταμείου Κοινωνικής Συνοχής Νόμων του 2002 και 2003, όπως αυτοί εκάστοτε τροποποιούνται ή αντικαθίστανται’. 22  The relevant Greek text reads as follows: ‘“εργοδοτούμενος” σημαίνει πρόσωπον εργαζόμεν ον δι΄έτερον πρόσωπον είτε δυνάμει συμβάσεως εργασίας ή μαθητείας είτε υπό τοιαύτας περιστάσεις εκ των οποίων δύναται να συναχθή η ύπαρξις σχέσεως εργοδότου και εργοδοτουμένου’. See Avraam K Prousi v Redundant Employees Fund (1988) 1 CLR 363. 21 Law

92  Nicos Trimikliniotis and Corina Demetriou The laws purporting to transpose the race and employment ­directives, ie, (EC) 2000/43 and 2000/78, laws No 58(I)/2004 (Article 2) and No 57(I)/2004 (Article 2), provide for a broader definition of ‘employee’: Any person who works or is trained in full-time or part-time occupation, fixed-term or permanent employment, continuous or otherwise, ­irrespective of the place of employment, including home employees but excluding selfemployment.23

There is no definition of employee in Cypriot tax law;24 income tax law deals with any form of income, including income from employment, but the terms ‘employee’, ‘employer’ and ‘employment’ are not defined therein.25 B.  Employer: Basic Definition There is no definition in the Law of Termination of Employment, but, as explained above, it is left to be deduced once ‘employee’ is defined on the facts of the case. However, in the original text of the Law of Termination of Employment, the term ‘employer’ was also defined, but was subsequently deleted by the amending legislation.26 In the case of Christofides, the judge27 discussed the meaning of the term ‘employer’ based on the original and the amended text of the law. The judge clarified that ‘employer’ is defined to mean ‘the person with whom the employee has entered into a contract of service and includes persons deemed by the Tribunal to have the status of employer, even though a contract of service does not exist’. He noted that the term includes ‘the Government of the Republic of Cyprus and anybody of persons corporate or incorporate and the legal personal representatives of a deceased employer’. He further noted that ‘by the deletion of the definitions of employee and employer’ and the substitution of the new definition, ‘the two definitions of “employer” and “employee” were merged into one’. Nonetheless, judges often use definitions in the context of discussing a case, either as obiter dicta or as part of

23 For the most up-to-date expert analysis of equality law in Cyprus, see the annual reports and other resources by C Demetriou, ‘Report on Measures to Combat Discrimination Directives 2000/43/EC and 2000/78/EC’ (2015) Cyprus Country Report 2015, www. equalitylaw.eu/downloads/3703-2016-cy-country-report-nd; L Efstratiou Georgiades, ‘Cyprus ­Country Report Gender Equality—How are EU rules Transposed into National Law?’ (2016), www.equalitylaw.eu/country/cyprus. 24 See A Neocleous, M Kyprianou, O Mikhailova and P Aristotelous, ‘Taxation’ in A Neocleous (ed) Introduction to Cyprus Law (Limassol, Neocleous & Co, 2010) 541–74; Ktenas (n 2). 25  Ο περί Φορολογίας του Εισοδήματος Νόμος του 2002 (118(I)/2002), available at: www. cylaw.org/nomoi/enop/non-ind/2002_1_118/full.html. 26  Termination of Employment (Amendment) Law, 1968, No 17/68. 27  Christofides (n 9) per Judge Loizos at 35.

The Concept of ‘Employee’: The Position in Cyprus 93 the ratio of a case. In Avraam K Prousi v Redundant Employees Fund,28 the judge stated that ‘an “employer” is any natural or legal person who is involved in an employment contract with an employee and is responsible for the business or enterprise’. Subsequent case law clarified that the registered joint venture is the employer and not the individual companies making up the joint venture,29 and that the employer in law is the company with which the employee has signed the contract of employment and not the shareholders of the company.30 The absence of a statutory definition may result in confusion, as matters are left to the court to construe on the facts of the particular case. This was illustrated in a very recent case31 in which the Supreme Court applied the definition of ‘employee’ to decide who is an ‘employer’. The Supreme Court rejected an application for judicial review which had sought to challenge the decision of the Minister of Labour and Social Insurance, rendering the applicant personally liable to pay social insurance contributions for the employees, who were employed by a fish restaurant company owned by a company in receivership, in which the applicant owned 45 per cent of the shares. The applicant had essentially stepped into the shoes of the employer in 2012, when the administrator appointed by the Court withdrew and the directors did not take up the management of the company. The applicant had written to the Social Insurance institution requesting a permit to pay the social insurance contributions of employees in order to continue the operation of the business and protect the rights of the employees, which included himself. In his letter to the Social Insurance institution, he argued that he was effectively the sole manager of the restaurant since he had taken up all functions and responsibilities after the previous manager withdrew, including instructing the employees, paying their salaries and approving their annual leave. He had also applied to the VAT authorities and was issued a VAT registration number to pay VAT on behalf of the company. These actions led the Social Insurance Director to conclude that the applicant was the employer in this case and that he was liable to pay social insurance starting from the date of his application to the Social Insurance institution until the company ceased trading. The Social Insurance institution also based its finding on the testimonies of the employees, who confirmed that the applicant was the only person managing the business of the company, from whom they received instructions and who paid their salaries. The applicant contested the legal 28 

Prousi (n 22). Christakis Savva v Redundant Employees Fund, 507/85, reported in Antoniou (n 2) 71. 30  Froso Apostolidou v Logos and Others, 32/93, 507/85, reported in Antoniou (n 2) 71. 31  Solon Charalambous v Republic of Cyprus through the Ministry of Labour and Social Insurance and the Director of Social Insurance, Ref 71/2013, 14 July 2016, available at: www.cylaw. org/cgi-bin/open.pl?file=apofaseis/aad/meros_4/2016/4-201607-71-20134.htm&qstring=% E5%F1%E3%E1%F4%E9%EA%2A%20and%20%E4%E9%E1%F6%EF%F1%2A%20 and%202016. 29 

94  Nicos Trimikliniotis and Corina Demetriou liability to pay social insurance contributions, arguing that he himself was only a servant acting as a mediator between the company and its employees, and that he was in control of the business on behalf of the company and not on behalf of himself. The applicant’s position was that the company was still the employer and that it therefore remained solely responsible for paying the social insurance contributions. The applicant further argued that the administrator had no right to withdraw from his duties, as this contravened the provisions of the Companies Law,32 and that even if the administrator’s resignation was possible, the responsibility for running the company should be conferred to the company’s directors. The Court rejected the applicant’s arguments. It found that the question whether an employment relationship exists or not is an issue of actual fact to be examined under the scope of the entire case. The definition of ‘employee’ includes persons whose occupation is determined under circumstances indicating a master and servant relationship. There is no specific definition of ‘employment relationship’ and its existence depends on various evidential factors which may lead to the finding that a master and servant relationship exists. In order to determine whether such a relationship exists, some of the elements include: (i) (ii) (iii) (iv) (v)

the right of the employer to choose the employee; occupation in a specified space and for specified hours; the existence of some form of control; the safeguarding of the continuation of the employment; and the payment of a specified salary.

According to the Court, the existence of a master and servant relationship is proven primarily by: (i) (ii)

the duty of the employee to render personal services;33 the right of the employer to control the employee’s work, either personally or through another servant or agent. This involves the right to instruct the servant on his or her hours of work, with regard to when to work, what to do and how to do it (within the terms of service), the test being the nature and degree of control over the person alleged to be the servant. This is the element which distinguishes a servant from an independent contractor or from the person employed merely to give his or her employer the result of his or her labour. The Court referred to previous case law,34 which establishes that the only criterion to determine whether an employment relationship exists is

Companies Law (Ο Περί Εταιρειών Νόμος) Cap 113, art 337. Tsapaco Catering Ltd v Δημοκρατίας (1998) 3 ΑΑΔ 796, 800–03. 34  Prousi (n 22). 32  33 

The Concept of ‘Employee’: The Position in Cyprus 95 not the payment of a salary for services rendered, but the degree of control exercised over the work of another; (iii) the court must examine the nature and degree of detailed control over the person alleged to be a servant;35 (iv) in the employment relationship, it is also the duty of the employee to obey such instructions by the employer. The judge, however, failed to clarify whether all, some or even only one of the above elements must be present in order to establish an employment relationship; rather, she referred to different authorities to reach a general conclusion. In the case under consideration, the Court rejected the applicant’s claim that he was not the employer but was merely running the restaurant owned by the company. According to undisputed evidence, he was acting on his own accord without receiving instructions from the company and he had control over the finances, receiving the income generated by the company’s activities. The decision is problematic as the Court rendered a shareholder, who was acting as manager, as ‘the employer’, failing to take the fact into account that the owner was a duly constituted company under the Companies Law (περί Εταιρειών Νόμου, Cap 113). It is paradoxical that the Court used the test to determine whether an employment relationship existed and who is an employee, which is a necessary starting point to determine who is the employer, but is not conclusive. The Court failed to provide any reasons for ejecting the alternative stated by the applicant, ie, that the employer was the company that employed the employees and that he was the manager and a mere shareholder. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-Types of Employees The legal status of different types of employees in the private sector is stipulated in labour law. Despite the differences in pay, status, and terms and conditions of employment, the legal status of employees is basically the same for domestic workers, teleworkers, persons employed by close relatives, cooperatives or in the agricultural sector, athletes, trainees, artists, journalists and persons performing mobile transport activities.36

35  Performing Right Society Ltd v Mitchell and Booker (Palais De Danse) Ltd [1924] 1 KB 762. 36  See N Trimikliniotis, ‘New Forms of Employment in Cyprus’ in B Waas (ed) New Forms of Employment in the EU (Alphen aan den Rijn, Wolters Kluwer International Publications, 2016).

96  Nicos Trimikliniotis and Corina Demetriou Female migrant domestic workers are a particularly vulnerable group of workers, which is the focus of many national and international reports. Over the past few years, the Cypriot Equality Body/Ombudsman has made a series of public interventions on behalf of female migrant domestic workers, who represent approximately 50 per cent of the entire population of third-country nationals working in Cyprus.37 In 2013, a self-initiated investigation of the Ombudsman in its capacity as a National Human Rights Independent Authority (NHRIA) highlighted the gendered dimension of domestic work, the problem of sexual harassment, the discriminatory content of their employment contracts, the absence of unionisation, the lack of access to healthcare, the gaps in the complaints mechanism and in identifying cases of extreme labour exploitation that potentially amounted to labour trafficking.38 In 2014, the Equality Body issued several reports pursuant to complaints from migrant domestic workers. At the same time, it entered into consultation with the Labour Disputes Department of the Ministry of Labour for the purpose of issuing a manual for dealing with labour complaints submitted by migrant workers, including female domestic workers, which contains provisions for the prevention of exploitation and genderbased violence. The draft was being prepared at the time of writing and it is expected that the manual will be produced in early 2015.39 On the other hand, civil servants who are also employees enjoy a better regime of protection as public sector employees. They are appointed by the Public Service Commission40 and their retirement is governed by the ­Pensions Law applicable to all civil servants. Employees in the public sector are also subject to labour law; ­however, civil servants and employees in semi-governmental industries41 fall under public law, which is governed by different courts and by different principles42 in comparison to those under private law. For employees under public law, the competent court is, at least at present, the Supreme Court; with the establishment of a separate Administrative Court, all matters relating 37  According to data supplied by the Ministry of Interior, in 2013, there were 30,000 female migrants employed as domestic workers in Cyprus: Commissioner for Administration in its capacity as National Human Rights Independent Authority (2013), Position Paper regarding the status of domestic workers in Cyprus (Tοποθέτηση Επιτρόπου Διοικήσεως ως Εθνική Ανεξάρτητη Αρχή Ανθρωπίνων Δικαιωμάτων αναφορικά με το καθεστώς των οικιακών εργαζομένων στην Κύπρο), File No A/D3/2013, 2 July 2013, available at: http://kisa.org.cy/wp-content/uploads/2014/04/ %CE%91%CE%943.2013-02.07.2013.pdf. 38 ibid. 39 See C Demetriou, ‘Cyprus Contribution to the FRA Annual Report’, University of Nicosia and Symfiliosi, Cyprus FRANET team, 1 December 2014. 40  Appointed in accordance with the Law on Civil Service, Δημόσιας Υπηρεσίας Νόμoι τoυ 1990 μέχρι 1996 (1/1990). 41  Employees in the Cyprus Electricity Authority (AHK), the Cyprus Telecommunications Authority (CYTA) and other industries governed by public law. Some of the authorities owned by the Republic of Cyprus are established and are thus governed under private law; therefore, the employees there are subject to private labour law. 42  See N Charalambous, Διοικητικό Δίκαιο, 2nd edn (Nicosia, 2004).

The Concept of ‘Employee’: The Position in Cyprus 97 to labour law in the public sector will be dealt with at first instance by the Administrative Court.43 The criteria for distinguishing public and private law employment relationships were clarified by the Supreme Court in the case of Constantas.44 In that case, the appellant was employed by the respondent as an electrician at the schools governed by the respondent. Following a disciplinary investigation of allegations of misconduct against the employee (the appellant), which found the appellant guilty of misconduct, the respondent froze the appellant’s salary for a period of three years. The appellant applied to the Court, seeking to set aside and annul the respondent’s aforementioned decision. The respondent claimed that the decision fell within the sphere of private law and not of public law and, as such, was not subject to review by the Supreme Court. The Board (the respondent) referred to Article 122 of the Constitution, which defines the term ‘public service’ as excluding: [W]orkmen except those who are regularly employed in connection with permanent works of the Republic.

The Board (the respondent) argued that the conditions of hiring, work, pay etc of its staff members, which are based on a collective agreement, bear the characteristics of private employment, leading to the conclusion that this is a case of private law and not of public law. The employee (the appellant) argued that the schools managed by the Board (the respondent) are permanent works of the Republic and that the power of the Board to impose sanctions does not arise from the collective agreement, but from a circular suggesting that at least the disciplinary proceedings, which form the subject matter of this application, fall within the sphere of public law. The Court found in favour of the Board (the respondent) on the basis that school boards are private law persons and that their relationships with employees therefore belong to the private law sphere and, as such, cannot be subject to the review function of the Supreme Court. The legal status and position of trainees has recently received some attention in Cyprus. With reference to the situation in Cyprus, two decisions of the Cyprus Equality Authority (hereinafter CyEA) are relevant: the first complaint that was investigated by the CyEA relates to the general terms of employment and working conditions in hotels as regards the employment of EU citizens.45 The second case recently decided by the CyEA46 relates to the rules and conditions of employment of trainees in ERASMUS, LEONARDO and other EU-related exchange programmes at various 43  The judges of the newly established Administrative Court have now been appointed and the Court is functioning. 44  Demetris Constantas v Board of Larnaca Greek Schools, Supreme Court Case 1058/2010, judgment delivered on 3 December 2012. 45  See CyEA 2011, Α.Ι.Τ. 1/2011, 22 June 2011. 46  See CyEA 2015, Α.Ι.Τ. 1/2015, 24 August 2015.

98  Nicos Trimikliniotis and Corina Demetriou hotels in tourist resorts in Cyprus. These legal positions are in line with EU law;47 however, little has been done to actually implement these positions.48 Nonetheless, the experience collected during their traineeships may not be counted towards their promotion, at least not in the public sector, as decided in the case of Panteli v Republic of Cyprus.49 This case concerned a civil service position of first appointment published in the ­Official Gazette in 2009 and filled in by the appointment of a third party in 2011. The three applicants sought to challenge this appointment on the ground that they had more experience in a position of responsibility than the person appointed, arguing that the Civil Service’s omission was wrong to take into consideration as ‘experience’ the period during which the individual appointed worked as a pupil (ie, a trainee) in a law firm. If the traineeship period was deducted from the appointed person’s overall experience, the person did not meet the five years’ prior service requirement of the job. The Supreme Court found the arguments well founded and annulled the decision on the ground that the administrative body had failed to carry out an adequate investigation, which is a necessary prerequisite for the validity of an administrative act. The administrative authority had wrongfully relied on a mere recommendation letter supplied by the appointed party’s first employer, who had described the appointed party’s general duties without specifying whether the appointed party held a position of responsibility or not. B.  The Establishment of a Specific Category of ‘Workers’ Apart from the term ‘employee’, we find the term ‘worker’ in various laws, primarily in, but not limited to, laws transposing Community directives where the term is used. Examples include Law 137(I)/2002, transposing the Posted Workers Directive. These measures, despite using the term ‘worker’ rather than ‘employee’, essentially proceed on the basis of an employment relationship. Law 137(I)/200, for example, defines a worker as: [A] person who works for another person under a contract of employment, or under such conditions that an employment relationship between employer and employee can be established. 47 

See Cyprus Equality Body 2015. Trimikliniotis, ‘The Rights of Trainees in Cyprus’ (2017) forthcoming. See also N Trimikliniotis, ‘Report on the Free Movement of Workers in Cyprus in 2012–2013’ (2013) National Expert Report for the European Network on Free Movement of Workers within the European Union coordinated by the University of Nijmegen's Centre for Migration Law under the European Commission’s supervision, available at: http://works.bepress.com/ nicos_trimikliniotis/41. 49  Marios Panteli et al v Republic of Cyprus through the Civil Service Commission, 23 January 2015, available at: www.cylaw.org/cgi-bin/open.pl?file=apofaseis/aad/meros_4/2015/ 4-201501-869-11etc.htm&qstring=%E5%F1%E3%EF%E4%EF%F4*%20and%202015. 48 N

The Concept of ‘Employee’: The Position in Cyprus 99 In general, and given that the existence of an employment relationship is a precondition for bringing a person within the scope of ‘worker’, workers enjoy the same rights as ‘employees’, particularly in terms of the termination of the employment relationship. However, special regulations may exist in relation to certain occupational activities involving particular classes of workers, such as ‘port workers’. Nonetheless, this is a normal feature across the board in relation to a variety of professions and does not in itself depict a distinction in the treatment between workers and employees. Cypriot courts have developed the criteria based on which an employment relationship can be deduced, primarily the ‘control test’, ie, the ability of the employer to control the method of work. Other important criteria include the payment of wages, the ability of the employer to choose his or her employees and the power of the employer to dismiss. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The contract of employment in Cypriot law as developed from contractual principles is typified by a range of qualities including subordination, integration and mutuality of obligation. In principle, the greater the degree of control or superintendence, the greater the likelihood that the worker will be deemed to be an employee. This is based on the control test, as the relationship requires the master to hold an exclusive exercise of the right of control over his or her servant. The court would look into factors such as the extent of control over the substance and quality of work performed, the method of control, transfer of control, the extent of integration in the employer’s organisation, the power of appointment, suspension and dismissal, and the existence and form of payment of wages, salaries and other benefits. The issue of control is at the heart of the test determining the existence of an employment relationship and, as a matter of law, is decided by the courts on the basis of the facts of the particular case. In the case of Patikkis,50 Judge Pikis noted: Section 5 of the Termination of Employment Law (24/67) is modelled on the common law understanding of a contract of employment and principles relevant to the right of an employer to dismiss his employee. This was affirmed in the case of KEM Taxi51 and Constantinou.52 The continuance of the relationship of

50  Savvas Patikkis and Another v Municipal Committee of Nicosia, 1988 February (Cases Stated Nos 184 and 185). 51  KEM (Taxi) Ltd v Anastassis Tryphonos (1969) 1 CLR 52. 52  Constantinou v Woolworth (1980) 1 CLR 302.

100  Nicos Trimikliniotis and Corina Demetriou master and servant, as the ‘relationship’ was termed in common law, was dependent on the subsistence of a climate of confidence and trust between the employer and employee. Conduct inconsistent with that standard of loyalty entitled the employer to terminate the contract. Following English common law traditions, there is a sharp distinction in terms of employment rights between the two different categories of ‘employees’: (a) persons working under ‘a contract of service’ (ie ‘self-employed’ or ‘independent contractors’), and (b) employees who are subject to direction and control; in that case, an ‘employment relationship’ exists between the employee and the employer, which is one of a contract of employment with all the rights provided for by law. The test of ‘control, dependence and direction of work’ is that used to distinguish between ‘employees’ and self-employed’/independent contractors. Employees are generally supervised and directed by others; they have a place and time of work, receive wages and have a ‘contract of employment’. A ‘contract of employment’ is clearly distinguished from a ‘contract for services’, as the latter does not provide for any employment rights guaranteed by labour law in accordance with Article 2 of the Termination of Employment Law No 24 of 1967: Under the said definition, as amended, there are two categories of employees that are included in the said term. First, those who work under a contract of service and second, those who work under circumstances from which the existence of a relationship of employee and employer may be concluded.53

In the case of Christofides,54 Judge Loizos posed the question ‘what is a contract of service and whether a relationship of employee and employer, which may be concluded from “the circumstances”, covers a broader spectrum than that of a contract of service’. The judge referred to a number of British authorities55 and quoted Lord Widgery, who stated that it is ‘well accepted now that the idea of the degree of control exercised by the employer over the servant being the decisive factor in this question, has been very largely modified’ and that other factors rather than simply the degree of control exercised by the alleged master have to be taken into account in separating a contract of service from a contract for services. Moreover, the judge quoted British authorities56 regarding ‘the fundamental test to be applied’: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’ If the answer to that question is ‘yes’,

53  Case Stated No 149, 1 March 1978. The judgment was delivered in English by Judge Loizos. 54 ibid. 55  Global Plant Ltd v Secretary of State for Health and Social Security [1971] 3 All ER 38; which referred to the cases of Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 3 All ER 817 and Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 1 All ER 433. 56  The test of Cook J, who in turn referred to the observations of Lord Wright, of Denning LJ and of the Judges of the US Supreme Court, in Market Investigations Ltd v Minister of Social Security [1968] 3 All ER 732, 737.

The Concept of ‘Employee’: The Position in Cyprus 101 then the contract is a contract for services. If the answer is ‘no’, then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list of considerations can be compiled, which are relevant for determining that question, nor can strict rules be laid down as to the relative weight the various considerations should carry in particular cases.

The judge concurred that ‘control will undoubtedly always have to be considered’, but this cannot ‘be regarded as the sole determining factor’. Other important factors are whether the person who is: [P]erforming the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportu­ nity of profiting from sound management in the performance of his task.

B. Indicators The Supreme Court set out criteria for distinguishing employment relationships and contracts for services in two important cases. In Cyprus Tourism Organization v Republic of Cyprus through the Minister of Labour and Social Insurance,57  the Cyprus Tourism Organisation (CTO) sought to set aside and cancel a decision of the Minister of Labour, according to which an employment relationship existed between the CTO and a third party (whom the CTO considered to be a contractor and not an employee), in respect of whom the CTO now had to pay social insurance contributions retroactively. The decision of the Ministry of Labour was based on the fact that the third party had a fixed salary, fixed working hours, the CTO exercised control over the execution of the work, and the means of production belonged to the CTO. The CTO argued that the aforementioned decision must be annulled because it lacked due investigation and there was an error as to the facts or the law. The Supreme Court rejected both these arguments, stating that there was sufficient evidence to establish that the first party had an employment relationship with the CTO, since the objective criteria of a fixed contract, the control of the work and of the means of production were present. It added that the Court would look into the essence of the relationship between the two parties, irrespective of any oral reference of the parties to a contract for services. The second case dealt with the issue of concealed employment. In Tritonia Developments Ltd v Republic of Cyprus through the Minister of Labour and Social Insurance,58 the appellant company

57 

Supreme Court of Cyprus, Case No 406/2011, judgment delivered on 19 February 2013, Tritonia Developments Ltd v Republic of Cyprus through the Minister of Labour and Social Insurance Supreme Court, Case Ref No 436/2010, 13 September 2012. 58 

102  Nicos Trimikliniotis and Corina Demetriou (Tritonia) sought to set aside the decision of the Minister of Labour confirming the findings of the Social Insurance Department that the occupation of a certain worker (OP), who rendered services to Tritonia during the period 2002–08, was concealed employment. The Director of Social Insurance had ordered Tritonia to pay the corresponding contributions to the Social Insurance for OP’s employment. OP had been working in Cyprus since 2002 after securing a visa to work at Tritonia. He was receiving a standard salary from Tritonia every month, whilst the tools and machinery he used belonged to Tritonia. He was receiving instructions and was supervised in the execution of his work by other employees of Tritonia and by its manager. Thus, although Tritonia claimed he was a sub-contractor, the Ministry’s investigation revealed that he was rendering subordinate work, which created an employment relationship. The Minister had ignored the fact that OP had been registered with the social insurance as ‘self-employed’ and that a sub-contractor’s agreement, signed only by OP, had been submitted to the Social Insurance Department. The Court stated that there is no particular criterion to determine whether an employment relationship exists—such a relationship depends on a number of factors which can lead to the finding as to whether a certain contract establishes a ‘master and servant’ relationship or whether a contract for services exists. Quoting British legal textbooks,59 the Court noted that an employment relationship presupposes the right of the employer to choose the employee, the services rendered during specific hours and in a specified space, a certain degree of control, circumstances ensuring the continuity of employment and the payment of remuneration. The Court referred to Cypriot legal precedent, which established that the question as to whether an employment relationship exists is always a question of the facts of each particular case. Payment of a salary for services rendered is not the only criterion; it also has to be established that the employer can exercise control over the work of the employee.60 Reference was also made to English legal precedents, which established that ‘the test to be generally applied lies in the nature and degree of detailed control over the person alleged to be a servant’.61 We can refer to a range of indicators identified in the case law to be taken into account when determining whether or not a contract of employment exists. The case law has examined complex relationships that refer to the extent of the employer’s control over the worker, but go beyond the old ‘control test’. As noted in one of the leading cases, Tokas,62 it seems that

59  T Chitty and J Chitty, Chitty on Contracts. Specific Contracts, 27th edn (London, Sweet & Maxwell, 1994) 698. 60  Prousi (n 22). 61  Performing Right Society Ltd (n 35). 62  Tokas v Redundancy Fund, Case 206/98.

The Concept of ‘Employee’: The Position in Cyprus 103 ‘in earlier cases, a single test, such as the presence or absence of control, was often relied on to determine whether the case was one of master and servant, mostly in order to decide issues of tortious liability on the part of the master or superior.’ However, the situation today is much more complex. In the more complex conditions of modern industry, more complicated tests have often to be applied. It has been suggested that a fourfold test would in some cases be more appropriate, involving: (i) control; (ii) ownership of the tools; (iii) chance of profit; and (iv) risk of loss. Control in itself is not always conclusive. In summary, the following factors can be said to be the different indicators employed by the courts: (i)

The traditional test is referred to as ‘dependence’, which is defined in different contexts in different cases and is discussed in more detail in section IV.C.63 (ii) The degree of the worker bearing risks related to the employer’s profit or loss and the degree of integration of the worker within the employer’s organisation.64 (iii) The extent to which the worker carries on his or her own business or is supervised by his or her employer;65 in one case, the court referred to ‘substantive control by the employer’.66 (iv) As set out in the Tritonia case,67 an indicator is whether the worker uses the employer’s materials and equipment or whether he or she owns or supplies his or her own.68 (v) The trade practice and structure and nature of the tasks performed may be of crucial importance.69 (vi) Another factor is what the parties themselves think about the nature of the employment relationship, but this is not conclusive as the court may consider otherwise based on the surrounding circumstances, as was decided in the case of Christofides.70

63 

Tsouris and Another v Redundancy Fund 134/95, 135/95. Lord Denning’s ‘part and parcel’ test: see Bank voor Handel en Scheepvaart NV v Slatford (No 2) [1953] 1 QB 248 (CA), 290. 65  Rami Abdel-Malak v Redundancy Fund Case 355/95. 66  Constantinos Christodoulakis v Redundancy Fund Case 246/87, 201/87. 67  Tritonia (n 58). 68 For a traditional statement, see, eg, Montreal v Montreal Locomotive Works [1947] 1 DLR 161 (PC). Cypriot case law adopted similar reasoning; see Christophoros Zannetos v Redundancy Fund 355/95. 69  Constantinos Christodoulakis v Redundancy Fund 246/87, 201/87. 70  Christofides (n 9). The judgment was delivered in English by Judge Loizos; see the next section below. 64 

104  Nicos Trimikliniotis and Corina Demetriou C.  The Relevance of ‘Economic Dependence’ Economic dependence is of some relevance, but it has not been explicitly addressed in Cypriot case law. As shown above, what is discussed was the traditional test of ‘dependence’ in general. In the case of Christofides,71 one of the leading cases referred to at length in this chapter, the Supreme Court analysed in detail the distinction between an independent contractor and a dependent employment by reviewing the main British authorities on the subject to construe the true meaning of Cypriot labour law as set out in the statutes and the common law. The question of economic dependence was implicitly addressed when the Court analysed dependence: The approach of the Tribunal that a person is an employee within the definition of the Law whose livelihood is fully or largely dependent upon continued employment, irrespective of what common law category his employment falls into, is not warranted by the definition, nor do the terms of the contract (Exhibit 1), as summed up by the Tribunal support the view that the applicant’s livelihood was, if not totally, at least largely dependent upon continued employment. Whatever that may mean, here we have a person whose services were terminated, upon the advertisement for an agent, he was preferred, obviously because of his past experience in that type of work and employed on specific terms, and at the same time be free to do any other work, except of a nature that would compete with that of the appellants.

This is the basic line of argument followed in the Cypriot case law at the different levels of the court system. Labour Dispute Court judgments also refer to and cite former English authorities to construe the law.72 V.  THE PRINCIPLE OF PRIMACY OF FACTS

As explained above, in Cypriot law, an express provision that a contract is or is not a contract of employment cannot conclusively determine whether or not it is such a contract. As stated in Avraam K Prousi v Redundant Employees Fund: The question as to whether a relationship of employer and employee exists is always a question of fact, and the facts of each particular case have to be taken into consideration. The only criterion for making a person an employee of another is not the payment of a salary for services rendered by him, but it also must be established that the employer exercises control over the work of the other.73 71 ibid.

72  See, eg Theodoros Theodorou v Lounic Confectionary Ltd, Case No 478/06, where the Employment Dispute Court of Limassol reviewed the nature of the dependence by extensively referring to and quoting former British authorities. For instance, it quotes the section entitled ‘Test whether a person is an employee under common law’ from Halsbury’s Laws of England. 73  Prousi (n 22) 368.

The Concept of ‘Employee’: The Position in Cyprus 105 The court may find that a person falls within the law’s definition of an employee, even if in the absence of such a contract, it believes that a relationship of employer and employee exists. In fact, it is not uncommon for contracts for services, the nature of which is such that it points towards an employment relationship, to be deemed by the court to be ‘disguised employment’; in such cases, all rights accruing to an employee under labour law (including protection from unfair dismissal) will apply to the contractor. A verbal reference to a sub-contracting agreement is not a determining factor when assessing the nature of the agreement, which depends on all actual facts. The case of Christofides v Redundant Employees Fund74 lays down the basic test that it is not the label that will determine the nature of the employment contract, but the facts: And in that respect applied the principle laid down by Jenkins L.J. in Addiscombe Garden Estates Ltd. v Crabbe [1957] 3 All E.R. 563 and referred to the passage of Jenkins L.J. who quoted from the judgement of Denning, L.J. in Facchini v Bryson [1952] 1 T.L.R. 1386 at p. 1389 as follows: The occupation has all the features of service tenancy, and the parties cannot by the mere words of their contract turn it into something else. Their relationship is determined by the law and not by the label which they choose to put on it … It is not necessary to go so far as to find the document a sham. It is simply a matter of finding the true relationship of the parties. It is most important that we should adhere to this principle, or else we might find all landlords granting licences and not tenancies, and we should make a hole in the Rent Acts through which could be driven—I will not in these days say a coach and four—but an articulated vehicle.

Testimony in this case revealed that a specific salary was paid for every working day, the right to a break, the right to a free drink during working nights, the duty to wear a certain uniform, all of which suggests sufficient control by Tritonia over OT so as for the latter to be considered an employee. The fact that OT was signing receipts for the payments received does not, by itself, prove the existence of a sub-contracting relationship; besides, OT had told the Director of Social Insurance that the aforementioned receipts had been given to him blank by Tritonia and he signed them without understanding their content. The Court rejected Tritonia’s argument that the Minister had not carried out a sufficient investigation; the file of the case proved that the Minister had ordered an investigation and considered all relevant factors, even though the Minister was not obliged to do so by law. Based on the above, the Supreme Court rejected Tritonia’s application and sustained the Minister of Labour’s decision that the aforementioned relationship was one of ‘master and servant’, ordering

74 

Christofides (n 9). The judgment was delivered in English by Judge Loizos.

106  Nicos Trimikliniotis and Corina Demetriou Tritonia to pay its contributions to the social insurance system. In Christofides v Redundant Employees Fund, Judge Loizos noted: The employee-employer relationship has always been understood to be one of master and servant and the expression under the circumstances from which its existence may be concluded does not change the nature of the relationship of employee-employer; in other words, it includes cases where there does not exist a contract of service or could not exist as such, and yet, the relationship of employeeemployer may be concluded from the surrounding circumstances. The purposes of the law itself would have been defeated were we to include agents and independent contractors within the definition of an ‘employee’ in this Law; a glance at the remaining provisions of the Law, bear out this interpretation.

VI.  QUALIFICATION IN FULL

Once a contract has been determined to be a contract of employment, no part of it may be qualified as a different type of contract for the purposes of labour law, including employment rights and social insurance. There is, however, no principle of law prohibiting parties from entering into other agreements, such as those for the provision of accommodation or subsistence, or to allow for other forms of legal relationships to be entered into as part of the employment relationship, so long that these are not contrary to labour law. There is no authority or legal literature on the subject. The general principles of contract law apply75 in addition to the principles of labour law. Ultimately, it is for the court to construe the meaning of the terms of the contract.76 The contractual relationship of employment may frequently give rise to other, non-contractual relationships—notably as regards vicarious liability, where the employer may be held responsible for the employee’s torts committed in the course of employment. In the absence of Cypriot case law, the Cypriot courts rely on British, EU, Commonwealth and other case law. VII.  LIMITS TO THE FREEDOM OF CONTRACT

As has already been noted, Cypriot law generally does not permit parties to label their relationships in any legally determinative way. However, provided that both parties agree to such changes in writing, both the terms and nature of the contract and the legal relationship can change. Basic

75  76 

See Cap 149, available at: http://cypruslaw.narod.ru/CAP149CY.htm. Georgios Koliou v Georgios Kounnas and Sons Ltd 808/93.

The Concept of ‘Employee’: The Position in Cyprus 107 contractual principles allow for alterations to contractual terms: Article 62 of Section 149, under ‘Contracts Which Need Not Be Performed’, stipulates on the ‘Effect of novation, rescission and alteration of contract’ that ‘if the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed’. Nonetheless, the court would scrutinise the terms closely and may rule against any changes which seem to be the result of duress or undue influence, or the result of an unfair bargaining position of one party (usually the employer). Any alterations to the substantive terms and conditions of the employment relationship would be examined closely if the alteration is in reality one-sided.77 If the employee refuses to perform duties which were the result of a modification of the substantive terms of the contract and subsequently quits his or her job, this will be constructive dismissal.78 Usually, any modification of the terms must be made in writing rather than being considered an exceptional or ad hoc change.79 However, the courts recognise the silent alteration of the terms of the employment contract: in one case, the employee, a secretary, was hired by a firm whose office was next door to her house and when the firm was relocated, the employer gave her a lift to and from the office for 18 months. When the employer told the employee that the lift was no longer available, which meant that she had to walk 500 metres four times a day, she refused to accept it. This was considered to be constructive dismissal.80 When in doubt, collective agreements must be interpreted in favour of the employee.81 In general, temporary arrangements do not constitute an alteration of the terms of the employment contract. In one case, the employer allowed the employee two afternoons off per week to take her children to private lessons; four months later, she stopped turning up every afternoon, so the employer insisted that she return to her normal working hours; she resigned and claimed damages for constructive dismissal. The court ruled against the employee’s claim: the case involved a temporary facilitation that did not alter her normal working hours.82 However, in another case, it was ruled that a failure by the employer to object to the de facto five-day work week that was unilaterally enforced by the employee amounted to implied consent or silent acceptance of the alteration of the terms of the employment contract; he should have complained in the first month.83 Similarly, in another case where the employer (hotel owners) imposed one day off per

77 

As was the case in Panayiotou v BATA (Cyprus) Ltd 292/90. Maro Kitti v DI Dimadis Ltd 356/90; and Andreas Larkou v Michael Geadis 125/73. 79  POAS v GEO Pavlides & Arouzos, No 216/84. 80  Maro Nestoros v Dimadis 57/71. 81 Appeal Memorandum No 323, Stylson Engineering Co Ltd v Antonakis Loizou, 12 November 1998. 82  Anastasia Panayiotou v 1. Pink Panther 2. Redundancy Fund 10/91, 11/91. 83  Christakis Agathokleous v DI Colokasides Ltd 399/96. 78 

108  Nicos Trimikliniotis and Corina Demetriou week instead of the two days off initially agreed and the employee acquiesced for 11 months, the court considered this to have been implied consent by the employee.84 The fact that an employee, an instructor in a school for children with mental disabilities, failed or refused to sign a document containing the terms and conditions of employment, but continued to work for one year without filing a complaint about the terms of employment, does not mean that the employee is not bound; any alteration of the terms of employment can be made in writing or as a result of the conduct of the parties.85 Once a contract of employment is concluded, there is no legal way of contracting out one’s statutory obligations. Employee status as such can be waived only by an agreement by the contracting parties or by operation of the law. Cypriot law allows for persons with kin or family relations to the owners of a firm to also be classified as employees. For instance, a spousal ­relationship does not exclude the establishment of an employer–employee relationship;86 the same applies to other kin and family relations.87 Moreover, neither does directorship, nor being a member of the Executive Board or being a shareholder, as explicitly stated by the court; it is a factual matter for the court to decide.88 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Cyprus has an established tripartite system which is regulated via the Code of Industrial Relations as the established norm.89 Collective agreements concluded on the basis of cooperation between the social partners are essentially gentlemen’s agreements. However, since the accession of Cyprus to the EU, a statutory regulation has been introduced.90 As a result, a number of terms and conditions of employment that were previously determined by collective agreements are now legally enforceable. Whilst this has not 84 

Photos Panagi v Les Palmiers Ltd 12/96. Antigoni Michael v Christou Steliou Ioannou Foundation 30/92. 86  Anthi Angeli v Redundancy Fund 328/84. 87  Christos Patala v Redundancy Fund 120/87. 88  Georgios Anastasiou v Redundancy Fund 167/92; Miliades Protopapas v Redundancy Fund 265/92. 89 The system of industrial relations in Cyprus dates back to the period of the British ­Colonial Administration and still retains some ‘British’ characteristics. The most prominent features are tripartite cooperation and voluntarism. 90  See JH Slocum, The Development of Labour Relations in Cyprus (Nicosia, PIO, 1972); M Sparsis, Tripartism and Industrial Relations: The Cyprus Experience (Nicosia, 1998). 85 

The Concept of ‘Employee’: The Position in Cyprus 109 affected the significance and process of collective bargaining, it has nonetheless assisted in providing the minimum terms and conditions of employment for non-unionised employees and unionised employees.91 In Cyprus, neither social dialogue mechanisms nor collective bargaining is particularly relevant for determining whether an ‘employment relationship’ or ‘employment contract’ exists. Social partners acknowledge that the Industrial Relations Code has served Cyprus well, but a revision was deemed necessary in view of harmonisation and accession to the EU. B.  Custom and Practice Trade unions play a role in delineating the relevant concept (employee, employer, employment relationship) given that in unionised industries, where there are trade union traditions, there is regulation on employment relationships and the terms and conditions of employment in relation to norms and customs. In unionised industries, collective agreements contain the definitions and processes for resolving differences; as such, they have established norms and customs recognised in law via the Code of Industrial Relations. The courts would refer to these norms and practices in their judgments in order to define and apply the law in work relationships. Collective agreements concluded on the basis of cooperation between the social partners are considered by the courts as setting norms, customs and practices.92 IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions Save for the presumptions relating to the burden of proof below, there are no general presumptions. We have also referred to the presence of the

91  Since the Basic Agreement, which was signed in 1962, this social contract was replaced in 1977 by the Industrial Relations Code of 1977. This is essentially a voluntary agreement that is not legally enforceable and that lays out the procedures to be followed for arbitration and the settlement of labour disputes. The Code consists of two parts that contain substantive and procedural provisions. The first part, which deals with the substantive provisions, identifies the principles that should govern industrial relations and the second part, which deals with the procedural provisions, identifies the procedures to be followed in disputes over interests. 92 See M Yannakourou and E Soumeli, ‘The Evolving Structure of Collective Bargaining in Europe 1990–2004: National Report Greece and Cyprus’, Research Project co-financed by the European Commission and the University of Florence, 2004 (VS/2003/0219SI2. 359910), available at: http://adapt.it/adapt-indice-a-z/wp-content/uploads/2014/08/matina_ yannakourou.pdf.

110  Nicos Trimikliniotis and Corina Demetriou indicators identified above. Employment contracts are subject to strict ­statutory provisions and this cannot be excluded by contract. Moreover, the court will always consider certain implied terms of contract. For instance, it is an implied term that due respect and care for the employer’s property is required.93 Also, it is a violation of an implied term if the employee abandons the workplace without reason or leave of absence from work.94 Finally, it is a breach of an implied term of contract if the employer fails to pay salaries to his or her employees.95 B.  The Burden of Proof The burden of proof has already been referred to in the context of the termination of the employment relationship. In general, under Cypriot law, it is presumed in principle that it is for the party that makes a claim must prove that claim in civil court based on the balance of probabilities. This is considered to be ‘a general and fundamental law rule of evidential law’.96 As such, the burden is on the individual filing a claim to prove that the contract is one of employment. Conversely, if a firm makes a claim that a contract is not one of employment, it will be for the employer to demonstrate this fact. The burden of implying any term in a contract will rest on the party seeking to imply it. Similarly, in cases on the employment status of majority shareholders, the onus is on the party denying the existence of a contract to prove that no such contract exists. X.  SPECIFIC PROCEDURES

There is no specific procedure for determining the employment status before the courts within proceedings in which that status is being questioned. If the status is contested in proceedings before the Labour Disputes Court, the question of the employment status will be determined at a preliminary hearing convened only to determine such preliminary issues without involving the full costs of trial. Such a preliminary judgment can be appealed to the Supreme Court. The courts take into consideration the decisions of the Labour Inspectorate regarding the existence of an employment relationship. Also, employees may apply to the Social Security Department of the Ministry of Labour 93 

Georgios Nasif v Papyros Ltd 287/94. Anastasia Kasapi v Theoplastics Ltd 851/89. 95  Antia Pavlidou v Antena Ltd 635/94. 96  Quoted from T Eliades and NG Santis, Το Δίκαιo της Aπόδειξης: Δικονομικές και Ουσιαστικ ές Πτυχές (Nicosia, HIPPASUS Publishing, 2014) 171. This state-of-the-art book cites a number of cases, such as AG of Kenya v Bank Fur Arbeit Uno Wirtschaft AG (1999) 1(A) AAD 585; Abrath v Eastern Railway (1893) 11 QBD 440; and Police v Nicolaou (1936) 15 CLR 78. 94 

The Concept of ‘Employee’: The Position in Cyprus 111 and Social Insurance to declare that they are employees, but this is a procedure outside the court system. The court will, of course, take into account the findings of the Social Security Department, but it is not bound by that decision. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons There is no such category in Cyprus. B.  Equality and Anti-Discrimination Law Cyprus has a number of equality and anti-discrimination measures in law and practice, which have certainly increased since its accession to the EU and the adoption of the anti-discrimination acquis.97 The scope of anti-discrimination laws applies to all sectors of private and public employment, self-employment and occupation, including contract work, self-employment and holding statutory office, with the exception of military service.98 As regards military service, the law provides an exception to the prohibition of age discrimination, where the fixing of an age limit is justified by the nature and the duties of the position.99 The scope of Law No 58(I)/2004 (transposing the Employment Equality Directive minus the ground of disability) includes conditions of access to employment, selfemployment or occupation, including selection criteria, recruitment conditions and promotion; access to vocational guidance and training, including practical work experience; employment and working conditions, including dismissal and pay; membership in an organisation of workers or employers, or any organisation whose members carry on a particular profession, including the benefits provided for by such organisations.100

97 N Trimikliniotis and C Demetriou, ‘Evaluating the Anti-discrimination Law in the Republic of Cyprus: A Critical Reflection’ (2009) 20(2) Cyprus Review 79; Demetriou (n 23); drafted for the European Network of Legal Experts in the Non-discrimination Field on the Grounds of Race or Ethnic Origin, Age, Disability, Religion or Belief and Sexual Orientation, available at: http://ec.europa.eu/justice/discrimination/files/ad_2014_country_reports/2015-cycountry_report_nd_final.pdf. 98  Law on Persons with Disabilities (Ο Περί Ατόμων με Αναπηρίες Νόμος), No 127(Ι)/2000, art 5(a), available at: www.cylaw.org/nomoi/arith/2000_1_127.pdf; Cyprus, Law on Equal Treatment in Employment and Occupation (Ο Περί Ίσης Μεταχείρισης στην Απασχόληση και την Εργασία Νόμος) 2004 No 58(I)/2004, art 4(a), available at: www.cylaw.org/nomoi/enop/nonind/2004_1_58/full.html. 99  Law on Equal Treatment in Employment and Occupation (n 99). 100  For the latest on discrimination law in Cyprus, see Demetriou (n 23); Efstratiou Georgiades (n 23).

112 

6 The Concept of ‘Employee’: The Position in the Czech Republic PETR HŮRKA

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HE LABOUR CODE (zákoník práce) in the Czech Republic1 does not provide a definition of ‘contract of employment’ (pracovní smlouva) and nor does the relevant case law. Instead, the definition of these terms is based on legal theory. Pursuant to the latter, a contract of employment constitutes a bilateral legal act that establishes a basic employment relationship (základní pracovněprávní vztah)2—an employment relationship (pracovní poměr) between an employer (zaměstnavatel) and an employee (zaměstnanec). Czech law distinguishes between basic and derived employment relationships. A basic employment relationship refers to regular employment relationships and relationships established by agreements on work performed outside an employment relationship (právní vztahy založené dohodami o pracích konaných mimo pracovní poměr).3 Derived employment relationships derive from basic employment relationships and include, for example, a non-competition agreement.

1  Act No 262/2006 Coll, Labour Code, as amended. Czech law is traditionally divided into private and public law. Private law deals with private individual relationships and public law governs the powers and authorities of state administrative bodies etc. Based on this separation, the Labour Code is a private law regulation because it deals with individual legal relationships between employers and employees and collective legal relationships between employers, their representatives and trade unions. The Separate Act on Employment (zákon o zaměstnanosti) Act No 435/2004 Coll deals with public law issues such as unemployment benefits and the fight against illegal work. 2  cf P Hůrka and N Randlová, Labour Code Commentary (Prague, Wolters Kluwer ČR, 2011) 42. 3  Labour Code, s 3.

114  Petr Hůrka The Labour Code sets out the form and content of the contract of employment. Accordingly, a contract of employment must compulsorily include so-called essential elements. These essential elements of a contract of employment are: (i)

type of work (druh práce) or, if applicable, types of work that the employee shall/will perform for the employer; (ii) place(s) of performance of work (místo výkonu práce), where the agreed type of work should be performed; (iii) the date of commencement of work (den nástupu do práce), which is the day on which the employment relationship commences.4 Save for the above-described essential elements of the contract of employment, the contracting parties may also agree on additional elements, particularly the duration of the employment relationship5 (a fixed-term employment relationship or an employment relationship for an indefinite term), a trial period,6 remuneration,7 reduced working hours,8 a non-competition clause9 etc.10 As regards the formal requirements of the contract of employment, the Labour Code stipulates that it must be concluded in writing,11 otherwise it is invalid. In general, Czech law distinguishes between nullity (zdánlivost) and invalidity (neplatnost) of a legal act. The grounds for nullity are described in both the Civil Code (občanský zákoník)12 and the Labour Code, and include: (a) absence of (free) will;13 (b) absence of manifestation of serious will;14 (c) indeterminacy or incomprehensibility of the legal act;15 (d) non-compliance with obligatory written form of legal act in specified cases (eg, a withdrawal from the contract of employment, a termination notice, an immediate termination notice or a cancellation in the probation period must be done in writing, otherwise it is null and void);16 and (e) provisions by which the employee waives his or her rights that unilaterally set out the employee’s obligations outside of the Labour Code or by which the parties would deviate from certain special provisions of the Labour Code.17 4 

ibid s 34(1)(a), (b), (c). Labour Code, s 39. 6  ibid s 35. 7  ibid ss 109 ff. 8  ibid s 80. 9  ibid s 310. 10  cf Decision of the Supreme Court dated 10 May 2011, file No 21 Cdo 1395/2010. 11  Labour Code, s 34(2). 12  Act No 89/2012 Coll, the Civil Code. 13  ibid s 551. 14  ibid s 552. 15  ibid s 553(1). 16  Labour Code, ss 34(4), 50(1), 60, 66(2), 77(4). 17  ibid ss 4a(4), 144a(3), 305(1), 346a. 5 

The Concept of ‘Employee’: The Position in the Czech Republic 115 Also, the grounds for invalidity are described in both the Civil Code and the Labour Code, and include: (a) if a legal act is contrary to good morals or statutes, if so required by the sense and purpose of a statute;18 (b) if something impossible is to be carried out;19 (c) lack of legal capacity;20 (d) lack of form (eg, a contract must be concluded in writing, but instead is made orally);21 (e) an error concerning a decisive circumstance;22 and (f) a lack of required approval by a respective body (eg, in case the Labour Code obliges the employer to first obtain approval by the trade unions).23 Czech law is based on the preference of the validity of legal acts rather than their invalidity.24 For this purpose, Czech civil law builds on the following concepts: (a) partial invalidity, which is preferred in the event that the above deficiencies only apply to certain parts of the contract;25 (b) the right of the court to change the scope of the contract in the event that the reason for invalidity only consists in an unlawful determination of quantitative, temporal, spatial or other scope;26 (c) if a meaning is undisputable, errors in writing or numbers do not cause the invalidity of a legal act;27 and (d) in the event that a contract (including a contract of employment) was concluded orally, the parties may substitute it by a written agreement, thus validating it.28 The Labour Code further states that: (a) the invalidity of a contract of employment may only be claimed by the parties prior to the commencement of work;29 (b) a legal act is not invalid merely because it was not first discussed with a respective body (eg, in the event that the Labour Code obliges the employer to first discuss the issue with the trade unions);30 and (c) the invalidity of a legal act may not be used to the employee’s detriment in the event that the employee alone did not cause the invalidity.31 Failure to observe the obligation to conclude a contract of employment in writing by the employer constitutes an administrative violation or administrative delict according to the Labour Inspection Act (zákon o inspekci práce).32 Failure to observe the obligation to provide the employee with 18 

Civil Code, s 580(1). ibid s 580(2). 20  ibid s 581. 21  ibid s 582. 22  ibid ss 583–85. 23  Labour Code, s 19(1). 24  Civil Code, s 574. 25  ibid s 576. 26  ibid s 577. 27  ibid s 578. 28  ibid s 582(1). 29  Labour Code, s 20. 30  ibid s 19(2). 31  ibid s 19(3). 32  Sections 12(1)(b) and 25(1)(b) of the Act No 251/2005 Coll, on Labour Inspection, as amended. 19 

116  Petr Hůrka a copy of the contract of employment33 does not result in an invalidity of the contract, but constitutes an administrative violation or administrative delict.34 B.  Employment Relationship: Basic Definition Employment relationships are only broadly defined in the Labour Code as legal relationships that arise from the performance of dependent work (závislá práce) between an employee and an employer as well as a legal relationship of a collective nature related to the performance of dependent work.35 From the perspective of legal theory, an employment relationship is a legal relationship between an employer and an employee, the content of which is the personal performance of dependent work by one contracting party (the employee) for the other contracting party (the employer).36 Employment relationships are relationships governed by law; they are created, modified and terminated on the basis of legal facts. Employment relationships are characterised by the following basic features:37 (i)

they regulate the employee’s performance of dependent work for the employer;38 (ii) they provide the employer with legal and organisational tools to manage and supervise the employee’s work in order to achieve the employer’s activities (organisational function) and to secure reasonable working conditions for the employee (protective function); (iii) they involve/imply the personal performance of work by the employee in exchange for remuneration. The basic employment relationship is a regular employment relationship and a relationship established by an agreement on work performed outside an employment relationship.39 An employment relationship exists between the employer and the employee, and it is created upon the conclusion of a contract of employment.

33 

Labour Code, s 34(5). Labour Inspection Act, ss 12(1)(a) and 25(1)(a). 35  Labour Code, s 1(a) and (b). 36  cf Hůrka and Randlová (n 2) 37. 37  cf P Hůrka et al, Labour Code and Related Provisions of the Civil Code with Detailed Commentary as of 1 January 2014 (Olomouc, ANAG Publishing, 2014) 24. 38 Pursuant to s 2(1) of the Labour Code, ‘dependent work’ means work that is carried out with the employer being the superior and the employee being subordinate, in the employer’s name and according to the employer’s instructions (orders), performed in person by the employee for the employer. 39  Labour Code, s 3. 34 

The Concept of ‘Employee’: The Position in the Czech Republic 117 An exception is the employment relationship of certain managerial employees (vedoucí zaměstnanci) who work in the public sector; their employment relationship is established by appointment (jmenování).40 The latter represent unilateral legal acts through which an employment relationship is established. Such unilateral legal acts are untypical, as the consent of the other contracting party, contrary to the general rule, is not required. It obviously follows that in appointing managerial employees, the essential elements of an employment contract must be laid down, including at least the position that will be taken up by the employee and the date of the commencement of work. In the event that the place of work is not agreed upon, it is assumed that the place of the performance of work will be the employer’s registered office. The establishment of an employment relationship by appointment covers managerial employees who work in the public sector, where the Labour Code41 or a special legal regulation specifically apply.42 Apart from regular employment relationships, other basic employment relationships exist under which it is possible to perform dependent work; these include legal relationships established by agreements on work performed outside the scope of an employment relationship. These legal relationships are not created upon the conclusion of a contract of employment; they are established on the basis of an agreement to complete an assignment (based on which the employee may perform up to 300 hours of dependent work per year)43 and on the basis of an agreement to perform work (based on which the employee may perform work up to an average of one half of regular weekly working hours).44 These relationships differ substantially from regular employment relationships, as the protection of the employee is reduced—there is very little protection against termination, the employee is not entitled to any severance pay, paid leave, impediments to work etc. On the other hand, the extent of work is limited (see above), so such agreements are mostly suitable for student work, internships etc. Czech law also regulates the transfer of rights and obligations from employment relationships in case of transfers of undertakings. Under the relevant legal regulations, the rights and obligations under an employment relationship may be transferred in cases stipulated by special legal regulations (such as in the event of mergers, spin-offs, sales of business etc) or by the Labour Code.45 The Labour Code specifies that in the event that the activities or tasks or parts thereof are transferred to another employer,

40 

ibid s 33(3). ibid s 33(3). 42  Such as the position of director of Czech Radio pursuant to s 9 of Act No 484/1991 Coll, on Czech Radio, as amended. 43  Labour Code, s 75. 44  ibid s 76. 45  ibid s 338(1). 41 

118  Petr Hůrka the rights and obligations under that employment relationship shall fully transfer to the new employer.46 Temporary work agencies (agentura práce) are also covered by Czech law.47 Employment relationships are established between the employee and the temporary work agency, and the temporary work agency temporarily assigns the employee to perform dependent work for the user company (uživatel). The user company assigns working tasks to the employee, but cannot establish any legal acts (such as termination of the employment relationship) involving the employee—such acts can only be established by the temporary work agency, as temporarily assigned employees are not covered by a legal relationship with the user; they merely perform dependent work for the user. Temporary assignment is also possible on the basis of an agreement between two employers. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition The term ‘employee’ is defined in the Labour Code.48 An employee is a natural person who has bound himself or herself to perform dependent work for the employer.49 This definition also applies to managerial employees whose employment relationship is established by appointment and is also applicable for the purposes of tax and social security issues as long as the relevant legal regulations do not contain their own definition. The subject matter of the natural person’s activity will be the performance of dependent work.50 Such work may only be performed within a basic employment relationship. The relevant provisions of the Labour Code place emphasis on the contractual agreement to perform work;51 thus, a natural person can only become an employee if he or she enters a contractual obligation with the employer on the basis of his or her declared will and in accordance with the voluntary labour principle.52

46 

ibid s 338(2). ibid ss 307a ff. 48  Until 2007, the statutory definition of ‘employee’ referred to an individual who performed certain ‘tasks’. Following the adoption of the Labour Code, effective from 1 January 2007, the definition of ‘employee’ is no longer based on the type of ‘tasks’ performed, notwithstanding whether these are common or uncommon, but rather on the ‘nature of the work’ (dependent or independent). 49  Labour Code, s 6. 50  ibid s 2. 51  ibid ss 33(1), 75 and 76(1). 52  Article 9(1) of Act No 2/1993 Coll, the Charter of Fundamental Rights and Freedoms. 47 

The Concept of ‘Employee’: The Position in the Czech Republic 119 An employee may be a natural person who has the capacity to be entitled to rights and owe duties under an employment relationship (legal ­personality) and to acquire such rights by his or her juridical acts and to commit himself or herself to such duties (legal capacity). A natural person as an employee acquires legal personality and legal capacity upon reaching the age of 15 and completing compulsory school education.53 A contract of employment or an agreement to complete a job or an agreement to perform work may therefore be concluded no sooner than both the above conditions have been met. B.  Employer: Basic Definition The term ‘employer’ is defined in the Labour Code.54 An employer is considered to be a person for whom a natural person (an employee) has agreed to perform dependent work. This definition is also applicable for the purposes of tax and social security issues as long as the relevant legal regulations do not contain their own definition. As already follows from the definition of dependent work,55 the employer acts in its own name and at its own liability where employment relationships are concerned. Thus, an employer may be a natural or a legal person with legal personality and legal capacity.56 Legal persons include legal persons under private law, such as joint stock companies, limited liability companies, associations and foundations, legal persons under public law, such as municipalities, regions and organisations receiving contributions from the state budget, and the state (Czech Republic) and foreign legal persons.57 According to this definition, employers who belong to a group of companies are treated independently.58 Joint employment is not regulated in the Czech Republic.

53 

Civil Code, s 35. Labour Code, s 7. 55  ibid s 2. 56  Legal personality, legal capacity and the restriction of legal capacity and representation, if applicable, are governed by the Civil Code. As regards the employer, a distinction must be made between natural and legal persons. A natural person acquires legal personality at birth (s 23 of the Civil Code). That means that from birth onwards, a natural person can become an employer and may own an enterprise with employees. A natural person gains legal capacity (that is, the capacity to acquire rights and obligations through their own legal acts) when he or she reaches maturity (s 30(1) of the Civil Code). A legal person acquires legal personality and gains legal capacity on the date of its incorporation (s 118 of the Civil Code). 57  A legal person with its registered office outside of the Czech Republic. 58  cf Decision of the Supreme Court dated 25 January 2012, file No 29 Cdo 3661/2010. 54 

120  Petr Hůrka III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees The term ‘employee’ is used to denote only those employees who perform dependent work in an employment relationship (including managerial employees). There are, however, no differences between white-collar and blue-collar workers (the Labour Code applies to all employees), and even special types of professions such as athletes or journalists perform their work under an employment relationship as long as their work can be defined as dependent work. However, case law allows persons such as athletes to perform work under a civil law contract (ie, outside an employment relationship) due to the unclear nature of their work (dependent/independent).59 Certain professions (mostly public professions) are regulated by special legal regulations60 that correlate with the Labour Code in line with the principle of: (i)

(ii)

subsidiarity (unless otherwise stated by a special regulation, legal relationships are governed by the Labour Code) between a cooperative and its members, the employment relationships of trainees preparing to enter civil service, territorial self-governing body officials, university academics, directors of public research institutions, Probation and Mediation Service employees and Public Defender of Rights employees; direct applicability and delegation (the legal relationship is covered by the Labour Code, provided that the Labour Code expressly states so or according to special legal regulations)—the employment relationships of judicial trainees, prosecuting attorneys, prosecutor trainees and employees that work in administrative offices and are engaged in the state administration as a service provided by the Czech Republic to the public in accordance with the Civil Service Act.61

59  cf Decision of the Supreme Administrative Court dated 29 November 2011, file No 2 Afs 16/2011. 60 Section 579 of Act No 90/2012 Sb, on Business Corporations and Cooperatives (Business Corporations Act); s 18 of Act No 283/1993 Sb, on State Attorneys; ss 40 and 41 of Act No 236/1995 Sb, on the Salary and Other Indemnities Associated with the Execution of the Office of Representatives of State Power and Some State Bodies and Judges and Members of the European Parliament; s 15a of Act No 85/1996 Sb, on the Bar; s 70(4) and (5) of Act No 111/1998 Sb, on Institutions of Higher Education; ss 2(4) and 27 of Act No 349/1999 Sb, on the Public Defender of Rights; ss 3(1) and 6(1) of Act No 257/2000 Sb, on the Probation and Mediation Service; ss 16a, 36a, 84 and 111 of Act No 6/2002 Sb, on Courts and Judges; s 1(2) of Act No 312/2002 Sb, on Officials of Territorial Self-Governing Bodies. 61  Act No 234/2014 Coll, the Civil Service Act, as amended.

The Concept of ‘Employee’: The Position in the Czech Republic 121 The differences between ‘normal’ employment relationships and the above professions vary and include, for example, the following: (i)

The existence of an employment relationship between a cooperative and its member may be a condition of membership in the cooperative if the Articles of Association of the cooperative state so.62 Therefore, the termination of an employment relationship between a cooperative and its members results in an automatic cancellation of membership in the cooperative.63 (ii) The employment relationship of territorial self-governing body officials is also governed by the Labour Code, with differences including, eg, a minimum age of 18 years, impeccability, citizenship or permanent residence in the Czech Republic and knowledge of the Czech language as conditions of entering into an employment relationship.64 A public tender is a precondition for entering into an employment contract for certain positions.65 Head officials may only be recalled from their position based on grounds specified in the TSBO Act66 (under the Labour Code, it would be possible to recall them without stating specific grounds).67 In the event of the termination of an employment relationship based on the official’s redundancy, the statutory severance pay is raised in contrast to the Labour Code by two to four average monthly earnings of the official, depending on his or her length of service (10, 15 or 20 years).68 Officials are, however, prohibited from performing any other gainful activity without the prior written consent of the territorial self-governing body, with the exception of scientific, pedagogical, publicist, literary or artistic activity.69 Officials are also restricted from performing duties in the statutory or supervisory bodies of business corporations.70 (iii) The employment relationship of prosecuting attorneys is governed by the Act on State Prosecution.71 Only a citizen of the Czech Republic who has reached at least 25 years of age, has completed university education in law, has certain moral qualities etc may be appointed as a prosecuting attorney.72 The functions of a prosecuting attorney and

62 

Act No 90/2012 Coll, on Business Corporations and Cooperatives (BCA), s 579(1). ibid s 579(2). 64  Act No 312/2002 Coll, on territorial self-governing body officials (TSBO Act), s 4(1). 65  ibid ss 6–9. 66  ibid s 12. 67  Labour Code, s 73(1). 68  TSBO Act, s 13. 69  ibid s 16(4) and (5). 70  ibid s 16(3). 71  Act No 283/1993 Coll, on State Prosecution, as amended. 72  ibid s 17(1). 63 

122  Petr Hůrka thus also his or her employment relationship are automatically terminated at the end of the year in which the prosecuting attorney reaches the age of 70 years.73 (iv) The civil service relationship of state employees is also characterised by specificities. A public tender is a precondition for entering into a civil service contract.74 The law specifically prohibits state employees who have a close relationship with each other (eg, father and son) to be in a subordination relationship.75 State employees may in certain cases be transferred to a different state administration body for a limited period of time, even without his or her consent.76 In certain cases (eg, temporary redundancy, performance of office in a trade union or suspension from service), the state employee may also be put out of service for a limited period of time.77 The termination of a civil service relationship is only possible for special reasons, such as poor performance for two consecutive assessment periods78 or redundancy of the state employee.79 The relationship is automatically terminated based on other grounds specified in the Civil Service Act, such as termination at the end of the year in which the state employee reaches 70 years of age80 or by conviction of the state employee of a crime, if the court issues a punishment prohibiting the offender from further performance of service.81 State employees are prohibited from performing any other gainful activity without the prior written consent of the administrative body, with the exception of scientific, pedagogical, publicist, literary or artistic activities.82 State employees are also restricted from performing duties in the statutory or supervisory bodies of business corporations.83 Czech labour law also regulates the legal relationships of employees who work outside the employer’s premises (teleworking, home working).84 ­Similarly to employees who perform work on the basis of an agreement to complete an assignment, some of the provisions of the Labour Code ­concerning, for example, obstacles to work (such as sickness, weddings and funerals), wages (salaries) and extra pay or time off for overtime work or

73 

ibid s 21(1)(f). Civil Service Act, ss 24 ff. 75  ibid s 43(1). 76  ibid s 47. 77  ibid ss 62–65. 78  ibid s 72(1)(b). 79  ibid s 72(1)(d). 80  ibid s 74(1)(h). 81  ibid s 74(1)(c). 82  ibid s 81(2). 83  ibid s 81(1). 84  Labour Code, s 317. 74 

The Concept of ‘Employee’: The Position in the Czech Republic 123 work on holidays do not apply to employees who do not work at the employer’s premises and who independently schedule their working hours (within the scope of the predetermined weekly working hours or, if applicable, the agreed shorter working hours). The employer and employee can also agree in a contract of employment or other type of agreement on additional conditions regulating the performance of work outside the e­ mployer’s ­premises (such as the o ­ bligation of the employee to regularly visit the employer’s premises). B.  The Establishment of a Specific Category of ‘Workers’ The term ‘worker’ bears no meaning in Czech labour law from the perspective of the employment relationship. The term ‘worker’ merely denotes a natural person who may be present at the workplace and who may perform a certain activity at this workplace, whereby such a person may be an employee or self-employed. It bears significance only from the perspective of protection of life and health at the workplace, as the Labour Code states that the employer shall guarantee the occupational health and safety of all natural persons who are present at the employer’s workplace.85 The term ‘worker’ does not entail any special legal relationship and does not constitute/induce/imply any level of protection guaranteed to the employee by legal regulations or any other similar legal status enjoyed by a regular employee. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration Under Czech law, subordination (ie, a relationship in which the employee is subordinated to the employer) is just one of the characteristics of dependent work. The Labour Code describes four characteristics of dependent work: (a) subordination of the employee; (b) performance of work in the name of the employer; (c) performance of work in accordance with the employer’s instructions; and (d) personal performance of work by the employee.86 As described above, dependent work must be performed under an employment relationship. Therefore, under Czech law, it is the employer (through its managerial employees and other representatives) that assigns

85  86 

ibid s 101(5). ibid s 2(1).

124  Petr Hůrka work-related tasks to the employee, issues binding instructions on how to perform their work and controls their work. The employee is obliged to perform dependent work in person and may not ask another person to perform the work on his or her behalf. The subordination of the employee towards the employee is mainly organisational. This means that it is the employer that assigns work to the employee, manages and supervises the employee, and rewards the employee for work performed. This subordination is one of the characteristics of dependent work as defined by the Labour Code (contrary to selfemployment)­. A basic feature is that work is performed in accordance with the instructions of the employer, through which the employer regularly manages and supervises the employee’s work. Dependent work is performed in the name of the employer, ie, the employee performs work in the employer’s name and on its account; the result of the work is attributed to the employer. The employer acquires all the rights and obligations as well as the profit and loss associated with the employee’s work. For this purpose, the employee is usually integrated into the employer’s structure, although no integration test exists to determine whether dependent work is being performed. Integration is not described in any legal regulation and it is up to the employer to create the organisational structure. To summarise, dependent work must be performed under an employment relationship; if the work to be performed is not characteristic of dependent work, the employer need not directly engage its own employees, but can have different natural or legal persons acting as contractors or subcontractors to perform such work. This relationship will then not be an employment relationship, but another type of contract in accordance with the Civil Code, such as a contract for work (smlouva o dílo),87 a mandate agreement (příkazní smlouva),88 a commercial agency agreement (smlouva o obchodním zastoupení)89 or innominate contracts (ie, contracts not directly regulated by the Civil Code),90 such as a services agreement (smlouva o poskytování služeb). Employment regulations will not apply to such legal relationships. B. Indicators Apart from the characteristics of dependent work, the Labour Code also describes certain obligations of the employer which serve as possible

87 

Civil Code, ss 2586 ff. ibid ss 2430 ff. 89  ibid s 2483 ff. 90  ibid s 1746(2) ff. 88 

The Concept of ‘Employee’: The Position in the Czech Republic 125 i­ndicators that dependent (subordinated) work is being performed. These are the performance of work: (a) for salary/wage; (b) at the employer’s costs; (c) at the employer’s liability; (d) in the working hours determined by the employer; and (e) at the employer’s premises or another agreed location (such as the employee’s home).91 Wages are agreed upon as regular payment provided to the employee for the performance of work. Remuneration is paid periodically for a given period, generally a calendar month, and only for the performance of work and not for other activities associated therewith, such as costs, liability or independent work. Dependent work must be performed at the employer’s costs; the costs of work refer in particular to raw materials, energy, materials, tools, facilities and work space. Thus, dependent work is predominantly performed at the employer’s premises with the use of the employer’s materials and equipment. Likewise, the employer is liable for any damage caused by the employee to a third person (customer) while performing his or her work-related tasks and in connection therewith. The employer is also liable for damage sustained by the employee while performing work. As regards dependent work, the employer is obliged to allocate work to the employee in accordance with the working hours and periods of rest stipulated by the Labour Code.92 The employer is entitled to utilise the employee’s work potential only in the periods and under the terms and conditions set out in the Labour Code. This obligation includes the scheduling of working hours and the allocation of work only during these working hours, the observance of the working hours and shifts, restriction of overtime and night work, statutory breaks at work and periods of rest, time off in the event of an obstacle to work, determining the employee’s holidays and keeping records on working hours. The case law also adds that the relationship between the employer and the employee must be of a certain duration, as one-time assignments cannot be considered dependent work.93 Other indicators which may be helpful in order to determine whether a particular relationship is dependent work or self-employment were described by doctrine and include: (a) the number of employers—in case of real subordination, the employee performs work solely for one employer; and (b) integration into the organisational structure of the employer.94

91 

Labour Code, s 2(2). ibid ss 78 ff. 93  cf Decision of the Supreme Administrative Court dated 13 February 2014, file No 6 Ads 46/2013. 94  cf P Hůrka, O Novák and M Vrajík, Current Labour Law Case Law with Detailed Commentary (Olomouc, ANAG Publishing, 2012) 20–21. 92 

126  Petr Hůrka Provided the activity performed by the natural person for the employer meets the characteristics of dependent work95 and if personal and/or economic dependence exists,96 it is an employment relationship that is governed by the Labour Code, and the employer is obliged to provide the employee with remuneration for such work. The work must be performed at the expense and under the liability of the employer, during working hours at the workplace or at an otherwise agreed place.97 C.  The Relevance of ‘Economic Dependence’ As described above, the Labour Code defines ‘dependent work’, which is the subject matter of an employment relationship. Given the characteristics and indicators described above, these result in the employee being economically dependent on the employer. Case law states that economic dependence is a common feature of dependent work and is a leitmotiv which differentiates dependent work from other types of work, such as friendly support.98 Therefore, although economic dependence is not a factor that necessarily has to be present in an employment relationship or that in itself means that an employment relationship has been established between economically dependent persons, with usually one person being economically dependent on another, the characteristics of dependent work will be fulfilled. V.  THE PRINCIPLE OF PRIMACY OF FACTS

Czech law also recognises the principle of primacy of facts; legal relationships under labour law are primarily considered according to their content and not according to their form. This principle can also be observed, in addition to others, in the fight against so-called ‘švarcsystém’, which is the hiring of self-employed persons instead of regular employees. In other words, in this scheme the relationship is formally a relationship between two self-employed enterpreneurs. However, in fact, the position of such external workers corresponded to that of employees.99 The subject matter of their activities was dependent work for the employer, performed under

95 

Labour Code, s 2(1). cf Decision of the Supreme Administrative Court dated 13 February 2014, file No 6 Ads 46/2013; cf Hůrka, Novák and Vrajík (n 94) 17–22. 97  Labour Code, s 2(2). 98  cf Decision of the Supreme Administrative Court dated 13 February 2014, file No 6 Ads 46/2013. 99  cf Decision of the Supreme Administrative Court dated 15 January 2009, file No 7 Afs 72/2008; Decision of the Supreme Court dated 16 June 2011, file No 21 Cdo 920/2010; or Decision of the Supreme Administrative Court dated 8 September 2011, file No 1 Afs 53/2011. 96 

The Concept of ‘Employee’: The Position in the Czech Republic 127 the employer’s organisational subordination, in the name of the employer, at its costs and under its liability. In accordance with existing legislation, this represents the performance of dependent work outside an employment relationship, which is prohibited under section 3 of the Labour Code. Should the law be circumvented in this manner and if it is proven that the external worker actually worked as an employee, the employer and the worker can be prosecuted for an administrative violation or an administrative delict, which will result in a fine for both the employer100 and the employee.101 A legal relationship agreed between a person who assigns work and a person who carries out the work will be assessed on the basis of its content, namely the actual performance of work, and not on the basis of the formal provisions in the contract. The key term here is ‘dependent work’—if it is not proven that the relationship actually involved dependent work, it will be considered a normal business relationship outside of labour law, as described in section IV.C above.102 VI.  QUALIFICATION IN FULL

As a general rule, the parties can also adjust their rights and obligations in areas that go beyond labour law. Yet they may not affect the rights and obligations guaranteed by the mandatory rules stipulated in the Labour Code.103 Other contractual relationships between the employee and the employer must take the existing employment relationship into consideration. The objective here is to primarily protect the employee, who, under duress caused by the employer as the stronger contracting party, could conclude contracts that are not in his or her favour. Certain rights and obligations directly associated with employment must be explicitly regulated in the contract of employment.104 Notably, labour law and civil law follow the principle of subsidiarity.105 Labour law is often linked to civil law and is interpreted accordingly. It should therefore be understood that labour law not only draws on

100  Following the provisions of s 140(1)(e) and (4)(f) of the Act on Employment, such an administrative violation or administrative delict is subject to a pecuniary penalty of up to CZK 10,000,000 (approximately €360,000). 101  Following the provisions of s 139(1)(c) and (3)(c) of the Act on Employment, such an administrative delict is subject to a pecuniary penalty of up to CZK 100,000 (approximately €3,600). 102  cf Decision of the Supreme Administrative Court dated 13 April 2010, file No 1 Afs 125/2009. 103  Labour Code, s 4a. 104 Specifically, the type of work, the place of performance of work and the date of commencement of work according to s 34(a), (b) and (c) of the Labour Code. 105  The principle of subsidiarity is embodied in s 4 of the Labour Code.

128  Petr Hůrka e­ mployment regulations, but that it is also very closely linked to civil law. The findings of the Constitutional Court106 introduced this principle as a general principle of private relationships. Thus, the Civil Code always also applies to employment relationships if the provisions of the Labour Code themselves cannot be applied. Following the new Civil Code and based on the findings of the Constitutional Court,107 the provisions of the Civil Code are therefore applied under certain conditions and to a certain extent to employment relationships. The basic rule for applying the Civil Code to employment relationships is that the Civil Code is applied in cases where the Labour Code cannot be applied. Thus, the Civil Code is applied to employment relationships if: (i) the Labour Code does not expressly rule this out; (ii) the Labour Code does not have its own applicable provisions; (iii) the application is in accordance with the principles of labour law.108 If not restricted by law,109 it is possible to deviate from the Labour Code according to the ‘what is not prohibited by law is permitted’ principle (eg, agreeing to include a specific number of overtime hours in the basic ­salary). Parties to an employment relationship (employers, employees or trade unions) can act in ways not restricted by a legal regulation (the Labour Code or the Civil Code). It is possible to deviate from the law under contracts stipulated by law, namely individual contracts (such as contracts of employment, agreements to complete an assignment and agreements to terminate employment contracts), collective contracts or innominate contracts. Czech law does not specifically regulate mixed contracts. It is possible to deviate from the Labour Code as long as it is not restricted by law.110 If the law prohibits this, deviations from the law are also restricted in status-related matters (legal personality, legal capacity), due to a lack

106  Judgment of the Constitutional Court, Pl ÚS 82/06, published in the Collection of Laws under No 116/2008 Coll, which cancelled the principle of delegation and introduced the subsidiary application of the Civil Code (ie, Act No 40/1964 Coll, later replaced by the current Civil Code) to employment relationships with effect as of the date of its publication in the Collection of Laws, ie, 14 April 2008. 107  Judgment of the Constitutional Court, Pl ÚS 82/06, published in the Collection of Laws under No 116/2008 Coll, which cancelled the principle of delegation and introduced the subsidiary application of the Civil Code (ie, Act No 40/1964 Coll, later replaced by the current Civil Code) to employment relationships with effect as of the date of its publication in the Collection of Laws, ie, 14 April 2008. 108  See s 1a of the Labour Code, which provides a non-exhaustive list: ‘The following fundamental principles are in particular applied in labour relationships: (a) specific legal protection of employee status; (b) satisfactory and safe working conditions for performance of work; (c) fair remuneration for an employee; (d) proper performance of work by an employee in accordance with their employer’s justified interests; (e) equal treatment of employees and prohibition of their discrimination.’ 109  Particularly s 4a of the Labour Code and s 1(2) of the Civil Code. 110  Section 1(2) of the Civil Code and s 4a of the Labour Code.

The Concept of ‘Employee’: The Position in the Czech Republic 129 of conformity with the minimum or maximum extent stipulated in the act (phrases like ‘at least’ and ‘at most’) and in cases where it violates good morals, public order, the fundamental principles of labour law111 or the provisions of the Labour Code implementing EU law. There are no specific provisions excluding the existence of non-­contractual relationships that lie outside the scope of labour law. For example, in the event that an employee causes damage to the employer, it must first be determined whether the damage was caused during the performance of work (in which case, the rules of the Labour Code apply) or whether the damage does not have any consequences for the performance of work (and which case, the rules of the Civil Code apply). The existence of different contracts between the employer and the employee is not excluded. For example, some employers provide loans to their employees as a benefit to purchase household appliances for their homes—such relationships are governed by the Civil Code and not by the Labour Code. As described above, the employer may not abuse the employee’s economic dependence and force him or her to enter into contracts that would be contrary to his or her needs. VII.  LIMITS TO THE FREEDOM OF CONTRACT

Whether or not the parties have entered into an employment relationship does not depend on the form of the contract or even on the parties’ will, but on the actual relationship between the parties. The Labour Code defines so-called dependent work in section 2. Whether or not dependent work is being performed is the criterion that will determine whether the relationship will be one of employment or not. The legislator thus makes it clear that dependent work is an objective status that follows from the nature of the relationship between the employee and the employer, regardless of how the parties label this relationship.112 The freedom of contract is limited in a way that where dependent work is performed, an employment relationship exists. Therefore, parties to a relationship that does not exhibit the characteristics of dependent work may agree on the application of certain provisions of the Labour Code (such as working hours, minimum salary or paid leave), but cannot enter into a contract of employment and establish an employment relationship if the criteria are not objectively qualified.

111 

Labour Code, s 1a. Supreme Court also commented on this in its Decision dated 16 June 2011 file No 21 Cdo 920/2010. 112 The

130  Petr Hůrka On the other hand, the Labour Code explicitly states that the employee may not waive his or her rights.113 Therefore, no valid waiver of employee status is allowed in an employment relationship. Notable exceptions are relationships that may qualify both as dependent work and as independent services, such as the work relationships of athletes. The case law confirms that it is up to the parties to choose the relationship which will best accommodate their needs.114 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

An employment relationship is only established on the basis of the performance of dependent work as defined under section 2 of the Labour Code. Although the parties to collective bargaining may dictate their rights and obligations within the context of the employment relationship, they cannot determine what an employment relationship is and what it is not. The same applies to customs and practice. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

Neither presumptions nor the shifting of the burden of proof with regard to the employee status of the individual or with regard to determining the existence of an employment relationship exist in Czech labour law or social security law. X.  SPECIFIC PROCEDURES

The labour inspection authorities (orgány inspekce práce), according to the Labour Inspection Act and Labour Office (Úřad práce) and the Act on Employment, are authorised to monitor employers in relation to their compliance with employment rules and regulations, and may impose pecuniary penalties should these be breached.115 The Labour Inspection Office (which, according to the Labour Inspection Act, controls compliance with the Labour Code) or, if applicable, the staff

113 

Labour Code, ss 4a(4) and 346c. cf Decision of the Supreme Administrative Court dated 29 November 2011, file No 2 Afs 16/2011. 115  Sections 3 and 9a ff of the Labour Inspection Act and ss 125 and 139 ff of the Act on Employment. 114 

The Concept of ‘Employee’: The Position in the Czech Republic 131 of the Labour Office (which, according to the Act on Employment, controls compliance with the Act on Employment) can visit the place of performance of work and check on compliance with employment rules and regulations. If they discover that illegal work is being performed on-site, such as moonlighting or bogus self-employment,116 they are entitled to impose a fine on both the employer and the employee for administrative delicts under sections 139–141b of the Act on Employment. Decisions of the Labour Inspection Office are subject to review by the courts. In addition, the Labour Inspection Office also provides consultancy services to entrepreneurs who are unsure about whether they can assign the work, in line with the law, to external contractors or whether the work is in fact dependent work. In that case, a contract of employment must be concluded.117 The competences of the Social Security Administration (správa sociálního zabezpečení) and the tax authorities (finanční úřady) are fairly limited in this regard, as these authorities only control compliance with tax and social security law, and may therefore qualify certain relationships as involving the performance of dependent work and impose the duty on the employer to pay taxes and relevant social security contributions from the remuneration of the employees, and penalise the employer for not doing so; these administrative bodies cannot rule that the employer breached certain provisions of the Labour Code or the Act on Employment. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons As described above, the Labour Code regulates the rights and obligations that arise during the performance of dependent work, which is performed by an employee in the name of an employer. These rights and obligations are not extended to employee-like persons unless this is stated in special legal regulations. In other words, if two persons are in a relationship and want to apply certain labour law standards, they must agree on their actual application in a contract. B.  Equality and Anti-discrimination Law The Labour Code specifically states that employers are obliged to ensure the equal treatment of all employees in terms of work conditions, ­remuneration 116  According to s 5(e)(1) of the Act on Employment, illegal work is, among other things, the ‘performance of dependent work by a natural person outside an employment law relationship’. 117  Section 5(k) of the Labour Inspection Act.

132  Petr Hůrka for work and the provision of other pecuniary performances and the performance of a pecuniary value, vocational training and the opportunity to achieve functional or other forms of growth in employment.118 Any discrimination in employment relationships is prohibited.119 Apart from these general obligations, a special Anti-discrimination Act (antidiskriminační zákon) exists.120 This Act deals, among other things, with the right to equal treatment and the prohibition of discrimination with respect to the right to employment and access to employment, employment contracts, services and other paid employment, including remuneration.121 This act prohibits any direct discrimination, indirect discrimination, harassment, sexual harassment, victimisation, instruction to discriminate and enticing discrimination based on grounds of race, ethnic origin, nationality, sex (including pregnancy, maternity, paternity and sexual identification), sexual orientation, age, disability, religion, belief or opinions.122 Based on this Act, any person who has been discriminated against has the right to submit a claim before the courts, in particular, that discrimination be refrained from, that the consequences of the discriminatory act be remedied and that he or she be provided with appropriate compensation, including monetary compensation for immaterial damage.123

118 

Labour Code, s 16(1). ibid s 16(2). 120  Act No 198/2009 Coll, on equal treatment and on the legal means of protection against discrimination and on amendment of certain laws (the Anti-discrimination Act), as amended. 121  ibid s 1(1)(a) and (c). 122  ibid s 2. 123  ibid s 10(1) and (2). 119 

7 The Concept of ‘Employee’: The Position in Denmark JENS KRISTIANSEN

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

D

ANISH LABOUR LAW does not apply a uniform code in the labour market. Hence, no uniform definition of the term ‘employment contract’ (ansættelseskontrakt) exists. No uniform definition has been developed in the case law. Employment legislation plays a minor role in regulating working conditions on the Danish labour market compared to collective agreements. The Danish Parliament has only enacted a limited number of employment laws. These laws primarily transpose EU directives. Furthermore, most of the legislation transposing EU directives expressly states that the respective Act does not apply if the employment relationship is covered by a collective agreement that implements the directive; see, for example, section 1(3) of the Act on a Written Statement (Ansættelsesbevisloven),1 which reads as follows: This Act does not apply where the employer has an obligation to provide employees with information about their employment relationship pursuant to a collective agreement that includes provisions which correspond to the provisions in ­Directive 91/533/EEC on the employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship.

It follows from the cited paragraph that the Act only applies: (1) to ­employees who are not covered by an implementing collective agreement; and (2) to

1  Lbkg nr 240 af 17/3/2010 om arbejdsgiverens pligt til at underrette lønmodtageren om vilkårene for ansættelsesforholdet.

134  Jens Kristiansen employees who are covered by an implementing collective ­agreement which does not, however, correctly implement the respective provisions of the directive. The legislation is—to a certain degree—based on a distinction between sub-groups of employees. For instance, some important features of whitecollar work (but not blue-collar work) are regulated in legislation (White Collar Workers Act: Funktionærloven).2 The working conditions of ­certain groups of agricultural and domestic workers are partly regulated by ­legislation.3 This is also the case for seafarers (see section III below).4 The different sub-groups of employees are covered by employment ­legislation of a general nature, eg, the Annual Holidays Act. However, there are exceptions, eg, the rules laid down in the Holidays Act do not apply to seafarers due to the special circumstances of this type of employment relationship. There are no formal requirements for concluding an employment contract. Like other contracts, an employment contract can be based on an oral or a written agreement between the parties (see section 1 of the Contract Act).5 However, the employer has a duty to inform the employee in writing on a number of essential working conditions in accordance with the Act on a Written Statement or a collective agreement transposing Directive 1991/533/EEC.6 A contract of employment is void or partly void if it is in breach of the rules laid down in employment law, basic legal principles or a collective agreement. A contract might also be void if one of the parties’ declaration of intent is flawed. If the contract or part of the contract is void, it is not enforceable by the courts. However, the parties to an employment contract may in some cases be allowed to deviate from the rules laid down in employment law or a collective agreement. For instance, parties to an employment contract are allowed to deviate from some of the rules laid down in the Annual Holidays Act.7 B.  Employment Relationship: Basic Definition Danish labour law does not entail a uniform statutory definition of the term ‘employment relationship’ (ansættelsesforhold). However, an employment relationship presupposes the existence of an employment contract. 2 

Lbkg nr 81 af 3/2/2009 om retsforholdet mellem arbejdsgivere og funktionærer. Lbkg nr 712 af 20/8/2002 om visse arbejdsforhold i landbruget m.v. 4  Lbkg nr 73 af 17/1/2014 om Søfarendes ansættelsesforhold m.v. 5  Lbkg nr 781 af 26/8/1996 med senere ændringer om aftaler og andre retshandler på formuerettens område. 6  Lbkg nr 240 af 17/3/2010 om arbejdsgiverens pligt til at underrette lønmodtageren om vilkårene for ansættelsesforholdet. 7  Lbkg nr 1177 af 9/10/2015 om ferie. 3 

The Concept of ‘Employee’: The Position in Denmark 135 In principle, the definition of an employment relationship—like the ­ efinition of an employment contract—is left to the specific statute or collecd tive agreement in question. However, neither statutes nor collective agreements usually contain a formal definition of the employment relationship. This means that the definition of the employment relationship has to a great extent been developed by the case law. However, the case law has not developed a uniform (formal) definition of an employment relationship. An employment relationship is normally based on a mutual agreement between the parties. However, according to section 2 of the Danish Act on Transfers of Undertakings8 (Virksomhedsoverdragelsesloven), a transferee of (part of an) undertaking automatically takes over the rights and duties of the transferor under the employment relationship with the transferred employees. Furthermore, the user undertaking might, on the basis of a collective agreement, be under an obligation to comply with a minimum rate of payment and other working conditions for temporary agency workers hired from a temporary work agency, even though the agency workers are formally considered to be employed by the temporary work agency.9 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition Danish labour law does not have a uniform statutory definition of the term ‘employee’ (lønmodtager). However, the definition of the term ‘employee’ introduced in section 1(2) of the Act on a Written Statement (Ansættelsesbevisloven) represents a sui generis benchmark in this regard. In accordance with the underlying Directive 533/1991/EEC on the employer’s obligation to inform the employee of the working terms, an employee is defined as ‘a person who receives remuneration for personal work in an employment relationship’. From a narrow point of view, this definition is only applicable to the employer’s obligation to inform the employee of the working conditions. However, according to the preparatory works of the Act,10 the formal ­definition of employee laid down in section 1(2) is intended to be a general guideline for the definition of employee within the scope of labour law.

8 

Lbkg nr 710 af 20/8/2002 om lønmodtageres retsstilling ved virksomhedsoverdragelse. eg Annex 17 of the Industrial Agreement (Industriens Overenskomst) between the Confederation of Danish Industry (DI) and the Central Organisation of Industrial Employees in Denmark (CO-Industry). 10  FT 1992/93, A, sp 6324 ff. 9  See,

136  Jens Kristiansen In line with this general intention, section 1(2) of the Annual Holidays Act states that: [F]or the purpose of this Act, an employee shall be taken to mean a person who receives remuneration in exchange for personal work under an employment relationship.11

In principle, the definitions of the term ‘employee’ in labour law, social security law and tax law are independent of each other. However, the definition contained in section 1(2) of the Act on a Written Statement is more or less identical to the definition laid down in section 43 of the Income Tax Act.12 Social security legislation does not contain a formal definition of employee, but in practice the definition is in line with those laid down in employment acts and the Income Tax Act.13 Thus, from a practical point of view, there are no significant differences in the meaning of the term ‘employee’ within the scope of labour law, social security law and tax law. However, the interpretation of the term ‘employee’ is still dependent on the specific act or collective agreement in question. For instance, an agency worker is considered an employee under the Act on a Written Statement.14 However, he or she is not in an employment relationship with respect to the White Collar Workers Act. According to section 1(2) of the White ­Collar Workers Act, the employee is under a duty to perform work upon the employer’s request. The Supreme Court has concluded that this condition is (usually) not met in the case of temporary agency workers.15 The courts have not developed a uniform definition of ‘employee’ or ‘employment relationship’. They have, however, developed a range of general criteria to determine whether specific work is carried out under an employment relationship or on a self-employed basis (see section IV below). Still, the decision—at least in borderline cases—is also made with regard to the objectives of the act or collective agreement in question. For instance, the case law has considered an agency worker to be an employee in accordance with the Act on a Written Statement, but not with the White Collar Workers Act.16

11 

Lbkg nr 1177 af 9/10/2015 om ferie. Lbkg nr 117 af 29.1.2016 om kildeskat. 13 See the Supreme Court of 30 March 2007 (U2007.1597H) and of 31 March 1999 (U1999.1050). 14  See the Maritime and Commercial High Court of 3 August 1999 (U1999.1870S). 15  See the Supreme Court of 5 September 1997 (U1997.1495H). 16  See the Maritime and Commercial High Court of 3 August 1999 (U1999.1870S) and the Supreme Court of 5 September 1997 (U1997.1495H). 12 

The Concept of ‘Employee’: The Position in Denmark 137 B.  Employer: Basic Definition Danish labour law does not have a uniform statutory definition of the term ‘employer’ (arbejdsgiver). The term is indirectly derived from the term ‘employee’. Consequently, every natural or legal person who employs one (or more) employee(s) is considered to be an employer. In practice, doubt may arise as to whether a natural person is always capable of being an employer. For instance, the Western High Court considered a disabled person, who had hired a personal assistant, to be an employer in relation to the employee. As a result, the disabled person was ordered to pay the employee compensation in the amount of six months’ pay because of unlawful dismissal due to pregnancy.17 In consideration of the difficulties related to being an employer, a disabled person is now entitled to transfer the status of employer (and a financial subsidy from the municipality) to a family member, an association or a private company.18 The formal employer is the natural or legal person who has signed the contract or entered into the relationship with the employee. Occasionally, there has been doubt as to whether the formal employer also needs to be considered the real employer. This, for instance, has been the case in situations where an employee is employed by a private ‘independent institution’ (selvejende institution), which is financed entirely by subsidies from a public institution. For example, in its decision, the Industrial Arbitrational Tribunal (faglig voldgiftsret) considered the private institution which had signed the employment contracts to be the employer, even though the institution’s childcare activities were financed entirely by subsidies from a municipality, and was thus obliged to provide information on pay and working conditions in accordance with the collective agreement covering employees in public childcare institutions. The tribunal underlined that the independent institution and municipality were independent legal persons and that neither the collective agreement in question nor the concrete circumstances of the case gave reason to ignore the fact that the employment contract was concluded by the independent institution as the employer.19 In employment relationships with agency workers, the temporary agency is considered to be the employer. However, the user undertaking might be under an obligation based on a collective agreement to instruct the agency to comply with rules laid down in the collective agreement. If the agency does not comply, for instance, with the minimum wage laid down in the ­collective agreement, the user undertaking might be obliged to pay the

17 

The Western High Court of 20 December 2007 (U2008.844V). See ss 95 and 96 of the Act on Social Service (lbkg nr 1284 af 17.11.2015). 19  Industrial Arbitrational Tribunal of 10 July 2010 (FV 2009.257). 18 

138  Jens Kristiansen ­ ifference between the wage actually paid and the minimum wage set in the d collective agreement.20 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Danish labour law—to a certain degree—is based on a distinction between different sub-groups of employees. Some sub-groups are covered by a special legislation, while others are not. The main distinction is between blue-collar workers (arbejdere) and white-collar workers (funktionærer). White-collar workers are covered by a specific statute, the White Collar Workers Act.21 They are shop assistants, clerks, technical and clinical assistants and managerial staff, among other groups. Factory workers, craftsmen, artists and teachers, among others, are not considered to be white-collar workers. The working conditions of those groups are in principle left to collective and individual agreements. The White Collar Workers Act—dating back to 1938— covers more than 50 per cent of all employees in the Danish labour market. However, it only covers some important aspects of white-collar work, such as payment during sickness (section 5), maternity leave (section 7) and termination of the employment relationship (section 2). It does not contain rules on minimum wages and working time. Those working conditions are left to collective and individual agreements. The interpretation of the term ‘employee’ is somewhat narrower when it comes to the White Collar Workers Act. As already mentioned in section II.A above, agency workers are not considered to be employees in relation to the White Collar Workers Act since they are not under a duty to perform work on request of the employer, even though they are considered to be employees in relation to the Act on a Written Statement. Specific rules apply to certain groups of agricultural and domestic workers (medhjælpere) and seafarers (søfarende).22 This legislation originated as early as the late nineteenth century and covers minor groups in the Danish labour market due to the special personal relationship between the parties in this type of employment. The legislation is restricted to a core group of working conditions. Young people on training schemes (elever) are regulated by a special legislation due to the educative purpose of the scheme, which in essence revolves 20 

See Labour Court of 21 April 2015 (case No 2014.103). Lbkg nr 81 af 3/2/2009 om retsforholdet mellem arbejdsgivere og funktionærer. 22 Lbkg nr 712 af 20/8/2002 om visse arbejdsforhold i landbruget m.v. and lbkg nr 73 af 17/1/2014 om Søfarendes ansættelsesforhold m.v. 21 

The Concept of ‘Employee’: The Position in Denmark 139 around combining periods of training in enterprises and vocational schools. The trainee is considered to be an employee. The employer is obliged to comply with the conditions on pay and working terms laid down in the collective agreement in the specific sector.23 Executives, who are entitled to enter into commitments at their own discretion, are usually not considered to be employees in relation to statutory rights, eg, the White Collar Workers Act and the Annual Holidays Act. On the other hand, the statutory prohibition against discrimination, eg, on the grounds of sex and age, is considered to cover executives as well as other employees.24 In general, appointed or elected representatives (valgte repræsentanter) are not considered to be employees, but rather bodies of the legal person. However, depending on the concrete circumstances, they may be considered employees. For instance, local union representatives (tillidsrepræsentanter) are elected by the employees in the enterprise. Hence, local representatives are considered to be both employees and representatives. Whether a shareholder working in the enterprise is considered an employee depends on the concrete circumstances. As a general rule, if the shareholder influences how the enterprise is managed, eg, based on holding a great part of the shares or membership of the executive board, he or she is normally not considered to be an employee. On the other hand, if the shareholder does not influence how the enterprise is managed—which it should be noted very often seems to be the case—he or she is considered to be an employee.25 Home workers and teleworkers are not considered special categories of employees according to Danish labour law. Thus, labour law is generally applicable to home workers and teleworkers. However, there may be deviations from the general rules due to the special circumstances of this type of work, eg, in the area of the protection of the working environment.26 The particularities of specific sectors are primarily ensured through the comprehensive system of collective agreements that lay down different rules for different sectors. In many cases, customised collective agreements apply to a specific sub-group of employees defined by occupation and/or education. The collective agreement normally provides comprehensive coverage with regard to pay and working conditions. In some sectors, eg, the media and entertainment sector, there might be collective agreements for persons

23  See ss 55 and 56 of the Act on Vocational Training (Erhvervsuddannelsesloven), lbkg nr 789 af 16.6.2016 om erhvervsuddannelser. 24  See Ministry of Employment, Guidance on Unequal Treatment, January 2006, 9. 25 See, eg, Labour Court of 15 October 1987 (AT 1997/105) and of 17 May 1989 (AT 1989/93). 26 See s 4 of the Working Environment Act (lbkg 1072/2010) and secondary regulation 247/2003.

140  Jens Kristiansen who perform work in a regular employment relationship and other collective agreements for persons performing ‘freelance’ work.27 The legal position of employees in the public sector does not, in principle, differ from that of employees in the private sector. However, civil servants (crown servants) are covered by a special statute, the Crown Servants Act (Tjenestemandsloven).28 The Crown Servants Act only applies to persons employed by the state as ‘crown servants’. As a general rule, the status of ‘crown servant’ is only allocated to employees in special occupations, eg, judges and officers of the police and armed forces. Crown servants are denied the right to strike, on the one hand, and are granted special rights, especially in the field of protection against dismissal and pension rights, on the other. Crown servants are not, as a rule, exempt from employment legislation. B.  The Establishment of a Specific Category of ‘Workers’ A separate category of ‘workers’—which differs from the category of ‘employees’—does not exist in Danish labour law. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The main feature of an employment relationship in Danish labour law is personal subordination of the person who carries out the work. The decision of whether the ‘worker’ is personally subordinated to the ‘employer’ depends upon the concrete circumstances of the individual case. The courts do not apply a formal test or method, but base their decision on a concrete assessment of a range of different indicators. Hence, the determination of personal subordination can vary from one type of employment to another. B. Indicators As already mentioned, the decision of whether a person is personally subordinated to another is always based on the concrete circumstances of

27 See, eg, collective agreements between the Danish Union of Journalists (Dansk ­Journalistforbund) and Danish Radio (Danmarks Radio). 28  Lbkg nr 488 af 6.5.2010 om tjenestemænd.

The Concept of ‘Employee’: The Position in Denmark 141 the ­individual case. As summarised in the legal literature, the decision is ­primarily based on the following criteria:29 (i)

the degree of the employer’s right to direct and control the work ­performed by the person in question (subordination); (ii) the arrangement of the financial relationship between the parties (including tax law issues and the worker’s entrepreneurial risk); (iii) the obligation to carry out the work personally or the right to have someone else perform the tasks; (iv) the personal relationship between the worker and the employer, including the place of the work; and (v) the worker’s social and occupational position, especially whether the worker is primarily considered to be comparable with an employee or a self-employed worker. Subordination in the sense of being personally subordinated to the instructions and control of the employer is probably the most important criterion in determining whether a person is an employee. In general, one important indicator of personal subordination is when the ‘employee’ is obliged to comply with the instructions of the ‘employer’, ie, to carry out the work in accordance with specific instructions given by the latter. Likewise, another important indicator of personal subordination is when the ‘employer’ is entitled to control the employee’s work and behaviour. Consequently, if a person is not subordinated to the instructions and control of another person, he or she will normally not be considered to be an employee.30 Nonetheless, a duty to comply with instructions and control does not in itself suffice to qualify a person as an employee. A self-employed person might also be under a duty to comply with (certain) instructions and control measures from an ‘employer’ depending on the parties’ contract/contractual clauses. In this case, it might be of some significance whether the ‘employer’ is entitled to determine the person’s place and time of work. Accordingly, if the person is not under the instructions and control of another and is free to decide the place and time of work, this is a strong indicator of self-employed status.31 The financial relationship between the parties is also a highly relevant criterion. If these issues are dealt with by the ‘employer’ as they are under an employment relationship, it will be difficult for the ‘employer’ to argue against the existence of an employment relationship with regard to labour law matters. However, the fact that the employer has dealt with tax issues 29 

See O Hasselbalch, Den Danske Arbejdsret, vol 1 (Aarhus, Aarhus BSS, 2009) 67 f. See, eg, the Western High Court of 14 March 2007 (U2007.1731V) and the Western High Court of 17 September 2014 (U2015.197V). 31  See, eg, the Western High Court of 17 September 2014 (U2015.197V). 30 

142  Jens Kristiansen as though the worker is self-employed does not preclude the relationship from being deemed one of employment with regard to labour law matters.32 In addition, if the person who carries out the work bears economic risks, it is an indicator of a self-employment relationship. Moreover, another important characteristic of an employment relationship is that the employee himself or herself performs the work or at least for the most part for the benefit of the employer. Normally, an employee does not bear any economic risk with regard to the work. However, the fact that the ‘employee’ bears limited risk or does not fully profit from performing the work, eg, has to buy some of the work tools himself or herself or receives only part of the profit (profit sharing), does not preclude that he or she will be deemed an employee.33 An employee is at least in principle obliged to carry out the work personally. Accordingly, it is an indicator of self-employment if the person carrying out the work is free to delegate the work to another person. For instance, an independent consultant is usually entitled (and obliged) to substitute himself or herself if it is not possible for him or her to carry out the work, eg, due to sickness. If the work is solely or partly carried out by persons employed by him or her, this is a strong indicator of self-employment.34 Finally, what might play a (minor) role in borderline cases is whether the terms and position of the worker are more comparable with an employment relationship than self-employment, or vice versa. This criterion seems especially significant in relation to employment legislation in borderline cases regarding social security legislation, eg, the Annual Holidays Act. For instance, a person who takes care of foster children on behalf of a municipality is generally not considered an employee, even though the person is working under some instructions and control from the municipality.35 According to the preparatory works (travaux preparatoires) of the Annual Holidays Act, such a person is normally considered an employee in relation to that Act.36 C.  The Relevance of ‘Economic Dependence’ The courts neither regard ‘economic dependence’ as required nor in itself sufficient when determining whether a person has employee status. For instance, in 2007, the Labour Court in deciding cases on breaches of ­collective agreements, among other cases in the field of collective labour 32 ibid. 33 

See, eg, the Maritime and Commercial High Court of 9 May 2007 (U2007.2251S). eg, Labour Court of 19 March 1997 (AT 1997/33) and of 15 October 1999 (AT 1999/5). 35  See, eg, the Western High Court of 14 March 2007 (U2007.1731V). 36  See FT 1999–2000, tillæg A, sp 4913 ff. 34 See,

The Concept of ‘Employee’: The Position in Denmark 143 law, ruled that a self-employed electrician was not considered an employee, even though he primarily worked for one ‘employer’. The Court stressed that the electrician had been able to organise his working time and provided the necessary work tools himself.37 V.  THE PRINCIPLE OF PRIMACY OF FACTS

According to long-standing practice, the parties to a contract for work are free to choose between a contract of employment (employment relationship) and a contract for services (self-employment). However, it follows from the case law that the labelling of the contract is not in itself decisive for determining employee status in relation to either employment legislation or collective agreements. The parties concluded a contract for services—thereby setting aside protective rules established in labour law—only insofar as the work in question is not performed on an employment basis in accordance with the objective criteria mentioned in section IV.B above.38 Whether a contract is in reality based on an employment relationship is subject to judicial control based on objective criteria. In principle, as established, for instance, by the Maritime and Commercial High Court in 2007, ordinary courts, the Labour Court and industrial arbitration tribunals have the power to conduct a full investigation of the nature of the relationship.39 The Maritime and Commercial Court, for example, considered a dentist to be an employee even though the contract, among other things, stated that the dentist was not working as an employee and was not subject to the instructions and control of the dentist clinic. In the Danish labour market, the question of ‘false labelling’ of work contracts has played a significant role in the case law, especially in relation to collective agreements. It has been frequent practice among some companies to try to avoid the rules laid down in collective agreements by labelling the relationship as a contract for services. However, the trade union that is party to the collective agreement is entitled to make claims against the employer even if the ‘employee’ does not want to make a claim himself or herself.40 Hence, trade unions have often asked the Labour Court to examine a ‘contract for services’, claiming that the contract is in fact a ‘contract of employment’. According to the long-standing case law, the decisive test is

37 

See, eg, the Labour Court of 23 October 2007 (AT 2007/197). See, eg, the Maritime and Commercial High Court of 9 May 2007 (U2007.2251S) qualifying a contract of independent work as an employment relationship covered by the White Collar Workers Act. 39  See, eg, the Maritime and Commercial High Court of 99 May 2007 (U2007.2251S). 40  See arts 13 and 22 of the Act on the Labour Court and Industrial Arbitrational Tribunals (lov nr 106 af 26.2.2008 om Arbejdsretten og faglige voldgiftsretter). 38 

144  Jens Kristiansen whether the work is carried out on a ‘real self-employed basis’.41 Notably, if the Labour Court reaches the decision that specific work is performed on an employment basis, the work will be covered by the collective agreement, which is binding upon the employer. VI.  QUALIFICATION IN FULL

A contract between two parties can only be either a contract of employment or any other contract. There is no third option according to which only part of a contract can qualify as a contract of employment. On the other hand, an employee and an employer are free to conclude an additional contract which as such does not qualify as a contract of employment. For instance, a person can work both as an employee and as a freelancer for the same employer. However, the work as a freelancer may not, in fact, lead to a circumvention of the protection offered to the individual as an employee. It is, of course, also important for the parties themselves to be able to distinguish between the two types of work in practice. If that is not the case, the courts might consider the entire arrangement to be an employment relationship or a relationship of self-employment depending on the circumstances of the individual case. Finally, apart from contractual relationships, non-contractual legal relationships may also exist between the parties. For instance, the parties may be liable under tort law in the event that damage is caused to the other party. The alleviation of liability of employees as developed by the courts is not restricted to liability arising from the contract, but also applies to liability under tort law.42 However, liability under tort law is restricted as far as the employee is concerned (see section 23(3) of the Act on Tort (Erstatningsansvarsloven)).43 VII.  LIMITS TO THE FREEDOM OF CONTRACT

As already mentioned, the parties to a contract of work are free to choose between a contract of employment (employment relationship) and a contract for services (self-employment). However, the parties have no freedom to decide whether the work is in fact based on an employment relationship or a relationship of self-employment.

41 See, eg, the Industrial Arbitrational Tribunals of 2 May 2013 (FV 2013.36) and of 12 July 2013 (2013.58). 42  Eastern High Court of 8 October 2007 (U2008.254Ø). 43  Lbkg nr 1266 af 21.3.2014 om erstatningsansvar.

The Concept of ‘Employee’: The Position in Denmark 145 The legal concept of ‘employee’ is mandatory and cannot be disposed of by the parties to the contract. Therefore, if a person qualifies as an ‘employee’ on the basis of an objective legal assessment based on the criteria mentioned in section IV above, the parties are not allowed to set this qualification aside by insisting that their contract is not a contract of employment. For instance, the parties are not free to decide that their contract is a contract for services and that it thereby is not covered by a collective agreement that the employer is obliged to comply with. The trade union, which is party to the collective agreement, is in any case entitled to question the arrangement before the Labour Court. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The legal concept of ‘employee’ in employment laws is mandatory in the sense that it cannot be disposed of by the parties to a collective bargaining agreement. For instance, the parties to a collective agreement are not entitled to derogate from the minimum protection laid down in the White Collar Workers Act.44 However, the Supreme Court has allowed the social partners a certain margin of appreciation in special circumstances.45 Social dialogue plays an important role in determining pay and working conditions in the Danish labour market. In principle, it is left to the parties to a collective agreement to define the concept of ‘employee’ or ‘employment relationship’ as far as the working conditions laid down in the agreement are concerned. However, collective agreements do not, in practice, define the term ‘employee’. Therefore, it is ultimately a question for the Labour Court or an industrial arbitration tribunal to decide whether a ‘freelancer’ is, for example, actually performing work as an ‘employee’ or a selfemployed person.46 A collective agreement is mandatory, as is an employment-related legal act. Therefore, the individual parties to a contract are not free to decide that the contract is a contract for services. The latter will be set aside if—on the basis of an objective assessment—the work is performed in a relationship of personal subordination of the ‘worker’. In that case, the work is covered by the collective agreement.47

44 

See White Collar Workers Act, art 21. See, eg, the Supreme Court of 12 November 2008 (U2009.406H). 46  See, eg, the Labour Court of 24 August 2007 (AT 2007/165). 47 See, eg, the Industrial Arbitrational Tribunals of 2 May 2013 (FV 2013.36) and of 12 July 2013 (2013.58). 45 

146  Jens Kristiansen B.  Custom and Practice Deviations on the basis of custom and practice are not acknowledged in Denmark. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions There are no formal presumptions on employee status in Danish law. Taxation for the work in question, though, is an important criterion in determining whether a person is to be considered an employee in terms of labour law. According to the preparatory work of the Act on a Written Statement, there seems to be a presumption in practice of a contract of employment in relation to labour law matters if the work is treated by the employer as an employment relationship in relation to tax matters.48 However, it still depends on the concrete circumstances of the individual case whether the ‘worker’ performs work as an employee or a self-employed person. For instance, in a Western High Court ruling from 2014,49 the Court did not consider a person working on a freelance basis as a contact person for refugees as an ‘employee’, even though the Danish Refugee Council had treated him as an employee with reference to tax matters. The Court stressed among other things that the freelancer was not working under the direction and control of the ‘employer’. B.  The Burden of Proof There are no formal rules on burden of proof with regard to determining whether a person is an employee or a self-employed worker. It is entirely left to the court how to decide the issue in the individual case. X.  SPECIFIC PROCEDURES

Self-employed persons must enlist in a public commercial register according to the Danish Commercial Code (Selskabsloven).50 However, the r­ egistration

48 

FT 1992/93, A, sp 6324 ff. See, eg, the Western High Court of 17 September 2014 (U2015.197V). 50  Lbkg nr 1089 of 14.9.2015 om aktie- og anpartsselskaber (selskabsloven). 49 

The Concept of ‘Employee’: The Position in Denmark 147 does not have constitutive effect in relation to specific work carried out by the registered self-employed person. Whether the registered person works as an employee or a self-employed person in relation to specific work is entirely dependent on whether the work in question is performed on the basis of an employment relationship or on a self-employed basis. Danish labour law does not give the parties concerned the right to request a public authority to determine whether an employment contract or employment relationship exists in advance. Each of the parties is free to question the formal status of a contract by bringing a claim before the court, eg, that the party is entitled to paid annual leave due to the status of employee. It is for the court to decide whether the person is—based on an objective test— actually working as an employee. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons Danish labour law does not recognise a special category of ‘employee-like’ persons. Work is either performed on the basis of an employment relationship or a relationship of self-employment. If a person in fact carries out work on a self-employed basis, he or she is not considered to be an employee or an employee-like person, although he or she might de facto be in a position similar to an employee. In a similar vein, Danish labour law does not recognise a special category of ‘economically dependent’ working persons. If a person carries out work on a self-employed basis, he or she is not considered to be an employee even though he or she is economically dependent on the employer, eg, as a franchisee. Employment legislation and collective agreements do not apply (partly) to economically dependent workers (who are not employees). The social security system does not recognise a special category of employee-like persons either. However, the social security system does to a certain extent apply to self-employed persons, eg, in case of sickness, maternity leave and unemployment. B.  Equality and Anti-discrimination Law The Equal Treatment in Employment Act (Forskelsbehandlingsloven) ­covers employees just like other employment laws.51 However, the personal

51  Lbkg nr 1349 af 16.12.2008 om lov om forbud mod forskelsbehandling på arbejdsmarkedet m.v.

148  Jens Kristiansen c­ overage of this Act is somewhat more comprehensive than might be the case in relation to most employment laws. A primary school pupil who participated in a work experience scheme at a private company was, for instance, considered to be covered by the Act. The Court ordered the ‘employer’ (a large retail store) to pay her c­ ompensation (godtgørelse) for unlawful ‘dismissal’ due to her reluctance to remove a ­religiously related headscarf.52

52 

The Eastern High Court of 10 August 2000 (U2000.2350Ø).

8 The Concept of ‘Employee’: The Position in Estonia GAABRIEL TAVITS

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

A

DEFINITION OF employment contract is delineated in the Estonian Employment Contracts Act (töölepingu seadus) (hereinafter ECA).1 According to § 1(1) ECA:

[A] natural person (employee—töötaja) who performs work for another (employer—tööandja) under an employment contract in a relationship of subordination and under the management and control of the employer is considered an employee. The employer pays the employee remuneration in exchange for such work.

The provisions on the employment contract are not applied to contracts under which the person primarily performs work independently and is free to choose the manner, time and place of performance of work.2 In that case, the person works under a contract for services, a contractor agreement or as a self-employed worker. The occupational health and safety rules apply to all the forms of employment relationships mentioned.3 Furthermore, they apply to members of the board of a legal person or a director of a branch of a foreign company, though they do not conclude employment

1 Employment Contracts Act (ECA) (Riigi Teataja) (State Gazette) I 2009, 5, 35, available in English at: www.riigiteataja.ee/en/eli/509012015006/consolide. The case law has not developed any other definition, but refers to the notion stipulated in the ECA; see, eg, Supreme Court, Case 3-2-1-13-08, 31 March 2008, in Estonian, available at: www.nc.ee. 2  ECA, para 1(4). 3 Paragraph 1(3) of the Occupational Health and Safety Act (OHSA) (Töötervishoiu- ja tööohutuse seadus)—RT I 1999, 60,616, available in English at: www.riigiteataja.ee.

150  Gaabriel Tavits contracts per se.4 Other types of contracts are concluded with such persons, eg, independent contractor agreements (töövõtuleping) or contracts for services (käsundusleping). Other labour laws do not generally apply to such persons.5 One sub-type of the employment contract is the freelance contract (­ sometimes also referred to as contract for services − käsundusleping). The freelance contract is a general contract for the provision of various services.6 The ECA and other labour laws generally apply to employment contracts. If an issue is not regulated in the ECA, the Law of Obligations Act (­Võlaõigusseadus) (hereinafter LOA) will apply.7 As a general rule, an employment contract is concluded in writing. The formal requirements for concluding employment contracts are specified in the ECA. Usually, no additional formal requirements stipulated in collective agreements are necessary. An employment contract is also deemed to have been entered into when the employee commences work which, under the given circumstances, is expected to only be carried out in exchange for remuneration.8 Nevertheless, failure to follow the formal requirements applicable to employment contracts does not entail the voidness of the employment contract.9 The requirement to conclude an employment contract in writing does not need to be met if the duration of the employment contract is less than two weeks.10 Although the ECA requires employment contracts to be concluded in writing, employees are quite often employed under an employment contract that was not concluded in writing.11 According to § 5 ECA, an employment contract concluded in writing must, at least, contain the following information: (i)

4 

the name, personal identification number or registry number, place of residence or seat of the employer and of the employee;

ECA, para 1(5). The only rules that might apply are those relating to the working environment. According to the Occupational Health and Safety Act, it must be applied in the following cases: ‘1) to work performed by a prisoner in line with the specifications provided for in the Imprisonment Act; 2) to work performed by a pupil or student in practical training; 3) to work of a member of the board of directors or a management body substituting the board of directors of a legal person; 4) to work of a soleowner’. 6  Paragraphs 619 ff of the Contract for Services (Käsundusleping), Law of Obligations Act (LOA)—RT I 2001, 81, 487, available in English at: www.riigiteataja.ee/en/eli/516062015006/ consolide. According to para 619 LOA, under a freelance contract, one person (the contractor) undertakes to provide services to another person (the contractee) pursuant to an agreement (to perform the assignment) and the contractee undertakes to pay remuneration to the contractor as agreed. 7  The ECA makes direct references to the LOA—eg, ECA, paras 1(3), 22(1), 40(1), (5). 8  ECA, para 4(2). 9  ibid para 4(4). 10  ibid para 4(5). 11  Supreme Court, Case 3-2-1-6-08, 19 March 2008; Supreme Court, Case 3-2-1-117-11, 7 December 2011, Decisions available in Estonian at: www.nc.ee. 5 

The Concept of ‘Employee’: The Position in Estonia 151 (ii)

the date of commencement of the employment relationship and commencement of work by the employee; (iii) a description of duties; (iv) an official title, if this entails a legal consequence; (v) the agreed remuneration for the work (wages), including the ­remuneration based on economic performance and transactions, and the manner of calculation, procedure of payment and the time the wages are due (pay day), taxes and payments paid/withheld by the employer; (vi) other benefits if agreed upon; (vii) the time when the employee is to carry out the agreed duties (working time); (viii) the place of performance of work; (ix) duration of holiday; (x) a reference to the terms or the specific terms for advance notice of cancellation of the employment contract; (xi) a reference to the internal rules of work that are established by the employer; (xii) a reference to a collective agreement if a collective agreement is applicable in relation to the employee. The information included in an employment contract must be communicated to the employee in good faith, clearly and unambiguously.12 If the information has not been communicated to the employee prior to the commencement of work, the employee has the right to request the details on the working conditions at any time. In that case, the employer is obliged to communicate the information on the working conditions within two weeks from receipt of the request.13 This allows an employer to hire an employee without concluding an employment contract in writing. Only when an employee requests a written contract is the employer obliged to present a contract in writing. If an employer does not provide information on the working conditions in writing, the employer will be subject to a fine imposed by the Labour Inspectorate.14 Any changes to the working conditions must be communicated to the employee in writing within one month of introducing the changes. The employer is obliged to keep the written employment contract throughout the term of validity of the employment contract and for ten years following the expiry of the employment contract.15

12 

ECA, para 5(2). ibid para 5(3). 14  ibid para 117. 15  ibid para 5(5). 13 

152  Gaabriel Tavits Certain employment conditions such as the probation period (shorter than four months),16 the term of the contract (if a fixed-term contract is concluded),17 the content of the agreement on the non-competition clause or on the content of confidential information,18 the performance of telework19 and temporary agency work20 must always be agreed in writing. If these employment conditions are not made in writing, it is presumed that such conditions were not agreed.21 The ECA contains a general rule granting employees a more favourable position. According to the ECA, an agreement that derogates from the provisions of the ECA and the Law of Obligations Act concerning the employee’s rights and obligations and the liability of the contracting parties to the detriment of the employee is not valid, unless the option of derogating from these provisions to the detriment of the employee is prescribed by the ECA.22 This implies that the ECA allows the conclusion of agreements that do not favour the employee, although this option is only possible in very rare cases.23 The ECA also contains other clauses that prohibit agreements that do not favour the employee. According to the ECA, an agreement on a condition that is harmful to the employee is void. The same principle applies when the agreement relates to the validity of the employment contract, which is contingent upon an uncertain event (a resolutive condition).24 If an agreement in an employment contract is not valid, it does not automatically mean that the entire contract is not valid.25 In the event that an agreement in the labour contract is void, the voidness of the agreement is of no relevance for the future (ex nunc), but for the past (ex tunc). This is valid especially when the parties to the agreement have already made use of their rights and obligations within the scope of the contract.26 If the parties to the agreement have not made use of their rights and obligations derived from the contract, the condition that breaches the law, public policy or basic legal principles, the condition is null and void from the very beginning. There is currently no case law on that principle.

16  According to para 86(1) ECA, if there is no agreement on a shorter probation period, the maximum probation period may be four months. 17  ibid para 6(2). 18  ibid para 6(3). 19  ibid para 6(4). 20  ibid para 6(5). 21  ibid para 6(9). 22  ibid para 2. 23  ibid paras 21(2) and 97(4). 24  ibid para 4(2), second sentence. 25  Paragraph 85 Tsiviilseadustiku üldosa seadus (General Part of the Civil Code Act)—RT I 2002, 35, 216, available in English at: www.riigiteataja.ee/en/eli/528082015004/consolide. 26 See also G Tavits, ‘The Nature and Formation of Labour Law’ (1997) 1 Juridica ­International 103–11.

The Concept of ‘Employee’: The Position in Estonia 153 B.  Employment Relationship: Basic Definition Estonian legislation does not contain a definition of the employment ­relationship. The ECA refers to the notion of ‘employment relationship’,27 but does not provide any clarification as to what precisely an employment relationship entails. The established case law does not typically refer to the employment relationship, but to the existence or non-existence of the employment contract.28 Legal theory also does not provide a definition of the employment relationship, but refers primarily to the employment contract.29 The employment relationship may, however, be inferred from the definition of the employment contract. As mentioned above, according to § 1 ECA, an employment contract is defined as a contract between an employee and an employer. An employee performs work-related tasks under the control of an employer, who has to pay remuneration in exchange for the labour.30 Social dialogue mechanisms and collective bargaining do not play a role in the definition of the employment relationship.31 The employment relationship can therefore be described as a relationship based on an employment contract. Social security laws also do not define the employment relationship. These laws usually refer to the notions of ‘employee’, ‘employer’ and ‘employment contract’.32 The characteristics of an employment relationship are relevant in the event of a transfer of undertaking. The criteria according to which a transfer of undertaking can be initiated differ under administrative law and under labour law. According to the case law, the criteria for initiating a transfer of

27 

eg, ECA, paras 23(2) and 97(2). Court, Case 3-2-1-13-08, 31 March 2008; Supreme Court, Case 3-2-1-41-11, 15 June 2011, available in Estonian at: www.nc.ee. 29  G Tavits, ‘Scope of Application of Estonian Labour Legislation’ (1996) 1 Juridica International 114–25; E. Käärats et al, Töölepingu seadus. Selgitused töölepingu seaduse juurde (Tallinn, Juura, 2013) 13–15. 30  ECA, para 1(1). 31 There is no definition of ‘employment relationship’ in the Collective Agreements Act. Only the notions of ‘employee’, ‘employer’ and ‘employment contract’ are used; para 2 of the Collective Agreements Act (Kollektiivlepingu seadus)—RT I 1993, 20, 533, available in English at: www.riigiteataja.ee. The Employees Trustee Act also refers to the notion of ‘employee’ and does not use the notion of ‘employment relationship’; para 2 of the Employees ­Trustee Act (Töötajate usaldusisiku seadus)—RT I 2007, 2, 6, available in English at: http// www.riigiteataja.ee. The practice of concluding collective agreements also demonstrates that the employment relationship and its definition are not used in collective agreements. K Pärnits, Kolletkiivlepingu roll ja regulatsioon nüüdiaegsetes töösuhetes (Tartu, Tartu Ülikooli kirjastus, 2015) 27–33. 32  See, eg, para 4(2) of the Unemployment Insurance Act. RT I 2001, 59, 359, English version available at: www.riigiteataja.ee/en/eli/522062016001/consolide; para 2 of the Social Tax Act, RT I 2000, 102, 675, English version available at: www.riigiteataja.ee/en/eli/504012017005/ consolide. 28  Supreme

154  Gaabriel Tavits undertaking are elaborated in labour law cases and taxation. No concrete list of applicable circumstances exists for a transfer of undertaking to take place. Estonian case law applies the criteria elaborated by the European Court of Justice to transfers of undertakings.33 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition There is no statutory definition of employee in Estonian legislation. However, the definition of employee has been elaborated in theory.34 Judge-made law does not provide a definition for ‘employee’. The case law refers to employees without defining them.35 Pursuant to the former, an employee is a physical person who performs his or her employment obligations under an employment contract and under the control of an employer. In return for his or her performance of work, an employee receives remuneration from the employer.36 Different fields of legislation and laws37 use the same notion of employee, ie, they do not apply any special definitions.38 In addition to the category of employees, another category of working persons exists—officials. Officials work in the public service and are appointed to their post by an administrative act.39 They are not considered sub-types of employees. Officials do not conclude employment contracts.40 According to the Rescue Service Act, there are two types of rescue workers: (1) officials of the rescue service; and (2) rescue workers. A rescue worker is an employee of a rescue service agency or of the Rescue College who is

33 M Leppik and M Lillsaar, ‘Ettevõtte üleminek maksuõiguses. Kohtupraktikaanalüüs’ (2013) 15, available in Estonian at www.riigikohus.ee/vfs/1487/Ettevotte%20yleminek%20 maksuoiguses_M.Lillsaar_M.Leppik.pdf; see also M Vutt, ‘Ettevõtte üleminek. Kohtupraktika analüüsRiigikohus’ (2010) available in Estonian at: www.riigikohus.ee/vfs/999/EttevotteYleminek_Margit_Vutt.pdf. 34  Tavits (n 29); G Tavits, ‘Persons Who Work But are Not Employees’ (1998) 3 Juridica Abstract 138–43. 35  See, eg, Supreme Court, Case 3-2-1-41-11, 15 June 2011, available in Estonian at: www. nc.ee. 36  ECA, paras 1(1) and 28(2)(2). 37  § 7(4) of the Civil Service Act (CSA) (Avaliku teenistuse seadus)—Riigi Teataja, 6 July 2012, 1, available in English at: www.riigiteataja.ee/en/eli/509072014003/consolide; § 2(1) of the Employees’ Trustee Act (Töötajate usaldusisiku seadus)—RT I 2007, 2,6 available in English at: www.riigiteataja.ee/en/eli/519012015010. 38  A different approach is taken in Trade Unions Act (Ametiühingute seadus)—RT I 2000, 57, 352, available in English at: www.riigiteataja.ee. According to para 2(3) of the Trade Unions Act, an employee is any employed person, regardless of the nature of the work performed. 39  CSA, § 7(1)(2). 40  ibid § 21.

The Concept of ‘Employee’: The Position in Estonia 155 employed under an employment contract to perform duties provided for in the Rescue Act.41 B.  Employer: Basic Definition In Estonian labour law, there is no legal definition of ‘employer’. The legal literature also does not clearly define who should be treated as an employer. There is also no case law dealing with a precise definition of ‘employer’.42 According to the definition of the ECA, an employer is a natural or legal person who must guarantee the provision of work for an employee and has the obligation to guarantee the payment of wages for its employees’ work.43 The ECA includes the notions of ‘employer’, ‘enterprise’ and ‘facilities’.44 The notion of ‘enterprise’ is defined in the general part of the Civil Code Act (Tsiviilseadustiku üldosa seadus). According to this Act, an enterprise is an economic unit in which a person operates.45 The party to the employment contract can be a physical or a legal person. A legal person is a subject of law pursuant to the law. A legal person is either a legal person under private law or a legal person under public law. According to theory, an employer can only be a legal person. Any other entity that does not possess the status of a legal person cannot be considered an employer. An enterprise and facility cannot be party to an employment contract. A facility is part of an enterprise, which forms an organisational whole.46 There is no definition of ‘employer’ in social security law. A definition of ‘employer’ can be found in the Unemployment Insurance Act (Töötuskindlustuse seadus). According to this Act, an employer is: (i) a resident legal person within the meaning of the Income Tax Act; (ii) a state and local government agency; (iii) a natural person who makes payments for insured persons in accordance with the Unemployment Insurance Act for insured persons; (iv) a non-resident who has a permanent establishment or operates as an employer in Estonia within the meaning of the Income Tax Act,

41  Paragraph 4(3) of the Rescue Service Act (Päästeteenistuse seadus)—RT I 2008, 8, 57, available in English at: www.riigiteataja.ee/en/eli/515042015001/consolide. 42  The case law states that as parties to the employment contract, only persons (legal persons and physical persons) can act. Supreme Court, Case 3-2-1-10-03, 30 April 2003, available in Estonian at: www.nc.ee. 43 ECA, para 1(1). For an understanding of employer in Estonian labour law, see also G Tavits, ‘Employer in Estonian Labour Law’ (1995) 9 Juridica Abstract 392–94. 44  ECA, para 47(1). 45  Tsiviilseadustiku üldosa seadus (General Part of the Civil Code Act), para 661. 46  LOA, para 183.

156  Gaabriel Tavits and who makes payments for insured persons in accordance with the Unemployment Insurance Act.47 In short, no definition of the employer exists, only a description of persons who can operate as employers.48 The Estonian Commercial Code provides a definition for ‘group of companies’. Accordingly, when a company is a partner or shareholder of another company and owns the majority of voting interests in the company, the participating company is called the parent undertaking and the company in which it participates is called the subsidiary. A parent undertaking, together with its subsidiaries, forms a group.49 The group itself is not a legal person in Estonian law and can therefore not be a party to an employment contract. The members of the group are independent legal persons and thus possess the ability to conclude employment contracts. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees In Estonian labour law, there is no legal distinction between different subgroups of employees.50 The only categories recognised in labour law are temporary agency workers and teleworkers. These designated groups of persons are legally treated as employees, ie, persons who work under an employment contract.51 No separate labour regulations exist in Estonia for home workers or other types of workers. Where no other regulations apply,

47 Paragraph 4 of the Unemployment Insurance Act (Töötuskindlustuse seadus)—RT I 2001, 59, 359, available in English at: www.riigiteataja.ee/en/eli/509072014020/consolide. 48 The notion of ‘employer’ is stipulated in the Gender Equality Act (Võrdse kohtlemise seadus). According to the Gender Equality Act, an ‘employer’ is defined as a natural or legal person who provides employment on the basis of an employment contract or a contract for the provision of services, or a state authority or a local government authority. See para 3(2)2) of the Soolise võrdõiguslikkuse seadus—RT I 2004, 27, 181, available in English at: www. riigiteataja.ee. A similar definition is found in para 4(2) of the Equal Treatment Act (võrdse kohtlemise seadus)—RT I 2008, 56, 315, available in English at: www.riigiteataja.ee. 49  Paragraph 6 of the Äriseadustik (Commercial Code)—RT I 1995, 26, 355, available in English at: www.riigiteataja.ee/en/eli/516062015010/consolide. 50  The members of the board of a company are not considered to be employees. According to the Estonian Supreme Court, it is possible for a member of the board to have two analogous contracts: (1) one civil law contract (usually a contract for services (käsundusleping), according to which the member of the board carries out tasks as a member of the board; and (2) an employment contract to perform different tasks. The Estonian Supreme Court has also stated that, taking into account the principle of party autonomy, board members are permitted to agree on the application of ECA articles. See Supreme Court, Case 3-2-1-134-02, 26 November 2002, available in Estonian at: www.nc.ee. 51  ECA, para 6(4) and (5).

The Concept of ‘Employee’: The Position in Estonia 157 it is assumed that the individual is performing work under an employment contract.52 Estonian labour law also does not distinguish between whitecollar and blue-collar workers. The only two categories of workers mentioned in the ECA are temporary agency workers and teleworkers.53 Though the ECA mentions that these forms of employment are recognised in Estonia, it does not provide for any other specific regulation on their employment conditions. According to the ECA, if an employer and an employee agree that the employee performs work for the employer, which is usually performed either at the employer’s premises or outside the employer’s premises (including the employee’s place of residence, ie, teleworking), the employer must notify the employee where his or her work duties are to be performed.54 This notification must be made available in writing. If such an arrangement is not available in writing, it is presumed that such an arrangement does not exist and that telework, for example, has not been agreed. There is no other rule that stipulates specific conditions of telework. Additional regulations are available for temporary agency work. According to the ECA,55 if the employer and the employee agree that the employee shall temporarily work in compliance with a third party’s (user undertaking) instructions and supervision (temporary agency work), the employer must notify the employee that the duties will be performed by way of temporary agency work at a user undertaking. When duties are performed by way of temporary agency work, an employment contract may be entered into for a specified term when justified by the temporary nature of the work at the user undertaking.56 In the case of temporary agency work, the employee must follow the instructions of the user undertaking. In the event of conflict between the employer’s instructions and those of the user undertaking, the employee is obliged to follow the instructions of the employer. There is no definition for ‘temporary agency worker’ or for ‘teleworker’ in Estonian legislation.57 The status of ‘employee’ in Estonian labour law is universal. No differences are made in national law, judicial rulings or social dialogue as regards the development of the notion of ‘employee’ in specific sectors (eg, the entertainment industry, media and sports). Certain specificities (special working conditions) may be regulated in collective agreements, but the status of employment as such is essentially universal. Specific

52 

ibid para 1(2), which presumes the existence of an employment contract. ibid paras 6, 10 and 17. 54  ibid para 6(4). 55  ibid para 6(5). 56  ibid para 17(5). 57  Telework and types of teleworking have been discussed in theory. See G Tavits, ‘Kaugtöö ja töösuhete reguleerimine’ (2000) 2 Juridica 93–99. 53 

158

Gaabriel Tavits

regulations mainly concern working time, the payment of wages and the guarantee of annual leave (eg, in the rescue services).58 Economically dependent workers are neither defined in Estonian legislation nor in Estonian case law. According to Estonian labour law theory, economically dependent workers are persons who work outside an employment contract, but are financially dependent on one or more employers (clients).59 This type of dependence does not entitle the worker to protection guaranteed by labour law. Economic dependence/independence is one of a number of criteria that must be evaluated to determine whether an employment relationship exists.60 At the same time, legal literature has recently raised the issue that it might be reasonable to concretise the position of economically dependent workers.61 In addition to economically dependent workers, the following categories of workers ought to be mentioned here: (i) (ii)

(iii)

(iv) (v)

Trainees are considered employees in Estonia. No specific regulations on the legal status of trainees exist in Estonian labour law. Artists can be hired under an employment contract or under a civil law contract. If no specific contract is concluded, the presumption is that an employment contract is applicable to the relationship.62 Seafarers’ employment conditions are regulated in the Seafarers Act.63 According to the Seafarers Act, an employment contract shall be concluded with seafarers.64 This means that seafarers are considered employees. Journalists can either be employed under an employment contract or a civil law contract. No specific legal regulations exist for journalists. Athletes are considered to be employees. The Sport Act65 does not specify the legal status of athletes. The Supreme Court stated in 2005 that athletes are employees and should be employed under an employment contract.66

58 Rescue Service Act (Päästeteenistuse seadus)—RT I 2008, 8, 57, available in English at: www.riigiteataja.ee/en/eli/515042015001/consolide. 59 R Haljasmäe, ‘Majanduslikult sõltuva töötegija õiguslik kaitse’ (2007) 4 Juridica 274–80; R Haljasmäe, ‘Töötajale ettenähtud tagatiste laiendamine majanduslikult sõltuvale töötegijale’ (2009) 4 Juridica 217–23. 60 Tavits (n 34); Käärats et al (n 29) 14. 61 Haljasmäe, Töötajale’ (n 59). 62 ECA, para 1(2). 63 Meretöö seadus (Seafarers Employment Act)—RT I 29 June 2014, 108, available in English at: www.riigiteataja.ee/en/eli/503092014003/consolide. 64 ibid para 6. 65 Sport Act (Spordiseadus)—RT I 2005, 22, 148, available in English at: www.riigiteataja. ee/en/eli/505012015004/consolide. 66 Supreme Court, Case 3-2-1-3-05, 14 June 2005, available in Estonian at: www.nc.ee.

The Concept of ‘Employee’: The Position in Estonia 159 Two categories of workers exist in the Estonian civil service: officials and employees. The Civil Service Act regulates the rights and duties of ­officials.67 Officials are not employees and no employment contract is therefore concluded with them. Officials are appointed to their post on the basis of an administrative act. No specific regulations exist for all other categories of employees in ­Estonia. Therefore, the general presumption is that an employment contract exists.68 B.  The Establishment of a Specific Category of ‘Workers’ There is no specific category of ‘workers’ in Estonia. Only one notion of employee exists and all employees are employed under an employment contract. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration A number of criteria exist that can be used to determine the status of the employment relationship. The criteria have been discussed in the literature since 1996.69 These criteria have also been developed in the case law of the Estonian Supreme Court.70 In 2005, the Estonian Supreme Court found that some of the criteria are similar for the employment contract (tööleping) and the contract for services (käsundusleping). The Supreme Court also stated that in some cases, it is difficult to draw a precise line between an employment contract and other contractual relationships.71 The main component for establishing the existence of an employment relationship is the level of dependence between an employee and an employer.72 Dependence as a component is also specified in the ECA for the notion of the employment contract.73

67 

Tavits (n 34). ECA, para 1(2). 69  G Tavits, ‘Duties of Employees’ (1997) 4 Juridica Abstract 181 f; Tavits (n 34); Käärats et al (n 29) 14. 70  Supreme Court, Case 3-2-1-13-08, 31 August 2008; Supreme Court, Case 3-2-1-41-11, 15 June 2011, available in Estonian at: www.nc.ee. 71  Supreme Court, Case 3-4-1-53-2014, 27 November 2014, available in Estonian at: www. nc.ee. 72  Supreme Court, Case 3-2-1-3-05, 14 June 2005, available in Estonian at: www.nc.ee. 73  ECA, para 1(1). 68 

160  Gaabriel Tavits In order to determine the level of dependence between an employer and an employee, the following criteria can be applied: (i)

According to the established case law, the extent to which an employee must follow the orders of an employer concerning the place, time and way of performing his or her employment obligations is of relevance.74 The level of dependence must be determined, taking into account the specific circumstances of the case. The level of dependence is connected to the work to be performed. The relationship between the parties to the contract during its fulfilment must also be assessed.75 (ii) Control of the work and work instructions. The level of dependence is connected to control over how the work is or must be performed.76 (iii) Integration of the worker into the enterprise. In this regard, control refers to the degree of subordination to the internal rules established by the employer. Internal rules refer to the organisational rules at the workplace. Labour law does not prescribe the content of such rules. They usually cover health and safety rules, rules on working and rest periods, and rules on behaviour at the workplace. No Estonian case law is available on how the level of integration of the worker into the enterprise should be assessed. (iv) Work performed solely or mainly for the benefit of another. This is the criterion mostly mentioned in the literature.77 (v) Tasks carried out in person. This criterion has been discussed in the literature.78 The ECA also refers to this criterion. According to the ECA, an employee fulfils his or her obligations in person, unless ­otherwise agreed.79 (vi) Tasks carried out during specific working hours or at an agreed place. An agreement on working hours is mandatory in an employment contract. This criterion shall be assessed together with the extent to which the individual must comply with the internal rules established by the employer.

74  Supreme Court, Case 3-2-1-41-11, 15 June 2011, available in Estonian at: www.nc.ee; Supreme Court, Case 3-2-1-3-05, 14 June 2005; Supreme Court, Case 3-2-1-9.05, 14 June 2005, available in Estonian at ww.nc.ee. 75  Supreme Court, Case 3-2-1-3-05, 14 June 2005, available in Estonian at: www.nc.ee. 76  Käärats et al (n 29) 12–14. 77  Tavits (n 29). 78 ibid. 79  ECA, para 28(2).

The Concept of ‘Employee’: The Position in Estonia 161 B. Indicators To determine the level of dependence, additional (supportive) indicators may be used. According to the literature, registration with the social security scheme has been used as one of the additional indicators,80 specifically registration with the health insurance and unemployment insurance scheme.81 Since 1 July 2014, an employer must register every employee in the employment register. Registration of an employee in the register automatically entails registration in the social security scheme (registration in the health insurance and unemployment insurance scheme).82 The objective behind the employment register is to prevent illegal employment and to ensure that the employer pays the employee the official wage and taxes. Theoretically, registration of employees in the register does not automatically imply that an employment contract has been concluded. Registration is, among other things, only an indication that such a relationship might exist. If a dispute about the nature of the relationship arises, it does not suffice to present an extract of the registration in the employment register. The following components are used as indicators to determine whether an employment relationship (dependence) exists or not. There is no legal regulation of such criteria. These criteria have been elaborated in legal theory:83 (i)

(ii)

80 

The obligation of the partner to provide work (mutual obligation). The legal foundation for such a mutual obligation is § 1(1) ECA, according to which a natural person (the employee) performs work for another (the employer) on the basis of an employment contract in subordination to the management and control of the employer. The employer pays the employee remuneration for the performance of work. The ECA also stipulates the employer’s obligation to provide the employee with the agreed work and to give clear and timely instructions.84 The provision of tools and materials by the person requesting the work. The legal basis for this indicator is the employer’s obligation to provide the employee with the agreed equipment in order to be able to perform the work.85 This implies that the tools and materials necessary to perform the tasks must be provided to the employee.86

Tavits (n 29).

81 ibid.

82 Paragraphs 251–258 of the Taxation Act (Maksukorralduse seadus)—RT I 2002, 26, 150, available in English at: www.riigiteataja.ee/en/eli/522062015002/consolide. 83  Tavits (n 29). 84  ECA, para 28(2)(1). 85 ibid. 86  Käärats et al (n 29) 13–15.

162  Gaabriel Tavits (iii) Periodic payments to the worker. According to the ECA, this is one of the criteria determining the existence of an employment contract. § 33(1) ECA stipulates that the employee’s wage must be paid at least once a month (ie, periodically). Periodic payment of remuneration can be considered a criterion to determine the existence of an employment relationship. (iv) A specified duration and continuity of work. Regulations on shortterm work do not differ from those for long-term work. The following indicators are not relevant: (i)

Remuneration as the sole or principal source of income. According to the ECA, there are no restrictions preventing an employee from concluding two or more employment contracts. Although the ECA stipulates that the maximum working time per week is 48 hours (including overtime), this limit has to only be complied with by a single employer.87 Therefore, this criterion does not provide any additional information about the existence or not of an employment relationship.88 (ii) Payment in kind. According to the ECA, wages may only be made in cash payments.89 Although it is theoretically possible for payments to be made in kind for other contracts, this method of payment is not used in Estonia. Therefore, this criterion is not helpful for determining the existence of an employment relationship. Payment in kind may be considered a criterion for non-existence of an employment relationship. (iii) Travel payments by the person requesting the work. According to the ECA,90 an employee may request travel payments for business trips. At the same time, this possibility is also not excluded in other contracts such as contracts for services, which are concluded, for example, with members of the board of a company.91 Therefore, this criterion also cannot be used to unequivocally determine the existence of an employment relationship.

87 

ECA, para 46(1). Tavits (n 29). 89  ECA, para 29(3). 90  ibid para 40(2). 91  The Estonian government has adopted a special regulation on the compensation of travel costs. Accordingly, the members of the board of a company can also claim compensation for costs connected to their business travel. See ‘Töölähetuse kulude hüvitiste maksmise kord ning välislähetuse päevaraha alammäär, maksmise tingimused ja kord’, Vabariigi Valitsuse määrus nr 110, 25.06.2009—RT I 2009, 36,245, available in Estonian at: www.riigiteataja.ee. 88 

The Concept of ‘Employee’: The Position in Estonia 163 C.  The Relevance of ‘Economic Dependence’ The economic dependence of a worker is neither emphasised in the legal literature nor in the case law. Theoretically, however, the so-called business risk is of significant relevance. An employee receives wages for performing his or her work-related tasks. An employee does not bear any risks for the services provided or for production. These risks are carried by the employer.92 V.  THE PRINCIPLE OF PRIMACY OF FACTS

The principle of ‘primacy of facts’ applies in Estonia. As a general rule, the title or type of contract is of no relevance; however, what plays a role is the conduct of the parties to the contract in the fulfilment of the contract. The courts will assess the understanding of parties to the contract as regards the nature of the contract. The actual performance of the contractual obligations is also relevant.93 The courts do not need to follow any specific procedure in order to conduct such an assessment. The determination of the existence of an employment relationship is based on the facts of each individual case (and not on how the parties perceive their relationship). According to Estonian case law, the circumstances of each individual case must be taken into account in order to determine the existence of an employment relationship. The conduct of the parties to the contract (ie, the employer and the employee) must be assessed. It is also necessary to review the contract and to analyse the conditions agreed upon (ie, whether the conditions are reminiscent of an employment contract or another type of contract). According to Estonian case law, it cannot be automatically excluded that another contract apart from the employment contract exists between the parties. Although the presumption is that an employment contract exists, a court or commission for individual labour disputes94 can decide in favour of

92 

Tavits (n 29). Supreme Court, Case 3-2-1-3-05, 14 June 2005, available in Estonian at: www.nc.ee. 94  The Commission for Individual Labour Disputes is a body that deals with disputes arising from individual employment contracts. There is a limit for litigation of such disputes—the disputed amount may not be higher than €10,000. The Commission for Individual Labour Disputes is part of the Ministry of Social Affairs. It consists of three members: a chairperson who has higher education in law, an employee representative and a representative of employers. The procedure applied by the Commission is more straightforward than that of the courts. At the same time, the Commission’s decision is equally valid to a court decision. In the event of non-fulfilment, the decision will be executed with the help of bailiffs. 93 

164  Gaabriel Tavits the ‘employer’ if he or she can prove the non-existence of the employment contract.95 VI.  QUALIFICATION IN FULL

It is not legally possible in Estonia for certain parts of the contract to comply with regulations other than labour law. The recent case law of the Estonian Supreme Court has introduced some changes to this principle.96 The Estonian Supreme Court has stated that the rules on agreements on noncompetition clauses in §§ 23–27 ECA are independently regulated and therefore will not constitute part of the employment contract. Agreements on non-competition clauses are considered independent contracts under civil law.97 This new approach has not yet been discussed in the literature. The Supreme Court did not issue clear guidance on why the non-competition clause should be concluded outside the employment contract, although such an agreement concerns the employment contract and the rights and duties of both the employee and the employer. VII.  LIMITS TO THE FREEDOM OF CONTRACT

The parties cannot alter the legal nature of their relationship in Estonia. This possibility is not recognised either in the legal literature or in the case law. According to the Estonian Constitution, freedom of contract applies in its full extent.98 Therefore, the parties to a contract are in principle free to conclude an employment contract whenever they want. According to the ECA, the provisions on the employment contract do not apply to a contract under which the person who performs the work is to a significant extent free to choose the manner, time and place of the performance of the work. This implies that it is possible to conclude an employment contract, although the ECA will not apply in such ­circumstances.99 95 

Supreme Court, Case 3-2-1-26-10, 19 April 2010, available in Estonian at: www.nc.ee. the Supreme Court modified its position on agreements on non-competition clauses, such agreements were considered part of the employment contract. The ECA also states that such an agreement is part of the employment contract and is not a separate agreement outside the scope of an employment contract (para 6(3)). 97  Supreme Court, Case 3-2-1-6-13, 6 March 2013, available in Estonian at: www.nc.ee/?id =11&indeks=0,2,10648,10678,10680&tekst=RK/3-2-1-6-13. 98  Paragraph 19 of the Estonian Constitution; Eesti Vabariigi Põhiseadus. Kommenteeritud väljaanne. (Tallinn, AS Juura, 2012), available at: www.pohiseadus.ee/ptk-2/pg-19; see also Supreme Court, Constitutional Court Chamber, Case 3-4-1-3-04, 30 April 2015. 99  ECA, para 1(4). 96 Before

The Concept of ‘Employee’: The Position in Estonia 165 The literature and the case law do not specify in which cases this option applies. This may be the case for religious institutions and persons involved in religious rituals.100 Although the individual performs work for another and the presumption is that an employment contract exists, the ECA excludes the existence of an employment contract in such cases.101 The ECA also states that the provisions on the employment contract do not apply to contracts of members of the board of a legal person or a director of a branch of a foreign company.102 In other words, although the members of the board conclude employment contracts, these cannot be considered employment contracts according to the ECA. Nonetheless, the Estonian Supreme Court has stated that although members of the board do not have the possibility of concluding an employment contract, it is not excluded that they agree on the applicability of the provisions of the ECA, which do not specifically apply only to employees.103 According to Estonian labour law, it is not possible to agree on the inapplicability of the employee status. Whether the status of ‘employee’ exists or not is determined by the court or by the Commission for Individual Labour Disputes.104 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The social partners do not have any influence on the development of the notions of ‘employee’ and ‘employment relationship’. Collective agreements do not contain a specific notion of ‘employee’ or ‘employment relationship’. The Collective Agreements Act does not prohibit defining the notions of ‘employee’ and ‘employment relationship’ if the parties to the agreement find it necessary to do so.105 There is also no reference to the obstacles that trade unions may face in their attempt to protect the rights of those workers

100  Seletuskiri töölepingu seaduse eelnõu juurde (Explanations to the Draft of the ECA). 10 December 2008, available in Estonian at: www.riigikogu.ee. 101  ECA, para 1(4). 102  ibid para 1(5). 103 The Estonian Supreme Court did not specify which regulations from the ECA apply specifically to employees and not to the members of the board. Supreme Court, Case 3-2-1-3904, 8 April 2004, available in Estonian at: www.nc.ee/?id=11&tekst=RK/3-2-1-39-04. 104  Paragraphs 2 and 3 of the Individual Labour Dispute Resolution Act—RT I 1996, 3, 57, English translation available at: www.riigiteataja.ee/en/eli/503072014007/consolide. 105  The notions of ‘employment relationship’ and ‘employee’ can be of relevance and there might be a need to define these to determine the applicability of a collective agreement. See K Pärnits, ‘The Role of Collective Agreements in the Regulation of Work Conditions in View of the Effects of Estonian Labour Law Reform’ (2012) 19 Juridica International 88–98.

166  Gaabriel Tavits who do not work under an employment contract. Persons who do not work under an employment contract are generally not entitled to representation rights. Accordingly, only those who are employed under an employment contract will be entitled to the rights and duties from the employee representation perspective.106 The social dialogue mechanisms do not play a role in defining the employment relationship. B.  Custom and Practice A custom that is accepted by the parties and that is an established practice is the impossibility of deviating from the employment relationship and from the definition of the employment relationship as stipulated in the ECA. The custom and practice that exists between the parties to an employment relationship do not influence the nature and notion of the employment relationship. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions According to the ECA, there is a presumption of the existence of an employment contract: when a person performs work for another, which, under the circumstances, can be expected to be performed only in exchange for remuneration, it is presumed to be an employment contract.107 According to the case law of the Supreme Court, only in cases where it is evident that no employment contract exists and the employer did not prove otherwise does the court108 deem that no employment contract has been concluded.109

106  At the same time, it should be mentioned that according to the Trade Unions Act, it is for the trade unions to decide who can be a member. Therefore, it is not excluded that other working persons (ie, not only employees) become members of a trade union. See para 2(3) of the Trade Unions Act (Ametiühingute seadus). 107  ECA, para 1(2); see also para 4(2). 108  There are no special labour courts in Estonia. For litigation involving individual labour disputes, ordinary civil law courts have competence. The Estonian court system consists of three levels of courts: the first level (county courts), the second level (district courts) and the third, the highest level (the Supreme Court). See www.nc.ee/?id=188. 109 Supreme Court, Case 3-2-1-41-11, 15 June 2011, available in Estonian at: www. nc.ee; Supreme Court, Case 3-2-1-13-08, 31 March 2008, available in Estonian at: www. nc.ee; Supreme Court, Case 3-2-1-7-09, 13 March 2009, available in Estonian at www.nc.ee; Supreme Court, Case 3-2-1-26-10, 19 April 2010, available in Estonian at: www.nc.ee.

The Concept of ‘Employee’: The Position in Estonia 167 B.  The Burden of Proof It is for the employer to prove that no employment contract exists and that there was no intention to conclude one.110 When it is not evident from the circumstances of the case and the employer has not proven that the parties have not concluded an employment contract, the court will deem that an employment contract exists between the parties.111 It is for the Commission of Individual Labour Disputes or for a court to decide whether a person is in fact ‘employed’ as a self-employed worker or as an employee. In the event of a dispute about the nature of the relationship or contract, it is for the employer to prove that no employment contract has been concluded and that the parties concerned wanted to conclude a ‘contractor agreement’ (töövõtuleping) or a contract for services ­(käsundusleping).112 If a person works under a contract for services, there are no financial risks. According to Estonian tax law, the party concluding a contract for services as a principal is also obliged to pay all necessary taxes such as income tax, social insurance contributions and unemployment insurance contributions.113 Accordingly, if a person is self-employed, the tax burden lies directly with him or her. X.  SPECIFIC PROCEDURES

In order to determine the existence of an employment relationship, a claim must be submitted to the Commission for Individual Labour Disputes or a court. The state agency, the Labour Inspectorate,114 does not have authority to establish whether an employment relationship exists. According to the Taxation Act, the Taxation and Customs Board has authority to ensure that the requirements of various tax acts are met. Within the framework of taxation regulations, Taxation and Customs Board may

110 

Supreme Court, Case 3-2-1-41-11, 15 June 2011, available in Estonian at: www.nc.ee. See also Supreme Court, Case 3-4-1-53-14, 27 November 2014, available in Estonian at: www.nc.ee. 112  Supreme Court, Case 3-2-1-41-11, 15 June 2011, available in Estonian at: www.nc.ee. 113 Paragraph 13(11) of the Income Tax Act (Tulumaksuseadus)—RT I 1999,101,903, available in English at: www.riigiteataja.ee; para 2(1), (5) and (6) of the Social Tax Act (Sotsiaalmaksuseadus)—RT I 2000, 102, 675, available in English at: www.riigiteataja.ee; paras 3(1) and 40 of the Unemployment Insurance Act (Töötuskindlustuse seadus). 114  The Labour Inspectorate is a state agency that is responsible for monitoring the fulfilment of labour legislation requirements and observing the fulfilment of occupational health and safety regulations. 111 ibid.

168  Gaabriel Tavits also investigate the nature of the employment relationship in order to establish an obligation to pay taxes.115 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons In order to understand which rights may be extended, it is necessary to analyse Estonian labour legislation. The regulations of the ECA do not extend to persons who are not employees. The occupational health and safety rules apply not only to persons who are employed under an employment ­contract but also for other activities.116 Social security regulations also do not contain any reference to ‘employee-like’ persons.117 Under Estonian labour law, there are no specific rules on ‘employee-like’ persons and this category of persons does not exist. Case law also does not differentiate employeelike persons. In general, the law is based on a binary distinction between employees and non-employees. B.  Equality and Anti-discrimination Law In Estonia, there are three different legal acts that deal directly with discrimination. According to paragraph 12 of the Estonian Constitution, all persons are equal before the law. The equality clause in the Constitution does not make any reference to the status of ‘employee’. Under the Equal Treatment Act,118 an ‘employee’ is a person who is employed under an employment contract or a contract for services, an official or any other person set out in the Civil Service Act. Persons applying for employment or service provision are also deemed to be employees.

115  Supreme Court, Case 3-3-1-25-15, 11 September 2015, available in Estonian at: www. nc.ee. 116 According to para 1(3) of the Occupational Health and Safety Act, the occupational safety rules also apply to: ‘1) the work of a prisoner performed in a prison in accordance with the specifications provided for in the Imprisonment Act; 2) the work of a pupil and student during his/her practical training; 3) the work of a member of the management board or a directing body substituting for the management board of a legal person; 4) the work of a sole proprietor’. 117 eg, according to the Sotsiaalmaksuseadus (Social Tax Act), reference is only made to employees: see para 2. Social tax is a state-administered tax that is paid to finance state-guaranteed pension insurance and health insurance. 118  Paragraph 4(1) of the Equal Treatment Act (Võrdse kohtlemise seadus).

The Concept of ‘Employee’: The Position in Estonia 169 The Equal Treatment Act contains the notion of ‘employee’ in a different (broader) sense. It not only makes reference to the employment contract, but also to specific private law contracts—contracts for authorisation as well as public service contracts. The Gender Equality Act119 uses the same notions.

119  Paragraph 3(2)(1) of the Gender Equality Act (Soolise võrdõiguslikkuse seadus). According to the Gender Equality Act, an ‘employee’ is a person who is employed under an employment contract or a contract for the provision of services, an official or any other person set out in the CSA. Persons applying for employment or for provision of services are also deemed employees.

170 

9 The Concept of ‘Employee’: The Position in Finland MATLEENA ENGBLOM

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HERE IS NO special definition of ‘employment contract’ (työsopimus) in Finnish legislation. The concept of ‘employment contract’ is included in the definition of ‘employment relationship’ (työsuhde), which is expressed in the Employment Contracts Act (hereinafter ECA).1 The concepts of ‘employee’ and ‘employment relationship’ are thus indirectly defined there in the first section of the ECA, where the scope of the application of the Act is defined.2 The concept of ‘employment contract’ is imperative legislation. The parties to an employment contract cannot agree that the ECA would not be applied in the employment relationship if the criteria of employment ­relationship are fulfilled.3 An employment contract can be made orally, electronically4 or in written form. A contract can even be made silently without special oral agreement.

1 

(1:1) Employment Contracts Act, Työsopimuslaki 55/2001, hereinafter ECA. Act applies to contracts (employment contracts) entered into by an employee, or jointly by several employees as a team, agreeing personally to perform work for an employer under the employer’s direction and supervision in return for pay or some other remuneration. As source material for English translations of legislation and terms, I have used the unofficial translations given on the website of the Ministry of Justice (www.finlex.fi) whenever possible. Not all regulations are there. I have also observed the translation guide in the website of the Ministry of Justice (www.finlex.fi/data/muut/saadkaan/laki.pdf). 3  Government Proposal (Hallituksen esitys HE 157/2000 vp) (hereinafter HE 157/2000). 4 (1:3:1) ECA: an employment contract may be oral, written or electronic; Kari-Pekka Tiitinen and T Kröger, Työsopimusoikeus (Helsinki, Talentum, 2012) 107–08: electronic means that the contract can be made with telecopy or email; M Kairinen, Työoikeus perusteineen 2 This

172  Matleena Engblom In legal praxis there have been cases where a person starts working and, as another person lets him or her work and starts paying remuneration, an employment relationship has been formed silently.5 This is very rare though.6 If a written contract has not been made, the employer is obliged to present the employee with written information on the principal terms of work7 by the end of the first pay period at the latest.8 This clarification must be given within one month after the starting of the employment. In contracts made for a fixed-term period, the clarification must be given if the fixed term lasts more than one month. The regulation is based on the implementation of Council Directive 91/533/EEC on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship.9 As there are no formal requirements for an employment contract, it seldom occurs that the contract as a whole should be regarded as null and void. The invalidity of an employment contract in itself could be due to the fact that one of the parties is lacking legal capacity or the contract is made in circumstances where grounds for invalidity exist.

(Raisio, Työelämän Tietopalvelu Oy, 2009) 186: an employment contract can be made by ­telefax, email or text messages with a mobile phone. No doubt an electronic employment contract could be made by text message or online communication as well, considering that making an employment contract is a free-form legal act. 5  See Helsinki Court of Appeal cases HHO 22.10.1996, HHO 3.2.1996 and 4.3.1999 in s 4.1, where no silent contracts had been formed. 6  It is perhaps more likely that a dispute arises on the subject of whether an employee has silently accepted a change to the terms of the employment contract. 7 The principal terms of work that must be announced according to (2:4) ECA are: the domicile or business location of the employer and the employee, the date of commencement of the work, the grounds for concluding a fixed-term contract and the date of termination of the contract, or its estimated date of termination, the trial period, the place where the work is to be performed or, if the employee has no primary fixed workplace, an explanation of the principles according to which the employee will work in various work locations, the employee’s principal duties, the collective agreement applicable to the work, the grounds for the determination of pay and other remuneration, the pay period, the regular working hours, the manner of determining annual holiday, the period of notice or the grounds for determining it (in the case of work performed abroad for a minimum period of one month), the duration of the work, the currency in which the monetary pay is to be paid, the monetary remunerations and fringe benefits applicable abroad, and the terms for the repatriation of the employee. 8  (2:4) ECA. 9  Council Directive (EEC) 91/533 of 14 October 1991 on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship [1991] OJ L 288. If an employer or its representative intentionally or through negligence commits a breach of the provisions of c 2, s 4, sub-s 1 or 2 on the obligation to provide an employee with written information on the principal terms of work, a fine shall be imposed on the employer for a violation of the Employment Contracts Act. In principle, this sanction has seldom if ever been realised, cf M Engblom, Työsuhteen ehdot—määräytyminen, muuttaminen ja tulkinta (Helsinki, SanomaPro, 2013) 84.

The Concept of ‘Employee’: The Position in Finland 173 A person under 18 years of age can conclude an employment contract.10 A young employee’s guardian (who has responsibility for the care and custody of the young person) has the right to cancel the young employee’s employment contract if he or she regards that this is necessary for the sake of the young person’s education, development or health.11 A person who has been declared legally incompetent or whose competence has been limited under the Guardianship Services Act12 may conclude and terminate a contract of employment on his or her own behalf. Invalidity grounds are regulated in the Contracts Act13 and include: grave duress,14 duress,15 fraudulent inducement,16 extortion,17 misprint or error,18 a contract in improper and discreditable circumstances,19 and a false document.20 A contract that has been made in circumstances which lead to invalidity on the above-mentioned grounds does not bind the party who has been the object of the other party’s dishonest action. If the employment contract does not bind the employee on the basis of invalidity grounds laid down in Chapter 3 of the CA, the ‘employee’ is entitled, instead of resorting to the invalidity of the contract, to terminate the employment contract immediately, unless the invalidity grounds have lost their significance.21 The ‘employer’ can only appeal to the CA. More often, invalidity can in practice concern an individual term of an employment contract. In that case, it is often a question of a term that is against the mandatory rules of law or is in conflict with a collective agreement. If a term of an employment contract is against the peremptory provisions of legislation or a collective agreement (työehtosopimus), it is regarded

10 

(1:6) ECA. (1:3) Young Employees’ Act (998/1993). 12  Guardianship Services Act (442/1999). 13  Contracts Act (228/1929; amendments up to 449/1999) (hereinafter CA). 14  ibid (3:28). 15  ibid (3:29). 16  ibid (3:30). 17  ibid (3:31). 18  ibid (3:32). 19  ibid (3:33). 20  ibid (3:34): if a simulated document has been drawn up and the holder under the document of a claim or other right has assigned the said right, the assignee shall be entitled to enforce the right if he or she acquired it in good faith. A simulated document means that the original parties have deliberately prepared a document which includes untrue information. An example in employment law could be a document where the salary has been stated as lower than what has in reality been paid for the purpose of misleading the tax authorities. See Supreme Court case KKO 1999:56, where the employers and the employee had agreed that income tax was not withheld from a part of the salary, and only the part where the tax was withheld was reported to the tax authorities. The Supreme Court held that this term of the employment contract was null and void (concerning the income tax), but the employers were obliged to pay the whole salary to the employee as agreed. 21  (10:1) ECA. 11 

174  Matleena Engblom as null and void. A null and void term of the employment contract is not to be applied; instead, the regulations of relevant laws will be applied. In Labour Court case TT 2000:33, the employee had fallen ill during his annual holiday. The employer had suggested that the holiday was transferred to start the same day as the employee had fallen ill and his sickness leave had started. The employee agreed. Since the holiday had started at the same time as the sickness leave took place, the employee was not entitled to the sickness leave payment from the employer, based on the collective agreement. The Labour Court stated that the incapacity for work had originated from an illness mentioned in the collective agreement. The employee was thus entitled to the sickness leave payment. The agreement between the employer and the employee was in contradiction to the peremptory provisions of the collective agreement. The agreement was stated to be null and void based on the Collective Agreements Act.22 The invalidity of a contract between the parties does not usually come into question in connection with the original employment contract, but in connection with an agreement on terminating the contract.23 In the Helsinki Appeal Court case HHO 10.9.1996,24 a bank clerk had, based on a forged document, withdrawn money from the bank account that belonged to her husband’s company and had placed it to her account. When the action was revealed, the bank offered the clerk the option to resign. The other alternative would have been that the bank would have cancelled the employment contract based on the ECA 8:1. The clerk resigned. Later she claimed that the agreement in question was null and void based on the Contracts Act 3:30, Fraudulent Inducement. The Appeal Court dismissed the claim since the employer would have had the right to cancel the employment contract on the basis of the employee’s dishonest conduct. B.  Employment Relationship: Basic Definition The basic definition of an employment relationship is in the ECA25 1:1, which regulates its scope of application: This Act applies to contracts (employment contracts) entered into by an employee, or jointly by several employees as a team, agreeing personally to perform work for

22  Collective Agreements Act (436/1946) (hereinafter CAA), para 6: ‘If a term of an employment contract is in contradiction with the terms of the relevant collective agreement, the term of the employment contract shall be invalid. Instead of the invalid term, the regulations of the collective agreement shall be applied.’ 23  Engblom (n 9) 104. 24  S 96/164. 25  (1:1) ECA.

The Concept of ‘Employee’: The Position in Finland 175 an employer under the employer’s direction and supervision in return for pay or some other remuneration. This Act applies regardless of the absence of any agreement on remuneration, if the facts indicate that the work was not intended to be performed without remuneration. The application of the Act is not prevented merely by the fact that the work is performed at the employee’s home or in a place chosen by the employee, or by the fact that the work is performed using the employee’s tools or machinery.

This definition is general. In all labour law regulation26 and social ­regulation27 as well as in collective agreements, the concept of ‘employment relationship’ is derived from the ECA.28 If a transfer of business takes place, the concept of employment relationships comes from the ECA as well.29 As a transfer is realised, rights, obligations and employment benefits based on employment relationships valid at the time of the transfer are devolved to the transferee. The transfer has no influence on evaluating whether a person’s work fulfils the criteria of employment relationship regulated in the ECA 1:1.30

26  Such as the Working Hours Act 605/1996 (hereinafter WHA) and the Annual Holidays Act 162/2005 (AHA). 27  Such as the Employees’ Pensions Act 395/2006; amendments up to 1097/2008 included (EPA) and the Act on Occupational Accidents and Occupational Diseases 459/2015. 28  (1:1) WHA: ‘This Act applies to all work performed under an employment contract as referred to in s 1 (1), of the Employment Contracts Act (55/2001) or within a state civil servant or municipal officeholder’s service relationship, unless otherwise provided’; (1:1) AHA: ‘Unless otherwise provided by law, this Act applies to all work carried out as part of an employment relationship or civil service relationship’; (1:1) EPA: ‘This Act provides for the private-sector employee’s right to an old-age pension, part-time pension, rehabilitation and disability pension as well as the employee beneficiary’s right to a survivors’ pension’; (2:1.2) EPA: ‘Employment relationship means an employment relationship based on s 1 of the Employment Contracts Act.’ 29  (1:10) ECA. 30  In legal praxis concerning transfer of business, it has usually been a question of whether the reorganisation is to be regarded a transfer of business; see, for example, Supreme Court cases KKO 2001:48, KKO 2001:49, KKO 2002:54, KKO 2008:88 and KKO 2009:37. The other essential question has been which benefits based on the employment relationship are transferred. See, for example, Supreme Court case KKO 2001:72, where the Court held that the transferee was not obliged to offer the supplementary pension as the transferor had done. In KKO 2009:28, the transferor had applied the technology industry collective agreement on the employment relationship. The transferee was obliged to apply the tourism and restaurants collective agreement. When the validity of the first-mentioned CA ceased, the new employer started to apply its own CA. The employee claimed that the terms of the technology industry CA had been transferred in connection with the transfer of business, but the Court held that the transferee had no obligation to apply the former CA after its validity had ceased. The CJEU has given a preliminary ruling in the case: Case C-396/07 Mirja Juuri v Fazer Amica Oy [2008] ECR I-08883.

176  Matleena Engblom In relation to temporary agency work, there is a special regulation in the ECA.31 If, with the employee’s consent, the employer assigns an employee for use by another employer (user enterprise), the right to direct and supervise the work is transferred to the user enterprise together with the obligations stipulated for the employer directly related to the performance of the work and its arrangement. The user enterprise must provide the employee’s employer with any and all information necessary for the fulfilment of the employer’s responsibilities. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition There is no separate basic definition of ‘employee’ in Finnish labour law except the one included in/inferred from the definition of the employment relationship mentioned above. The employee is the other party of the employment relationship, who performs work personally, under the employer’s direction and supervision in return for pay or some other form of remuneration. Naturally, there is a lot of legal praxis concerning the question of how the concept of employee is defined, ie, how the basic elements or criteria of employment contract are interpreted. In Supreme Court case KKO 1987:4, the Finnish Baseball Federation had ordered an umpire to serve in a game. Since there was no contract between the umpire and the playing club, there was no employment relationship. In Supreme Court case KKO 1999:97, a person was working as a head of administration in a bank. He was also a member of the board. The Court held that no employment relationship existed. The judgment was based on the lack of actual direction and supervision of the claimant’s work. When deciding whether a relationship is an employment contract, one essential element is the position of the person who is performing the work.32 The position of employee is a legal but also a social concept. These two approaches to the same phenomenon are both important. A typical feature of being an employee is that he or she is economically dependent on the employment relationship. An exception to this is, of course, part-time workers, who can have several employment contracts at the time. In their case, the existence of an employment relationship is based mainly on the contract and the employer’s right to direct and supervise work. Further, this is an

31 

(1:7.3) ECA. Kairinen (n 4) 71 and 78–87: there are the five basic elements regulated in (1:1) ECA, and other, competing rules stated in jurisprudence and legal praxis. 32 

The Concept of ‘Employee’: The Position in Finland 177 additional element when considering the elements of employment relationship, which is not a legal one. The social aspects still have significance, especially when there are no self-employed persons in the Finnish employment law or in the legal praxis. As a general rule, the concept of ‘employee’ is the same regardless of whether the employee works in the public sector or the private sector. Public sector employers are the state, municipalities, the Evangelical Lutheran Church of Finland and the Orthodox Church of Finland. Further, there are divisions based on the hierarchical position or the character of the work, like ‘johtaja’ or ‘päällikkö’ (leader, manager), or ‘asiantuntija’ (expert). This kind of segmentation is not a legal one, but a sociological one. Employment legislation is applied to the employment relationships of the managers and leaders. The only exception is a manager working as a chief executive officer or managing director (see below). A chief executive officer or managing director (toimitusjohtaja) is not an employee, and there is no employment relationship between the executive and the employer company. The work is based on a manager contract, not an employment contract. The position of CEO is based not on the ECA, but the Finnish Companies Act.33 In Finnish jurisprudence, the legal status of a CEO is based on so-called ‘organ theory’.34 The executive officer is regarded as an organ of the company. B.  Employer: Basic Definition Like the definition of ‘employee’, the definition of ‘employer’ is derived indirectly from the concept of ‘employment relationship’. The employer is the other party of the employment relationship for whom the work is done. The employer is the person who uses the power to supervise and direct the work, who pays the remuneration for the work and who gets the direct results of the work.35 In practice, very often the employer is represented by another person. Ordinarily, this takes place when the employer is a legal person (a partnership, a limited partnership, a limited company or a public authority or public body). In those cases the competence of the employer must be

33 (624/2006). 34 

Kairinen (n 4) 85, 94; Tiitinen and Kröger (n 4) 47–49. in Finnish labour law, the concept of ‘employer’ is treated as if the employer would always be a natural person. The personal pronoun referring to an employer is he/she (Finnish ‘hän’; there is no feminine/masculine form in Finnish for the singular third person). However, very often the employer is a legal person and the correct personal pronoun would be ‘it’ (‘se’ in Finnish). 35  Notably,

178  Matleena Engblom realised by a natural person. It is also possible that even if the employer is a natural person, the competence of the employer is used by some other person, like a foreman (esimies) or a supervisor (työnjohtaja). Notably, in Finland there is a special regulation on the representative of the employer in the ECA (1:9), according to which ‘the employer may assign another person to direct and supervise the work as the employer’s representative’. In this regulation, the concept of employer’s representative means a natural person who carries out the direction and supervision of work. This person does not necessarily have to be a manager or have other special hierarchical position in the organisation. His or her legal status can be an employee as well. A typical title is supervisor (työnjohtaja). Other typical titles that could be mentioned are shift manager (vuoropäällikkö), production manager (tuotantopäällikkö) and head of department (­osastopäällikkö). In short, an employer’s representative is a natural person who represents the employer and acts for it, him or her. If the representative of the employer in the exercise of these functions causes a loss to the employee through fault or negligence, the employer shall be liable for the loss.36 The regulation above gives the employer the authority to transfer his, her or its managerial prerogative to another person. However, this transfer does not release the actual employer from liability in the event that loss is caused to the employee. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Finnish labour law includes only one type of employee, as described in ­II.A above. In practice, however, there are several ‘sub-types’ of employees. In Finland, these sub-types are often categorised on the basis of the way of working or the type of the employment contract, such as: (i)

employee in fixed-term employment relationship (määräaikainen työntekijä);37

36  There is a special definition of ‘employer’s representative’ in the (47:8) Criminal Code of Finland (39/1889, amendments up to 766/2015 included, hereinafter CC): representative of an employer in the CC refers to a member of a statutory or other decision-making body of a legal person and one who on behalf of the employer directs or supervises the work. 37  An employee with a fixed-term contract. According to (1:3) ECA, there must be justified reasons for a fixed-term contract. In Government Proposal (Hallituksen esitys HE 239/2010 vp), it has been stated that typical justified reasons can be substitution, project work or starting a new business.

The Concept of ‘Employee’: The Position in Finland 179 (ii) (iii) (iv) (v)

part-time employee (osa-aikainen työntekijä);38 distance employee/worker (etätyöntekijä);39 employee/worker working at home (kotityöntekijä);40 moving employee (liikkuva työntekijä).41

These descriptions/notions define either in terms of the type of the employment contract or the way in which the employee is working. From a legal point of view, all these types are employees. There are no definitions of the relevant sub-types of employees in legislation or legal praxis. In spoken language there is also the concept of ‘temp worker’ (­pätkätyöläinen), a person who is given only short periods of work, possibly against the ECA’s regulations, though he or she wishes to have a permanent job. The term is somewhat value-laden and has a negative connotation.42 There is no special legislation on casual workers. Legally they are employees with fixed-term contracts and, if they work part-time, are part-time workers. There is a regulation in the ECA43 concerning the rights of employees working in part-time or fixed-term contracts. Without proper and justified reasons, less favourable employment terms than those applicable to other employment relationships must not be applied to fixed-term and part-time employment relationships merely because of the duration of the employment contract or working hours. Examples on this regulation can be found in the ECA as well as in the Working Hours Act (hereinafter WHA). In the WHA, there are some groups of employees whose work remains outside the scope of the Act.44 These

38  Normally a full-time employee works 40 hours per week (3:6 WHA) or, depending on the collective agreement, fewer hours (typically 37.5 hours). An employee who works fewer hours than a full-time employee is a part-time employee. If additional work can be offered, the employer is obliged to offer the work to part-time employees: (2:5) ECA. 39  There is no legal definition of ‘distance work’ in Finland. The Ministry of Employment and the Economy has published a distance work guide for employers. It explains that distance work is work that is performed with the help of IT technology in a functional place; see www. tem.fi/files/18201/etatyoopas_tyonantajille.pdf, 6. 40  The concept of ‘home worker’ (kotityöntekijä, kotona työskentelevä työntekijä) must be dissociated from the concept of ‘domestic worker’ (kotitaloustyöntekijä). There are few domestic workers in Finland nowadays. Normal regulation is applied to their work as a main rule. Usually private persons buy their domestic services from undertakings. 41  ‘Moving employee’ here means an employee who works in many places and less in a fixed workplace like an office. An example of a moving worker is a sales agent (myyntiedustaja) or real estate agent (kiinteistönvälittäjä). 42  A more neutral term would be ‘casual worker’ (tilapäinen työntekijä), but the nuance is different. 43  (2:2) ECA. 44  Pursuant to s 2 of c 1: ‘With the exception of s 15 (3), this Act does not apply: 1) to work which must be considered management of an undertaking, corporation or foundation or an independent part thereof by virtue of the relevant duties and of the employee’s position otherwise, or independent work directly comparable to such management; 2) to employees who perform religious functions in the Evangelical-Lutheran Church, Orthodox Church or some other religious community; 3) to work performed by an employee at home or otherwise

180  Matleena Engblom special groups of tasks where the WHA is not applied can be divided into four main groups:45 (i) (ii) (iii) (iv)

employees in leading or remarkably independent positions; employees working at home;46 employees with a changing or distant workplace; employees who are family members of the employer.

It is significant that these employees left out of the WHA form a very heterogeneous group. The type of their work can be well-paid, leading or expert work, as well as physical, traditional work. As a general rule, the WHA is the only part of the labour legislation that is not applied to them; all regulations of the ECA, the Annual Holidays Act and the Occupational Safety and Health Act, for instance, are fully applicable to them. There are also terms that describe work forms where work is performed, but typically not in an employment relationship. Persons performing this kind of work can be voluntary workers (vapaaehtoistyöntekijä), trainees (harjoittelija) or actors in the third sector (kolmannen sektorin toimija). However, if the work is performed in circumstances where the basic elements of an employment relationship are realised, the work is considered to be based on an employment contract. As mentioned above, the concept of ‘employee’ as a legal definition is general in Finland. If a person is regarded as working in an employment relationship, all employment regulation is applied. In all employment legislation, like the WHA and the AHA, the scope of application is expressed by referring to the concept of ‘employee’ defined in the ECA. There is no concept of a self-employed person in Finland. Work is performed in an employment relationship or not. If the work is not based on an employment relationship, it is based to some other form of contract, like an assignment.

in conditions where it cannot be considered a duty of the employer to monitor arrangement of the time spent on said work; 4) to forest, forest improvement and timber-floating work or to related work, excluding mechanical forest and forest improvement work and short-distance timber transport performed off-road; 5) repealed (991/2010); 6) to work performed by members of the employer’s family; 7) to reindeer husbandry; 8) to fishing and processing of the catch immediately connected therewith; 9) to work where the working hours have been separately prescribed or which is covered by another act on working hours, under which it has been exempted from working hour restrictions; or 10) to work performed by civil servants that is covered by the Act on the Working Hours of Defence Force Civil Servants (218/1970) or by civil servants of the Frontier Guards, unless otherwise prescribed by decree. 45  Civil servants and other office holders are not covered here. The main rule is that the WHA is applied to them as well as to employees. 46  There are exceptions in the home worker rule. In Supreme Court case KKO 2002:36, the employee’s task was telephone discussions with clients. The employee worked at her home. The Court stated that the WHA was to be applied to the work since the employer had given instructions on the arrangements of the work and supervised the working hours.

The Concept of ‘Employee’: The Position in Finland 181 In practice, this means that there are no categories of employee (or worker) groups who are granted a smaller set of employment rights compared to those granted to ‘basic’ employees. The only exception here is working hours regulation in some cases (as described in note 44 above). Otherwise, there are no concepts or definitions of specific groups of workers. The definitions come from the employment legislation concerning special types of work, usually in the regulation defining the applicability of certain legislation. In the public sector, there are first employees who work within an employment relationship in exactly the same way as would be the case in the private sector. The ECA is applied to these employment relationships as well as to other employment form. Work in the public sector can still have an influence on some procedural aspects. For example, if an employee in a municipality is dismissed on individual grounds, this is based on the ECA47 and the procedure comes from the ECA,48 but the employer, a public body, must also observe the regulations of the Administrative Procedure Act.49 An example of this is the procedure where the legal grounds of the dismissal are handled. The dispute concerning the grounds for dismissal, based on the ECA, belongs to the authority of general courts. Administrative issues, like qualification and procedural issues, fall under the authority of the administrative courts. A procedural incorrectness leads to the nullification of an administrative decision.50 Second, there are offices (virka).51 Public office relationships (virkasuhde) are regulated by special legislation,52 but there is a large amount of employment legislation, which is applied to the public office relationships in the same way as it is to employment relationships.53 The persons working in offices are civil servants or office holders (viranhaltija).

47 

(7:2) ECA. ibid (9:2). 49  (434/2003) (Hallintolaki), hereinafter APA. 50  For example, the disqualification regulation must be observed even when dealing with an employment relationship. A disqualified person must not take part in the decision-making of public bodies. The disqualification can be based on family connections, for instance. See (5:27 and 5:28) Administrative Procedure Act. 51  In spoken language, it is possible that people sometimes use the word ‘virka’ when they mean employment. Legally they are definitely two different concepts, as explained above. S Koskinen and H Kulla have defined the term ‘office’ (‘virka’ in Finnish) in Virkamiesoikeuden perusteet (Helsinki, Lakimiesliiton Kustannus, 1995) 6–7 as follows: ‘Office is an entity of public tasks, and has been formed in special procedure (administrative procedure). Typical, but not necessary, for an office is that public authority is maintained. The regulation of offices is organised within a strict legal framework.’ 52  Act on Local Government Officials (304/2003), hereinafter LGO; Act on State Civil Servants (750/1994), hereinafter ASCS; and Act on Evangelical Lutheran Church (1054/1993), hereinafter Church Act. 53 For example, the WHA, the AHA and the OSHA are applied to offices as well as in employment relationships. However, the ECA is not applied to the offices and civil servants. 48 

182  Matleena Engblom Theoretically and from a strictly legal perspective, public office holders cannot be classified as sub-type of employees, for reasons that are explained further below.54 The main reason for this is that no contract is made between the office holder and the employer, unlike in an employment relationship, where the existence of a contract, even a silent one, is a precondition for the existence of an employment relationship. On the other hand, from a sociological point of view, the difference is not so significant. From this perspective, public office holders can be regarded as a sub-type of employees; after all, both groups are dependent salary earners. Offices are present in the state of Finland, the municipalities and the ­Evangelical Lutheran Church.55 In the Orthodox Church of Finland, there are exclusively employment relationships.56 Positions where public authority is maintained are normally organised as offices, not employment relationships. Examples of this are the offices of judges and policemen. However, there are also many other positions, like head nurses in state and municipal hospitals or pastors of the Evangelical Lutheran Church, working in public office relationships even though not a lot of public authority is maintained. In general, the trend is that these offices are decreasing, whereas employment relationships are increasing in the public sector. There were 429,000 salary earners working for municipalities in 2014, which means one in every five salary earners in Finland. Of these, 73 per cent were employees and 27 per cent were officials.57 There are significant differences between employment relationships and offices. First, an office is not based on a contract. The public office relationship starts when a person is appointed to an office based on his or her consent. The office holder (civil servant) is given a commission and no contract is made.58 Also in Finnish jurisprudence, employees and office holders are traditionally kept strictly apart. The reason for this is that formerly the legal position of public office holders was principally different because they could not be dismissed from their office. The only possibility was a removal from office, where the requirements were very exacting. Even today, the legal procedures

54 For the legal status of different types of service relationship (employment/office), see H Saipio, L Niittylä and E Vartiainen-Hynönen, Kunnallisen viranhaltijan oikeusasema, (Helsinki, Gummerus, 1996) 23–25; Koskinen and Kulla (n 51) 10–12; and N Bruun, O Mäenpää and Ti Kaarlo, Virkamiesten oikeusasema (Keuruu, Otava, 1995) 51 f. One of the remarkable differences is that in offices, the employer can define formal requirements (competence) for the office holders, whereas in employment contracts, the formal requirements are not official in the same way as they are in public offices. 55  Public office relationships have their own special characteristic in different public bodies: Koskinen and Kulla (n 51) 8–10. 56  See the Act on Orthodox Church in Finland (2006/985). 57 www.kuntatyonantajat.fi/fi/kunta-tyonantajana/henkilosto/Sivut/default.aspx. 58  (2:9) Act on Local Government Officials (LGO).

The Concept of ‘Employee’: The Position in Finland 183 concerning employment relationships and public office relationships differ significantly (see below). Another important difference is that if any disputes occur, employment contract disputes are taken to general courts or the Labour Court (Työtuomioistuin) if it is a question of collective agreement issues.59 Disputes concerning public office relationships, in turn, are handled in the administrative courts.60 The third and in practice the most important difference concerns the illegal termination of an employment contract or an office. If the termination of an employment contract is subsequently declared illegal, the consequences are that the employer is judged to pay compensation to the employee (the amount of the compensation is equivalent to 3–24 months’ salary). If an office is terminated illegally, the consequences can be that the office is declared to be reinstated.61 Naturally, the wrongfully treated official is also entitled to financial compensation.62 Principally, the basic legal status of an office holder differs from that of an employee. The relationship between an employer and employee is mainly regulated by the employment contract as far as the obligations of the ‘employee’ are concerned.63 The ECA creates a loose framework for the contract. As for office holders, the job description (office description) is individually defined by the employer (public body), but the general duties are strictly detailed in the legislation in question.64 In Finnish employment legislation, there is only one term meaning the person who performs the work: ‘työntekijä’ (employee).65 The term ‘worker’ is not used in the legislation at all. In Finnish, the translation of ‘worker’ would also be ‘työntekijä’. There is actually one single specific group of workers in Finnish labour law legislation: young employees. The Young Employees Act (hereinafter

59  In Finland, the Labour Court is a special court that handles disputes between social partners, ie, trade unions and employers’ federations. The Labour Court is a tripartite organ with representatives of the social partners and the state. See the Labour Court Act (646/1974 as amended by several acts, including 102/2012). 60  (10:50) LGO. 61  ibid (8:44). 62  ibid (8:45). 63  C 3 ECA. 64  The LGO, the ASCS or the Church Law. See also Bruun, Mäenpää and Tuori (n 54) 126 and 138. The office holder is above all obliged to observe his or her official duties. 65  As a general rule, Finnish labour law avoids the categorisation of employees. The labour law makes no distinction between wage earners and salaried employees, or blue-collar and white-collar workers. It has been a definite legislative policy to avoid creating anything that could be regarded as privileges for certain categories of employees and to try to abolish any existing privileges. ILO report, referring to AJ Suviranta, Labour Law in Finland, 3rd edn (Helsinki, Kauppakaari Oyj, 2000) 69, at www.ilo.org/wcmsp5/groups/public/---ed_dialogue/--dialogue/documents/genericdocument/wcms_205361.pdf.

184  Matleena Engblom YEA)66 is aimed at protecting employees who are less than 18 years old against improper and hazardous jobs, and to guarantee them sufficient leisure time to support their health or development. The work must not hinder the school attendance of a young person in question.67 There is no special definition of the concept of ‘employee’ in the YEA: the concept of ‘employee’ used therein comes from the Occupational Safety and Health Act (hereinafter OSHA),68 which regulates that the OSHA must be applied to all work based on an employment relationship as well as in an office. As the concept of ‘employment relationship’ is regulated by the ECA, the concept of ‘employee’ under the YEA is therefore the same as in the ECA. In other texts and contexts,69 there are other terms. Also, in collective agreements, employees can be categorised into several groups. The main division is between white-collar and blue-collar employees. In this connection, a white-collar employee is ‘toimihenkilö’, a clerical worker or salaried employee who does not perform physical tasks as a rule. A blue-collar worker is ‘työntekijä’, and in this context the term could be translated as ‘worker’. In social and sociological contexts (eg, in many collective agreements), there is also ‘ylempi toimihenkilö’, an upper clerical employee or senior salaried employee. These distinctions do not form an acceptable reason to treat employees differently based on their hierarchical status. In Supreme Court case KKO 2009:52, the employer had offered more comprehensive occupational health care to clerical (white-collar) workers than to (blue-collar)workers performing physical work. As no acceptable reason based on the tasks had been presented for the different treatment, the Court held that the employer company had breached its duty to treat employees equally.70 B.  The Establishment of a Specific Category of ‘Workers’ A category of ‘workers’ does not exist in Finland as a legal concept.

66  The Young Employees’ Act (Laki nuorista työntekijöistä) (998/1993), hereinafter YEA, as amended by several Acts, including No 1517/2009. 67  (1:2) YEA. 68  (1:2) Occupational Safety and Health Act (738/2002) (Työturvallisuuslaki). 69  For example, in social science. 70  (2:2) ECA. An acceptable reason for better healthcare for a group of employees could be tasks that are physically draining (for example, miners) or mentally draining (nurses in palliative care).

The Concept of ‘Employee’: The Position in Finland 185 IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration A key feature of the concept of ‘employment contract’ is that the employer essentially has the right to supervise and direct the work. This right must exist in principle and there must also be the means to exercise it in practice (eg, reports). Even in home work and other distance work, there must be some system of how the employer can direct and supervise the employee’s working performance. If no such system exists, there is no employment relationship either. In all forms of employment, how much or how often the employer realises this right in practice is less important. It can be said that this criterion is more theoretical than practical, even though the practical side is required too. It is not necessary that the employer keeps giving detailed instructions concerning the work performance while the work is being carried out. However, some instructions should be given before the performance and some subsequent surveillance should be organised.71 In Supreme Court case KKO 1999:113, a Salvation Army Officer was regarded as having worked in an employment relationship with the Salvation Army. The Salvation Army had claimed that no employment contract had been made; the work was based on voluntariness, Christian ethics, conviction and calling. The District Court and the Appeal Court had held that the criteria of an employment relationship had not been realised, especially because of the ethical background of the employer. The Supreme Court admitted that the employment relationship included special details, but nevertheless all elements of an employment contract could be indicated in this case.72 As mentioned in section I.A, Finnish legislation includes no formal requirements for an employment contract. The contract can be an oral or even a tacit agreement.73 Even if no oral contract has been made, the

71 J Paanetoja, Työlainsäädännön soveltamisalasta (Helsinki, Talentum Media Oy, 1993) 126; and S Koskinen, H Mikkola and A Purola, Työntekijä vai yrittäjä työoikeudessa, ­vero-oikeudessa ja toimeentuloturvassa (Rovaniemi, University of Lapland, 1997) 9–10. 72 It was also a question of the claimed unfairness of the contract (para 36 CA). The employer had ordered the employee to move to another working place which was 150 km from the former working place. The employer admitted that there was no other reason for the change other than the traditions of the organisation. The employee, on the other hand, referred to her family situation (she had young children). However, the Supreme Court saw no unfairness here. The case is also discussed in Engblom (n 9) 113–14. 73  (1:3.1) ECA.

186  Matleena Engblom e­ xistence, character and contents of the contract have to be concluded from the actions and behaviour of the parties. However, forming a whole employment relationship without even an oral contract is extremely rare and there are few cases where a person has subsequently succeeded in claiming that he or she was an employee. In Helsinki Court of Appeal case HHO 22.10.1996,74 a person had been working in a farm that was owned by a married couple. After the work ceased, the claimant demanded salary remuneration from the couple. They claimed that it was not a question of employment contract at all; their guest had lately been released from prison and they had wanted to help him keep away from bad company. According to the couple, it had been agreed that the remuneration of the work was a free stay at the farm. The Court of Appeal held that no employment relationship existed. There was no contract, and no direction and supervision had occurred. In Helsinki Court of Appeal case HHO 3.12.1996,75 two friends had been keeping each other company and the younger of them had been helping the elder one with many practical things. The elder one had supported her friend financially, but the amounts of money had been modest. Later, the younger party started to demand a salary for the work she had performed. The Court of Appeal held that it had not been a question of an employment relationship, but a social type of relationship. No employment contract had been made, and no right to direct and supervise the work had existed. In Helsinki Court of Appeal case HHO 4.3.1999,76 a recovering alcoholic had been performing some work in a rehabilitation centre, such as repairing things and undertaking certain maintenance tasks. After he left the centre, he claimed remuneration for the work. The Court of Appeal held that it was true that work had been performed and that the centre had actually demanded that from this person, but the work had to be unsalaried because it was part of the rehabilitation programme.77 These examples indicate situations where typically it is regarded that no employment contract has been formed in practice. No silent employment contract had been formed either.78 These cases also have in common that the financial significance of the work was not remarkable.

74 

S 96/1049. S 96/12256. 76  S 98/1017. 77  This should be compared with Supreme Court case KKO 1990:29, where the claimant had worked as a volunteer in a young person’s institution and been given accommodation, food, clothes, healthcare and small amounts of money. It was held that the claimant had worked under the supervision and direction of the representatives of the institution. The Court stated that the work had been performed based on an employment relationship. 78  If a silent employment contract is regarded as being formed, some salary or other payment should have in practice been paid. In all three cases, the other party had received some ­economic benefit. In the farm and the rehabilitation centre, the claimants had been given 75 

The Concept of ‘Employee’: The Position in Finland 187 B. Indicators In Finnish jurisprudence, the subject of possible indicators has been handled in many studies.79 The courts apply a fairly established practice, so the legal praxis is relatively customary. The indicators are as follows: (i) (ii)

Who dictates when the work is done, ie working hours? Who dictates where the work is done—in the premises of the employer or in a place the employee has chosen? (iii) Who owns the machines or equipment used in the work? (iv) Who owns the space where the work is done? (v) Who dictates how the work is done/work methods? (vi) Who dictates who is in charge of supervising the work? (vii) Who observes the quality of the work performance? (viii) Who sets the aims of the work? (ix) Is income tax (ennakonpidätys) withheld from the payment made? (x) Who takes care of social security payments (sosiaaliturvamaksu)? (xi) Who takes care of the employment pension contribution (työntekijän eläkevakutusmaksu)? (xii) Who takes care of the accident insurance? (xiii) Who carries the financial risk for the business? These are technical criteria. In the following, the social criteria (economic dependence on the employer) will be discussed. C.  The Relevance of ‘Economic Dependence’ In Finland, the more economically dependent a person is on his or her employer, the more likely it is that an employment relationship exists. ­Economic dependence can be demonstrated by a number of indicators: (i) (ii) (iii) (iv) (v)

the person is working full-time; the contract is valid indefinitely; the person is working for one employer only; the major part of the person’s income comes from this employer; the person is not allowed to perform work for any other employer while the contract is valid.80

accommodation, which could be regarded as remuneration. In the case of the two friends, one party had offered some small amounts of money to the other party. 79 

See, eg, Tiitinen and Kröger (n 4) 19–20; and Kairinen (n 4) 78–91. ECA: ‘Employees shall not do work for another party or engage in such activity that would, taking the nature of the work and the individual employee’s position into account, cause manifest harm to their employer as a competing activity contrary to fair employment practices.’ 80  (3:3)

188  Matleena Engblom V.  THE PRINCIPLE OF PRIMACY OF FACTS

In Finland, the issue of whether or not work is regarded as creating an employment contract is judged by objective reasons. Accordingly, if the ECA 1:1 essential elements of an employment contract81 exist, the relationship is an employment contract. On the other hand, if even one of the ­elements is missing, the relationship is not an employment contract, but some other contract for services. What the parties have meant or thought is not the determining factor. The above-mentioned principle is established under legal practice. However, it can also be concluded based on the ECA 1, which stipulates that ‘this Act applies regardless of the absence of any agreement on remuneration, if the facts indicate that the work was not intended to be performed without remuneration’. The ratio of this principle is to protect the parties of an agreement, usually the work-performing party, but also third parties. This third party could be a bankruptcy estate or a death estate, for instance, or an authority like an unemployment fund or a wage security office.82 In certain situations, it is beneficial for the parties to claim the existence of an employment relationship. An example of this kind of situation that if one of the spouses goes bankrupt, the spouses claim that there has been an employment relationship between them, and the other spouse is entitled to salary benefits from the bankruptcy estate. VI.  QUALIFICATION IN FULL

In Finnish labour law, a form of hybrid or mixed-type employment contract exists (sekatyyppinen työsopimus).83 This refers to a contract of work that fulfils the elements of another type of contract as well. Examples on this kind of situations can be a rental agreement or a purchase of goods, where a part of the rent or remuneration is paid by working performance. Hence, the legal relationship fulfils the definition of an employment contract as well as some other contract. As a general rule, several different regulations can then be applied to this relationship.84

81  Contract, performing work, working for another person (the employer), remuneration, right to direction and supervision. 82  A state authority that remits payment in case of an employer’s insolvency according to the Pay Security Act (866/1998 as amended by Acts No 438/2000 and 78/2001). 83  R Pekkanen, Sekatyyppinen työsopimus (Helsinki, Suomen Lakimiesliiton Kustannus Oy, 1966) 175, 179 and 183–85. 84 Kairinen (n 4) 73; and J Vuorio, Työsuhteen ehtojen määrääminen (Helsinki, Uuden Auran OY kirjapaino, 1955) 41–46.

The Concept of ‘Employee’: The Position in Finland 189 In Supreme Court case KKO 1953 II 115, a person had leased out land, and the parties of the tenancy agreement had agreed that the payment could be paid by work performance. The leaseholder performing the work was regarded to be an employee. In the Finnish legal system, there is no prohibition of the possibility that the parties to an employment contract may settle other contracts between each other; for instance, the employer is allowed to buy the employee’s car and the employer is allowed to buy the employee’s house. Still, in the event that disputes arose in connection with other contracts between the parties, there is no doubt that their position as employment relationship parties would be taken into account when interpreting their rights, duties and circumstances.85 Therefore, it can be presumed that because of the dependent status of the employee, the risk of pressure and abuse exists when the parties negotiate other contracts. The presumption must be the same even though the contracts in principle seem to have no connection with the employment relationship. This must be taken into account when interpreting the contract in question. In Finnish legal praxis, a mixed-form (sekamuotoinen) contract also exists.86 This refers to a fixed-term contract that can still be terminated by giving notice within the fixed-term period. The arrangement is possible if there are legal (justified) reasons for the fixed term. Of course, if the employer gives notice, there must be legal grounds for this according to the ECA.87 VII.  LIMITS TO THE FREEDOM OF CONTRACT

Every now and then, there are court cases where the parties have in the first place agreed on work without an employment contract, but the other party later starts to claim to have been an employee.88

85 In terms of the bargaining position between the parties of an employment relationship, the employer is normally regarded as having a stronger position: Kairinen (n 4) 43; and N Bruun, Kollektivavtal och rättsideologi (Vammala, Juridica, 1979) 117–18. 86  See Supreme Court case KKO 2006:4. 87  (7:3) ECA. 88  It is quite difficult to get this kind of case to the Supreme Court. The Supreme Court only handles cases that have significance as precedents ((30:3) Code of Judicial Procedure (4/1734; amendments up to 732/2015 included). As the character of an employment contract is mainly a question of proof, the cases do not end up before the Supreme Court very often. They are thus usually finally solved in the Appeal Courts. The Labour Court also handles few such cases because it is seldom unclear whether an employment contract has been made or not. This depends on the Labour Court’s nature as a special court handling disputes between social partners, and collective agreements.

190  Matleena Engblom Freedom of contract is restricted in many ways in Finnish employment law. Applying employment law is compulsory in Finland if the contract is considered to be an employment contract.89 The scope of employment law is peremptorily regulated in the ECA 1:1. According to the ECA 13:6, any agreement reducing the rights of and benefits due to employees under this Act shall be null and void unless otherwise provided for in this Act.90 For instance, in a Supreme Court case from 1999:97, a person who had held the position of head of administration in a commercial bank and who had been member of the board was held not to have been an employee. According to the reasoning of the judgment, the Supreme Court stated that even though the claimant had been given a written dismissal of an employment contract, this did not indicate that an employment relationship had existed. No written employment contract had been signed and the position of the claimant was independent. In Supreme Court case KKO 1996:49, a managing director of an association was held to be an employee, even though he had a relatively independent position. A managing director in a company is not an employee because his or her position is a company organ, and the position is regulated in the Finnish Companies Act.91 No similar regulation is included in the Associations Act.92 The Supreme Court stated that since the criteria of an employment contract were fulfilled and the Associations Act includes no exceptions like the Finnish Companies Act, the claimant was to be regarded as an employee. An employment contract that does not qualify objectively will not become topical as long as one of the parties starts to claim that the whole agreement or some terms of it is null and void. Problems emerge if claims are presented to a third party on the basis of an employment contract and the objective criteria are not fulfilled. The third party can be the employer’s death estate, a bankruptcy estate, a transferee in a transfer of business, the tax authorities, the pension security authorities or the pay security authorities. Even if the employment relationship is not regarded as existing, the parties can in principle present claims based on the contract. Employment legislation is not applied, of course.

89 

As mentioned above in section I. See HE 157/2000. The employee rather than the employer is protected. The parties can freely agree on terms that are less beneficial for the employer. The only restrictions can come from the CA. 91 (624/2006). 92 (503/1989). 90 

The Concept of ‘Employee’: The Position in Finland 191 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Social partners cannot affect the concept or definition of basic legal terms concerning the employment relationship. The reason for this is that labour law legislation—for example, the ECA, the WHA, and the AHA—is hierarchically higher than collective agreements. Thus, although there are many terms that social partners can agree differently from what is in the law, these are minor points. Fundamental issues cannot be organised in collective agreements. Above all, the social partners cannot weaken the position of the employee compared with legislation. In Labour Court case TT 2011:29, the Court held that the employer had not presented acceptable reasons why a group of employees had been paid less than another group performing similar tasks. The salary difference had been based on a collective agreement and was in contradiction with the duty of equal treatment.93 The provisions of the collective agreement were declared null and void in this respect. B.  Custom and Practice In Finland, an employment contract can be formed through practice and custom.94 More typical is that an individual term of the contract is formed in this way.95 A practice that has been applied by the parties for a long time can be regarded as forming a binding term of an employment contract. In addition, the parties must have understood the binding character of the practice. Terms that concern financial values can most probably be regarded as forming a binding term in an employment contract. For instance, ‘­Christmas Pay’ (jouluraha) has been held as forming a binding term in Supreme Court case KKO 1990:93. Other terms can be formed by custom and practice as well. In Vaasa Appeal Court case VHO 15.12.2010 S 09/645, there was a written contract that working hours were agreed individually every time the employee was called into work (the employee in question was a part-time employee with no minimum working hours). In practice, the employee had been working

93 

(2:2) ECA. There are no formal requirements for an employment contract. It can be written, oral, or even silent; see section I.A above. 95  Tiitinen and Kröger (n 4) 769 and Engblom (n 9) 155–63. 94 

192  Matleena Engblom six hours per day, five days per week. The Appeal Court stated that this practice had formed the term on the employee’s working hours. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions In many employment disputes, the burden of proof rests upon the employer.96 However, the party that claims that an employment relationship exists is obliged to prove this claim. In principle, there is no presumption that if work is performed, the employment contract exists. Naturally, in practice in many cases, it is quite easy to prove that an employment contract has been agreed, but this is definitely not always the case. However, there are some presumptions in labour law, and the party that claims that an exception to the main rule has been agreed is obliged to prove that this is the case. These presumptions include the following: (i) (ii) (iii) (iv)

the contract is valid indefinitely;97 the work is supposed to be full-time work;98 there is no trial period;99 and the work is agreed to be done for remuneration.100

B.  The Burden of Proof There are not many regulations on the burden of proof in Finnish labour legislation. Normally, the burden of proof is on the claimant, ie, the party that presents claims is obliged to prove the rightfulness of their claims.101

96  Termination disputes usually start when an employer terminates the employment contract. The employer is obliged to prove that grounds for termination (ECA 1:4 (trial period), 7:2 (employee-related grounds), 7:3 (financial grounds) or 8:1 (cancellation)) existed. 97  (1:3) ECA. 98  The party that claims that a contract is made for part-time work is obliged to prove this. The reason for this is that the vast majority of employment relationships in Finland relate to full-time work. The same is true of fixed-term contracts. The main form in Finland is contracts for an indefinite period. 99  The trial period is regulated in (1:4) ECA. The trial period can be observed only if it has been agreed between the employer and the employee. 100  It is very rare that anyone works without receiving a salary. A salary is also one of the basic elements of an employment relationship. An employer that claims that no salary was meant to be paid is obliged to prove this; Kairinen (n 4) 71, 75 f. See also HE 157/2000. 101  (17:2) Code of Judicial Procedure.

The Concept of ‘Employee’: The Position in Finland 193 For example, if the employer or the employee claims that a trial period had been agreed, he or she is obliged to prove this. An employer who has terminated the employment contract is obliged to prove that there were legal grounds for the termination. The party that claims that an employment contract has been made is obliged to prove this. An exception is that in discrimination cases, the burden of proof is divided. First, the employee is obliged to prove that it is probable that the employer has acted in a discriminatory way. Only if the employee is able to prove this probability of a discriminatory action is the employer obliged to prove that there was an acceptable reason for his or her action other than discrimination. In the Act on Equality between Women and Men,102 there is regulation on the burden of proof:103 if a person considers that he or she has been a victim of discrimination under the provisions of this Act and presents a matter referred to in the Act to a court of law or to a competent authority, and the facts give cause to believe that the matter is one of gender discrimination, the defendant must prove that there has been no violation of the equality between women and men, but that the action was for an acceptable reason and was not due to gender. This provision does not apply to the consideration of criminal cases. The same is true of the burden of proof in the NonDiscrimination Act,104 which is equivalent.105 In a criminal case, the prosecutor or other claimant shall prove the circumstances on which his or her request for punishment is based. A guilty judgment may only be made on the condition that there is no reasonable doubt regarding the guilt of the defendant.106 In practice, this means that the evidence must be very clear. The law is the same in employment crimes as in other crimes.107 X.  SPECIFIC PROCEDURES

In Finland, deciding whether work is done in an employment relationship belongs to general courts108 (district courts and by leave to appeal the courts of appeal and the Supreme Court).

102 

(609/1986), hereinafter Equality Act. Ibid (9a). 104 (1325/2014). 105  (6:28) NDA. 106  (17:3) Code of Judicial Procedure. 107  Examples of employment offences in the Criminal Code of Finland (39/1889, amendments up to 766/2015) include: Work Safety Offence (47:1) and Work Discrimination (47:3). 108  The Labour Court handles disputes between social partners, ie, employees’ unions and employers’ federations, concerning the interpretation and application of collective agreements. The question of the existence of an employment relationship is in practice based on the 103 

194  Matleena Engblom There is no special procedure to clarify the existence of the employment relationship. It is possible to take legal action for a declaratory judgment for the purpose of confirming the existence or non-existence of an employment relationship. In practice, the question on the existence of an employment relationship usually arises in connection to salary claims and claims based on the illegal termination of an employment contract. Usually the procedure concerning the existence of an employment contract arises when the work ceases. Very often the question whether an employment contract had been agreed between the parties is connected to the dispute concerning the legality of the termination of the contract, eg, when the employee is claiming compensation for the illegal termination of a contract and possibly salary claims. If the contract has been cancelled,109 ie, a period of notice has not been observed, the salary for the period of notice is also claimed. The Labour Council110 is a special authority that can give ‘opinions’ on the application and interpretation of certain forms of employment r­ egulation.111 The Occupational Safety and Health Administration ­Authorities can give opinions on issues within their field of competence. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons Finnish labour law does not include ‘employee-like’ persons. If a person performing work is not regarded as being an official (the legal status of an official is usually very clear, because the establishment procedure of an office

ECA rather than on collective agreements. See para 1 of the Act on Labour Court (646/1974) (as amended by several Acts, including 102/2012). 109 Cancellation means terminating the contract with immediate effect without a notice period. Cancellation is based on ECA 8:1: ‘The employer is only upon an extremely weighty cause entitled to cancel an employment contract with an immediate effect regardless of the applicable period of notice or the duration of the employment contract. Such a cause may be deemed to exist in case the employee commits a breach against or neglects duties based on the employment contract or the law and having an essential impact on the employment relationship in such a serious manner as to render it unreasonable to expect that the employer should continue the contractual relationship even for the period of notice.’ 110  See (1:1) Act on the Labour Council and Derogation Permits Concerning Labour Protection (400/2004) (as amended by several Acts, including No. 223/2010), hereinafter ALC. 111  (2:7) ALC: ‘It is the function of the Labour Council to issue opinions at request on the application and interpretation of the Working Hours Act (605/1996), the Annual Holidays Act (272/1973), the Occupational Safety and Health Act (738/2002), the Young Workers’ Act (998/1993) and on whether the Act on Co-operation within Undertakings (334/2007) or the Act on Co-operation within Finnish and Community-wide Groups of Undertakings (335/2007) applies to a particular company (336/2007).’

The Concept of ‘Employee’: The Position in Finland 195 is formal), then the work is performed as part of some other contractual relationship. Usually it is a question of entrepreneurship. A self-employed person, for instance, would in Finland be regarded as an entrepreneur, unless in some cases the criteria of the employment relationship would be fulfilled and this person would be regarded as an employee. There are also contracts where no remuneration is meant to be paid. These cases can be a neighbourly help, ‘bee’ work or neighbourly work (talkootyö), unpaid third sector work or voluntary work. ‘Bee’ work is quite popular in Finland, especially in the countryside, and it has a remarkable financial value too. The tradition comes from agricultural society, which was dominant in Finland up to the 1950s. It means that there is a project, like renovating a roof or painting a house, and neighbours, relatives and other acquaintances come to help with the project. The reward is often food, a pleasant atmosphere and a promise of reciprocal help in the future. Occasionally, salary claims are presented afterwards. A more essential question, however, is the applicability of the Employment Accidents Insurance Act112 if accidents happen during the ‘bee work’. The tax authorities may also be interested in the bee work performances if they are significant. In addition, the Occupational Health and Safety Authorities may occasionally see some problems in bee work because the safety aspects might be less thoroughly taken care of. In Supreme Court case KKO 1952 II 7, two persons had been working for the benefit of each other under the principle of reciprocity. An occupational accident had occurred. The damages were covered by the insurance based on Employment Accidents Insurance Act.113 B.  Equality and Anti-discrimination Law There are two main regulations on equality and anti-discrimination law in Finland: the Non-discrimination Act114 and the Act on Equality between Women and Men.115 These Acts cover all sectors of society, like services, education, and working life. Directive 2006/54/EC on Equal Opportunities and Equal Treatment of Men and Women in Matters of Employment and Occupation and Directive 2000/43/EC on Equal Treatment between Persons Irrespective of Racial or Ethnic Origin have been implemented as a result of these Acts. The difference between these two Acts is that the Equality Act covers ­discrimination based on sex, gender identity, gender presentation, pregnancy 112 

Employment Accidents Insurance Act (20.8.1948/608).

114 

Non-discrimination Act (1325/2014). Act on Equality between Women and Men (609/1986).

113 ibid. 115 

196  Matleena Engblom or childbirth, while the Non-discrimination Act covers other discriminative elements like age, ethnic or national origin, nationality, language, religion, belief, opinion, political activity, trade union activity, family relations, health, disability, sexual orientation and other personal characteristics. As mentioned above, these are general Acts that are applied to all employment relationships, including those involving state officials, municipalities and the church. In other employment legislation, there is regulation concerning equal treatment—the regulation concerning actual discrimination (regulated in the Equality Act).116

116  For example, (2:2) ECA: ‘The employer shall not exercise any unjustified discrimination against employees on the basis of age, health, disability, national or ethnic origin, nationality, sexual orientation, language, religion, opinion, belief, family ties, trade union activity, political activity or any other comparable circumstance.’ Provisions on the prohibition of discrimination based on gender are laid down in the Act on Equality between Women and Men (609/1986). The definitions of ‘discrimination’, ‘prohibition on sanctions’ and ‘burden of proof’ in cases concerning discrimination are laid down in the Non-discrimination Act (21/2004). Similar regulation can be found in the Act on Local Government Officials (3:12) and the Act on State Civil Servants (750/1994) (para 4:11).

10 The Concept of ‘Employee’: The Position in France FRANCIS KESSLER

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

E

MPLOYMENT CONTRACTS MUST be distinguished from civil law contracts as they are not governed by general contract law, but by specific rules: labour law regulations. Employment contracts in France are primarily governed by the French Labour Code, although Article L 1221-1 of the Labour Code refers to civil law regulations. The definition of the contract of employment is not of a statutory nature. The fact that the definition developed through case law explains the adaptability of the definition to developments in labour relations. This adaptability has raised criticism in the name of stability and ‘legal security’. A statute law of 11 February 19941 based on the Court of Cassation’s case law2 concludes that the existence of an employment contract is characterised by a legal relationship of subordination between the employee and the employer: the employment contract is an agreement under which a person undertakes to carry out work for another in exchange for payment of remuneration; the work must be performed under an employment contract, under dependency and subordination, or performed under the direction, authority, supervision or control of the employer, or on the latter’s orders or instructions or on the employer’s account. 1 

Articles 35 and 49 of Statute Law No 94-126 du 11 février 1994 on the sole proprietor. lien de subordination se caractérise par l’exécution d’un travail sous l’autorité de l’employeur qui a le pouvoir de donner des ordres et des directives, d’en contrôler l’exécution et de sanctionner les manquements’—‘The relationship of subordination is characterised by work under the authority of the employer who has the authority to give orders and instructions, to supervise implementation and to sanction breaches’ (Court of Cassation, Social Chamber, 25 October 2005, No 01-45.147). 2 ‘Le

198  Francis Kessler Article L 8221-6 of the Labour Code specifies which persons are considered disconnected from the client’s instructions on the basis of an employment contract for the performance of an activity that gives rise to registration. However, the existence of an employment contract can be established when the person (or persons) covered by the contract provides services directly or via an intermediary on the basis of the client’s instructions under conditions that place him or her in a relationship of permanent legal subordination. Moreover, according to Article L 8221-6-1 of the Labour Code, a person is considered self-employed if the worker’s conditions of work are exclusively defined by him or her or by the contract issued in accordance with the client’s instructions. A judge can requalify the relationship between the individual presumed to be performing work as a self-employed person and the client’s instructions when the obligations of the worker place him or her in a relationship of subordination that is comparable to that between an employee and an employer. A few years ago, a commission presented proposals to reform labour law and suggested introducing a provision in the Labour Code that would define the contract of employment, including subordination.3 According to Article 1102 of the French Civil Code (hereinafter Civil Code), the contract of employment is a synallagmatic contract by which two contractors, the employer and the employee, have reciprocal obligations.4 In reference to doctrine and case law, ‘the contract of employment is thus a contract by which a person, the employee, works for another and under its subordination in exchange for remuneration’.5 Three criteria are required according to case law to establish the existence of a contract of employment: (i) (ii)

the employee must perform work; he or she must receive a wage, which hence excludes unpaid workers from the status of employee; (iii) The existence of legal subordination (see sections IV.A–C below). However, the presence of the first two elements does not suffice. In fact, the performance of work for payment may be subject to other contracts. On the contrary, the notion of legal subordination is specific to the ­contract of employment. It is a decisive criterion, which distinguishes the 3  Rapport De Virville, proposal° No 21, hwww.ladocumentationfrancaise.fr/rapports-publics/044000015/index.shtml. 4  ‘Le contrat est synallagmatique ou bilatéral lorsque les contractants s’obligent réciproquement les uns envers les autres’—‘The contract is synallagmatic or bilateral when the contracting parties are mutually obliged to each other’ (Civil Code, art 1102). 5  ‘Le contrat de travail est une convention par laquelle une personne s’engage à travailler pour le compte d’une autre et sous sa subordination moyennant une remuneration’—‘The contract of employment is an agreement by which a person undertakes to work on account of another and under its subordination in exchange for remuneration’ (Court of Cassation, 22 July 2014, Bull civ IV, No 576).

The Concept of ‘Employee’: The Position in France 199 contract of employment from other forms of contract. It is indeed the only constitutive element that is not found in other contracts. Moreover, the qualification of a contract of employment is a central issue as the status of employed and self-employed persons differs extensively. An individual who is an employee benefits from protection and workers’ social security afforded under the Labour Code. Moreover, the labour courts (Conseil de prud’hommes) have jurisdiction over employee claims. Selfemployed workers do not benefit from the protections and rights provided in the Labour Code. As regards the formal requirements of the contract of employment, it should be noted that no requirement for a written employment contract exists. Furthermore, if a person works under conditions similar to those of a labour contract without formally having concluded a written contract, the judge will requalify it as an employment contract. A written contract of employment is required in the following situations: (i) (ii) (iii) (iv)

where provided for by the applicable collective bargaining agreement; for fixed-term contracts; for part-time contracts; and for apprenticeship employment contracts.

A fixed-term contract that is not concluded in writing will be requalified as an open-ended contract.6 Furthermore, employment contracts executed in France must be drafted in French.7 Where French is not the employee’s mother tongue, he or she may request a translation of the contract in his or her mother tongue. In the event of a dispute, the contract drafted in the employee’s mother tongue prevails.8 The employment contract can be concluded for a fixed or an indefinite term, on a full-time or part-time basis. The employment contract specifies issues relating to employee rights and obligations not already covered by other sources of employment law. The employment contract is negotiated within the overall framework of the Labour Code and the applicable collective bargaining agreement. When the employment contract’s terms are less advantageous to the employee than those of the collective bargaining agreement or the Labour Code, the

6  ‘Le contrat de travail à durée déterminée est établi par écrit et comporte la définition précise de son motif. A défaut, il est réputé conclu pour une durée indéterminée’—‘The employment contract for a fixed period is established in writing and include/s a precise depiction of its grounds. Otherwise, it will be deemed to have been concluded for an indefinite period’ (art L 1242-12 of the French Labour Code, hereinafter Labour Code). 7  ibid art L 1221-3. 8  Court of Cassation, Social Chamber, 29 June 2011, No 09-67492.

200  Francis Kessler Labour Code’s terms will be enforced, or if those of the collective bargaining agreement are more advantageous (although with some exceptions), they will be enforced, thus superseding the contractual terms. Since 1 July 1993, Article 2 of the European Community of Council Directive of 14 October 1991 on the employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship (91/533/EEC) has been implemented. The employee must be given a written statement within two months of the commencement of the employment relationship, containing all specified terms and conditions.9 First, it should be noted that in case of invalidity of the contract, the worker loses the status of employee. The consequences of the invalidity of the contract must be measured, particularly with regard to the question whether the invalidity can produce retroactive effects. Building on the successive nature of the employment contract and the requirement for employee protection, the case law excludes an employment contract from being void. The Court of Cassation has ruled that if the parties cannot reciprocally restore their relationship of transaction due to the nature of those obligations, the value of the performance of each party and the advantage the other had must be considered. Hence, an employee can request the employer to pay the remuneration corresponding to the work effectively delivered.10 B.  Employment Relationship: Basic Definition The concept of ‘employment relationship’ is synonymous with employment contract in France.11 The status of employee—in accordance with French labour law—depends on the existence of a contract of employment. The importance of employee protection associated with the status of employee makes the qualification of a contract of employment a key issue in labour law and generates imperative case law. The question of the scope of labour

9 

Labour Code, art L 1221-3. ‘Attendu cependant qu’un contrat nul ne peut produire aucun effet; Que s’il a été exécuté, les parties doivent être remises dans l’état où elles se trouvaient auparavant; Que si, en raison de la nature des obligations, il leur est impossible de se restituer réciproquement ce qu’elles ont reçu, il y a lieu de tenir compte de la valeur des prestations de chacune d’elles et de l’avantage que l’autre en a retiré’—‘Given, however, that an invalid contract cannot produce any effect, that if it has been executed, the relationship between the parties must be restored to its initial state; that if it was impossible for them to return to each other what they have received, it is appropriate to take account of the value of each performance and of the benefit obtained by the other party’ (Court of Cassation, Social Chamber, 9 March 1978, No 77-40.015). 11  Court of Cassation, Social Chamber, 13 November 1996, No 94-13187. 10 

The Concept of ‘Employee’: The Position in France 201 law has attracted much attention in France over the last few years12 for two reasons. First, the criteria for the application of labour law, ie, the criteria determining the existence of a contract of employment, have undergone a major transformation in the last 10 years. The notion of ‘employee’ determines the application of both labour and social security law. Second, the issue is not presented as one of definition of the notion of ‘employee’, but as one of definition of the notion of ‘contract of employment’. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition An employee is a person who performs work for an employer in exchange for remuneration and under its legal subordination.13 This is the case for taxi drivers, for example, but also for those who hire a car fully equipped for transport activities. This definition also applies to professional ­journalists, for example.14 B.  Employer: Basic Definition An employer is a person who exercises authority and assigns tasks to employees which are remunerated. Co-employment is possible in France.15 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Workers in France are usually categorised as follows: (i) (ii) (iii) (iv)

blue-collar workers and clerical staff; technicians and supervisors; engineers and executives (cadres); and senior executives (cadres supérieurs).

12  Cahiers du Conseil Constitutionnel No 31, March 2011, www.conseil-constitutionnel. fr/conseil-constitutionnel/francais/nouveaux-cahiers-du-conseil/cahier-n-31/entreprise-droitsfondamentaux-et-droits-sociaux.96757.html. 13  E Dockès, ‘Notion de contrat de travail’ (2001) Droit social 546; J Pélissier, A Supiot and A Jeammaud, Droit du travail, 24th edn (Paris, Dalloz, 2008) 387, para 287; B Bossu, F Dumont and PY Verkindt, Droit du travail (Paris, Montchrestien, 2011) 74, para 187; E Peskine and C Wolmark, Droit du travail (Paris, Dalloz, 2011) 31, para 28; F Héas, Droit du travail (Brussels, Larcier, 2012) 168–69. 14  Labour Code, art L 7123. 15  Court of Cassation, Social Chamber, 30 November 2011, No 10-22.964.

202  Francis Kessler Depending on the executive’s level of responsibilities and autonomous ­decision-making power, he or she may be considered a senior executive. In the event of a dispute, the court will evaluate the actual duties performed by the employee rather than the professional category mentioned in his or her employment contract or on his or her pay slip.16 This distinction is important in terms of working time, the election of work representatives, collective bargaining and industrial tribunal rules. It should be noted that: (i)

senior management executives within a company may be exempted from all of the restrictions on working time, pursuant to Article L 3111-1 of the Labour Code; (ii) as regards the selection of personal representatives (délégués du personnel, comité d’entreprise), the law provides for a first category of ‘workers’ and a second category of ‘supervisors, technicians and cadres’, collective agreements provide for amendments, and a third category, ‘cadres’ (executives); (iii) cadres and cadres supérieurs have their own common section in the industrial tribunal (see below). The French Labour Code also includes several presumptions of salaried work (présomptions de salariat), for instance, for journalists (Article L 7112-1), performing artists (Article L 7121-3),17 models (Article L 7123-3), or salespersons (Article L 7313-1). B.  The Establishment of a Specific Category of ‘Workers’ The notion of ‘civil service’ is commonly understood in France as employees in government administration, education, hospital and the police. Technically, it also refers to military staff as well as employees of the judiciary. Nonetheless, these categories are usually considered separately, as a

16 ‘La seule différence de catégorie professionnelle ne saurait en elle-même justifier, pour l’attribution d’un avantage, une différence de traitement entre les salariés placés dans une situation identique au regard dudit avantage, cette différence devant reposer sur des raisons objectives dont le juge doit contrôler concrètement la réalité et la pertinence’—‘Different professional categories do not justify a difference in treatment between employees who are in a similar situation; any difference in treatment must be based on objective reasons which the judge must verify and assess’ (Court of Cassation, Social Chamber, 1 July 2009, No 07-42.675). 17 However, French law does not define ‘entertainer/artist’ and instead presents a nonexhaustive list of entertainment professions and categories. This list determines who is considered an entertainer/artist. It includes, for example, formally trained opera, choir and classical singers (l’artistelyrique), actors, dancers, show entertainers (l’artiste de variétés), musicians, popular and folk singers (le chansonnier), orchestra conductors, orchestra arrangers (l’arrangeur orchestrateur), and film directors, and extras (l’artiste de complément). TA Kenneybrew, ‘Employing the Performing Artist in France’ (2006) 13 Tulsa Journal of Comparative and International Law 249.

The Concept of ‘Employee’: The Position in France 203 s­ tatutory law other than the Civil Service General Statute (statut général de la fonction publique (CSGS)) applies to them. Legally, the Statute refers to public sector employees governed by the CSGS and contract employees governed by public law. The current French civil service system is based on four civil service laws. Together these represent the CSGS. The ­Statute consists of a basic law providing for the rights and obligations of all civil servants and of three laws that relate to the three civil service groups. These laws cover civil servants of the French state (la Fonction publique de l’Etat), public servants working in regional and local governments (la fonction publique territoriale) and public servants working in public hospitals, in particular nursing staff (la fonction publique hospitalière). Civil service law mostly consists of government decrees. The piece of legislation that governs the career of civil servants in France is the CSGS. It applies to all civil servants and embodies the rights and obligations of civil servants, and emphasises the concepts of career and hierarchy. According to Article 20 of the Law of 13 July 1983, compensation is based on the employee’s grade and the rank he or she has achieved, or on the post to which he or she has been appointed. Individual remuneration is determined by a civil servant’s membership in a unit, depending on the person’s grade within that unit. A civil servant’s rank to which a gross index applies sets out that individual’s position in detail on the index scale common to all civil servants. Furthermore, special statutes have been developed for each unit, which complement the general statute. They aim to organise the career of civil servants within a unit. They include details on categories, classes and steps, promotions, performance evaluation, disciplinary issues etc for each particular unit. Only a few statutes derogate from the rules of the general statute. Article L 1251-64 of the Labour Code, introduced by law in 2008,18 ­stipulates that portage salarial is a unity of contractual relationships ­organised between an umbrella company, an independent contractor and a customer company. In the portage salarial, two contracts are established: (i) (ii)

a service contract between the umbrella company and the customer company/client enterprise; and a contract of employment (a temporary contract) between the independent contractor and the umbrella company.

The umbrella company is obliged to provide the employee with work. The latter has the competence, qualification and autonomy to identify clients and negotiate the performance of work tasks with them.19

18  Law No 2008-596 of 25 June 2008, which aimed to modernise the job market, introduced the notion of ‘umbrella company’ into the Labour Code. 19  ‘La conclusion d’un contrat de travail emporte pour l’employeur l’obligation de fourniture du travail’—‘The existence of employment relationship obliges the employer to provide work to the employee’ (Court of Cassation, Social Chamber, 4 February 2015, No 13-25627).

204  Francis Kessler IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration According to the established case law, the nature of the employment contract must be determined in accordance with the actual facts, taking all factors and circumstances relating to how the work is performed into account. In a landmark Société Générale case dated 16 November 1996, the Social Chamber of the Court of Cassation drafted a definition of subordination for the first time, which applies to both labour law and social security law. It has been held that the employment contract is characterised by the existence of a legal relationship of subordination demonstrated by the ‘execution of work under the authority of an employer who has the power to give orders and instructions, to monitor their execution, and sanction the breaches of subordinates’.20 Although subordination is not equated with proper economic dependence, an analysis of the case law reveals that judges do not rely solely on an evaluation of the provisions of the contract of employment, considering that such contracts do not always accurately reflect the realities of the employment relationship. An analysis of subordination involves an evaluation of the employment relationship in the overall context, ie, judges take multiple factors based on the level of control of the employer over the worker’s activity into account.21 The case law has developed a series of indicators for the existence of subordination, such as the employer’s managerial prerogatives, his or her right to impose disciplinary sanctions, the performance of work within the employer’s premises, organisation or a workplace established by the employer, and the use of tools, materials and equipment provided by the employer. These indicators do not need to be simultaneously present, but in accordance with the specific circumstances of each situation. Other criteria, some of which are listed below, allow the courts to ascertain the existence of a relationship of subordination. The courts use a set of factors to determine the existence of such a relationship. The existence of only one single factor is not sufficient or decisive: —— Working hours: employees shall comply with company working hours or working time under penalty of disciplinary measures. Independent 20  ‘Le lien de subordination est caractérisé par l’exécution d’un travail sous l’autorité d’un employeur qui a le pouvoir de donner des ordres et des directives, d’en contrôler l’exécution et de sanctionner les manquements de son subordonné’—‘A relationship of subordination is characterised by the performance of work under the authority of an employer who has the power to give orders and instructions, to monitor the execution of work tasks and to punish negligence of his subordinate’ (Court of Cassation, Social Chamber, 13 November 1996, No 94-13.187). 21  ‘L’existence d’une relation de travail salarié dépend des conditions de fait dans lesquelles est exercée l’activité professionnelle’—‘The existence of an employment relationship depends on the actual conditions under which the professional activity is exercised’ (Court of Cassation, Social Chamber, 9 May 2001, Bull 2001, V, No 155, No 98-46158).

The Concept of ‘Employee’: The Position in France 205

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——

—— ——

contractors, on the other hand, are not subject to company working hours and have the autonomy to arrange their own working time.22 Duties and remuneration: employees perform permanent work tasks for which they regularly receive a monthly salary. When a company calls upon an independent contractor, it is usually because he or she has specific skills and is requested to complete a work assignment that the company’s own staff cannot carry out. Independent contractors are usually paid a lump sum remuneration upon completing the work assignment.23 Place of work and work equipment: employees usually work on company premises. The company usually provides them with all the necessary work equipment and materials. Independent contractors, on the other hand, are expected to have their own work equipment. They can occasionally use company facilities, but primarily carry out their work using their own means. Independent contractors usually also have their own office and business cards. Exclusivity or portfolio of clients: employees usually work for one employer, while independent contractors have a portfolio of clients.24 Registration: employees are registered with various institutions, notably the social security agency, by their employer who pays social security contributions on their behalf. By contrast, independent contractors have to personally register as self-employed independent contractors and pay their own taxes and social security contributions.25

22  ‘Un radiologue exerce son activité dans une clinique selon un horaire fixé avec son accord, mais qu’il se devait de respecter’—‘A radiologist worked in a clinic based on a fixed timetable, which was agreed with the clinic and he had to respect it’ (Court of Cassation, Social Chamber, 30 June 1988, No 85-43661). 23 ‘Le thème de l’intervention des conférenciers et leur rémunération n’étaient pas déterminés unilatéralement par la Société générale, mais convenus avec les intéressés, et que ceuxci n’étaient soumis par ailleurs à aucun ordre, à aucune directive, ni à aucun contrôle dans l’exécution de leur prestation, ce dont il résultait que les conférenciers et intervenants n’étaient pas placés dans un lien de subordination à l’égard de la Société générale’—‘The theme of the intervention of the speakers and their remuneration were not unilaterally determined by Société Générale, but agreed with the speakers, and they were not subject to any instruction, directive or any control in the execution of their work. That is the reason why the speakers and participants were not considered to be in a relationship of subordination with regard to the bank “Société Générale”’ (Court of Cassation, Social Chamber, 13 November 1996, No 94-13187). 24 ‘Le travail subordonné se trouve normalement accompli au lieu et suivant l’horaire prescrits, par un salarié travaillant seul, sans auxiliaire rémunéré par lui, avec un matériel et des matières premières ou produits fournis par l’employeur et sous son contrôle’—‘Subordination means that the employee works with materials provided by the employer’ (GH Camerlynck, Le contrat de travail, 2nd edn (Paris, Dalloz, 1988) 68). 25  ‘La juridiction prud’homale est compétente pour tous les litiges liés au contrat de travail et notamment pour ordonner réparation du préjudice résultant de la faute de l’employeur qui a omis de déclarer un salarié aux organismes sociaux’—‘The labour court has jurisdiction over all disputes related to the employment contract and can in particular order compensation for any prejudice on the part of the employer who failed to register an employee with social security’ (Court of Cassation, Social Chamber, 28 June 2006, No 04-43969).

206  Francis Kessler B. Indicators Judges use several elements to determine the existence of a relationship of legal subordination, which in isolation would not be sufficient to characterise an employment relationship. Subordination is a determining but at the same time constant and flexible element of the employment relationship; thus, the case law has developed a series of indicators of the existence of a relationship of subordination, such as the employer’s managerial prerogatives, his or her right to impose disciplinary sanctions, the performance of work at the employer’s premises, organisation or at a workplace established by him or her with the use of tools, materials and equipment provided by the employer. These indicators do not need to exist simultaneously, but should be based on the specific circumstances of each situation, regardless of how the parties name or describe the contract. Each component of the employment contract must be verified by evidence, by the so-called ‘body of evidence’ (‘faisceau d’indices’) method.26 As regards the relationship of subordination, judges investigate components which in isolation would not suffice to characterise such a relationship. However, by combining the individual components, the judges can establish the nature of the activity. The components may include the provision of materials, the working hours or even the place of work.27 For example, the work in an organised department may constitute evidence of a legal relationship of subordination when the employer unilaterally determines the conditions of the execution of work.28 However, this in itself is not a determining criterion for the status of employee. The unique and primordial criterion of the status of employee consists of the existence of work performed under subordination.

26  ‘Ce sont les circonstances de fait qui déterminent l’existence d’un rapport de subordination; celui-ci ne dépend ni de la volonté exprimée par les parties, ni de la dénomination qu’elles ont donnée à leur convention’—‘The facts determine the existence of a relationship of subordination; such a relationship depends neither on the will expressed by the parties nor the name they have given their agreement’ (Court of Cassation, Social Chamber, 19 December 2000, No 98-40.572). 27  ‘Un gardien assumait des missions selon les directives précises et un emploi du temps fixé par la société, qui en contrôlait l’exécution et seule le rémunérait selon la durée du travail, et caractérisé l’existence d’un contrat de travail entre les parties, la cour d’appel a ainsi légalement justifié sa décision’—‘A guard worked missions according to specific guidelines and a timetable set by the company. The company monitored his work and he was remunerated based on the hours he worked. All these elements characterised the existence of a contract between the parties’ (Court of Cassation, Social Chamber, 10 December 1992, No 89-43246). 28  ‘Le travail au sein d’un service organisé peut constituer un indice du lien de subordination lorsque l’employeur détermine unilatéralement les conditions d’exécution du travail’—‘The work within an organised service may be an indication of subordination when the employer unilaterally determines the conditions of the execution of work’ (Court of Cassation, Social Chamber, 13 November 1996, No 94-13187, Société Générale).

The Concept of ‘Employee’: The Position in France 207 In accordance with this principle, the Court of Cassation has, eg, held that speakers not employed with the company, and who had agreed with the company on the topic of their intervention and their remuneration, but were not subject to any instructions or control over the execution of their performance were not considered to work under a relationship of subordination.29 On the other hand, subordination exists when an employee is required to comply with the internal rules of the organisation for which he or she works and where the organisation uses its disciplinary powers over the employee and removes its responsibilities.30 C.  The Relevance of ‘Economic Dependence’ Since the judgment of the Civil Law Chamber of the Court of Cassation of 6 July 1931, the criterion of economic dependence has not per se determined the existence of an employment contract. According to the Court: The legal relationship of workers with the person for whom they work cannot be determined by their weakness or economic dependence, but only by a contract between the parties; the status of employee requires the existence of a legal relationship of subordination between the worker and the employer.31 29 ‘Le thème de l’intervention des conférenciers et leur rémunération n’étaient pas déterminés unilatéralement par la société mais convenus avec les intéressés et que ceux-ci n’étaient soumis par ailleurs à aucun ordre, à aucune directive, ni aucun contrôle dans l’exécution de leur prestation, en sorte qu’ils ne se trouvaient pas placés dans un lien de subordination à l’égard de cette société’—‘The speakers not employed with the company which agreed on the topic of their intervention and their remuneration and who were not subject to any instruction or control over the execution of the performance of the work were not considered to be in a relationship of subordination with the employer’ (Court of Cassation, Social Chamber, 13 November 1996, No 94-13187). 30  ‘The ruling, though it found that Mr X … had exercised the functions of director within the ARDT, also determined that he had to comply with the internal rules of the organisation and that the latter had implemented its disciplinary power by suspending the applicant’s signature for a transfer and by withdrawing his responsibilities, the Court of Appeal, which did not draw on the legal consequences of its findings from which the existence of a relationship of subordination characterising an employment contract followed, violating the aforementioned text’ (Court of Cassation, Social Chamber, No 94-45.102). Likewise: ‘By the ineffective reasoning derived from the exercise of a simultaneous professional activity on a full-time basis by the person concerned, whereas, on the one hand, he was obliged under penalty of sanctions and in accordance with the internal regulations of the club and the charter of rights and duties of the player, to participate in sports activities, to follow the instructions given during the training sessions and to comply with the regulations of the club, and whereas, on the other hand, the player was receiving money in exchange for the time spent in training sessions and games, from which it deduced that notwithstanding the conventional qualification given to the payment, it constituted remuneration for the performance of work, the Court of Appeal has violated the abovementioned text’ (Court of Cassation, Social Chamber, 28 April 2011, No 10-15.573). 31  ‘Mais attendu que la condition juridique d’un travailleur à l’égard de la personne pour laquelle il travaille ne saurait être déterminée par la faiblesse ou la dépendance économique dudit travailleur et ne peut résulter que du contrat conclu entre les parties; que la qualité de salarié implique nécessairement l’existence d’un lieu juridique de subordination du travailleur à la personne qui l’emploie’ (Court of Cassation, Civil Law Chamber, 6 July 1931, Bardou).

208  Francis Kessler V.  THE PRINCIPLE OF PRIMACY OF FACTS

In the French legal system, the principle of the primacy of facts is recognised, meaning that the substance of the relationship as opposed to the form of the contract determines the legal nature of the contract. The qualification of the contract by the parties does not bind the judge(s), as a work contract only depends on the conditions of the work to be performed.32 In the ‘Ile de la tentation’ case, the Court of Cassation stated that the employment relationship does not depend on the will of the parties to the contract or on the name given to this contract, but on the circumstances under which the work is performed.33 The Court of Cassation also redefined taxi drivers’ rental contracts as employment contracts by asserting the ‘state of subordination’ in which the lessees found themselves.34 The Supreme Court also examined the case of workers engaged in the delivery and collection of parcels under a franchise agreement. The ‘franchisees’ collected the parcels from premises rented by the ‘franchiser’ and delivered them according to a schedule and route determined by the latter. In addition, the charges were set by the enterprise, which collected the payment directly from the customers. The Court of Cassation examined the facts of three ‘franchisees’ in three separate cases and issued three rulings on the same day.35 It held that the provisions of the Labour Code were also applicable to persons whose occupation essentially consisted of collecting orders or receiving items for handling, storage or transport on behalf of a single industrial or commercial enterprise when those persons performed their work at premises supplied or approved by that enterprise under conditions and at prices imposed by that enterprise, without the need to establish a relationship of subordination. This is understood to amount to an extension of the scope of the Labour Code to certain ‘franchised’ workers.

32  As an example in a famous case, ‘Ile de la tentation’, the Court of Cassation ruled that: ‘L’existence d’une relation de travail ne dépend ni de la volonté exprimée par les parties ni de la dénomination qu’elles ont donnée à leur convention mais des conditions de fait dans lesquelles est exercée l’activité des travailleurs’—‘The existence of an employment relationship does not depend on the will expressed by the parties or on the name they have given to their agreement, but on the conditions under which the activity of the workers is exercised’ (Court of Cassation, Social Chamber, 3 June 2009, Nos 08-40981, 08-40982, 08-40983 08-41712, 08-41713 and 08-41714). 33 Ibid. 34  Court of Cassation, Social Chamber, 19 December 2000, No 98-40572. 35  Court of Cassation, Social Chamber, 4 December 2001, Nos 50105034, 35 and 36; Droit social, 2002, 162–63.

The Concept of ‘Employee’: The Position in France 209 The requalification of an employment relationship entails: (i)

the payment of overtime hours, if any, bonus schemes and other benefits applicable within the company; (ii) the payment of social security contributions—payments made to the independent contractor will be considered as part of his or her ‘salary’ and, as such, will be subject to employee/employer social security contributions; (iii) termination of a services agreement will be deemed as an unfair termination, entailing payment of severance (ie, notice period, dismissal indemnity, paid holidays) and damages; (iv) ‘shadow employment’, a criminal offence, may be established. Shadow employment (ie, failure to declare salaried employment) is punishable by up to three years of imprisonment and a fine of up to €45,000 for the company’s legal representative, and a fine of up to €225,000 for the company as a legal entity. Moreover, reimbursement corresponding to at least six months of wages will be awarded in case of termination of the relationship with the independent contractor, now considered to be an employee. VI.  QUALIFICATION IN FULL

Under French law, it is possible for certain parts of a contract to qualify as an employment contract and to be subjected to rules other than those of labour law. For example, an employment contract is governed by principles of civil law such as good faith provided in Article 1134 of the Civil Code or even the validity of consent.36 Under French law, non-contractual relationships exist outside the scope of labour law. For example, an employer can be held civilly liable for its employee’s actions. In fact, Article 1384 of the Civil Code states that: A person is liable not only for the damages he causes by his own actions, but also for those caused by persons for whom he is responsible, or by devices that are under his supervision … Masters and employers for the damage caused by their servants and employees within the scope of the activities for which they have been employed.

However, the employer will not be held liable for any of the employee’s activities (at the work place or during his or her working time or through the use of working tools) that are not related to his or her work assignment.

36 

Civil Code, art 1109.

210  Francis Kessler The Court of Cassation has defined the misuse of assignment as follows: ‘The worker performs tasks without official permission and performs work for which he/she was not hired.’37 In French law, the existence of a contract between the parties related to the employment relationship other than an employment contract is prohibited. VII.  LIMITS TO THE FREEDOM OF CONTRACT

Parties cannot alter the legal nature of their contract because—as already mentioned—the principle of primacy of facts prevents this in the French legal system. The notion of ‘employee’ is not defined in French law. French case law infers this from the definition of the employment contract. The latter is defined as ‘an agreement by which an individual works for another person (natural or legal), under the latter’s subordination, for which he/she receives remuneration’. Therefore, three factors typify an employment contract: (1) the execution of tasks; (2) remuneration; and (3) a relationship of subordination. As the first two factors are found in nearly every agreement, a relationship of subordination is the only factor that makes it possible to differentiate employees from other service providers, including independent contractors. Hence, the key factors taken into account by the courts comprise the frequency of instructions, the monitoring of performance of work and possible sanctions.38 In French labour law, parties can enter into a contract of employment even if it does not qualify objectively because—as mentioned above—the qualification is not binding on the judge. The status of employee cannot be waived in French labour law since the judge can requalify the relationship between the person presumed to exercise an activity as a self-employed person and the originator’s/client’s order when the obligations of the worker place him or her in a relationship of subordination comparable to that between an employee and an employer.39

37 

Court of Cassation, Plenary Assembly, 19 May 1988, No 87-82.654. X was required to meet timelines and to periodically issue a report of the work carried out, regardless of whether he had been given instructions and that this form of monitoring took place at his own request’ (Court of Cassation, Social Chamber, 14 March 1991, No 88-20374). 39  ‘Considering, however, that in application of Art L 120-3 of the Labor Code (now art L 8221-6 of the Labour Code) in terms of the formulation then in force, natural persons registered at the register of trade and companies are presumed to not be bound by a contract of employment in the performance of the activity giving rise to such registration, the press holder can demonstrate the existence of a contract of employment, whose qualification depends on the actual conditions of the activity’s exercise; that the judges found that Ms X … was carrying and delivered newspapers to retailers exclusively on account of the “Depeche du Midi”, and then on account of the company “Auch diffusion presse”, on a route and according to a schedule 38 ‘Mr

The Concept of ‘Employee’: The Position in France 211 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The social dialogue mechanisms do not, in principle, interfere with the law and case law defining ‘employment relationships’/‘employment contracts’. The status of employee, unlike employment contracts, applies independently of the will of the parties (see above).40 The principle remains that the parties are not entitled to choose the qualification of the contract: ‘The existence of an employment relationship depends neither on the will expressed by the parties, nor on the designation the parties have given their agreement/contract, but on the factual conditions according to which the worker’s activity is performed.’41 This is also true for the parties to a collective agreement, with the exception of the entertainment industry and journalists. In the entertainment industry, the so-called ‘contrat de travail d’intermittent’ is concluded, dating back to 1969 and partially amended in 2003. This covers a set of professions that to some extent differ considerably (from artistic performances to the administration of such a production). The only common denominator of these widely diverging activities is that in principle, they all form part of the (performing) arts sector. The objective is to take the specific nature of the (performing) arts sector into account in terms of the production cycle and to facilitate professional transition periods for salaried employees in the sector. Periods of non-work, unemployment between two contracts, as well as dismissals are compensated immediately by unemployment insurance (Pôle-Emploi). Inactivity is therefore not the same as unemployment—it entitles an individual to payment of a replacement income. This replacement income depends on the number of hours the individual has worked or the wages he or she has earned prior to the period of inactivity; these figures differ from those stipulated in ordinary law. Under the intermittence system, any contract, irrespective of its duration, that binds an artist or worker employed in a show irrespective of his imposed by these two companies, against remuneration unilaterally fixed by them. She was subject to numerous obligations such as the definition of the delivery sector, the list of persons to whom the papers were to be delivered each day, prohibition to deliver other publications, the impossibility of freely defining the schedule of activity and being subject to specific instructions’ (Court of Cassation, Social Chamber, 10 December 2002, No 00-44.646). 40  ‘L’existence d’une relation de travail salarié ne dépend ni de la volonté exprimée par les parties ni de la dénomination qu’elles ont données à leur convention, mais des conditions de fait dans lesquelles est exercée l’activité des travailleurs’—‘The existence of an employment relationship depends neither on the will expressed by the parties, nor on the designation the parties have given their agreement/contract, but on the factual conditions according to which the activity of the worker is performed’ (Court of Cassation, Social Chamber, 17 April 1991, Bull 1991, V, No 200, No 88-40121). 41  See section IV.B above.

212  Francis Kessler or her mission (artist, worker, technician, administrative staff etc) to an organiser (whether occasional or permanent, private, public, or associative professional) is presumed to be an employment contract.42 The intermittence system scheme falls under the aegis of the jointly managed national unemployment insurance scheme, the National Union for Employment in Industry and Commerce (Union nationale pour l’emploi dans l’industrie et le commerce (UNEDIC)). A similar mechanism exists for professional journalists. Accordingly, press cards are issued by a joint commission of journalists and editors, which excludes government bodies.43 The purpose of this card is to facilitate the journalist’s work and in order for such a card to be issued, the applicant only has to demonstrate that he or she properly meets the definition of a professional journalist for the purposes of Article L 7111-3 of the French Labour Code; this Article provides that a professional journalist is a person whose principal and regular occupation is the practice of his or her profession for remuneration in a media company. Article L 7112-1, paragraph 1 of the French Labour Code states that in this case, there is an assumption of the existence of a labour contract.44 B.  Custom and Practice In France, the notion of employee/employment contract/employment relationship cannot be defined by reference to custom or practice. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions Legal presumptions of employment and non-employment exist in France. For the purpose of protecting certain professions benefiting from a particular status, the Labour Code stipulates that these must be exercised within the framework of a contract of employment.

42  JM Rémy, ‘L’intermittence du spectacle en France, modèle d’analyse des enjeux de la flexicurité’ (Colloquium Flexicurity in France, 7 December 2006); JM Renoux, ‘Les intermittents du spectacle et de l’audiovisuel: un modèle de flexicurité?’ (Colloquium Flexicurity in France, 7 December 2006). 43  Labour Code, art L 7111-6. 44  See section IV.B above.

The Concept of ‘Employee’: The Position in France 213 This is the case for: salespersons;45 journalists;46 performing artists;47 models;48 home workers;49 caretakers, employees of buildings, attendants and nursing assistants;50 hosts and hostesses appointed to changing rooms and show programme sellers;51 (viii) some managers of businesses.52 (i) (ii) (iii) (iv) (v) (vi) (vii)

The legal insecurity of individual entrepreneurs results from the fact that the contract concluded with the customer may be requalified as a contract of employment by the judge, leading to an affiliation with the general social security scheme. Law No 2003-721 on the economic initiative dated 1 August 2003 restored the presumption of non-employment which had been removed by Law No 2000-37, referred to as Law ‘Aubry II’ of 19 January 2000. Thus, Article L 8221-6 of the Labour Code defines conditions under which a job contract can be requalified as a contract of employment and establishes a presumption of absence of an employment contract. According to French labour law, natural persons registered in a given register (either the corporate and commercial register or the transport company registry for goods haulage or for passenger transport) and executives registered in the Trade and Companies Register are presumed to not be bound to the client through an employment contract for the business activity covered by the relevant registration. However, this presumption can be rebutted and the existence of a contract of employment can be established when those persons engage in performances (directly or not) for a work provider under conditions that place them in a relationship of subordination similar to that which exists between the employee and its employer.

45 

Labour Code, art L 7313-1. ibid art L 7112-1. 47  ibid art L 7121-3. 48  ibid art L 7123-3. 49  ibid art L 7412-1. 50  ibid art L 7211-2. 51  ibid art L 7321-2. 52  ibid art L 7321-3. 46 

214  Francis Kessler B.  The Burden of Proof According to Article 1315 of the Civil Code, the burden of proof rests with the applicant.53 In the absence of a legal presumption of employment, ‘it is he who claims the existence of an employment contract who must prove its existence’.54 On the contrary, in the presence of an apparent contract, the party claiming its fictional nature shall bear the burden of proof.55 X.  SPECIFIC PROCEDURES

Litigations on the existence of an employment contract must be brought before a labour tribunal (conseil de prud’hommes). The courts are not bound by the designation given to the relationship by the parties. This means that if the facts collected point towards a requalification of the contract, the court can requalify a contract for services as an employment contract. The requalification of an independent contractor as an employee is not automatic and must be issued by a court, which must first ascertain the existence of a relationship of subordination between the independent contractor and his or her customer. The legal process before the industrial tribunal involves two stages: first, an attempt is made to conciliate the two parties; and, second, where conciliation has failed, the case is litigated before the court. The industrial tribunal consists of a Conciliation Chamber and a Judgement Chamber.56 About one-third of disputes brought before these tribunals are resolved by means of conciliation. Individual claims of employers and employees arising from the employment contract shall be referred to the industrial tribunal. The employment contract must comply with the provisions of the Labour Code and must imply the existence of a relationship of subordination between the employer and employee. Claims are said to arise from an employment contract when they are linked to the establishment, validity or interpretation of the contract, to the performance of contractual duties or to the breach of contract where disputes arise after a contract has expired, the cause of which is a dispute that emerged prior to its expiration. All issues directly or indirectly related to the employer–employee

53  ‘Celui qui réclame l’exécution d’une obligation doit la prouver. Réciproquement, celui qui se prétend libéré doit justifier le paiement ou le fait qui a produit l’extinction de son obligation’—‘The one who calls for the execution of an obligation must prove it. Conversely, the one who pretends to be released from it must justify the payment or the fact that has produced the termination of its obligation.’ 54  Court of Cassation, Social Chamber, 21 June 1984, No 82-42.409. 55  Court of Cassation, Social Chamber, 18 June 2008, No 07-42.845. 56  Labour Code, art R 1423-12.

The Concept of ‘Employee’: The Position in France 215 r­ elationship, such as the enforcement of a non-competition clause or even the failure of the employer to register the employee with the social security authorities, shall be tried before an industrial tribunal. A claim is individual, even where there are several plaintiffs, when each employee acts on his or her own behalf claiming an individual advantage, or when controversies between an employer and one of his or her employees or between an employer and several of his or her employees are considered separately. This is the case even where the tribunal’s decision is likely to have a broad impact in practice on other employees, eg, through a reduction in working hours. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-like’ Persons The category of ‘employee-like’ persons does not exist in France. However, some persons are considered to be employees on the grounds of economic dependence, but are not employees per se. In this respect, the reluctance of the labour courts to recognise economic dependence as an alternate to subordination is limited by the legal provisions that, in limited situations, acknowledge economic dependence. These persons are not considered employees and their contract is not a contract of employment. According to Articles L 7321-1 ff of the French Labour Code, some persons who head an enterprise can benefit from the regulations of the Labour Code. The criteria are primarily economic: exclusive or quasiexclusive activity for predominantly one company and prices imposed by this company. These provisions enable the application of the Labour Code in the absence of unambiguous subordination. Examples of its application include managers of petrol stations, licensees, exclusive distributors and, more recently, franchisees. In addition, Article L 7321-3-1 of the French Labour Code authorises the application of certain provisions of the Labour Code (notably those relative to the minimum wage)57 to managers expressly named ‘non-employees’. Nevertheless, proceedings must be brought before commercial tribunals (Tribunaux du commerce). Concerning individuals who are employed by their wife or husband, even if the legislator refers to the requirement of ‘authority’, subordination is no longer required according to a recent case decided by the Court of ­Cassation.58 It suffices for the wife or husband to effectively take part in the activity of the enterprise and receive wages above the minimum wage. 57 

See section IV.B above. Y … participait effectivement à l’activité ou à l’entreprise de son épouse à titre professionnel et habituel et qu’il percevait une rémunération horaire minimale égale au salaire 58  ‘M.

216  Francis Kessler B.  Equality and Anti-discrimination Law French law covers (i) equality and (ii) anti-discrimination. Concerning equality, several situations must be distinguished: (i)

(ii)

Fixed-term contract and temporary work: an employee with a fixedterm contract benefits from the legal and conventional provisions applicable to employees with a permanent contract, with the exception of the provisions on the termination of the employment contract.59 Employees with a fixed-term contract60 and temporary workers61 are entitled to remuneration that may not be lower than that of an employee who works in the same company with an equivalent vocational qualification and who performs the same functions, but within the scope of a permanent contract. Part-time employees: the equality principle is adapted to part-time work.62 In fact, all rights attributed by law or collective agreements to full-time employees are equally also attributed to part-time employees. This is the case in terms of remuneration in cases of equivalent qualification and equivalent jobs. Allowances for the termination of contracts of employees who have been working full-time and part-time are calculated pro rata for the period of employment according to the modalities fixed when joining the company.63

minimum de croissance, c’est à bon droit que la cour d’appel en a déduit que les dispositions du Code du travail étaient applicables à leurs relations professionnelles; qu’ainsi, abstraction faite des motifs tirés de l’existence d’un lien de subordination, qui n’est pas une condition d’application des dispositions de l’article L. 784-1 du Code du travail’—‘Mr Y … effectively participated in the activity of the company of his wife and received minimum hourly remuneration equal to the minimum wage. The Court of Appeals inferred that the provisions of the Labour Code were applicable to their professional relationship; thus, regardless of the grounds for the existence of a relationship of subordination, it is not a condition for implementing the provisions of Art L 784-1 of the Labour Code’ (Court of Cassation, Social Chamber, 6N ­ ovember 2001, No 99-40756). 59 

Labour Code, art L 1242-14. ibid art L 1242-15. 61  ibid arts L 1215-18 and L 1215-43. 62  ibid arts L 3123-9–L 3123-13. 63  ibid art L3123-13. ‘Qu’en statuant ainsi, alors que dans le cas où un salarié a été occupé successivement à temps partiel et à temps plein dans l’entreprise, l’indemnité qui lui est due se calcule proportionnellement aux périodes d’emploi à temps partiel et à temps plein; que, dès lors, en allouant au salarié une indemnité de licenciement calculée sur la base d’un emploi à temps plein après avoir relevé qu’il avait été engagé pendant plus d’un an à temps partiel, le conseil de prud’hommes a violé le texte susvisé’—‘In so deciding, even when an employee has continuously worked on a part-time or full-time basis in the enterprise, the claim amount due to him must be calculated proportionately to part-time employment and periods of full-time work; therefore, determining severance compensation calculated on the basis of full-time employment whereas he had been working part-time for over a year, the Labour Court violated the aforementioned text’ (Court of Cassation, Social Chamber, 16 February 1994, No 90-40362) 60 

The Concept of ‘Employee’: The Position in France 217 However, the probation period of part-time workers may not be longer than that of a full-time employee.64 In order to determine seniority rights, the duration taken into account for a part-time employee is the same as that of a full-time employee. (iii) Professional equality between men and women: equal treatment between men and women at work implies that the employer must respect several principles:65 —— the prohibition of discrimination in hiring of workers; —— non-differentiation in terms of remuneration and career development; —— obligations towards staff representatives (necessity of a written report and negotiations); —— informing employees and job applicants, and setting up measures to prevent sexual harassment in the company. Recourse, civil penalties and criminal sanctions66 are provided in case of violation of the principle of gender equality. (iv) Principle of equal treatment: according to a decision of the Court of Cassation related to Case No 13-22.179 of the Social Chamber dated 27 January 2015 and to cases dated 8 June 2011,67 the Social Chamber held that the principle of equal treatment was contrary to differences in advantages made between professional categories, in particular between managers and other employees, unless those differences were based on objective reasons which the judge had to evaluate in detail in terms of actuality and relevance by taking into account the specificities of the employees of a given category, in particular the conditions for exercising the functions, career development and the modalities of remuneration. This rule is applied to any verified inequality, regardless of its source. In several cases dated 27 January 2015, the Social Chamber amended its position by ruling that differences in treatment between professional categories established in collective agreements, negotiated and signed by representative trade unions are presumed to be justified. Thus, it is for the party contesting differences in treatment to demonstrate that these differences do not exist due to considerations that

64  ‘La période d’essai d’un salarié à temps partiel ne peut avoir une durée calendaire supérieure à celles du salarié à temps complet’—‘The trial period of a part-time worker may not be longer than that of a full-time employee’ (Labour Code, art L 3123-9). 65  ibid arts L 1141-1–L 1146-3. 66  Penal Code, art 225-2. 67  No 10-14.725 and 10-11.933.

218  Francis Kessler are of a professional nature. Consequently, the burden of proof has been reversed concerning differences in treatment resulting from collective agreements. Discrimination is prohibited under French law throughout the employment relationship, including with regard to appointment, compensation, professional equality, dismissal and disciplinary sanctions. Article L 1132-1 of the Labour Code provides that no one shall be excluded from the recruitment process and that no employee shall be punished or dismissed due to his or her origin, gender, morals, sexual orientation or identity, age, marital status or pregnancy, race, nationality, ethnic or racial origin, political opinions, trade union activities, religious beliefs, physical appearance, name, medical condition or disability. The misdemeanour of discrimination is a criminal offence punishable by a maximum of three years’ imprisonment and a maximum fine of €45,000.68

68 

Criminal Code, art 225-2.

11 The Concept of ‘Employee’: The Position in the Former Yugoslav Republic of Macedonia1 TODOR KALAMATIEV AND ALEKSANDAR RISTOVSKI

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HE CONTRACT OF employment (договор за вработување) constitutes a major component of labour law and is the single legal ground for concluding an employment relationship. This position of the employment contract in the modern labour law system of the Former ­Yugoslav Republic of Macedonia (hereinafter Macedonia) was preceded by a long period of theoretical and statutory marginalisation.2 There is no definition of employment contract in Macedonia’s current labour legislation, but the conceptual notion of this term derives from

1  This chapter is based on relevant national and international legal literature. The prevailing legal sources originate from the countries of the former Yugoslavia. In addition to legal literature, it is based on the Macedonian relevant labour legislation. It does not include case law because there is no relevant court practice that covers employment relationships (ie, criteria and indicators of subordination). We also could not find any court decisions that refer to a differentiation between employment contracts and contracts for services. This finding is based on interviews conducted with judges from the department of labour disputes at the Macedonian courts. 2  Former Macedonian labour legislation (prior to independence in 1991 and the adoption of the first Law on Employment Relations in 1993, Official Gazette of the Republic of ­Macedonia, No 80/93) envisaged different legal grounds for the commencement of an employment relationship as substitutes for contracts of employment (such as the decision on admission of the employee to work/Official Gazette of SFRY, No 15/1965; the declaration of acceptance of the self-management agreement/Official Gazette of SFRY, No 53/1976 etc). These legal grounds reflected the notion of the employment relationship in situations in which the state was built on the foundations of socialist governance and workers’ self-management.

220  Todor Kalamatiev and Aleksandar Ristovski ­ omestic legal doctrine. As such, the contract of employment represents d a key component of labour law and a major legal ground for the establishment of an employment relationship.3 The contract of employment could be defined as a contract on the basis of which a person commits himself or herself to work on behalf and at the expense of another person in exchange for remuneration.4 The essential (basic) elements of the employment contract are: ‘the performance of a particular job’ (вршење на определена работа), ‘compensation for the work performed’ (надоме сток за извршената работа) and ‘subordination’ (субординација). While the first two elements of the employment contract are so-called ‘elements of duty’ (ie, the employee is obliged to work and the employer is obliged to pay the employee for the work performed), the third element is interpreted as an ‘element of personal connection’ or a relationship between the employee and the employer, which serves as a basic criterion for distinguishing between contracts of employment and other contracts similar to a contract of employment (for example, contracts for service).5 Hence, unlike the other elements that other (personal) work contracts entail, the element of ‘subordination’ (or, more precisely, legal subordination) is an element that is only characteristic of contracts of employment. The preliminary conclusion that can be drawn from the dominant theoretical approach of Macedonian labour law is that the contract of employment is a special kind of contract (sui generis ­contract) which cannot be equated with any civil law contracts.6 The contract of employment is a strictly formal contract which must be concluded in writing. The Law on Employment Relations (Законот за работните односи) stipulates that the employment contract must be concluded in writing and must contain mandatory elements such as: [I]nformation about the contracting parties, their residence, ie, their primary address; date of commencement of work; job title, ie, information on the type of work for which the employee has concluded the employment contract, including a brief description of the work to be carried out under the employment contract; provisions regarding the employer’s obligation to inform the employee about the risks of the job and about any special professional qualifications, knowledge or special medical check-ups in accordance with the law, stating specific risks that, in accordance with legal regulations, can result from the work; place where the work is to be carried out. If the exact place is not stated, it shall be presumed that the employee carries out the work at the employer’s premises; the duration of the employment contract, when an employment contract for a fixed period is concluded; whether the employment is part- or full-time; provision on regular daily

Каламатиев, Засновање на работен однос (Skopje, докторска дисертација, 1996) 242. Г Старова and T Беличанец, Трудово право (Skopje, Универзитет Св.Кирил и МетодијСкопје, Правен факултет, 1996) 128. 5  Г Старова, Трудово Право (Skopje, Просветно Дело А.Д, 2005) 242. 6  Каламатиев (n 3) 249. 3 T 4 

The Position in the Former Yugoslav Republic of Macedonia 221 or weekly working hours and the organisation of working hours; provision on the amount of the basic salary expressed as a monetary amount that the employee is to receive for performing the work in accordance with the law, applicable collective agreement and employment contract; provision on other allowances the employee is entitled to for performing the work in accordance with the law and collective agreement; provision on annual leave, ie, the manner of determining the annual leave; and listing the employer’s general regulations which set out the employee’s working conditions.7

A copy of the contract shall be kept at the business premises of the employer’s headquarters8 and a copy of the concluded employment contract shall be handed over to the employee on the day of signing of the employment contract.9 In case the employer (as a legal entity) does not act in accordance with the latter obligations, the employer will be fined in the amount of €3,000.10 A fine in the amount of €300–450 shall be imposed on the employer (natural person) for the same misdemeanour.11 Traditionally, the contract of employment contained the mutual rights, obligations and responsibilities of both contractual parties. The established rights, obligations and responsibilities need to be aligned with the Law on Employment Relations and the applicable collective agreements. Hence, the employment contract and the collective agreement cannot set out fewer rights than those determined by law; if the contract contains such provisions, they shall be considered null and void and the relevant provisions of the law shall apply.12 According to general contract law, contracts that are contrary to the legal and moral norms are considered null and void. Invalid contracts do not meet the conditions necessary for the occurrence and validity of the contract itself.13 According to the Law on Obligations (Закон за облигациони односи): [A] contract which is not in compliance with the Constitution, laws and good practice is considered null and void.14

However, nullity does not necessarily have to refer to the entire contract. Apart from the nullity of the entire contract, the Law on Obligations also recognises the partial nullity of contracts, ie, the nullity of a certain provision

7 The Law on Employment Relations (Закон за работните односи) (Сл.весник на Република Македонија, бр.62/05), art 28, para 1. 8  ibid art 15, para 1. 9  ibid art 15, para 3. 10  ibid art 265, para 1, sub-para 1. 11  ibid art 265, para 3. 12  ibid art 12, para 2. 13  Г Галев and Ј Дабовиќ Анастасовска, Облигационо Право (Skopje, Универзитет Св.Кирил и Методиј, Правен Факултет Јустинијан Први, 2008) 445. 14 The Law on Obligations (Закон за облигационите односи) (Сл.весник на Република Македонија, Бр.18/01) art 95, para 1.

222  Todor Kalamatiev and Aleksandar Ristovski of the contract does not necessarily imply the nullity of the entire contract. This is the case if the contract can persist without the nullified provision or if that particular provision was never a condition or a decisive motivation to conclude the contract.15 In addition to the Law on Obligations, other provisions on the partial nullity of the employment contract are incorporated into the Law on Employment Relations. The latter stipulates that the clause of the employment contract that is contrary to the general provisions on rights, obligations and responsibilities of the contracting parties as defined by law, collective agreement and the employer’s internal regulations shall be null and void from the time of conclusion of the employment contract:16 The provisions of a law, collective agreement, employer’s internal regulations which partially lay down the contents of the employment contract, shall be an integral part of this employment contract and shall supplement it or shall directly apply.17

Normally, the annulment of the employment contract is retroactive and the contract returns to its original form, ie, it is deemed that the contract was never concluded. Therefore, it is not fair or legally valid for any of the parties to keep what they previously agreed on.18 Under such circumstances, the most important consequence of the nullity of the employment contract is the process of restitution (ie, the return of what was agreed on illegal grounds). Nevertheless, the Law on Obligations prescribes a certain ‘exemption’ from this primary consequence of the nullity of the contract. This is the case if restitution is not possible or if the nature of what has already been accomplished precludes the return of what was agreed on illegal grounds. In that case, the Law on Obligations prescribes adequate pecuniary compensation according to the rates at the time of the court decision.19 This position of the Law on Obligations implicitly leads to the conclusion that the annulment of the employment contract and its legal consequences may assume a different character from the labour law perspective, especially if the contract had been executed and the employee had effectively and factually performed the employment duties subjected to the nullity of the contract. The contract of employment is based on an ‘exchange’ of labour for wages, so the process of restitution, which obliges the employer to ‘return’ the ‘labour’ to the employee he or she ‘spent’ in the execution of the contract could be contentious and debatable. In this case, the theory of ‘factual employment relationship’ applies, which is based on the assumption that the employment relationship existed as a ‘factual state’ and the employee ­actually and

15 

ibid art 97, para 1. ibid art 29, para 1. 17  ibid art 29, para 2. 18  Галев and Дабовиќ Анастасовска (n 13) 450. 19  Law on Obligations, art 96, para 1. 16 

The Position in the Former Yugoslav Republic of Macedonia 223 e­ fficiently performed the work duties that arose from the employment contract. Hence, the annulment of the employment contract and its retroactive effect cannot influence the work that has already been performed by the employee as well as the rights he or she acquired as a result of this ­performance of work.20 B.  Employment Relationship: Basic Definition The definition of the term ‘employment relationship’ (работен однос) is one of the most complex subjects in labour law, since the manner in which it is defined directly reflects the personal scope of labour legislation and the employment status of the persons covered by social security. Unlike the definition of the employment contract, which is left to labour law theory, the definition of the employment relationship is set out in Macedonian labour legislation.21 According to the Law on Employment Relations of 2005, the employment relationship is defined as: [A]ny contractual relationship between the worker and the employer where the worker voluntarily takes part in the employer’s organised work process in exchange for a salary and other remuneration, personally and continuously carries out the work according to the instructions and under the supervision of the employer.22

The theoretical ‘demystification’ of the term ‘employment relationship’, which is defined in the Law on Employment Relations, makes it possible to determine the elements of the term itself, ie, the necessary legal assumptions whose fulfilment or non-fulfilment affects the existence or non-existence of the employment relationship.23 Macedonian labour law theory distinguishes between two types of elements of the employment relationship: essential and non-essential elements. It must be emphasised that certain essential elements of the employment relationship can be identified in ‘other’ labour relationships as well. However, the existence of the 20  A Baltič and M Despotovič, Osnovi Radnog Prava Jugoslavije—sistem radnih odnosa—I Osnovni Problemi Soiologije Rada (Belgrade, Savremena Administracija, 1971) 218. 21  The first Law on Employment Relations (LER of 1993) emphasised the ‘contractuality’ of the employment relationship as an element which was missing from the legal definition of the term ‘employment relationship’ incorporated into the preceding law prior to independence (ie, the Law on the Basic Rights of the Employment Relationship, Official Gazette of the SFRY, No 1030 from 28 September 1989, art 1, para 2). By defining the employment relationship as a contractual relationship between the worker and the employer for the performance of certain activities and the exercise of the rights and obligations of that relationship, the Law on Employment Relations of 1993 affirmed the new development in the labour law system based on the freedom of the market and entrepreneurship as well as the new contractual relations between labour and capital. 22  Law on Employment Relations, art 5, para 1. 23  Старова (n 5) 201.

224  Todor Kalamatiev and Aleksandar Ristovski employment ­relationship is conditioned by the mutual and simultaneous occurrence of all essential elements. Without them, there can be no employment relationship.24 ­Compared to the essential elements, the non-essential elements merely complement the employment relationship, indicating the various modalities and features of its existence. These are the elements not required to be present in the notional determination of the employment relationship, such as the length of employment, the duration of working time, the type of work that needs to be performed, the personal characteristics of the employee etc.25 The legal ‘anatomy’ of the definition of ‘employment relationship’ presupposes the existence of several essential elements that complete the notion of the employment relationship as a modern contractual relationship which is the basic subject of labour law. In this regard, the Law on Employment Relations of the Republic of Macedonia refers to the following elements of the employment relationship: contractuality (догово рност), bilateralism (билатералност), payability (платежност), personal performance of the work (лична врска), continuity (континуитет) and subordination (субординација): The employment relationship shall be established when an employment contract between the employee and the employer is signed.26

The labour legislation of Macedonia covers changes to the employment relationship status, ie, when a transfer of undertaking or parts of the undertaking takes place: In terms of status changes to the employment relationship, all rights, obligations and responsibilities under the employment contract and the employment relationship shall be transferred to the new employer who shall be obliged to guarantee these for at least one year, that is, until the expiry of the employment contract, ie, the collective agreement binding the previous employer.27

A similar obligation exists in other cases of transfer of undertaking or parts thereof, where the rights and obligations deriving from the employment relationship shall be fully transferred from the employer to the employeracquirer to whom the transfer is made.28 The conditions for providing temporary employment for the purpose of performing temporary work for another employer are regulated by the Law on Temporary Employment Agencies (Закон за агенциите за привремени в

24 T Popovič, Radno Pravo (Belgrade, Novinsko-izdavačka ustanova Službeni List SFRJ OOUR ‘Knjige’, 1980) 28. 25 T Каламатиев, ‘Поим и елементи на работниот однос’ (2002) Зборник на трудови на Правен Факултет Јустинијан Први, Евроинтеграција—идеи, состојби, рализација 328. 26  See Law on Employment Relations, art 16. 27  See ibid art 68, para 2. 28  See ibid art 68-а, para 4.

The Position in the Former Yugoslav Republic of Macedonia 225 работувања).29 According to this Law, the temporary employment agency shall provide temporary employees based on a previously concluded contract to loan an employee from an agency to another employer-user and an employment contract concluded between the agency and the employee who is being loaned to the employer-user.30 While the ‘contract on loaning an employee’ concluded between the temporary employment agency and the employer-user is treated like a contract that is regulated by civil law, the ‘employment contract’ is a legal basis for establishing an employment relationship between an employee and the temporary employment agency, regardless of the duration of such a contract. Finally, it should be reiterated that the ‘employment relationship’ as defined in the Law on Employment Relations could be subsumed under the so-called ‘principle of unity’. The latter is based on the assumption of a ‘single’ employment status of workers, irrespective of the fact whether they are employed in the private or public sector. This means that the labour and public service legislation of the Republic of Macedonia only recognises a single definition of the employment relationship. Eventually, the definition of the employment relationship within the framework of the Law on Employment Relations shall apply when assessing the ‘social security’ status of ‘workers under an employment relationship’ as ‘insured persons’ in compliance with the regulations for compulsory pension and disability insurance (Закон за пензиско и инвалидско осигурување),31 as well as the provisions for health insurance (Закон за здравствено осигурување).32 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition Macedonia’s labour law system is based on the term ‘worker’ (работник) as a subject of the employment relationship. Macedonian labour law theory distinguishes between the ‘subjects of the employment relationship’ and ‘subjects of labour law’. While the former term refers to holders of the rights and obligations arising from the employment relationship itself, the latter refers to all stakeholders who participate in the process of r­egulation of

29  Law on Temporary Employment Agencies (Закон за агенциите за привремени вработува ња) (Сл.весник на Република Македонија, бр.49/06). 30  ibid art 3. 31 Law on Pension and Disability Insurance (Закон за пензиско и инвалидско осигурува ње) Official Gazette of the Republic of Macedonia, No 53/13—consolidated version, art 11, para 1(1). 32 Law on Health Insurance (Закон за здравствено осигурување) Official Gazette of the Republic of Macedonia, No 65/12, art 5, para 1.

226  Todor Kalamatiev and Aleksandar Ristovski labour law institutions in general.33 Hence, the term ‘subjects of the employment relationship’ has a narrower scope and applies to parties of a contract of employment, ie, ‘workers’ and ‘employers’. From the perspective of the Macedonian labour law system, the term ‘worker’ can be defined as a generic term. In fact, Macedonian labour law theory and legislation ‘equates’ the terms ‘worker’ (работник) and ‘employee’ (вработен) as terms that have an identical meaning. Yet, the Law on Employment Relations uses the term ‘worker’, defining it as any natural person who has entered into an employment relationship on the basis of a concluded contract of employment.34 Analysing this ‘descriptive’ definition, we conclude that the term ‘worker’ ultimately derives from the fulfilment of the essential elements of the employment relationship, among which the element of ‘subordination’ is of key importance. Concerning the status of employment, the opposite of the term ‘worker’ is ‘self-employed’ person.35 The classification of the employment status in Macedonia is based on the binary division of ‘employees’ and ‘self-employed persons’: 74.7 per cent of the total number of employed persons are considered ‘employees’, while the remaining 26.3 per cent are deemed to be ‘self-employed’ persons. A definition of ‘selfemployed persons’ can be found in several laws that cover the issues of employment and social security. For instance, the Law on Employment and Insurance against Unemployment (Закон за вработување и осигурување во случај на невработеност) stipulates that a: ‘[S]elf-employed person’ is a natural person who performs an independent economic activity or renders professional or other intellectual services through which he/she generates income for his/her own benefit under conditions determined by law.36

Identical definitions can be found in both the Law on Pension and Disability Insurance37 and the Law on Contributions for Mandatory Social

Старова (n 5) 26–27. Law on Employment Relations art 5, para 1, sub-para 2. 35  According to data from the State Statistical Office, the labour force in Macedonia numbered 961,416 persons in the fourth quarter of 2014, of which 696,046 were employed, while 265,370 were unemployed. The activity rate in this period was 57.4 per cent, the employment rate was 41.5 per cent, while the unemployment rate was 27.6 per cent. With regard to the ‘economic status’ category, current statistical data indicate the following results: employees (520,335), employers (31,692), self-employed workers (101,078) and unpaid family workers (54,441). See State Statistical Office of the Republic of Macedonia, Labour Force Survey (Third Quarter, 2014). 36  See Law on Employment and Insurance against Unemployment (Закон за вработување и осигурување во случај на невработеност) (Сл.весник на Република Македонија, бр.37/97) art 2, para 1, sub-para 2. 37  See Law on Pension and Disability Insurance (Закон за пензиското и инвалидското осиг урување) art 7, para 1, sub-para 7. 33  34 

The Position in the Former Yugoslav Republic of Macedonia 227 Insurance (Закон за придонеси од задолжително социјално осигурување).38 The definition of the term ‘self-employed persons’ encompasses several key elements that determine the employment status of such workers, regardless of the legal and organisational structure of their economic activities or professional and intellectual services. These elements are: personal service, independence and profit-making. Self-employed persons are always natural persons who (personally) perform specific work. Such a person ‘independently’ performs an economic activity and provides professional or other intellectual services to gain income ‘for his/her own account’. Independence or autonomy is the contrary of subordination. Finally, the business of a selfemployed person or the provision of his or her professional or other intellectual services has a ‘profitable character’. His or her main goal is to make profit or to generate income. B.  Employer: Basic Definition The current Law on Employment Relations provides a ‘descriptive’ definition of ‘employer’, which delineates the term as: [A]ny legal entity and natural person, as well as another entity (body of a state authority, body of a local self-government unit, subsidiary of a foreign company, diplomatic and consular representative office) that employs workers on the basis of an employment contract.39

In addition to this descriptive term, the law defines the term ‘small employer’ as any employer employing up to 50 employees.40 In this regard, frequently arising questions may be who concludes the employment contract on behalf of the employer, especially when the employer is a legal person, or who represents the employer or acts on his or her behalf at the time of commencement of the employment relationship?41 According to the Law on Employment Relations: [I]f the employer is a legal entity, unit of the local self-government, subsidiary of a foreign company or another organisation, the employer shall be represented by a representative who is determined by law, articles on incorporation or statute, or by a person authorised in writing by the employer to represent him/her.42 If the

38 See Law on Contributions for Mandatory Social Insurance (Закон за придонеси од задолжително социјално осигурување) (Сл.весник на Република Македонија, бр.142/08) art 4, para 1, sub-para 10. 39  Law on Employment Relations art 5, para 1, sub-para 6. 40  ibid art 5, para 1, sub-para 7. 41  Г Старова, ‘Договорот за вработување како правен основ за засновање работен однос’ (2007) 43 Зборник на Правниот факултет Јустинијан Први- Скопје 311. 42  Law on Employment Realtions art 17, para 1.

228  Todor Kalamatiev and Aleksandar Ristovski employer is a body of the state authority, it shall be represented by its official or by a person authorised in writing by him/her, unless otherwise defined by law.43

III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees The Macedonian labour law system makes no distinction between the employment status, rights and obligations of ‘blue-collar’ and ‘white-collar’ workers. In fact, Macedonian labour legislation stipulates a single and generic term, namely ‘worker’, which subsumes all natural persons who have entered into an employment relationship on the basis of a concluded contract of employment. In a similar vein, Macedonia’s labour law system does not differentiate between ‘workers’ as regulated by the Law on Employment Relations (as a lex generalis) and ‘public sector employees’ (вработени во јавниот сектор), or ‘civil servants’ (административни служ беници), whose employment status is regulated by subsidiary public service regulations, particularly the Law on Public Sector Employees (Закон за вр аботените во јавниот сектор)44 and the Law on Civil Servants (Закон за административните службеници).45 The Law on Public Sector Employees ‘shall regulate the general principles, classification of jobs, records, types of employment, the general rights, duties and obligations, mobility as well as other general issues relating to public sector employees’46 and defines the terms ‘public sector employee’ and ‘employer’. Public sector employees are persons who work in an employment relationship47 with: [B]odies of the State and local authority and other state bodies established in accordance with the Constitution and law, as well as with institutions that carry out activities in the field of education, science, health, culture, labour, social protection and child protection, sport, as well as other activities of public interest established by law, and organised in the form of agencies, funds, public institutions, and public enterprises established by the Republic of Macedonia or the municipalities, the City of Skopje, as well as the municipalities in the City of Skopje.48

43 

ibid art 17, para 2. on Public Sector Employees (Закон за вработените во јавниот сектор) (Сл.весник на Република Македонија, Бр.27/14). 45 Law on Civil Servants (Закон за административните службеници) (Сл.весник на Република Македонија, Бр.27/14). 46  Law on Public Sector Employees, art 1. 47  ibid art 2, para 2. 48  ibid art 2, para 1. 44  Law

The Position in the Former Yugoslav Republic of Macedonia 229 The Law on Civil Servants regulates the ‘status, qualification, employment, promotion, professional training, measurement of the impact and other issues related to the employment relationship of civil servants, as well as the status and competencies of the Administration Agency’.49 The term ‘civil servant’ ‘encompasses persons who work in an employment relationship to perform administrative tasks’.50 The term ‘worker’ as defined in Macedonian labour legislation is also applicable to natural persons who perform non-standard (atypical) forms of work. According to the Law on Employment Relations, a: ‘[F]ixed-term worker’ is any person who works in an employment contract concluded directly between the employer and the worker, and where the expiry of the employment contract is determined by objective reasons, such as a specified date, completion of a certain activity, or occurrence of a certain event.51

Other non-standard sub-types of workers exist who could be included in the legal category of ‘workers’. Such workers are seasonal workers,52 part-time workers,53 home workers,54 domestic helpers55 and managerial persons.56 The legal status of workers who sign ‘managerial contracts’ (so-called ‘man­ agerial persons’ or ‘managers’) differs from other workers to whom the s­ tatus of employment applies. The legal regime that regulates the employment status, rights and obligations of ‘managers’ consists of two laws: the Law on Trade Companies57 and the Law on Employment Relations. The Law on Trade Companies (Законот за трговските друштва) sets out two types of contracts that regulate the employment status and working conditions of ‘managers’. The first type of contracts are those that regulate the relationship between executive members of the board of directors, members of the management board, or between the manager and the company,58 while the second type of contracts are those that regulate the relationship between the management body and persons with special authorisations and responsibilities (ie, officers).59 Counterparts to these contracts are those regulating relationships between the management body (manager) and the company60 and

49 

Law on Civil Servants, art 1. ibid art 3, para 1. 51  Law on Employment Relations art 5, para 1, sub-para 3. 52  ibid art 47. 53  ibid art 48. 54  ibid art 50. 55  ibid art 53. 56  ibid art 54. 57 Law on Trade Companies (Закон за трговските друштва) (Сл.весник на Република Македонија, бр.28/04). 58  ibid art 366, para 2. 59  ibid art 366, para 3. 60  Law on Employment Relations, art 55. 50 

230  Todor Kalamatiev and Aleksandar Ristovski employment contracts with managerial persons (managers)61 as contracts that are regulated by the Law on Employment Relations. In fact, the difference between the first and second type of contracts is that the first type regulates the employment rights and obligations of persons belonging to ‘senior management’ (members of the management body), while the second type regulates the employment rights and obligations of persons belonging to ‘lower-level management’ (persons with special authorisation and responsibilities, ie, officers). In any case, the Law on Trade Companies and the Law on Employment Relations implicitly stipulate that both types of contract shall be treated as employment contracts. Nonetheless, the employment rights and obligations of ‘managers’ (members of the management body) and of ‘lower-level managers’ (officers) differ from those of other ‘regular’ workers. The Law on Trade Companies states that: [T]he provisions of the collective agreement as well as those of the Law on Employment Relations referring to the establishment and termination of the employment relationship, disciplinary responsibility, salary, other pecuniary compensation and protection of employee rights, shall not apply to the members of the management body and officers.62

In this respect, the Law on Employment Relations permits certain derogations from specific aspects of the employment relationship of managerial persons as well. Thus: [I]n case of concluding an employment contract with managerial persons (ie, managers), the parties to the contract may differently regulate the rights, obligations and responsibilities arising from the employment relationship, especially regarding conditions and limitations of fixed-term employment; working hours; daily rest periods and annual leave; remuneration for work and termination of the employment contract.63

Persons who conclude contracts to ‘enter’ the labour market (such as ­trainees64 and workers in a probation period)65 are also included in the category of ‘workers’. This category excludes ‘volunteers’66 because such

61 

ibid art 54. See Law on Trade Companies, art 366, para 4. 63  See Law on Employment Relations, art 54. 64  According to the Law on Employment Relations, ‘trainees’ are defined as ‘persons who conclude employment contracts in order to perform work that corresponds to the type and degree of their vocational education for the first time, for the purpose of training and to carry out work autonomously under an employment relationship’ (art 56, para 2). 65 The Law on Employment Relations stipulates that ‘at the time of conclusion of the employment contract, the employee and the employer may agree on a probation period, whose duration may not exceed six months’ (art 60, para 2). 66  Generally, the legal position and employment status of ‘volunteers’ is regulated in two laws (the Law on Employment Relations and the Law on Volunteering). According to the Law on Employment Relations, ‘volunteers’ are defined as persons whose voluntary period is a requirement for taking a professional examination or for the independent performance of an activity 62 

The Position in the Former Yugoslav Republic of Macedonia 231 persons conclude contracts for a voluntary period, which due to their legal nature will not be treated as contracts of employment. In fact, ‘volunteers’ are not treated as workers in an employment relationship, but are covered by specific provisions prescribed in the Law on Employment Relations, such as provisions on the duration and course of the trainee period, the limitation of working hours, daily breaks and annual leave, indemnification liability, as well as the provision of safety at work.67 Finally, the group of ‘workers’ who concludes or may conclude employment contracts also includes the following persons: professional athletes, journalists, accountants, artists etc. The employment status of professional athletes is regulated in the Law on Sports (Закон за спортот).68 According to the latter, ‘a professional athlete shall be any person who participates in sports competitions and has signed a professional and employment contract with a sport club’.69 ‘The sport shall be the professional athlete’s main activity and all employment rights and obligations shall be provided by the sport club with which the athlete has signed the contract in accordance with law.’70 The employment status of journalists is regulated in the Law on Media (Закон за медиумите), which states that journalists can be employed by a publisher, can conclude a signed contract with a publisher or can perform his or her journalistic activities as an independent profession (freelance journalist).71 Hence, journalists can be ‘employed’ (by signing an employment contract and establishing an employment relationship), ‘selfemployed’ (as freelance journalists) or ‘engaged’ journalists (as contractors) who in practice usually conclude contracts for services, copyright contracts or contracts for occasional work with publishers.72 The employment status of accountants is regulated in a similar manner (they can carry out accounting activities in three forms, namely in employment, as a sole proprietor or by hiring a company to perform accounting activities).73 This also applies to artists who can work as ‘providers of a public service in culture’74 by

(art 61, para 1). According to the Law on Volunteering (Закон за волонтерството), ‘volunteers’ are defined as natural persons who provide services, skills and knowledge for the benefit of other persons, bodies, organisations and other institutions on a voluntary basis and without financial or other gain (Official Gazette of the Republic of Macedonia, No 85/07, art 4). 67 

See Law on Employment Relations, art 61, para 1. Law on Sports (Закон за спортот) (Сл.весник на Република Македонија, бр.29/02). 69  ibid art 31-а, para 1. 70  ibid art 31-а, para 2. 71 See Law on Media (Закон за медиумите) (Сл.весник на Република Македонија, бр.184/13) art 2, para 1, sub-para 4. 72  See K Ozimec, ‘Precariat: A New Working Class in Macedonia’ (Precarious Work in the Media Industry, SSNM, Skopje, 2014) 14. 73  See Law on Accountancy (Закон за вршење на смектоводствени работи) Сл.весник на Република Македонија, бр.95/12) art 20, para 4. 74  See Law on Culture (Закон за културата) Сл.весник на Република Македонија, бр.31/98) art 76-а. 68 

232  Todor Kalamatiev and Aleksandar Ristovski establishing an employment relationship or who can work as ‘independent artists’75 as self-employed workers. In Macedonia, the employment status of church employees (ie, religious officers) is unclear. According to the Law on the Legal Status of Churches, Religious Communities and Religious Groups (Закон за правната положба на црква, верска заедница и религиозна група), a religious officer is a person who works ‘in the service’ of performing religious rites, as well as educational, organisational and charitable activities in accordance with the norms of the supreme authority of their registered church, religious community and religious group.76 On the other hand, the Law on Contributions for Mandatory Social Insurance treats ‘religious officers’ as persons obliged to pay social contributions for themselves.77 In practice, these persons are treated as self-employed persons both in terms of labour legislation and social security and tax regulations. B.  The Establishment of a Specific Category of ‘Workers’ The category of ‘workers’ in Macedonia is only a ‘nominal’ term. In fact, the term ‘worker’ is the single legal term comprising all ‘employed persons’, ie, natural persons who work in an employment relationship. Thus, as already mentioned above, the category of ‘workers’ is equated with the category of ‘employees’; in other words, Macedonian labour legislation does not distinguish between the former and the latter category. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration Subordination as a key element of the employment relationship can be analysed on the basis of its criteria. No case law exists in Macedonia on the criteria for determining subordination (for further information, see section V below). The Law on Employment Relations emphasises the following two criteria of subordination: the performance of work according to the instructions and under the supervision of the employer; and the participation of the worker in the employer’s organised working process. Hence, we can conclude that the criterion ‘performance of work according to the i­nstructions

75 

See ibid art 14. Law on the Legal Status of Churches, Religious Communities and Religious Groups (Закон за правната положба на црква, верска заедница и религиозна група) (Сл.весник на Република Македонија, бр.113/2007) art 2, para 2. 77 Law on Contributions for Mandatory Social Insurance (Закон за придонеси од задолжителното социјално осигурување) art 13, para 3. 76  See

The Position in the Former Yugoslav Republic of Macedonia 233 and under the supervision of the employer’ refers to the existence of the criterion ‘control of the work and instructions’,78 which is a typical criterion for the countries of continental Europe and the labour law systems influenced by civil law, or the ‘control test’,79 which is typical for the UK and other countries influenced by ‘common law’. The Law on Employment Relations stipulates that ‘the worker shall be obliged to observe the requirements and instructions of the employer in relation to the fulfilment of work duties under the employment relationship’.80 In practice, it is not always possible to distinguish instructions (orders and directions) in relation to the fulfilment of ‘work duties’ from the instructions in relation to the fulfilment of ‘services’ whose contents, subject, volume and intensity may vary depending on whether the concrete contract shall be treated as a contract of employment or a contract for services. Hence, it shall be considered that while workers (as subjects of an employment contract) shall be obliged to perform work pursuant to the orders and directions of the employer and under the employer’s supervision,81 the providers of the work/service contractors (as subjects of the contract for services) may receive general instructions from their client/employer whose right to give orders and directions is limited solely to cases where this corresponds to the nature of the work itself.82 The employment contract presumes the existence of the employer’s managerial prerogative, which consists of giving instructions (orders and directions) and exercising direct supervision over the manner of the performance of work duties by the workers. On the other hand, the performer of the work (as a subject of the contract for services) is not obliged to put his or her physical or intellectual labour at the disposal of the employer.83 The criterion ‘performance of work according to the instructions and under the supervision of the employer’ from the perspective of Macedonian labour law theory indicates that this criterion subsumes several other elements, such as the performance of work at a specific place of work and the performance of work during specific working hours.84 In this regard, the Law on Employment Relations stipulates that: [T]he worker shall be obliged to conscientiously carry out the work at the job for which he has concluded the employment contract, during the working hours and

78  European Labour Law Network, ‘Regulating the Employment Relationship in Europe: A Guide to Recommendation No 198’ (Governance and Tripartism Department, International Labour Office, Geneva, 2013) 38. 79  S Deakin and GS Morris, Labour Law, 5th edn (Oxford, Hart Publishing, 2009) 133–35. 80  See Law on Employment Relations, art 31. 81 Baltič and Despotovič (n 20) 174. 82  ‘[The] customer/client is entitled to supervise the performance of the work and to give instructions when this corresponds to the nature of the work and the performer of the work is obliged to enable that’ (Law on Obligations, art 622). 83  И Бабиђ, Уговори Грађанског Права (Правни Факултет Универзитета Унион У Београду, 2006) 174. 84 See Г Старова, Трудово Право (Skopje, Просветно Дело А.Д, 2005) 242.

234  Todor Kalamatiev and Aleksandar Ristovski at the location set down for carrying out the work, respecting the organisation of the work and the business activity of the employer.85

The second criterion of subordination in Macedonia’s labour law system is ‘the participation of the worker in the employer’s organised working process’. This criterion corresponds to the criterion ‘integration of the worker in the enterprise’,86 which is typical for the countries of continental Europe and the labour law systems influenced by civil law, or the ‘integration test’, which is characteristic for the UK and other countries influenced by ‘common law’.87 This criterion assumes that the worker should only be responsible for the results and effects of his or her work by adhering to the employer’s organised working process. In this regard, the Law on Employment Relations states that the worker shall be obliged to conscientiously carry out the work at the job for which he has concluded the employment contract ‘respecting the organisation of the work and the business activity of the employer’.88 B. Indicators Determining the indicators of subordination requires even more subtleness than defining subordination itself. Describing the indicators of subordination in the Macedonian labour law system is further complicated by the lack of case law. As already mentioned above, subordination is a major element of the employment relationship and a key criterion for the delineation of employment contracts and contracts for services. Generally, contracts for services are regulated by the Law on Obligations.89 In addition to the Law on Obligations, contracts for services are implicitly regulated in the Law on Employment Relations as well, but under a different name (­ ‘special contracts’).90 The Law on Employment Relations sets out a descriptive definition of the term ‘special contracts’. In this regard, the employer may conclude a contract with a particular person: [T]o carry out work that does not lie within the scope of the employer’s activity, for the purpose of independent manufacture or repair of certain goods, or independent performance of certain manual or intellectual work.91

Furthermore, the law prescribes that a ‘special contract’ may also be concluded for cultural and artistic work with a person who carries out cultural 85 

See Law on Employment Relations art 30, para 1. See European Labour Law Network (n 78) 38. 87  See Deakin and Morris (n 79) 135–36. 88  See Law on Employment Relations, art 30, para 1. 89  See Law on Obligations, arts 617–46. 90  See Law on Employment Relations, art 252. 91  ibid art 252, para 1. 86 

The Position in the Former Yugoslav Republic of Macedonia 235 and artistic activities.92 Hence, one indicator differentiating ‘contracts of employment’ and ‘contracts for services’ is the performance of work within or outside the scope of the business/profession of the employer. Employment contracts shall always be concluded within the framework of the business activity or profession of the employer, while ‘special contracts’ (ie, contracts for services) shall be concluded outside the scope of the employer’s business activity or profession. Moreover, it is important for the service contractor (eg, entrepreneur, performer of the work) to not be treated as a dependent (subordinated) subject to the other contracting party in the contract for services, but as a subject who carries out the agreed work autonomously and independently. Therefore, the service contractor (as a contracting party to the contract for services) is free to choose ‘in what way’ and ‘how’ to carry out the agreed work.93 Hence, within the framework of service agreements, there is no classic relationship of dependency between the employer and the service contractor, ie, the performer of the work. On the other hand, when concluding a contract of employment, the worker finds himself or herself in a position of continuous dependence on the employer, which is characterised by the inclusion of the worker in the organised process of work and by his or her submission to the working conditions and authority of the employer.94 In theory, we find other criteria for distinguishing between employment contracts and contracts for services, which ultimately can be treated as indicators for the existence or non-existence of subordination in the specific contractual relationship. Such indicators are bearing the economic risk, methods of payment for the performance of work, the obligation to perform the work personally and the duration of the contract. When the parties conclude an employment contract, the overall ‘economic risk’ of such a contract is borne by the employer. Conversely, if the parties conclude a contract for services, the risk is borne by the service contractor (ie, the performer of the work). The service contractor is free to organise the work in the manner he or she deems fit since he or she is the only bearer of the economic risk and the only person responsible for the potential damage that may arise from how the activity is organised.95 ‘The method of payment for the performance of work’ is a powerful but not an absolute indicator that can always and with certainty determine the existence of subordination. According to Macedonian labour law theory, this indicator can be related to the element of ‘payability’, which furthermore is an essential element for the existence of an employment relationship. In this regard, ‘payability’ implies that no employment relationship exists

92 

ibid art 252, para 2. and Despotovič (n 20) 174. 94  Бабиђ (n 83) 174. 95 Baltič and Despotovič (n 20) 175. 93 Baltič

236  Todor Kalamatiev and Aleksandar Ristovski unless the worker receives a salary or other income.96 The term ‘salary’ can be defined as monetary income which is specified in the employment contract and which the employee is entitled to as an appropriate remuneration for his or her efforts.97 Usually, the worker is entitled to receive a salary paid at regular intervals, while service contractors receive single monetary compensation for the entire work performed.98 Workers’ salaries are usually paid at equal intervals (usually monthly) and are proportional to the period during which the work duties were performed. On the other hand, the remuneration of service contractors consists of a lump sum which is paid after the work is completed. However, the aforementioned explanations of the ‘method of payment’ as an indicator of subordination should be viewed critically. A first criticism addresses the ‘general acceptance’ of the dynamics in the payment of persons who are party to an employment contract or contract for services. Similarly to the employment contract, when concluding and implementing a contract for services, it is assumed that remuneration will be paid to the service contractor in the form of periodic or advance payments (so-called ‘situational payments’) proportional to the phases of contracted work already completed.99 This is usually the case when work duties of a larger scale are performed, which usually require an extended period of time.100 The second criticism relates to the ‘method of payment’ as an indicator of subordination and actually refers to the amount of payment. ­Usually, the amount of a worker’s remuneration is determined proportionally to his or her working time (so-called remuneration based on the worker’s working hours).101 Nonetheless, the right to remuneration does not exclude more flexible methods of payment, such as payment based on performance (ie, pay by performance) or piece-rate payments which are more common as a means of payment when concluding a contract for services. Another indicator to determine subordination and the resultant differentiation between an employment contract and a service contract is the obligation to ‘perform the work personally’ (individually). Like the previous indicator (method of payment), according to Macedonia’s labour law theory, personal work performance is characteristic of an essential element of the employment relationship. This indicator derives from the ­assumption that the performance of the work itself (as a subject of the employment contract) is of an inherently personal nature (intuitu personae). This means

96 

MD Učur, Radno Pravo (Rijeka, Express Digitalni Tisak d.o.o, 2001) 56. V Mlinarič and Z Obradovič, Plače (Zagreb, TIM Press, 2006) 14. 98  M Ruždjak, Zasnivanje radnog odnosa (Zagreb, Poslovni zbornik d.o.o, 2005) 45. 99 Baltič and Despotovič (n 20) 174. 100  Ruždjak (n 98) 45. 101 T Каламатиев, Ж Митревски, А ‘Ристовски, Права од работен однос на жените и младите работници во Република Македонија’ (Skopje, Фридрих Еберт Фондација—Канцелар ија во Република Македонија, 2011) 41–42. 97 

The Position in the Former Yugoslav Republic of Macedonia 237 that only the worker himself or herself can perform the work on his or her own behalf. Hence, ‘personal relationship’ in this context means that the work which is the subject of the employment relationship cannot be taken or released to any person other than the individual who established the employment relationship.102 This indicator is confirmed by the wide range of authorisation the employer has on the procedure to select a candidate for employment, on determining the date that the employee will commence work, prohibiting the transfer of the execution of competences of the employment relationship to third parties (with the exception of work duties arising from the employment contract for work at home, which allows for the inclusion of immediate family members in the performance of assigned tasks) etc.103 While one party to the contract of employment (worker/employee) must always be a natural person, the service contractor/ entrepreneur as the subject of the contract can be a natural or legal person. The service contractor/entrepreneur can entrust the execution of the work duties to a third party, which implies that the contracting party to the service contract has no obligation to perform the work personally. Accordingly, the Law on Obligations provides that unless the contract itself or the nature of the work to be performed requires otherwise, the service contractor/performer of work is not obliged to perform the work personally.104 Yet, in certain situations, the service contract may be a personal contract (intuitu personae) which entails the mandatory personal execution of the work, depending on the nature of the work and its relationship to the personal and professional features and characteristics of the service contractor/ performer of the work.105 An evident example of this could be copyright contracts, ie, contracts for copyrighted work. Finally, the last indicator examined here for determining subordination is ‘the duration of the contract’. In theory, an employment contract is a permanent contract (in relative terms), while, a service contract is temporary in nature.106 We find support for this approach in the Law on Obligations, which states that: [T]he performer of the work is obliged to perform the work within the given time, and if the time frame is not specified, then within a time frame that is reasonable for the completion of such work.107

102  A Frimerman and A Nikolič, Samoupravni radni odnosi (Belgrade, Centar za radničko samoupravljanje, 1980) 14. 103  Љ Ковачевиќ, Правна субординација у радном односу и њене границе (Правни факултет, Универзитета у Београду, 2013) 272. 104  Law on Obligations, art 629. 105  See Popovič (n 24) 57–58. 106 Baltič and Despotovič (n 20) 173. 107  Law on Obligations, art 626, para 2.

238  Todor Kalamatiev and Aleksandar Ristovski Yet the duration or length of the performance of the given work is not a key element of the employment contract or the contract for services, as some employment contracts are concluded for a very short term (two to three days). Some contracts for services are concluded for several years.108 C.  The Relevance of ‘Economic Dependence’ The labour law system of Macedonia is based on the concept of legal subordination (dependence) as an essential element, which determines the existence of the basic conceptual notions of labour law, such as the employment relationship, the employment contract and the worker. In theory, there is a difference between ‘legal subordination’ and ‘economic subordination’. Legal subordination relates to the employment relationship/employment contract, and one of its purposes is to allow the courts to distinguish whether a person performing a professional activity is indeed subject to an employment relationship/employment contract or not. Economic dependence (subordination), on the other hand, arises from the factual situation in which the means acquired by the worker as a result of his or her performance of work to the benefit of the employer represent his or her only or primary source of income. In Macedonia, there is a prevailing view that legal subordination is the only appropriate and clear-cut criterion for determining the existence of an employment contract. Without such a criterion, it would be impossible to differentiate between employment and service contracts.109 V.  THE PRINCIPLE OF PRIMACY OF FACTS

The labour law system of Macedonia does not contain provisions that can be treated as a basis for the principle of primacy of facts. According to the case law, contracts for services are considered valid if they are concluded in accordance with the provisions of general contract law. Macedonian case law does not provide the possibility of bringing a legal dispute before the court to determine the legal status of the subject of the service contract, particularly when it effectively meets the ‘factual’ assumptions associated with an employment contract, ie, a genuine employee. The majority of litigation cases involving service contracts relate to the non-fulfilment of contractual rights and obligations stipulated in the contract (for example,

108 

See Ruždjak (n 98) 44. Старова and Беличанец (n 4) 129–30; Каламатиев (n 25) 375; A Ристовски, ‘Редефинирање на бинарниот модел на работните односи и регулирање на нестандардната работа’ (докторска дисертација, 2015) 186. 109 

The Position in the Former Yugoslav Republic of Macedonia 239 open ­contractual payment or non-execution of contractual work). The current approach of Macedonian legislation to ‘fight’ disguised employment focuses only on persons engaged in the public sector. On 12 February 2015, the Parliament of the Republic of Macedonia adopted the so-called Law on Transformation into Permanent Employment Relationships (Закон за трансформација во редовен работен однос).110 The reason for the adoption of the Law was the need to address the long-standing and adverse practice of ‘employment’ of persons in the public sector on legal grounds which are contrary to the contract of employment, and which de facto excluded these persons from the scope of labour legislation. The purpose of the Law on Transformation into Permanent Employment Relationships is to convert contractual relationships of persons engaged on the basis of a volunteer contract, service contract, author’s contract or other contracts with state government institutions in the fields of culture, education, health, and child and social protection, and with local governments and public enterprises, institutes, funds and other legal entities established by Macedonia into indefinite employment relationships, and to limit the period and number of persons who can be ‘hired’ under such contracts.111 Furthermore, the Law provides the possibility of transforming a contractual relationship into an employment relationship of indefinite duration (for persons who had been working on the basis of a contract lasting at least three months up to 30 November 2014 and who had valid contracts at the time that the amendment was introduced), the procedure of transformation into an indefinite employment relationship, the restrictions on future hiring of workers with voluntary agreements and contracts for services etc.112 The adoption of this Law inevitably points to the conclusion that a number of persons in the public sector were and are still working in ‘disguised’ employment relationships. With the introduction of this Law, they will be entitled to acquire the regular legal status of employee and to be integrated into the system of employment legislation. However, the Law on Transformation into P ­ ermanent ­Employment Relationships leaves room for ‘doubt’ that disguised employment relationships will be properly understood and identified as an illegal practice of hiring workers. More specifically, in one of its provisions, the Law imposes a: [P]rohibition on public sector institutions to recruit persons to carry out physical and/or intellectual work under a contract for services in an amount exceeding one per cent of the total number of regularly employed workers at the end of the previous year, ie, more than three persons in public sector institutions in which the total number of employees is less than 300 persons.113

110 Law on Transformation into Permanent Employment Relationships (Закон за трансформација во редовен работен однос) (Сл.весник на Република Македонија, бр.20/15). 111  ibid art 1. 112  ibid arts 2–7. 113  ibid art 8, para 1.

240  Todor Kalamatiev and Aleksandar Ristovski In addition, the ‘permissible’ contracts for services should not last longer than 24 months.114 Considering the preceding provisions of the Law on Transformation into Permanent Employment Relationships, the following questions could arise: does the legislator continue to legitimise the practice of ‘disguising’ genuine employment relationships of a small number of public sector employees by offering them contracts for services instead of contracts of employment? Does the legislator limit the conclusion of any kind of service contracts? These issues still need to be answered. The legislator’s approach, ultima ratio, does not seem to resolve the issue of really ‘fighting’ the practice of concealing employment relationships. An additional confirmation of this argument is the fact that the Law on Transformation into Permanent Employment Relationships only applies to the public sector. ‘Factual’ employees in the private sector continue to be in a vulnerable position, and an appropriate legal solution that would identify their real legal status has not yet been established. By introducing the principle of primacy of facts in the Law on Employment Relations, employees, state bodies and the courts will acquire the necessary legal grounds for determining the genuine legal status of persons engaged in ordinary civil contracts or ‘disguised’ contracts of employment. VI.  QUALIFICATION IN FULL

Labour relations in Macedonia are consistent with the rigid ‘binary’ division, which on the one hand defines genuine employment relationships and, on the other hand, other ‘work’ relationships. One can conclude that by signing an ‘employment contract’, the contracting parties are entitled to full qualification as subordinated workers (ie, employees) and that these persons ‘as a whole’ are covered under the labour legislation and social security scheme. The ‘other’ personal work contracts (as contracts on the other side of the ‘binary’ model) are covered under general contract law and the subjects of such contracts are generally not integrated into the legal regime of labour legislation. Since the beginning of 2015, the binary model has been subject to major changes as regards the social insurance regime.115 The new

114 

ibid art 8, para 2. At the time of writing, the amendments of several different laws (the Law on Employment Relations, the Law on Contributions for Mandatory Social Insurance, the Law on Employment and Insurance against Unemployment, the Law on Pension and Disability Insurance and the Law on Health Insurance) were in force. These amendments have established a system to regulate so-called ‘freelance work’ by imposing obligations to pay mandatory social insurance contributions on the grounds of ‘other contracts’ that differ from contracts of employment. However, they were abolished only seven months after their entry into force (ie, 1 January 2015) with the amendments of the relevant laws (from 31 July 2015) as a reaction to the strong criticism of these provisions by professionals and the general public. 115 

The Position in the Former Yugoslav Republic of Macedonia 241 amendments to the Law on Employment Relations provide that remuneration for work performed on the grounds of a ‘special contract’ is subject to mandatory social insurance contributions, which are regulated by a special law,116 namely the Law on Contributions for Mandatory Social Insurance, which seeks to establish a new integrated category of contracts to cover contracts on the ‘other’ side of the binary model. According to the Law on Contributions for Mandatory Social Insurance, these contracts shall be referred to as ‘other contracts’ and shall include all types of contracts or other acts, regardless of their form and type, for which it will be possible to determine the amount of compensation for the execution of physical and/ or intellectual work, including the enforcement of functions of named or elected persons, managers or members of a body of management and supervision of companies, the managing and monitoring of state and public institutions (agencies, departments, funds, regulatory bodies, public enterprises, institutes, factories etc), participation in and membership of other bodies, boards, councils, commissions, committees, institutions, bodies etc.117 In general, ‘special contracts’ or ‘other contracts’ (which in their essence are contracts regulated by civil law) involve three categories of persons: ‘freelancers’, who until the changes of the legal regulations at the beginning of 2015 did not enjoy any form of social security status (based on mandatory social insurance for employed or self-employed persons), ie, they were treated as unemployed persons; ‘employed persons’ (workers) who, apart from the employment contract, conclude other ‘special’ contracts with their employer or other legal entities that have ownership or an organisational or managerial connection with the employer; and employed persons (workers), ‘pensioners and self-employed persons’ who conclude ‘special’ or ‘other’ contracts with other persons-payers and who thereby secure certain benefits despite receiving a regular wage/pension/income. VII.  LIMITS TO THE FREEDOM OF CONTRACT

The employment relationship is a contractual relationship and the contractual element is the primary (key) element that arises from the legal definition of this term. This means that the contracting parties have the freedom to negotiate the process of the establishment of the employment relationship and the signing of the employment contract, throughout the duration of the employment relationship and even at the stage of termination of the employment contract. However, freedom of contract between the parties

116 

Amendments to the Law on Employment Relations (Official Gazette, No 20/15) art 1. to the Law on Contributions for Mandatory Social Insurance (Official Gazette, No 48/15) art 1. 117 Amendments

242  Todor Kalamatiev and Aleksandar Ristovski is not absolute and unlimited. The Law on Employment Relations imposes ­limitations on the autonomy of the parties. It provides that during the conclusion and termination of the employment contract as well as throughout the duration of the employment relationship itself, the employer and the worker are obliged to comply with the provisions of this and other laws, the international agreements that are binding for the Republic of M ­ acedonia and other regulations, collective agreements and general acts of the employer.118 However, neither the Law on Employment Relations nor any other law that is part of Macedonia’s labour legislation contains a provision preventing the ‘concealment’ of the true legal nature of the contract that has been signed by the contracting parties (which in essence is an employment contract) or a provision that would ‘objectify’ the real contractual relationship between the parties (which in accordance with its features is actually an employment relationship). This could lead to a false legal situation where the contracting parties have unlimited freedom and absolute autonomy to determine their mutual rights and obligations as long as the contract is not contrary to the Constitution, laws and best practices. Hence, a contract which nominally (by its name) and by its contents belongs to the domain of civil law can be legally valid in terms of general contract law, but can at the same time be ‘invalid’ in accordance with labour law if the factual relationship between the parties corresponds to a legal relationship whose legal ground is the contract of employment. Still, the annulment of such a civil contract—in terms of labour law—should have a certain legal basis. Since Macedonian labour legislation does not recognise the principle of primacy of facts or the principle of legal presumptions for the existence of an employment relationship, and since the case law of the Macedonian courts does not include any court decisions that fill in the legal gap arising from the practice of ‘concealment’ or ‘misqualification’ of actual employment relationships, the only legal ground for the protection of workers in such a situation are the general principles and provisions arising from the Law on Obligations. In this regard, the provisions that relate to the so-called ‘apparent contract’ may be particularly important. The Law on Obligations provides that the apparent contract has no legal validity for the parties.119 If the apparent contract ‘conceals’ another contract, then that other contract applies if the conditions of legal validity are met.120 Finally, the provisions related to the ‘interpretation of contracts’ could play a major role in resolving problems that arise from the ‘concealment’ or ‘misqualification’ of contracts. The provision of the law relating to the interpretation of ‘vague clauses of contracts in specific cases’ could be especially relevant in this

118 

Law on Employment Relations, art 12, para 1. Law on Obligations art 58, para 1. 120  ibid art 58, para 2. 119 

The Position in the Former Yugoslav Republic of Macedonia 243 c­ ontext. If the contract is concluded on the basis of previously agreed content, or when the contract was otherwise prepared and proposed by a party, the ambiguous clauses will be interpreted in favour of the other party.121 It appears that this provision of the Law on Obligations aims to protect the ‘objectively weaker’ party, which in the context of labour law is always the worker. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The rights to unionise and bargain collectively are basic labour rights of workers, which express the collective aspects of Macedonia’s labour law system.122 According to Macedonian labour legislation, collective agreements can be concluded on three different levels: general collective agreements (at the level of Macedonia), special collective agreements (at the branch—ie, department—level in accordance with the National Classification of Activities) and individual collective agreements (at the employer level). According to available data, two valid general collective agreements and 14 special collective agreements currently exist in Macedonia.123 The collective agreements in Macedonia are not particularly innovative in terms of defining the concept ‘employee’ (ie, worker). They usually apply the definition of the term ‘employee’ (ie, worker) as stipulated in the Law on Employment Relations.124 B.  Custom and Practice Customs and practices are not treated as a legal source by the Macedonian legal system and there are no customs and practices that refer to the issues related to the subject of this study.

121 

ibid art 92. See T Каламатиев, Колективна права у Закону о Радним Односима Републике Македоније (Радно и Социјално Право, часопис за теорију и праксу, Број 1/2012, Година XVI) 115. 123 See T Каламатиев and А Ристовски, Колективно договарање во јавниот сектор на Република Македонија со посебен осврт кон колективното договарање во здравствената дејност (терцијарно) здравство (Skopje, Деловно право, Година XV, Бр.28, 2013) 258. 124  Definitions of the term ‘employee’ (ie, worker) are found in the General Collective Agreement for the Public Sector (GCAPS) and in several different special collective agreements. The GCAPS defines the term ‘employee’ (ie, worker) as any natural person who has established an employment relationship for an indefinite or definite period, working full-time or part-time or with a short working time (Official Gazette of the Republic of Macedonia, No 10/08), art 3. 122 

244  Todor Kalamatiev and Aleksandar Ristovski IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions Macedonian labour legislation does not contain a specific provision establishing a legal presumption of the existence of an employment relationship or a catalogue of indicators designating the existence of an employment relationship. B.  The Burden of Proof The establishment of the burden of proof in labour disputes in Macedonia’s legal system arises from the regulations on civil proceedings, which apply in the sphere of employment relationships as well. The Code of Civil Procedure (Закон за парнична постапка) provides that ‘each party is obliged to present the facts and evidence on which its claim is based’.125 Normally, this provision is used to determine the burden of proof of the worker who has initiated the labour dispute on the grounds of unfair termination of the employment relationship or in cases of the protection of labour rights. However, Macedonian labour legislation provides two exceptions to the general rule that the bearer of the burden of proof is the plaintiff (ie, the worker). The first exception refers to disputes in cases of discrimination, while the second refers to disputes related to mobbing in the workplace. In both cases, the burden of proof is shifted to the employer. Since Macedonia’s labour law system does not contain a legal ground for initiating a procedure to prove the existence of an employment relationship, any observation on the burden of proof would seem to be unwarranted. X.  SPECIFIC PROCEDURES

Labour legislation, social insurance regulations and procedural laws in Macedonia do not establish any kind of specific procedure for determining the existence or non-existence of an employment relationship. The same definition is found in the Collective Agreement of the Ministry of Internal Affairs (Official Gazette of the Republic of Macedonia, No 126/10) and in the Collective Agreement on Social Protection of the Republic of Macedonia (Official Gazette of the Republic of Macedonia, No 83/06). In other special collective agreements (Collective Agreement on Energy from 9 October 2009; Collective Agreement for the Catering of Macedonia, Official Gazette of the Republic of Macedonia, No 02/08 and the Collective Agreement for Communal Activities of the Republic of Macedonia), the term ‘employee’ (ie, worker) is defined as any natural person who has entered into an employment relationship based on an employment contract. 125 See Code of Civil Procedure (Закон за парнична постапка) (Сл.весник на Република Македонија, бр.79/05) art 205, para 1.

The Position in the Former Yugoslav Republic of Macedonia 245 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons Macedonia’s labour law system is based on a rigid binary division between ‘workers’ (ie, employees), as persons who are subsumed under the scope of protection of the Law on Employment Relations, and ‘self-employed’ persons, who are covered by several special laws.126 This means that in terms of their ‘employment status’, persons can be treated either as ‘workers’ or ‘self-employed’ persons. Labour legislation and social security in Macedonia do not recognise any ‘intermediate’ categories between ‘genuine’ workers (employees) and ‘genuine’ self-employed persons. In other words, the Macedonian labour law system does not recognise the category of ‘economically dependent workers’ that exists in comparable labour law systems under different names and forms (eg, ‘employee-like persons’ (Germany), ‘parasubordinated workers’ (Italy) or ‘semi-dependent workers’ (UK)). However, the fact that Macedonian labour legislation and social insurance do not regulate this category of workers does not mean that there are no persons with characteristics of individuals who are treated as ‘economically dependent workers’ in practice. These individuals could be classified as so-called ‘freelance workers’. Several laws in Macedonia regulate the legal position of freelance workers, such as the Law on Employment Relations, the Law on Employment and Insurance against Unemployment, the Law on Contributions for Mandatory Social Insurance, the Law on Pension and Disability Insurance and the Law on Health Insurance. Analysis of the legal status, rights and obligations of the ‘new’ category of service providers (so-called ‘freelance workers’) leads to the conclusion that persons belonging to this group constitute an extremely heterogeneous category. For instance, as regards their social security status, Macedonia’s new social security system covers two categories of ‘freelance workers’. The first category consists of persons who generate income from performing physical and/or intellectual work, based on one or more contracts for services, and/or intellectual property contracts or another contract that determines remuneration for the completed work and who up to 1 January 2015

126  Such laws are, for example: the Law on Trade Companies (Official Gazette, No 28/04), which defines the term ‘sole proprietor’; the Law on Agricultural Activity (Official Gazette, No 11/02), which defines the term ‘individual farmer’; the Law on Exercise of Crafts-Related Activities (Official Gazette, No 62/04), which defines the term ‘craftsman’; the Law on Advocacy (Official Gazette, No 59/02), which defines the term ‘individual lawyer’; the Law on Notary Public (Official Gazette, No 55/07), which defines the term ‘notary public’; the Law on Accountancy (Official Gazette, No 95/12), which defines the terms ‘accountant’ and ‘authorised accountant’; the Law on Culture (Official Gazette, No 31/98), which defines the term ‘independent artist’; the Law on Tourism Activity (Official Gazette, No 62/04), which regulates the activities of ‘tourist guides’ and ‘tourist attendant’; and the Law on Catering Activity ­(Official Gazette, No 62/04), which regulates the activities of caterers.

246  Todor Kalamatiev and Aleksandar Ristovski (ie, the entry into force of the regulations governing so-called ‘freelance’ work) had no social security status (based on mandatory social insurance for workers or self-employed persons), ie, they were treated as unemployed persons.127 The description and identification of this category of persons largely corresponds to the universal term ‘freelancers’. In the absence of a compatible term under Macedonian law, we refer to such persons as ‘freelancers’ or a ‘narrower category’ of freelance workers. Within the second category of ‘freelance workers’, we classify the other group of persons who generate income from the performance of physical and/or intellectual work based on one or more contracts for services, and/or intellectual property contracts or another contract that determine the remuneration for the completed work. In this category, we include persons who at the time of acquisition of the remuneration had already acquired a social security status as ‘insured person’ in accordance with the regulations on mandatory social insurance. The second category of ‘freelance workers’ is broken down into two sub-groups. The first sub-group categorises ‘persons employed by an employment contract’ (workers, ie, employees) who generate income from physical and/or intellectual work based on one or more contracts for services and/or intellectual property contracts or another contract that specify the remuneration for the completed work: [W]ith an employer with whom they are employed or with other legal entities that have ownership, an organisational or administrative relationship with the employer.128

These forms of income (fee/s) generated by workers who have concluded a contract with an employer or other legal entities associated with the employer shall be treated as ‘additional income’, which does not arise from the workers’ basic employment relationship (employment contract). The second sub-group consists of persons (workers, ie, employees, selfemployed persons and pensioners) who, in addition to the income gained from their basic employment (ie, salary), self-employment (ie, income from their business or professional activities) or retirement (ie, pension), generate

127 According to the Law on Contributions for Mandatory Social Insurance (art 7, para 1(15) and art 10, para 1(18)), this category of persons are treated as ‘persons obliged to pay contributions for mandatory social insurance’ (ie mandatory pension and disability insurance at a rate of 18 per cent and mandatory health insurance at a rate of 7.3 per cent) provided that the total net amount of the incomes from the concluded contract/contracts is higher than the amount of the minimum salary determined by law (the minimum salary in Macedonia in 2015 was €155). 128 According to the Law on Contributions for Mandatory Social Insurance (art 7, para 1(14) and art 10, para 1(17)), this category of persons involves ‘persons obliged to pay contributions for mandatory social insurance’ (ie, mandatory pension and disability insurance at a rate of 18 per cent and mandatory health insurance at a rate of 7.3 per cent), regardless of the amount of ‘additional’ income generated as a result of concluding ‘other’ contract/s with their employers, ie, legal persons affiliated with the employer.

The Position in the Former Yugoslav Republic of Macedonia 247 additional income from physical and/or intellectual work based on one or more contracts for services and/or intellectual property contracts or other contracts that specify remuneration for the completed work.129 This subgroup classifies persons who already have a social security status as ‘insured persons’ (based on employment or self-employment) or used to have this status (before meeting the requirements to retire), and continue to generate additional income from other external payers. To summarise, to describe the two sub-categories of ‘freelance workers’, we use the generic term persons— performers of freelance work or ‘broader category of freelancers’. As regards the social security status based on the applicable criteria for persons included in the social security system as well as the employment status based on the applicable criteria for persons subsumed under employment legislation, we conclude that within the entire body of regulations governing the legal position of the broader category of so-called ‘freelance workers’ special significance is given to persons belonging to the narrower category of ‘freelance workers’ or so-called ‘freelancers’. In terms of their social security status, these individuals are treated as ‘persons obliged to pay social security contributions’ and thus acquire the right to pension and disability entitlements and the right to health insurance. Hence, ‘freelancers’ who until the adoption of the regulations on so-called ‘freelance’ work had no social security status as workers, ie, employees or self-employed persons (in other words, they were treated as unemployed despite having performed certain physical and/or intellectual work based on one or more contracts for services and/or intellectual property contracts or another contract), are now subsumed under the regulations on mandatory social insurance and are consequently entitled to the corresponding rights from the pension and disability insurance as well as the health insurance scheme. The legal regime establishing the social security status of ‘freelancers’ implicitly refers to the existence of freelancers who have concluded a single (or mainly one) contract for services, intellectual property contract or another contract with one (or mainly one) contractual party, and freelancers who have concluded one or more contracts for services, intellectual property contracts or other contracts with several different contractual parties. Considering the descriptive definition of economically dependent workers as workers who find themselves in a position of economic dependence on their employer(s)

129 According to the Law on Contributions for Mandatory Social Insurance (art 7, para 1(13) and art 10, para 1(16)), this category of persons are treated as ‘persons obliged to pay contributions for mandatory social insurance’ (ie, mandatory pension and disability insurance at a rate of 18 per cent and mandatory health insurance at a rate of 7.3 per cent), provided that the total net amount of income generated as a result of concluding ‘other’ contract/s is higher than the amount of the average net salary per employee announced in January of the current year according to the data of the State Statistical Office (the average net salary per employee in Macedonia announced in January 2015 was €349).

248  Todor Kalamatiev and Aleksandar Ristovski (ie, ­procuring entities, clients)—in other words, persons executing predominantly personal work within a certain time period and for a single or mainly one employer (ie, procuring entity, client)—the description of an economically dependent worker could be analogised with that of a freelancer who concludes a single (or mainly one) contract for services, an intellectual property contract or another contract with one (or mainly) one contractual party. Based on this factual situation, these groups of f­ reelancers could find themselves in a position of economic dependence on their employer(s). Despite such a ‘factual’ relationship, ‘economically dependent workers’ are not recognised by the Macedonian labour law system and do not have separate labour law protection (eg, the right to protection from unfair dismissal, the right to a notice period, to severance pay, to daily, weekly and annual leave, to limited working hours, to unionise and bargain collectively etc). ‘Economically dependent workers’, whose legal position implicitly coincides with the legal position of the Macedonian notion of ‘freelancers’, are also excluded from the personal scope of application of the Law on Employment Relations. In fact, the Law on Employment Relations (as a general law regulating issues in the sphere of labour) does not identify specific (intermediate) employment statuses which correspond to the category of ‘economically dependent workers’. We conclude that despite the ‘actual’ existence of a particular category of persons who meet the criteria to be designated as ‘workers with a special employment status’ different from the employment status of genuine workers or self-employed persons (who could be possibly called ‘tertium genus workers’), these persons are treated as ‘formally’ selfemployed workers, meaning that they are covered by the legal regime of general contract law. B.  Equality and Anti-discrimination Law The anti-discrimination law of Macedonia consists of several legal regulations such as the Law on Prevention and Protection against Discrimination (Закон за спречување и заштита од дискриминација) as a lex generalis, the Law on Protection against Harassment at the Workplace (Закон за заштита од вознемирување на работното место), the Law on Equal Opportunities for Women and Men (Закон за еднакви можности на жените и мажите), the Law on Employment Relations etc. The broadest scope of application of regulations on anti-discrimination can be found in the Law on Prevention and Protection against Discrimination.130 According to this Law, the 130 The Law on Prevention and Protection against Discrimination (Official Gazette the Republic of Macedonia, No 50/10) provides several different grounds for discrimination such as sex, race, skin, gender, belonging to a marginalised group, ethnic origin, language, citizenship, social origin, religion or confession, other types of beliefs, education, political belonging,

The Position in the Former Yugoslav Republic of Macedonia 249 ­ revention and protection against discrimination shall be applicable to all p ­natural and legal persons in the process of exercising the rights and freedoms guaranteed under the Constitution and the legislation of M ­ acedonia.131 Another relevant law that covers and protects a broader category of persons is the Law on Protection against Harassment at the Workplace. This Law regulates the rights, obligations and responsibilities of employers and employees in terms of prevention of the psychological and sexual harassment at the workplace, measures and procedures for protection against harassment at the workplace, as well as other issues referring to the prevention and protection against harassment at the workplace.132 Its personal scope of application covers employers, employees, applicants for employment and persons engaged under contracts to carry out professional activities with the employer.133

personal or social status, mental and physical disability, age, family or marital status, property status, health condition or on any other grounds established by the law or by ratified international agreements (art 3). 131 

ibid art 2. on Protection against Harassment at the Workplace (Закон за заштита од вознемирување на работното место) (Сл.весник на Република Македонија, бр.07/13) art 1. 133  ibid art 3, para 3. 132 Law

250 

12 The Concept of ‘Employee’: The Position in Germany BERND WAAS

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A.  The Contract of Employment and the Employment Relationship

I

N GERMANY, NO statutory definition of the term ‘contract of employment’ (Arbeitsvertrag) existed for a long time.1 It is undisputed, however, that a contract of employment is a sub-category of the so-called ‘service contract’ (­Dienstvertrag).2 The term ‘service contract’ is defined in

1  According to a Draft Act that was recently adopted by Parliament, the Civil Code will be amended to include the definition of the term developed by legal doctrine and the courts. A new s 611a, to be included in the Civil Code, will then read as follows: ‘Through a contract of employment, an employee will be obliged to work in the service of another person, observing the instructions issued by that person and being in a position of personal dependence. The power of issuing instructions may either affect the content, mode of work performance, time or location of the activity. A person is bound to obey instructions of another person if he or she is not essentially free to arrange his or her professional activities at his or her own discretion and decide when to perform the work. The degree of personal dependence required may vary from one activity to another. Determination of the contract of employment depends on an overall assessment of all relevant facts. If such an assessment indicates the existence of an employment relationship, the designation of the contract by the parties bears no relevance’ (‘Durch den Arbeitsvertrag wird der Arbeitnehmer im Dienste eines anderen zur Leistung weisungsgebundener, fremdbestimmter Arbeit in persönlicher Abhängigkeit ver­ pflichtet. Das Weisungsrecht kann Inhalt, Durchführung, Zeit und Ort der Tätigkeit betreffen. Weisungsgebunden ist, wer nicht im Wesentlichen frei seine Tätigkeit gestalten und seine Arbeitszeit bestimmen kann. Der Grad der persönlichen Abhängigkeit hängt dabei auch von der Eigenart der jeweilgen Tätigkeit ab. Für die Feststellung, ob ein Arbeitsvertrag vorliegt, ist eine Gesamtbetrachtung aller Umstände vorzunehmen. Zeigt die tatsächliche Durchführung des Vertragsverhältnisses, dass es sich um ein Arbeitsverhältnis handelt, kommt es auf die Bezeichnung im Vertrag nicht an’). The new law will come into force as from 1 April 2017. 2 However, S Greiner, ‘Erfolgsbezogene Vergütungen im Arbeitsverhältnis—oder: der Arbeits­vertrag als spezieller Werkvertrag?’ (2015) Recht der Arbeit (RdA) 218 is sceptical, pointing to the fact that agreements on performance-related remuneration may render contracts of employments to specific cases of so-called ‘contracts for work’ within the meaning of s 631(1) of the Civil Code rather than service contracts.

252  Bernd Waas section 611(1) of the Civil Code (Bürgerliches Gesetzbuch). Accordingly, a ‘service contract’ is a contract on the basis of which ‘a person is obliged to perform work [subordinated or not] in exchange for remuneration owed by another person’. What distinguishes a contract of employment from others is the existence of personal subordination (persönliche Abhängigkeit) between the service provider and the other party to the contract.3 In line with statutory law, no formal requirements exist to conclude a contract of employment.4 This means that a contract of employment can be based on a mere oral agreement between the parties concerned.5 Even certain conduct implying the intention to form a contract of employment (konkludentes Verhalten) may give rise to the formation of a contract of employment. However, collective agreements (Tarifvertrag) often provide that contracts of employment must be concluded in writing. The parties to the contract may also agree on a written form or even on a notarial act; in that case, the contract is ineffective if the formal requirement is violated by the parties.6 A contract of employment may either be void or voidable. For instance, if the contract breaches the law7 or is contrary to public mores,8 it is void.9 The same applies if the contract violates the provisions of a collective agreement or of a works agreement Betriebsvereinbarung. However, in most cases, violations may lead to only parts of the contract being void. As a rule, the contract of employment as such continues to exist, while nullity of the contract is restricted to that part of the agreement that is in breach of the law.10 If one of the parties was under a misapprehension when concluding the contract of employment, the declaration of intent and, as a consequence, the contract as

3 

The concept of ‘personal subordination’ will be explained in more detail below. With regard to contracts of apprenticeships (Berufsausbildungsvertrag), however, a written form is required according to s 11 of the Act on Occupational Training (Berufsbildungsgesetz). As regards temporary agency workers, no written form is required, but a detailed written statement on the terms and conditions of employment must be issued according to s 11(1) of the Act on Temporary Agency Work (Arbeitnehmerüberlassungsgesetz). 5  However, according to s 623 of the Civil Code, a termination of the employment relationship by notice or by a separation agreement must be made in writing in order to be effective. 6  See Federal Labour Court of 19 September 1985—2 AZR 539/84. 7  See s 134 of the Civil Code (‘a legal transaction that violates a statutory prohibition is void, unless the statute leads to a different conclusion’). 8  See s 138(1) of the Civil Code (‘a legal transaction that is contrary to public policy is void’). 9  Moreover, the capacity to conclude a contract is necessary. According to s 105(1) of the Civil Code, the declaration of intent of a person who is not capable of concluding a contract is void. 10  Section 139 of the Civil Code on ‘partial nullity’ notwithstanding (‘If a part of a legal transaction is void, then the entire legal transaction is void, unless it is to be assumed that it would have been undertaken even without the void part’). This basic rule of the Civil Code has been largely reversed by the courts in civil law and, in particular, in employment law. According to the Federal Labour Court, s 139 cannot be applied if rules that aim to protect employees were breached. See Federal Labour Court of 4 October 1978—5 AZR 886/7. 4 

The Concept of ‘Employee’: The Position in Germany 253 such is voidable (Anfechtung).11 In general, an admissible rescission leads to the ineffectiveness of the contract from the beginning.12 Specific rules apply to contracts of employment. According to the so-called doctrine of deficient employment relationships (Lehre vom fehlerhaften Arbeitsverhältnis), if the parties have already started performing their duties under the given contract, a rescission is in principle only effective in future, the reason being that a complete reversal of the transactions would result in major difficulties and might also collide with the need to protect employees.13 As regards the past, the contract of employment is deemed to have been effective.14 B.  Employment Relationship: Basic Definition No statutory definition of the term ‘employment relationship’ (Arbeitsverhältnis) exists in Germany. In any event, an employment relationship must, in principle, be based on a contract of employment. According to the socalled doctrine of contract (Vertragstheorie), it is the contract of employment that forms the legal basis for the exchange of work for pay.15 The existence of an agreement between the parties is deemed to be indispensable for acknowledging the existence of an ‘employment relationship’ (and

11  See s 119(1) of the Civil Code, according to which ‘a person who, when making a declaration of intent, was misled about its contents or had no intention whatsoever of making such a declaration, may be exempt from its content, if it is to be assumed that he would not have made the declaration with knowledge of the factual position and with a sensible understanding of the case’. According to s 123(1), a person may be exempt from his declaration if he was induced to make a declaration of intent based on deceit or unlawfully by duress. 12  See s 142(1) of the Civil Code (‘if a voidable legal transaction is circumvented, it is to be regarded as having been void from the outset’). 13  See Federal Labour Court of 15 November 1957—1 AZR 189/57—and of 29 August 1984—7 AZR 34/83. See also J Joussen, ‘Der Vertrauensschutz im fehlerhaften Arbeitsverhältnis’ (2006) Neue Zeitschrift für Arbeitsrecht (NZA) 963. 14  The same applies in principle if the contract of employment is ineffective. See U Preis, in T Dieterich et al (eds), Erfurter Kommentar zum Arbeitsrecht, 17th edn (Munich, Verlag CH Beck, 2017) para 611 BGB fn 146. Another term that is sometimes used in this context is a ‘de facto employment relationship’ (faktisches Arbeitsverhältnis); See, especially G Haupt, ‘Über faktische Vertragsverhältnisse’ in Festschrift für Heinrich Siber (Leipzig, Weichler Verlag, 1941) 19. This term is, however, rejected by most authors on the ground that an agreement between the parties is required in any case; see, eg, U Preis, in T Dieterich et al (eds), Erfurter Kommentar zum Arbeitsrecht, (2017) para 611 BGB fn 145. 15  In the past, it has even been claimed by some authors that an employment relationship would result from the integration of a person into the work organisation of another rather than the conclusion of a contract (so-called Eingliederungstheorie). See especially A Nikisch, ‘Die Eingliederung in ihrer Bedeutung für das Arbeitsrecht’ (1960) Recht der Arbeit (RdA) 1; W Siebert, Das Arbeitsverhältnis in der Ordnung der nationalen Arbeit (Hamburg, Hanseatiche Verlagsanstalt, 1935) 35. This doctrine could not establish itself in employment law. Reference to the Eingliederungstheorie has been made by the Federal Labour Court of 25 February 2015— 5 AZR 962/13(A). Social security law, on the other hand, is dominated by the Eingliederun­ gstheorie; See, eg, Federal Social Court of 18 March 1987—9b RU 16/85.

254  Bernd Waas for qualifying a person as an ‘employee’).16 The Federal Labour Court has clearly stated that the so-called doctrine of the deficient employment relationship does not represent an exception to this rule, since an agreement is always required, though this agreement may prove to be legally defective.17 In principle, an employment relationship can only result from a contractual agreement between the parties concerned. Only a few exceptions exist. One exception is section 78a(2), sentence 1 of the Works Constitution Act (Betriebsverfassungsgesetz), according to which a permanent employment contract shall be deemed to exist between a trainee and the employer following vocational training if the trainee serves as a member of, in particular, a so-called youth and trainee delegation or works council (Betriebsrat), and demands continued employment from the employer in writing within the last three months prior to completion of his or her vocational training. This provision underscores the independence of members of organs of employee representation and the continuity of their work, and addresses the problem that mere dismissal protection of trainees would fail to lead to full protection, as the trainee relationship automatically ends without the need to give notice. According to section 613a(1), sentence 1 of the Civil Code (Bürgerliches Gesetzbuch), if a business or part of a business passes to another owner by legal transaction, the latter assumes the rights and duties under the employment relationships that exist at the time of transfer. Finally, according to section 10(1), sentence 1 of the Act on Temporary Agency Work (Arbeitnehmerüberlassungsgesetz), in case the contract of employment between a temporary agency worker and the temporary work agency is void because the latter lacks the required permission by the state authority,18 an employment relationship is deemed to exist between the temporary agency worker and the user undertaking.19 This provision aims to ensure that the user undertaking checks whether the temporary work agency is in 16  See, eg, Federal Labour Court of 16 February 2000—5 AZB 71/99, according to which forced labourers do not qualify as employees. 17  See, eg, Federal Labour Court of 19 July 1973—5 AZR 46/73. 18 Such permission is required according to s 1(1), sentence 1 of the Act on Temporary Agency Work. Under a new Act that will come into force as from 1 April 2017 the legal fiction of an employment relationship between the temporary agency worker and the user undertaking will apply to all cases where the contract between the worker and the agency is void. 19  Currently, the application of s 10(1), sentence 1 is restricted to cases in which permission to hire out is lacking. Other violations of the law do not fall within the scope of this provision. If the temporary work agency permanently hires out a worker, though assignments according to s 1(1), sentence 2 must be ‘temporary’; there is no legal fiction for an employment relationship between the worker and the user enterprise as long as the temporary work agency is in possession of a permission. See Federal Labour Court of 10 December 2013—9 AZR 51/13. The Court explicitly states (fn 31) that the ‘replacement’ of an employer by another is also problematic from the constitutional law perspective (freedom of occupation of the temporary agency worker). According to a Draft Act that was recently passed by Parliament, s 10(1), sentence 1 will give it a considerably wider scope of application; for a critique, see W Böhm, ‘Fiktiver (Leih)Arbeitnehmerschutz (§§ 9, 10 AÜG-E)?!’ (2016) Neue Zeitschrift für Arbeitsrecht 528: ‘Massive breach of freedom of contract.’

The Concept of ‘Employee’: The Position in Germany 255 possession of a permission as it will otherwise become the employer of the temporary agency worker. The fact that a contract is in principle required to initiate an employment relationship derives from honouring the freedom of contract which is constitutionally protected under Articles 2 and 12(1) of the Basic Law (Grundgesetz), the German Constitution.20 The exceptions mentioned above pass the constitutional test since the limitation of the freedom of contract on the part of the employer is justified under the so-called principle of the social state (Sozialstaatsprinzip),21 and obligations to enter into a contract or legal fictions of an employment relationship may be effective means of remedying the existing imparity between the parties.22 With regard to the employee’s position, it should be noted that a continuation of the employment relationship with the employer under section 78a of the Works Constitution Act (Betriebsverfassungsgesetz) requires the trainee to demand continuation and that an automatic transfer of the employment relationship in the case of a business transfer depends on the employee’s decision not to object to the transfer.23 As regards the position of temporary agency workers, it is similarly argued that the legal fiction of an employment relationship with the user undertaking does not apply if the temporary agency worker, for one reason or another, objects to becoming an employee of the user undertaking.24 Section 7(1) of Social Code IV (Sozialgesetzbuch IV) provides a definition of ‘employment’ (Beschäftigung) for the purposes of social security law. ­Section 7(1), sentence 1 of Social Code IV stipulates that: [E]mployment is subordinate work, in particular within the framework of an employment relationship.

20  See, eg, Federal Labour Court of 2 June 2010—7 AZR 946/08: ‘Freedom to enter into an employment relationship or not is an expression of the freedom of contract … That freedom is violated, if an employment relationship is established without requiring matching declarations that aim at the conclusion of an employment relationship or even by operation of law and against the will of one or both parties.’ 21  This principle represents one of the constitutional principles guaranteed in art 20(1) of the Basic Law: ‘The Federal Republic of Germany is a democratic and social federal state.’ 22  See M Horcher, ‘Kontrahierungszwang im Arbeitsrecht—unter besonderer Berücksichtigung von § 15 Abs. 6 AGG’ (2014) Recht der Arbeit (RdA) 93–102. 23  See s 613a(6) of the Civil Code: ‘the employee may object in writing to the transfer of the employment relationship within one month of receipt of notification … The objection may be addressed to the previous employer or to the new owner’. This provision is a mere codification of case law, according to which the power to object follows from the freedom of contract. See Federal Labour Court of 2 October 1974—5 AZR 504/73. This position of German law was explicitly acknowledged by the Court of Justice of the European Union (CJEU); see Judgment of the CJEU of 16 December 1992, Cases C-132/91, 138/91 and 139/91 Katsikas v ­Konstantinidis [1992] ECR I-6577. 24  See State Labour Court Hesse of 6 March 2001—2/9 Sa 1246/00. Others are of the opinion that the temporary work agency may at most terminate the contract without notice; see State Labour Court Düsseldorf of 26 July 2012—15 Sa 1452/11.

256  Bernd Waas Section 7(1), sentence 2 of Social Code IV acknowledges two indicators of ‘employment’: first, it refers to a person who is subjected to the authority of another person to direct him or her (Tätigkeit nach Weisungen); and, second, it refers to a person who forms part of the business organisation of another person (Eingliederung in die Arbeitsorganisation des Weisungsgebers). According to the ­ Federal Social Court (Bundessozialgericht), the existence or non-­existence of ‘employment’ is determined by the standards of social security law only.25 What section 7(1) of Social Code IV essentially conveys in any event is that ‘employment’ exists in any event if the employment relationship is acknowledged in employment law. However, the definition of ­‘employment’ in social security law is not (fully) congruent with the relevant definition of employment law since social security law also covers public law relationships, while employment law is restricted to the sphere of private law.26 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition No statutory definition of the term ‘employee’ exists, but there is a judgemade one which is based on German doctrine. According to that definition, an employee is a person ‘who on the basis of a contract of private law is obliged to perform work in the service of another person’.27 This definition points to the fact that an employee is directed by another in the performance of his or her duties. In other words, he or she is subordinated to or personally dependent upon another (persönlich abhängig). According to the Federal Labour Court, it is this very personal dependence that is ‘one of the essential reasons for the development and strengthening of labour law’.28 Though it is generally acknowledged that the content of a legal term can vary from one legal provision to another, it is also widely acknowledged that the term ‘employee’ is a uniform term in the sense that it applies to all parts of employment law. This is the result of the so-called doctrine of the uniform term of employee (Lehre von einheitlichen A ­ rbeitnehmerbegriff).29

25 

See, eg, Federal Social Court of 18 December 2001—B 12 KR 10/01 R. See, eg, Federal Social Court of 25 January 2006—B 12 KR 12/05 R. 27  eg, civil servants are excluded from this definition as their position is regulated by public law. 28  Federal Labour Court of 15 March 1978—5 AZR 819/76 explicitly refers to the labour law scholar A Hueck. 29  See R Richardi, in R Richardi et al (eds), Münchener Handbuch zum Arbeitsrecht, vol 1, 3rd edn (Munich, Verlag CH Beck, 2009) para 16 fn 12. In fn 44, the same advocates for a ‘relative’ term in the sense that on the basis of a purposive perspective, the term ‘employee’ may vary from one set of rules to another. 26 

The Concept of ‘Employee’: The Position in Germany 257 However, ‘uniformity’ in that sense does not exclude the possibility of ­certain deviations. As a matter of fact, the term ‘employee’ that is used in the context of the Works Constitution Act (Betriebsverfassungsgesetz), for instance, slightly differs from the term that applies in individual employment law.30 With regard to the question what constitutes ‘personal dependence’ or ‘subordination’ (Weisungsabhängigkeit), section 84(1) of the ­Commercial Code (Handelsgesetzbuch) is regularly referred to. At first glance, it provides no more than a legal definition of the term ‘commercial agent’ ­(Handelsvertreter). According to section 84(1), sentence 2, if a person is ‘essentially free to arrange his or her professional activities at his or her own discretion and decide when to perform work’, that person is considered self-employed (selbstständig). This provision represents the starting point for defining the term ‘employee’, however, as such a person is not free to arrange his or her professional activities at his or her own discretion and is not allowed to decide when to perform work. B.  Employer: Basic Definition The term ‘employer’ is not legally defined. The courts indirectly derive the definition from the term ‘employee’. According to the Federal Labour Court, ‘an employer is a person who employs at least one employee’.31 Every (natural or legal person) can qualify as an employer. On the other hand, a group of companies as such cannot be an employer since it lacks the quality of a legal entity.32 30 See also Federal Labour Court of 5 December 2012—7 ABR 48/11. With this ruling, the Court abandoned its so-called ‘two-components doctrine’, according to which a worker’s affiliation with a given establishment required both the existence of a contract with its owner and actual integration into the work organisation. According to the Court, ‘unlimited application [of this doctrine] does not lead to reasonable results if staff is deployed in other companies’. See W Linsenmaier and H Kiel, ‘Der Leiharbeitnehmer in der Betriebsverfassung—­ “Zwei-Komponenten-Lehre” und normzweckorientierte Gesetzesauslegung’ (2015) Recht der Arbeit (RdA) 135–57. 31  See Federal Labour Court of 21 January 1999—2 AZR 648/97, which stresses that the legal concept of employment is devised from the perspective of the employee. See also Federal Labour Court of 9 September 1982—2 AZR 253/80, which states that the ‘employer is the other party to the employment relationship, thus he who can demand work from the employee under the employment contract’. See is this context also B. Waas, in H Nakakubo/T Anaki (eds), The Notion of Employer in the Era of the Fissured Workplace 105–125 (Alphen aan den Rijn, Wolters Kluwer, 2017). 32  See Richardi, Münchener Handbuch zum Arbeitsrecht (n 29) para 23 fn 1. The existence of a group of companies may, however, have consequences for the protection of employees. For instance, though dismissal protection is, in principle, related to the enterprise and not to a possible group of companies, there are exceptional cases in which it has been held that the employer—under the principle of proportionality—is required to aim to ensure continued employment with another company that belongs to the same group before dismissing an employee. See Federal Labour Court of 23 March 2006—2 AZR 162/05;

258  Bernd Waas A fairly old institution of German law is the so-called ‘indirect e­ mployment relationship’ (mittelbares Arbeitsverhältnis).33 According to the courts, an ‘indirect employment relationship’ exists when an employee is employed by another person (often referred to as the ‘intermediate master’—Zwischenmeister), who for his or her part is an employee of a third party (the entrepreneur), whereby the work is performed directly for the e­ ntrepreneur.34 It is assumed that such an ‘indirect employment relationship’ aims to establish subsidiary liability of the entrepreneur with regard to the payment of wages in particular. The rationale is that an entrepreneur is liable if he or she directly benefits from the work performed.35 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Various sub-types of employees exist to which specific rules apply. The historical differentiation between blue-collar workers (Arbeiter) and whitecollar workers (Angestellte) has almost fully lost its importance.36 However, the category of managerial employees (leitende Angestellte) is still of major significance. The legal position of a managerial employee is determined by the fact that though he or she is personally dependent upon the employer, his or her tasks are characteristic of an employer’s tasks, such as workforce planning, recruitment and giving notice. Hence, managerial employees are treated differently from other employees in law. For instance, the Works Constitution Act (Betriebsverfassungsgesetz) generally does not apply to them.37 Instead, they are covered by a special Act, the Speaker’s ­Committee

23 April 2008—2 AZR 1110/06; 24 May 2012—2 AZR 62/11. It is generally acknowledged that an employee can have more than one employer. In that case, there is often joint and several liability as well as joint and several creditorship on the part of the employer. If the parties to the contract did not clearly assign the power to direct to a single person, then every employer is presumed to be able to make use of it. The employee complies with his or her obligation to work by following the corresponding instructions. See R Lange, ‘Mehrfacharbeitsverhältnisse—Nicht nur F ­ abelwesen’ (2012) Neue Zeitschrift für Arbeitsrecht 1121, 1122. 33  The practical importance has been limited so far; see Preis (n 14) para 611 BGB fn 172. This, however, could change in the future. 34  This is the definition provided by the Federal Labour Court of 9 April 1957—3 AZR 435/54. According to the Court, the ‘indirect employment relationship’ represents an ‘unwritten principle of law’. 35  Federal Labour Court of 9 April 1957—3 AZR 435/54. 36  It still plays a (minor) role in public service and in a few collective agreements. 37  See s 5(3), sentence 1 of the Act. According to s 5(3), sentence 2, managerial employees are employees ‘who (1) are entitled to assume responsibility to engage and dismiss employees on behalf of the establishment or one of its departments; or (2) are endowed with general authority (power of procuration) or full power of representation or power to sign, the latter also being important in relation to the employer; or (3) regularly carry out other duties which

The Concept of ‘Employee’: The Position in Germany 259 Act (Sprecherausschussgesetz).38 Dismissal protection of managerial employees is considerably weaker than for ‘ordinary’ employees. While dismissal of the latter is deemed null and void if it is found to be in breach of the provisions of the Dismissal Protection Act (Kündigungsschutzgesetz), the employer is essentially free to terminate the employment relationship with a managerial employee under the condition that he or she is prepared to pay compensation.39 Various sub-groups of employees exist, which are defined by their occupation. Specific rules apply to so-called ‘commercial employees’ (kaufmännische Angestellte).40 It should be noted, however, that the provisions on the restrictions to trade and commissions contained in the Commercial Code (Handelsgesetzbuch) basically apply to all employees.41 Special rules also apply to ships’ crews. Many of their rights and duties are governed by a specific Act, the Seamen’s Act (Seemannsgesetz). The position of employees in public service does not, in principle, differ from that of employees in the private sector. Collective agreements that apply to them regularly contain specific provisions, however. Artists can perform work on the basis of either a contract of service ­(Dienstvertrag) or a contract of employment (Arbeitsvertrag). Often, the qualification proves difficult.42 In many cases, tailor-made collective agreements apply to artists and contain special provisions on the rights and duties of the parties and termination. Equally importantly, arbitration courts exist in this regard; section 4 in conjunction with sections 101–110 of the Labour Courts Act (Arbeitsgerichtsbarkeit) specify that where legislation confers exclusive jurisdiction on labour courts, this jurisdiction may only be excluded by agreement in two cases: one of these cases is section 101(2), sentence 1, according to which an arbitration court’s competence can be

are important for the existence and development of the company or an establishment and fulfilment of which requires particular experience and knowledge, if, in doing so, they either essentially make decisions on their own responsibility or substantially influence these decisions; this may also be the case with stipulated procedures, particularly those based on legal provisions, plans or guidelines and when cooperating with other executive staff’ (translation provided by the Language Service of the Federal Ministry of Labour and Social Affairs). 38  As a consequence, there is no uniform representation of workers’ interests by a single organ. The rights of speaker’s committees are restricted to information and consultation. As opposed to works councils, they do not enjoy co-determination rights. 39 Section 9(1), sentence 2 and section 14(1), sentence 2 of the Dismissal Protection Act. The scope of application of those provisions is criticised by some authors as being too narrow; see, eg, W Hromadka, ‘Arbeitnehmer, Arbeitnehmergruppen und Arbeitnehmerähnliche im Entwurf eines Arbeitsvertragsgesetzes’ (2007) Neue Zeitschrift für Arbeitsrecht 838, 839. 40  The historical category of ‘industrial employees’ (gewerbliche Arbeitnehmer) no longer exists due to modifications of the Factories Act (Gewerbeordnung); see s 6(2) of the Act. 41  According to s 110, sentence 1 of the Factories Act (Gewerbeordnung). 42 See, eg, Federal Labour Court of 7 February 2007—5 AZR 270/06 on a contract to perform as an external at an opera house.

260  Bernd Waas established on the basis of a collective agreement if that agreement targets predominantly stage artists, filmmakers or artists.43 Employees in church service also represent a distinct category. In principle, employment law is fully applicable to them.44 However, churches can fix specific loyalty duties due to their right to self-determination which is guaranteed under the Constitution.45 However, recently (and partly triggered by judgments of the European Court of Human Rights),46 the courts seem to have developed a more critical position in this regard.47 Collective agreements rarely exist in this area. Mostly, terms and conditions of employment are fixed by special commissions whose members are appointed on the basis of parity. The right to strike is considerably restricted.48 Professional athletes regularly qualify as employees.49 Employment relationships may also exist between close relatives, the crucial question then being whether a certain activity goes beyond what can be based in the context of family law.50 Home workers form a unique group of workers and are subject to specific regulations.51 B.  The Establishment of a Specific Category of ‘Workers’ The category of ‘workers’ does not exist in Germany. This means that ­German law does not, in principle,52 acknowledge groups of persons who, albeit not qualifying as employees, would be entitled to certain employment rights. 43 The other exception concerns s 101(1) of the Act, which specifies that an arbitration tribunal may decide civil law disputes arising from collective agreements or disputes between the parties concerning the existence or non-existence of a collective agreement. For more details see B Waas, in M Ebisni et al (eds), Resolving Individual Labour Disputes – A comparative overview 135–166 (Geneva, ILO, 2016). 44  Federal Constitutional Court of 4 June 1985—2 BvR 1703/83; Federal Labour Court of 17 April 1996—10 AZR 558/95. 45  Articles 4 and 140(3) of the Basic Law in conjunction with art 137(3) of the Weimar Reich Constitution (Weimarer Reichsverfassung). 46 See especially Schüth v Germany (merits) A no 1620/03 (2010) ECHR; and Schüth v Germany (just satisfaction) no 1620/03 (2012) ECHR. 47  See, eg, Federal Labour Court of 10 April 2014—2 AZR 812/12. See also Federal Labour Court of 17 March 2016—8 AZR 501/14 (A): request for a preliminary ruling by the CJEU on the legal position of employees in church service with regard to anti-discrimination law. 48  See Federal Labour Court of 20 November 2012—1 AZR 179/11 and 1 AZR 611/11. 49  Federal Labour Court of 17 January 1979—5 AZR 498/77 (professional football players). There is an ongoing discussion as to whether professional athletes and other groups of employees with a particularly high income should be excluded from the protection of labour law. However, suggestions to this effect have met with resistance, as there is widespread consensus that the application of labour law should not depend on not overstepping a certain income limit; see, eg, F Bayreuther, ‘Braucht es rechtliche Sonderregelungen für den unternehmerähnlichen Arbeitnehmer?’ Neue Zeitschrift für Arbeitsrecht (NZA) 1238, 2013. 50  See, eg, State Labour Court Schleswig-Holstein of 30 August 2006—3 Sa 156/06 (A). 51  Home Work Act (Heimarbeitsgesetz) of 14 March 1951. Home Workers are not personally dependent but depend on the employer economically. See, eg, Federal Labour Court of 3 April 1990—3 AZR 258/88. 52  An exception is so-called employee-like persons, who will be dealt with later.

The Concept of ‘Employee’: The Position in Germany 261 IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration A contract of employment is characterised by a relationship of personal dependence or subordination between the parties.53 In this regard, it is crucial to determine whether and to what extent a person is subjected to another person’s power to direct,54 the scope of which may vary depending on whether it comprises work content, the mode of performance of work, time, work period and place of work. Equally important is the extent to which another person forms part of the work organisation of another. To determine whether a person is sufficiently subordinated to justify the relationship with another person as qualifying as an employment ­relationship, the Federal Labour Court applies the so-called ‘typological method’. The starting point of the legal analysis is that the term ‘employee’ refers to a mere ‘type’ (Typusbegriff), meaning that all of the decisive criteria must not necessarily be met in individual cases. Nor is there a feature of dependent work that is not also occasionally found among self-employed persons.55 Moreover, the Federal Labour Court denies the possibility of fixing abstract criteria in advance that must be met in individual cases.56 In some cases, the Court went so far as to state that there is simply no single criterion among the many that must be applied in the process which may be considered indispensable.57 Instead, the courts use various criteria that are indicative of the existence of an employment relationship.58 The basis

53  Note, however, Federal Labour Court of 29 August 2012—10 AZR 499/11 (‘no ­provision according to which a dependent service could only be provided on the basis of an employment relationship’). 54  This power is dealt with in s 106, sentence 1 of the Factories Act. 55  Federal Labour Court of 23 April 1980—5 AZR 426/79. 56  See especially Federal Labour Court of 23 April 1980—5 AZR 426/79. 57  Federal Labour Court of 23 April 1980—5 AZR 426/79 provides that ‘as regards the differentiation between employees and “independent” persons, no single criterion exists that must be present from the large variety of possible features in order to speak of personal dependence. It is therefore inevitable for practical reasons and legal certainty to make the necessary distinction by applying a typological method’. 58  Some time ago, the competent ministry put forward a Draft Act that aimed to prevent possible misuse by employers of contracts to perform work. For the first time, a non-exhaustive list of indicators would have been introduced into statutory labour law to be used by the courts when determining whether an employment relationship exists. According to the Draft Act, an employment relationship exists if: (a) a person is not allowed to decide his or her working time, the services owed or his or her workplace; (b) a person predominantly renders his or her services at the premises of another; (c) he or she regularly uses the resources of third parties to render services owed; (d) renders his or her services together with others who are deployed or charged by another party; (e) works exclusively or predominantly for another party; (f) does not own an operational organisation to render the services owed; (g) renders services

262  Bernd Waas of the corresponding legal qualification of the contract is in any event an ‘evaluating general assessment’ (wertende Gesamtbetrachtung), meaning that the courts—in deciding individual cases—take a ‘holistic view’ in order to determine whether a person qualifies as an ‘employee’.59 The criteria for determining personal subordination vary from one case to another. With regard to persons who work in broadcasting, for instance, the Court holds that subordination does not result from work instructions or from the person being bound to a certain place or time of work. Instead, subordination can be based on the fact that the person relies on the technical equipment put at his or her disposal by the broadcasting company and the fact that the work is regularly performed within the framework of a team.60 The ‘typological method’ employed by the Federal Labour Court has been criticised by many scholars as lacking transparency and as leading to results that cannot easily be foreseen by the parties concerned. Even clearly manageable normative criteria would end up as mere topoi, aspects to be considered.61 The Federal Constitutional Court, however, has held that a clear predictability of the results cannot be required and that the existence of legal doubts cannot be avoided in the face of the large number of possible scenarios arising in this area.62 In determining personal subordination, the freedom of a person to structure his or her work and to decide his or her working hours is of key importance. This derives from section 84(1) of the Commercial Code ­(Handelsgesetzbuch) on self-employed persons, which can be used as an argumentum e contrario when determining whether a person is an ‘employee’. In general, the courts will ask whether and to what extent a person is subjected to the power of another person to direct the content of

that do not entail manufacturing or constructing a specific product or a specific work result; (h) does not guarantee the result of his or her work. This Draft Act met with fierce resistance and was quickly withdrawn. For a critique, see, eg, U Baeck, T Winzer and N Kramer, ‘Neuere Entwicklungen im Arbeitsrecht’ (2016) Neue Zeitschrift für Gesellschaftsrecht (NZG) 20–24; T Schüren and S Fasholz, ‘Inhouse-Outsourcing und der Diskussionsentwurf zum AÜG—Ein Diskussionsbeitrag’ (2015) Neue Zeitschrift für Arbeitsrecht (NZA) 1473–78 with regard to the position of temporary agency workers; M Henssler, ‘Überregulierung statt Rechtssicherheit—der Referentenentwurf des BMAS zur Reglementierung von Leiharbeit und Werkverträgen’ (2016) Recht der Arbeit (RdA) 1–24. 59  Federal Labour Court of 23 April 1980—5 AZR 426/794. An application of this ‘general evaluation assessment’ in cases of ‘economy on demand’ is made by S Lingemann and J Otte, ‘Arbeitsrechtliche Fragen der “Economy on Demand”’ (2015) Neue Zeitschrift für Arbeitsrecht 1042. 60  Federal Labour Court of 15 March 1978—5 AZR 819/76. 61  Preis (n 14) para 611 BGB fn 54 with additional references; J Brammsen, ‘Der Arbeitnehmerbegriff—Versuch einer einheitlichen Neubestimmung’ (2010) Recht der Arbeit (RdA) 267. 62  See Federal Constitutional Court of 20 May 1996—1 BvR 21/96 on the social security term ‘employment’.

The Concept of ‘Employee’: The Position in Germany 263 the job duties, the mode of performance, the time, working period and place of work.63 As already mentioned, the courts acknowledge that the extent of the necessary power to direct may vary from case to case with respect to location, time and work content. For instance, members of outdoor staff are regularly free to determine their place of work. Even so, they (may ­easily) qualify as employees when considering work instructions, time constraints and organisational integration. Specifically, if persons are supposed to instruct customers or their contractual partner in the use of technical devices in accordance with the deadlines and requirements at the premises of these customers, but on the basis of specifications issued by their contractual partners, they are employees rather than self-employed workers.64 Telework may entail considerable freedom with regard to working time. Even so, persons who perform such work are often employees, as the employer may essentially decide on the job content (and the software to be used by the employee).65 People like artists, doctors or other highly skilled professionals are usually not subjected to instructions on how to perform their job. However, they may qualify as employees if—in all other respects—it can be said that the person performs work under a relationship of personal subordination.66 In short, the degree of subordination required is dependent on the characteristics of the concrete activities.67 Accordingly, in their assessment of the facts, the courts may inquire whether a person’s independence is in some way compensated for by dependence on another person. Since the Federal Labour Court explicitly holds that the existence of an employment relationship is dependent on the ‘degree’ of personal subordination,68 the only thing that can safely be said is that the more far-reaching the power to direct a person, the more likely the contract of that person will be considered a contract of employment.69 In this context, the question may arise as to whether qualification as an ‘employment relationship’ can be avoided by including detailed provisions on job content and working time in the contractual agreement. As a matter of fact, the Federal Labour Court is indeed inclined to qualify relationships as ‘free service contracts’ if there is no room (and need) to exert the power to direct, as the parties have already agreed on detailed conditions in the contract.70 This position of the Court has been criticised by some authors on

63  See, eg, Federal Labour Court of 30 Nov 1994—5 AZR 704/93 and, more recently, of 21 July 2015—9 AZR 484/14. 64  Federal Labour Court of 6 May 1998—5 AZR 247/97. 65  See R Wank, ‘Telearbeit’ (1999) Neue Zeitschrift für Arbeitsrecht (NZA) 225. 66  Federal Labour Court of 27 July 1961—2 AZR 255/60 (head physician). 67  Federal Labour Court of 15 March 1978—5 AZR 819/76. 68  See, eg, Federal Labour Court of 15 March 1978—5 AZR 819/76. 69  See, eg, Federal Labour Court of 13 November 1991—7 AZR 31/91. 70 Federal Labour Court of 30 October 1991—7 ABR 19/91. In the underlying case, a teacher at an educational institution was not considered an employee since the content of the

264  Bernd Waas the ground that it opens the door to evading the application of employment law by skilfully framing the given contract. It is argued that such a detailed contract indicates the vulnerability of the party providing the service, and may even consolidate qualification of the contract as one of employment.71 In addition to assessing the extent of another person’s power to direct, the courts often use the ‘integration test’ and ask whether a person forms part of the organisational structure of an undertaking (integration— Eingliederung).72 The question is then whether work is performed within the framework of an organisation that was constituted by another.73 Integration in that sense is often referred to as ‘organisational dependence’, which essentially means dependence on the tools and materials provided by the employer and a possible necessity to collaborate with other persons and to adapt one’s own work with that of others. The legal literature has sometimes criticised the fact that the integration test must fail when there is no work organisation. Some authors also claim that emphasising integration is often little more than paraphrasing personal subordination.74 In any event, the ‘integration test’ is of little value if integration is derived from personal subordination, which is sometimes the case in the rulings of the Federal Labour Court.75 B. Indicators In the Federal Labour Court’s view, the essential feature of employment is that the individual, the employee, is directed by another.76 Hence, the existence of work instructions is the main indicator of subordination.77 However, work instructions as such do not suffice to justify qualifying a person as an

service provided and the working hours were dealt with in detail in the contract and thus, as the Court put it, ‘removed the teacher from the employer’s power to direct’. In the Court’s view, it was irrelevant that the teacher was bound to a curriculum, the reason being that only methodological and didactic instructions from the employer to specify a certain design of teaching could lead to personal subordination. 71 Preis (n 14) para 611 BGB fn 52 with references. See also Federal Labourt Court of 16 July 1997—5 AZR 312/96 (qualification as employee cannot be ruled out by making instructions part of the contract itself). 72  The criterion of integration is reminiscent of an old and now outdated doctrine (so-called Eingliederungstheorie), according to which an employment relationship comes into existence on the basis of the employee’s integration rather than contractual consensus between the parties concerned. See n 15 above. 73  Federal Labour Court of 20 July 1994—5 AZR 627/93. 74  See Richardi (n 29) para 16 fn 25. 75  Federal Labour Court of 30 November 1994—5 AZR 704/93: ‘Inclusion in a work organisation that was established by another essentially arises from that person’s power to direct.’ 76  Federal Labour Court of 15 March 1978—5 AZR 819/76. 77  Federal Labour Court of 20 July 1994—5 AZR 627/93.

The Concept of ‘Employee’: The Position in Germany 265 employee, since a self-employed person can also be the addressee of instructions; with regard to contracts for work (Werkvertrag), section 645(1), sentence 1 of the Civil Code explicitly deals with ‘instruction(s) given by the customer for the performance of the work’.78 Apart from that, it must be noted that in the case of work that requires a high standard of know-how, instructions tend to be the exception rather than the rule.79 This leads to another element of subordination, namely that work may be carried out within specific hours or at an agreed place. The Federal Labour Court has often denied employee status if a person proved to essentially be free in terms of his or her decision when to perform work.80 Yet, the fact that the availability of a person is required under a contract points to subordination (or integration). The obligation to be available most of the time strongly indicates an ‘employee status’.81 Yet persons may still qualify as employees even if they are essentially free to determine the place and time of work (and are not subjected to work instructions either). In the Federal Labour Court’s view, employee status may follow in such cases from the fact that these persons rely on the employer’s technical equipment and are part of a team.82 The latter points to integration or organisational dependence. In the context of integration, one question that is occasionally asked by the courts is whether similar work is performed in the undertaking by persons who undoubtedly qualify as employees, and whether the employer generally does not differentiate between persons who are employees and the person whose legal qualification is being examined.83

78  This often leads to the difficulty of differentiating between directions under a contract for work and an employment contract. In this regard, see, for instance, Federal Labour Court of 25 September 2013—10 AZR 282/12, according to which the former are ‘instructions which relate solely to the agreed work’, while everything points to an employment contract if an activity is planned and organised by another person and the ‘contractor’ is incorporated into a foreign work organisation to an extent that autonomous organisation of the work is de facto all but impossible. 79  Federal Labour Court of 20 July 1994—5 AZR 627/93: being bound to work instructions is rather atypical when it comes to high-quality work. This type of activity may mean that the persons concerned enjoy a high degree of freedom when designing their work, perform work on their own initiative and are independent in terms of job content. 80 See, eg, Federal Labour Court of 16 July 1997—5 AZR 312/96. In this decision, the Court opined that delivering newspapers was a simple activity which only provided limited freedom for individual work arrangements. In the Court’s view, subordination in such cases generally arises from the fact that the deliverer is mostly assigned to a specific geographical area and is provided with a list of clients to which the newspapers must be delivered within a pre-determined timeframe. 81 See, eg, Federal Labour Court of 30 November 1994—5 AZR 704/93, according to which radio broadcasters and translators, who perform work based on service schedules, are likely to be employees, even if they are allowed to reject certain assignments. 82  Federal Labour Court of 15 March 1978—5 AZR 819/76. 83  Federal Labour Court of 3 October 1975—5 AZR 445/74 and 28 June 1973—5 AZR 19/73.

266  Bernd Waas The fact that work is performed solely or primarily for the benefit of another (Fremdnützigkeit) in the sense that ‘an employee—unlike an ­entrepreneur—is not free to use his labour in accordance with the purposes fixed by himself, at his own authority and at his own risk’, but must place it at the disposal of another person84 may also form an indicator of an employment relationship.85 Apart from this, the courts sometimes examine whether the division of opportunity and risk between the parties is fair. In the Federal Labour Court’s view, employees are usually not burdened with business risks. If a party which provides services bears entrepreneurial risk under the terms of the contract, it cannot be regarded to be objectively necessary to establish an employment relationship.86 Some authors go even further and consider it a key element that an employee, due to the extent of his or her obligations, may have lost the possibility of using his or her working abilities for his or her own entrepreneurial purposes.87 In the legal literature, it is sometimes argued that the legal qualification of a relationship should basically depend on a risk assessment. Accordingly, the key question must focus on the existence or non-existence of entrepreneurial risk. Anyone who voluntarily bears such risks shall be qualified as a self-employed worker. On the other hand, persons who either do not bear such risk or do so involuntarily shall be qualified as employees.88 However, the Federal Labour Court is reluctant to apply this approach.89 Under German law, work that is performed under an employment contract must not necessarily be carried out in person. According to section 613, sentence 1 of the Civil Code, the party under the duty of service must, in case of doubt, render that service in person; however, the parties to the contract are free to provide otherwise. Even so, the performance of work in person is an indication of the existence of a contract of employment. On the other hand, it is contraindicative if a person is allowed to delegate work to, for instance, family members.90 If a person is in no position to meet his

84 

See Federal Labour Court of 15 March 1978—5 AZR 819/76. Some authors, however, claim that by relying on this argument, the Court confuses cause and effect; see Richardi (n 29) para 16 fn 34. It may be due to this critique that the argument is no longer used in the later decisions of the Court. 86  See Federal Labour Court of 13 August 1980—4 AZR 592/78. 87  M Lieb, ‘Beschäftigung auf Produktionsdauer—selbständige oder unselbständige Tätigkeit?’ (1977) Recht der Arbeit (RdA) 210; and, more recently, R Schwarze, ‘Arbeitnehmerbegriff und Vertragstheorie’ (2005) Zeitschrift für Arbeitsrecht (ZfA) 81. See also Federal Labour Court of 29 January 1992—7 ABR 25/91, which stated that ‘in case of doubt, he is an employee who is contractually bound to another person permanently instead of having established a number of business contracts with others in the market’. 88 See especially R Wank, Arbeitnehmer und Selbständige (Munich, Verlag CH Beck, 1988) 391. 89  Federal Labour Court of 25 May 2005—5 AZR 347/04, according to which the bearing of entrepreneurial risk was ‘irrelevant’. The Court did, however, acknowledge that the person in question was a ‘quasi-salaried worker’. 90 Federal Labour Court of 16 July 1997—5 AZR 312/96; 12 December 2001—5 AZR 253/00; 4 December 2002—5 AZR 667/01 (highly controversial). 85 

The Concept of ‘Employee’: The Position in Germany 267 or her contractual obligations alone, but relies on other persons whom he or she hires himself or herself, it might be that no employment relationship exists.91 As regards the issue of remuneration, it is acknowledged that an employment relationship typically involves an agreement on pay or, in any event, a ‘reasonable expectation’ that service provided will be remunerated.92 However, a service can also be provided on the basis of a so-called mandate (Auftrag), which is characterised by the very fact that the service provided is not remunerated.93 In any event, it is acknowledged that the mandate (in the context of voluntary work) may not lead to the circumvention of employment law.94 In addition to these indicators, there are quite a number of secondary indicators for the existence of an employment relationship. Among these are periodic payments or otherwise, payments in kind, recognition of entitlements that are typical for an employment relationship, travel payments by the person requesting the work, granting of annual leave, payment of income tax and social security contributions, and keeping and retaining social documents at the place of work. An indication of an employment relationship may also be when a person places his or her entire working abilities at the disposal of another person and any secondary activities are prohibited under the contract. Another indication may be the provision of tools or materials by the person requesting the work.95 Conversely, business registration has not been considered to be of relevance by the courts.96 In any event, the Federal Labour Court has made it clear that secondary ­indicators

91  For instance, the organiser and conductor of a spa orchestra, who acts towards his ­client as the owner of a music agency and enters into contracts with musicians himself in order to be able to perform on stage, was held by the Federal Labour Court to not be an employee. See Federal Labour Court of 20 January 2010—5 AZR 99/09. Another example arises with regard to franchising agreements: usually, no employment relationship exists if the franchisee has the right to meet his or her contractual obligations with the help of other persons and if he or she depends on the support provided by others for factual reasons. See, eg, Federal Civil Court of 27 January 2000—III ZB 67/99; and State Labour Court Düsseldorf of 27 August 2010— 10 Sa 90/10. 92  See s 612(1) of the Civil Code: ‘Remuneration is deemed to have been tacitly agreed if in the given circumstances it is to be expected that the services are only rendered for remuneration.’ See also State Labour Court Rhineland-Palatinate of 6 August 2015—5 Sa 123/15: ‘If a person provides services for another person, anticipating that he will be appointed heir of that person, no claims will, in principle, arise under an employment relationship.’ 93  See s 662 of the Civil Code, which states that ‘by accepting a mandate, the mandatary agrees to carry out a transaction entrusted to him by the mandator for the mandator gratuitously’. This implies that the mandatary in case of doubt may not transfer the performance of the mandate to a third party (s 664(1), sentence 1) and, in addition, is in principle subjected to instructions of the mandator (s 665 sentence 1). 94  Federal Labour Court of 29 August 2012—10 AZR 499/11 (the Court held that v ­ oluntary work at a telephone counselling service did not qualify as employment). 95  See, eg, Federal Labour Court of 8 June 1967—5 AZR 461/66. 96  Federal Labour Court of 19 November 1997—5 AZR 653/96 (concerning the status of a driver who had his own car).

268  Bernd Waas must be treated with caution. In particular, the conduct of the other party to the contract (for instance, not demanding a certificate of incapacity for work in case of illness) is irrelevant if it is attributable to an erroneous legal position. Apart from that, the actual facts may be mere appearances which are either incidental or can freely be changed by the employer by virtue of his or her power to organise his or her business.97 C.  The Relevance of ‘Economic Dependence’ The Federal Labour Court considers ‘economic dependence’ to neither be required nor in itself to be sufficient when determining ‘employee status’.98 According to section 12a of the Act on Collective Bargaining Agreements (Tarifvertragsgesetz), in particular, economic dependence as such may lead to a qualification as a ‘quasi-salaried worker’. In the Federal Labour Court’s view, this definition of ‘quasi-salaried worker’ proves the point that mere ‘economic dependence’ does not suffice when determining whether a person qualifies as an ‘employee’.99 V.  THE PRINCIPLE OF PRIMACY OF FACTS

In Germany, the principle of ‘primacy of facts’ is acknowledged in the sense that the ‘true nature’ of the contract, irrespective of its ‘labelling’ by the parties, is the determining factor when legally assessing the relationship between the parties.100 In the Federal Labour Court’s view, the basic idea of employment law as an instrument of protecting employees from the (regularly economically more powerful) employer would be impaired if the latter could set aside this protection by simply using contractual language that points in the direction of a ‘free service contract’. Mandatory provisions of employment law may not be evaded by choosing a contract which does not mirror the facts. How the parties to a contract describe their legal relationship is not decisive, nor are the desired legal consequences of a contract

97 

Federal Labour Court of 9 March 1977—5 AZR 110/76. Labour Court of 16 March 1994—5 AZR 447/92; 27 June 2001—5 AZR 561/99; 20 September 2000—5 AZR 61/99. 99  Federal Labour Court of 20 September 2000—5 AZR 61/99, where ‘the legal concept of “employee” arises primarily from a converse argument based on the legal position of selfemployed persons as well as quasi-salaried employees. From those rules, it follows that neither economic dependence nor the fact that a certain activity may be performed for only one client are such as to justify qualification as an “employee” … The statutory grading system is based not on a dual system, but on a tripartite system which differentiates between employees, similar persons and self-employed workers’. 100  See, eg, Federal Labour Court of 19 November 1997—5 AZR 653/96. 98 Federal

The Concept of ‘Employee’: The Position in Germany 269 of any relevance.101 The only thing that matters is the ‘actual content’ of the contract, which is derived from its practical implementation.102 As a result, if a contract is implemented in a way that contradicts the parties’ labelling thereof, its practical implementation will be decisive.103 However, the elements of practical implementation are only suitable for identifying an employment relationship if it is not atypical but a manifestation of a contractual practice that has been continuously observed by the parties.104 However, given all of the above, it should be noted that insisting on the existence of an employment relationship may in exceptional cases constitute so-called contradictory behaviour (widersprüchliches Verhalten) and may accordingly be contrary to good faith if the other party, on the basis of the relationship as lived by the parties, relied and was allowed to rely on the non-existence of an employment relationship.105 VI.  QUALIFICATION IN FULL

A contract between two parties can only either be a contract of employment or any other contract. There is no third option according to which only part of a contract can be qualified as a contract of employment. On the other hand, an employee and an employer are perfectly free to conclude an additional contract, which as such does not qualify as a contract of employment. The parties can conclude such a contract at any time. In practice, contractual relationships other than those based on a contract of employment exist quite frequently.106 For instance, the employer may lease an apartment to the employee that is associated with the employment relationship. The law may also make specific provisions in reference to an employment 101 

Federal Civil Court of 25 June 2002—X ZR 83/00. Federal Labour Court of 19 November 1997—5 AZR 653/96. 103  See, eg, Federal Labour Court of 22 March 1995—5 AZB 21/94 (employee status of a member of Scientology). In its ruling, the Court underlined that establishing obligations under the bylaws of an association may not result in binding rules of labour law being evaded. See also in this regard CJEU of 17 November—C-216/5 on the legal status of a Red Cross nurse. See also Federal Labour Court of 21 February 2017—1 ABR 62/12. 104  Federal Labour Court of 11 August 2015—9 AZR 98/14. The principle of the ‘primacy of facts’ as described above also applies in cases in which the courts examine the question whether a sub-contractor’s employees, who work on the premises of an entrepreneur, are vicarious agents of that sub-contractor or temporary agency workers. See Federal Labour Court of 27 January 1993—7 AZR 476/92: ‘Legal qualification of a contract as a contract to temporarily assign workers … is dependent on its actual business content. If practical implementation of the contract differs from the contractual language, the former will prevail.’ Under a law which will come into force on 1 April 2017, a new sentence will be added to section 1 of the Act on Temporary Agency Work, according to which temporary agency work exists if a worker is integrated in the establishment of a hirer-out and is subjected to the latter’s instructions. 105  Federal Labour Court of 17 April 2013—10 AZR 272/12. 106  See T Kania, Nichtarbeitsrechtliche Beziehungen zwischen Arbeitgeber und ­Arbeitnehmer (Frankfurt am Main, Peter Lang Verlagsgruppe, 1990). 102 

270  Bernd Waas relationship between the parties for the lease agreement and its association with the contract of employment. One example of this is section 576 of the Civil Code, which fixes specific periods for notice of termination in the case of associated lease agreements.107 In any event, it is generally acknowledged that establishing an employment relationship as well as other contractual relationships between the same parties may not lead to an ­evasion of employment law.108 Apart from contractual relationships, non-contractual legal relationships often exist between the parties. For instance, the parties may be liable under tort law in the event that damage is caused to the other party. The limitation of liability of employees as developed by the courts is not restricted to liability arising from the contract, but applies to liability under tort law as well.109 VII.  LIMITS TO THE FREEDOM OF CONTRACT

The legal concept of ‘employee’ is mandatory and cannot be disposed of by the parties to the contract. If a person on the basis of an objective legal assessment qualifies as an ‘employee’, the parties are not allowed to set this qualification aside by insisting that their contract is not a contract of employment. The Federal Labour Court has made it clear that: [S]ocial protection of employees afforded by mandatory employment law provisions cannot be circumvented by the parties by labelling an existing employment contract differently and thereby, either consciously or unconsciously, disposing of any legal consequences linked to the existence of an employment relationship.110

If the parties did not choose what, in light of the facts, would be the ‘appropriate’ legal form for their contractual relationship, they fall short of that legal form (the so-called Rechtsformverfehlung) and are held to it on the basis of the objective circumstances.111

107  Section 491(2) no 4 of the Civil Code makes specific provision for loan agreements that employers conclude with employees as an additional benefit to the employment contract. 108  See Preis (n 14) para 611 BGB fn 36; E Rumpenhorst, ‘Personalunion zwischen Arbeit­ nehmer und Selbständigem im gleichen Unternehmen?’ (1993) Neue Zeitschrift für A ­ rbeitsrecht (NZA) 1067–69 109  See, eg, Federal Labour Court of 28 October 2010—8 AZR 418/09. 110  Federal Labour Court of 15 March 1978—5 AZR 819/76. 111 See Preis (n 14) para 611 BGB fn 41. See also V Jahnke, ‘Rechtsformzwang und Rechtsformverfehlung bei der Gestaltung privater Rechtsverhältnisse’ (1982) Zeitschrift für Handelsrecht (ZHR) 595; M Stoffels, ‘Statusvereinbarungen im Arbeitsrecht’ (2000) Neue Zeitschrift für Arbeitsrecht (NZA) 690; K Uffmann, ‘Vertragstypenzuordnung zwischen Rechtsformzwang und Privatautonomie im Bereich der ‘Neuen Selbständigkeit’—dargestellt am Beispiel der Honorarärzte’ (2012) Zeitschrift für Arbeitsrecht (ZfA) 1.

The Concept of ‘Employee’: The Position in Germany 271 However, in the opposite case (if the parties choose a ‘contract of employment’ though the contract on the basis of an objective assessment is a ‘free service contract’), the designation of the given contract by the parties usually prevails.112 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The legal concept of ‘employee’ is also mandatory in the sense that it cannot be disposed of by the parties to a collective bargaining agreement. This has been made clear with regard to ‘quasi-salaried workers’, but equally applies to employees. ‘Quasi-salaried workers’ are basically persons who are equally socially vulnerable like employees and therefore in equal need of protection. On one occasion, the Federal Labour Court conceded that the term ‘equal need of protection’ is not clear and must therefore be further substantiated. However, the Court also made clear that the parties to collective bargaining cannot extend the legal term ‘quasi-salaried workers’ beyond its statutory boundaries and thus include other groups within the scope of the collective agreement. If they do so, such a collective agreement is partially invalid.113 B.  Custom and Practice Deviations on the basis of custom and practice are not acknowledged in Germany. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions In social security law, a rebuttable presumption with regard to employment existed in the past.114 It was introduced in 1998 in an effort to fight bogus employment and consisted of four criteria (non-employment of a ­compulsorily insured worker, lasting activity for one entrepreneur, service 112  Federal Labour Court of 13 March 1987—7 AZR 724/85; 12 September 1996—5 AZR 1066/94; 18 March 2014—9 AZR 694/1. 113  Federal Labour Court of 2 October 1990—4 AZR 106/90. 114  Section 7(4), sentence 1 of Social Code (Sozialgesetzbuch) IV.

272  Bernd Waas that is typically provided by an employee, and appearance on the market outside the scope of an entrepreneurial activity), two of which had to be met to trigger the presumption. Amid wide protests, especially from employers, the provision was later amended.115 In 2002, it was completely abolished. Since then, no presumptions apply in social security law. The same holds for employment law, though there are efforts in some quarters to introduce a provision presuming an employment relationship in order to effectively fight what is claimed to be an increasing use of civil law contracts by employers in an effort to evade employment law.116 B.  The Burden of Proof Introducing specific provisions on the burden of proof is discussed in the legal literature,117 but such provisions do not yet exist. Accordingly, it is basically the task of the employee to prove the existence of the requirements of an employment relationship. In practice, this leads to the need to produce extensive evidence of having been subjected to the instructions of another person.118 X.  SPECIFIC PROCEDURES

For the purposes of social security law, section 7a(1), sentence 1 of Social Code IV states that the parties concerned can request a decision about the existence of an employment relationship, unless the collection agency or another insurance carrier has not already initiated proceedings for a

115  Then three out of five criteria had to be fulfilled: non-employment of a compulsorily insured person whose income exceeded a certain amount, lasting activity for basically one client only, client or comparable person who normally uses employment contracts for these activities, activity not entailing typical features of an entrepreneurial activity, and activity being equivalent with an activity formerly performed for the benefit of the client under a contract of employment. Moreover, the presumption was partly deactivated by introducing an additional requirement of its application, namely that the person concerned had not fulfilled his or her duty to cooperate with the authorities. 116  See Jobst-Hubertus Bauer, T Klebe and A Schunder, ‘Neujustierungen im Arbeitsrecht— Aktuelle Vorschläge’ (2013) Neue Zeitschrift für Arbeitsrecht (NZA) 827. 117 This also applies to the necessary differentiation between outsourcing and temporary agency work. See, eg, B Ulrici, ‘Darlegungs- und Beweislast bei Abgrenzung von Leiharbeit und sonstigem Fremdpersonaleinsatz’ (2015) Neue Zeitschrift für Arbeitsrecht (NZA) 456; JP Francken, Neuregelung der Darlegungs- und Beweislast in Verfahren nach §§ 9, 10 AÜG’ (2014) Neue Zeitschrift für Arbeitsrecht (NZA) 1064; C Brors, Nochmals: Neuregelung der Darlegungs- und Beweislast zur Abgrenzung von Leiharbeit und Fremdpersonaleinsatz bei Werk- oder Dienstverträgen (2014) Neue Zeitschrift für Arbeitsrecht (NZA) 1377; P Schüren, ‘Beweislastumkehr zur Bekämpfung von Scheinwerkverträgen’ (2014) Betriebs-Berater 2613. 118  See, eg, State Labour Court Düsseldorf of 18 December 2014—15 Ta 582/14.

The Concept of ‘Employee’: The Position in Germany 273 ­ eclaration of employment at the time of application. Upon application, the d competent authority119 then decides the question on the basis of an overall assessment of all the circumstances of the individual case.120 This provision aims to make it easier and faster to determine whether an employment relationship exists. Moreover, it tries to provide legal certainty, especially with regard to cases bordering ‘false’ self-employment. As regards employment law, no similar procedure exists. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons In Germany, a category of workers exists that includes those who are neither ‘ordinary’ self-employed workers nor employees. Persons belonging to this category are not personally dependent or subordinated, as is the case with employees, but are ‘economically dependent’ only.121 A legal definition of these so-called ‘quasi-salaried workers’ (arbeitnehmerähnliche Personen) can be found in section 12a of the Act on Collective Bargaining Agreements (Tarifvertragsgesetz). The requirements enumerated in this provision are: first, economic dependence (as opposed to personal dependence or subordination); second, the need for social protection; third, work performed personally without the aid of subordinate employees; and, fourth, work either performed for one person mainly or where the worker relies on a single entity for more than half of his or her total income. The latter requirement must basically be understood as further substantiating economic dependence. In addition to economic dependence, the law requires the person to be in need of social protection. This is the case if—on the basis of an objective assessment—the degree of dependence is such that it is comparable with dependence that comes with employment, and the services provided are such that, according to a social typology, they are similar to that of ­employees.122 The parties to collective bargaining cannot extend the meaning of ‘social protection’. Yet, since it is a vague term, they are allowed to further substantiate it. In particular, they are in principle free to fix salary limits above which no need for social protection is deemed to exist.123 In the Federal Labour Court’s view, a need for social protection exists if there is

119 

German Federal Pension Insurance (Deutsche Rentenversicherung Bund). Section 7a(2) of Social Code IV. 121  Federal Labour Court of 15 November 2005—9 AZR 626/04. 122  See Federal Labour Court of 2 October 1990—4 AZR 106/90. 123  Federal Labour Court of 14 December 2004—9 AZR 673/03 and of 2 October 1990—4 AZR 106/90. 120 

274  Bernd Waas a need for a person to dispose of his or her working power in order to secure his or her existence, which is similar to the corresponding need of an employee.124 Because quasi-salaried workers are regarded as requiring specific legal protection, some elements of employment law are extended to them. In particular, they enjoy the right to annual leave.125 The rules on the prevention of discrimination are applicable to them as well.126 The labour courts are competent for both employees and ‘quasi-salaried workers’.127 However, it must be stressed that only single rules and provisions of employment law are (by way of analogy) made applicable to quasi-salaried workers.128 In p ­ rinciple, employment law is not applicable to them.129 In particular, neither the Act on Dismissal Protection (Kündigungsschutzgesetz) nor section 613a of the Civil Code (regarding transfers of an undertaking) can be applied. B.  Equality and Anti-discrimination Law According to section 6(1) of the General Act on Non-discrimination ­(Allgemeines Gleichbehandlungsgesetz), employees, trainees and ‘quasisalaried workers’ fall within the scope of application of the Act. This Act transposes Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons, irrespective of racial or ethnic origin, and Council Directive 2000/78/EC of 27 November 2000, establishing a general framework for equal treatment in employment and occupation in particular. According to section 1, the purpose of the Act is to prevent or stop discrimination on the grounds of race or ethnic origin, gender, religion or belief, disability, age or sexual orientation.

124  Federal Labour Court of 2 October 1990—4 AZR 106/90 and of 21 December 2010— 10 AZB 14/10. 125  Section 2, sentence 2 of the Federal Holidays Act (Bundesurlaubsgesetz). 126  Section 6(1) no 3 of the General Act on Non-discrimination (Allgemeines Gleichbehandlungsgesetz). 127  Section 5(1), sentence 2 of the Labour Courts Act (Arbeitsgerichtsgesetz). Apart from that, it should be noted that their contracts, as is in principle also the case with employment contracts (see s 310(4), sentence 2 of the Civil Code), are subject to judicial control of standard business terms (Allgemeine Geschäftsbedingungen), one of the results being that a reasonableness test must be applied to them. See s 307(1) of the Civil Code, which states that ‘provisions in standard business terms are ineffective if, contrary to the requirement of good faith, they unreasonably disadvantage the other party to the contract with the user. An unreasonable disadvantage may also arise from the provision not being clear and comprehensible’. 128  Whether the (judge-made) rules on workers’ liability apply to ‘quasi-salaried workers’ is doubtful. See State Labour Court Hesse of 2 April 2013—13 Sa 857/12 (the application of those rules in any event if the quasi-salaried worker forms part of the business organisation of the employer). 129  Federal Labour Court of 8 May 2007—9 AZR 777/06 (provision on notice periods not applicable).

13 The Concept of ‘Employee’: The Position in Greece COSTAS PAPADIMITRIOU

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

I

N GREECE, NO statutory definition of the term ‘contract of employment’ (σύμβαση εξαρτημένης εργασίας) exists. A contract of employment is a sub-category of the so-called ‘work contract’ (σύμβαση εργασίας). The term ‘work contract’ is defined in Article 648 of the Civil Code. According to the latter, a ‘work contract’ is a contract on the basis of which the worker undertakes to perform work for the employer during a fixed or indefinite period and the employer is obliged to pay remuneration. According to jurisprudence, a ‘dependent employment relationship’ to which the provisions of labour legislation apply exists if the work is performed in a position of ‘subordination’, ie, when the worker is obliged to perform the work according to the employer’s instructions concerning the place, time and manner of this performance, and when the employer is entitled to supervise and control the employee’s work performance.1 No formal requirements exist for concluding a contract of employment. A contract of employment can be based on a mere oral agreement between the parties concerned.2 Certain conduct implying an intention to form a contract of employment can give rise to the formation of a contract of employment.

1 Areios Pagos (Supreme Court) 602/1998, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1989, 36; Areios Pagos (Supreme Court) 376/2006, Δελτίον Εργατικής Νομοθεσίας ­(Bulletin of Labour Law) 2010, 569. 2  D Zerdelis, Ατομικές Εργασιακές Σχέσεις (Athens-Thessaloniki, Sakkoulas, 2015) 306.

276  Costas Papadimitriou Not even an agreement on salary is necessary.3 Article 649 of the Civil Code provides that a salary shall be deemed to have been tacitly agreed if the work performed is completed under the usual circumstances in consideration of a salary only. However, certain contracts need to be concluded in writing, such as part-time employment contracts,4 renewals of fixed-term employment contracts,5 temporary agency work employment contracts,6 and private law employment contracts with the state, public entities or municipalities. A contract of employment may be null and void. Various grounds for nullity are provided in Greek civil law. They are linked to the person’s capacity to enter into the contract7 and to the fact that the contract contravenes a provision of law designed for the protection of the public interest or is contrary to public mores.8 Nullified acts are considered either absolutely9 or relatively null, depending on which party may invoke the nullity. A contract of employment may also be voidable if it is based on a vice of consent, such as in the case of error, deception or threat.10 The nullity of a part of the contract entails the nullity of the entire contract if it can be deduced that the contract would not have been concluded without the voidable part.11 However, in most cases, violations may lead to only parts of the contract being void. In any case, a void contract shall not produce ab initio any legal effects. Nevertheless, in the event of nullity of an employment contract, specific rules apply. If the employee has started to perform work under a void contract, the annulment is effective only for the future.12 Given that the complete reversal of the transaction to its original state is no longer possible, the invalidity could change in favour of the employer and to the detriment of workers. Consequently, as regards the past, the employer is required to pay in accordance with the provisions of unjust enrichment.13 The employees are entitled to the pay that would have been due for an employee who has a legal contract in the same occupation

3 Areios Pagos (Supreme Court) 1274/1994, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1984, 428; Areios Pagos (Supreme Court) 1824/1983, Επιθεώρηση Εργατικού Δικαίου (Review of Labour Law) 1985, 220. 4  Article 38, para 1 of Law 1892/1990. 5  Article 5, para 2 of Presidential Decree 81/2003. 6  Article 124, para 1 of Law 4052/2014. 7  Article 136 of the Greek Civil Code. 8  ibid art 178. 9  ibid art 180. 10  ibid arts 140–53. 11  ibid art 181: ‘The nullity of a part entails the nullity of the transaction as a whole if it can be deduced that the transaction would not have been concluded without the void part.’ 12  G Leventis and C Papadimitriou, Ατομικό Εργατικό Δίκαιο (Athens, DEΝ, 2011) 320. 13  Articles 904 f of the Greek Civil Code.

The Concept of ‘Employee’: The Position in Greece 277 with the same qualifications and abilities.14 The employer is also required to pay severance as provided by law15 and remains responsible for the health and safety of all employees, including those whose contract is considered null or has been nullified. B.  Employment Relationship: Basic Definition There is no statutory definition of the term ‘employment relationship’ (σχέση εξαρτημένης εργασίας). An employment relationship must, in principle, be based on a contract of employment. Under the so-called Doctrine of Contract (συμβατική θεωρία), the contract of employment forms the legal basis for the exchange of work and pay. In principle, an employment relationship can only result from a contractual agreement between the parties concerned.16 However, there are some exceptions. In the event of a transfer of undertaking, the new employer takes over the rights and duties associated with the existing employment relationships at the time of the transfer.17 In the event that the employment of a temporary agency worker in the user undertaking continues after the end of the assignment or the total duration of the assignment exceeds 36 months, a contract of employment is deemed to exist between the temporary agency worker and the user undertaking.18 Finally, the law provides for certain compulsory contracts. The employment relationship is not the result of the will of the employer and the employee. Rather, the law19 imposes on the employer the conclusion of an employment relationship with certain categories of persons, such as veterans of war, disabled persons and members of large families. The fact that a contract is, in principle, required to form an employment relationship derives from the notion of the freedom of contract, which enjoys constitutional protection under Article 5, para 1 of the Greek Constitution. The compulsory contracts mentioned above pass the constitutional test since the limitation to the freedom of contract on the part of the employer is justified under the so-called principle of the social state, as they

14 Areios Pagos (Supreme Court) 974/1991, Επιθεώρηση Εργατικού Δικαίου (Review of Labour Law) 1993, 508; Areios Pagos (Supreme Court) 141/1989, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1990, 21. 15 Areios Pagos (Supreme Court) 1022/1993, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1994, 244. 16  Zerdelis (n 2) 317. 17  Article 4 of Presidential Decree 178/2002. 18  Article 117, para 4(a) of Law 4052/2012. 19  Law 2643/1998.

278  Costas Papadimitriou are measures to protect vulnerable categories of employees.20 Regarding the position of temporary agency workers, it is argued that the legal fiction of an employment relationship with the user undertaking corresponds to a qualification of a real situation arising after the end of the assignment between the employee and the employer, which creates rights in favour of the employee.21 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition There is no general statutory definition of the term ‘employee’ (εργαζόμεν ος), only a judge-made one. According to this definition, an employee is a person who performs his or her work subject to the employer’s instructions concerning the workplace, time and manner of the performance of work, and where the employer is entitled to carry out supervision and control functions to ascertain the employee’s compliance.22 This definition points to the fact that in the performance of his or her duties, the employee is directed by another. In other words, he or she is subordinated to or personally dependent on another.23 The term ‘employee’ forms a uniform term in the sense that it applies to all parts of employment law. It is also generally used with the same meaning in social security law and tax law. B.  Employer: Basic Definition The term ‘employer’ (εργοδότης) is not legally defined. It is indirectly derived from the term ‘employee’.24 Accordingly, an employer is the person in whose service another person performs work in the context of an employment relationship involving subordination. Any (natural or legal) person can qualify

20 Areios Pagos (Supreme Court) 864/1984, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1985, 505. Areios Pagos (Supreme Court) 990/1995, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1996, 117. 21 Areios Pagos (Supreme Court) 742/2009, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2010, 490. 22 Areios Pagos (Supreme Court) 602/1998, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1989, 36; Areios Pagos (Supreme Court) 376/2006, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2010, 569. 23 Areios Pagos (Supreme Court) 528/1971, Επιθεώρηση Εργατικού Δικαίου (Review of Labour Law) 1971, 1505. Areios Pagos (Supreme Court) 947/1992, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1994, 283. 24  I Koukiadis, Εργατικό Δίκαιο-Ατομικές εργασιακές σχέσεις (Athens-Thessaloniki, Sakkoulas, 2014), 365.

The Concept of ‘Employee’: The Position in Greece 279 as an employer. On the other hand, a group of companies as such cannot be the employer as it lacks the quality of a legal entity.25 However, in some cases the law refers to groups of companies, eg, in the case of consultation26 or the transfer of companies.27 In the case of temporary agency work, two kinds of employers are identified: the direct employer (the temporary work agency) and the indirect employer (the user company).28 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Various sub-types of employees exist to which specific rules apply. Greek law still distinguishes between blue-collar (manual) workers (εργάτες) and white-collar employees (υπάλληλοι). White-collar employees perform ‘intellectual’ work, ie, work which requires specialised work experience, theoretical education, initiative and responsibility.29 Blue-collar workers, in turn, perform tasks that predominantly require physical effort. The significance of this distinction mainly concerns the term of notice and the calculation of redundancy payments. Greek doctrine strongly criticises the above distinction, asserting that it is contrary to the principle of equal treatment of employees as it provides less favourable protection for blue-collar workers without valid justification.30 The category of managerial employees (διευθύνοντες υπάλληλοι) is also of major significance. Even if these persons are personally dependent on the employer, they exercise the typical tasks of an employer, hold senior positions in the company, occupy responsible and key posts, or exercise entrepreneurial or employer functions.31 As a result, the law treats managerial employees differently from other employees.32 They are excluded from the

25 Areios Pagos (Supreme Court) 1222/2003, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2004, 710. 26  Article 16, para 1 of Law 1767/1988. 27  Article 8 of Presidential Decree 178/2002. 28  Article 115 of Law 4052/2012. 29 Areios Pagos (Supreme Court) 389/1950, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1950, 293; Areios Pagos (Supreme Court) 637/2005, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2006, 23. 30  Koukiadis (n 24) 276 ff. However, according to jurisprudence, this distinction is not contrary to the constitutional principle of equality: see Areios Pagos (Supreme Court) 1281/2010, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2010, 1506. 31 Areios Pagos (Supreme Court) 1033/2008, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2009, 2015; Areios Pagos (Supreme Court) 660/2000, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2000, 1029. 32  Article 2 of Law 2269/1920.

280  Costas Papadimitriou protective restrictions relating to working time33 (working hours, rest day, pay for overtime and night work and pay for work on Sundays, and annual leave). In addition, various sub-groups of employees exist: (a) Apprentices (μαθητευόμενοι) are young people who combine practical training with the performance of work.34 The predominant characteristic of an apprenticeship relationship is to learn a craft, and not remuneration.35 The period of apprenticeship ranges from two to five years, depending on the given case. During this period, apprentices are deemed to be manual workers for the purposes of the application of labour law provisions.36 (b) Domestic workers (οικιακοί εργαζόμενοι) reside in their employer’s house and perform work in the employer’s household. They do not fall within the scope of labour legislation on working time.37 (c) Home workers (κατ’οίκον εργαζόμενοι) are persons who work in their own home. The rules of labour law only apply to home workers where their work relationship with the person for whom they supply their labour exhibits all the characteristics of working as an employee under a contract of employment. However, home workers who reside in small towns with fewer than 6,000 inhabitants do not fall within the scope of labour legislation on working time, remuneration and termination of the contract.38 (d) A teleworker (τηλεργαζόμενος) is a worker who uses telecommunication technology to replace the daily commute to a central place of work. Some special rules are provided by law39 and in the national collective agreement40 which transposes the European Collective Agreement on Telework. (e) The law provides some special rules on the employment of professional athletes. Written agreements between a professional athlete and a new club concerning his or her transfer signed before the beginning of the transfer period are invalid.41 Financial disputes are referred to

33 Areios Pagos (Supreme Court) 1511/2004, Επιθεώρηση Εργατικού Δικαίου (Review of Labour Law) 2004, 1272. 34  Leventis and Papadimitriou (n 12) 175. 35  Areios Pagos (Supreme Court) 19/1987, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1987, 1002; Areios Pagos (Supreme Court) 1592/2009, Επιθεώρηση Εργατικού Δικαίου (Review of Labour Law) 2010, 1272. 36  Article 1 of Royal Decree 16/18.7.1920. 37 Areios Pagos (Supreme Court) 1352/2009, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2010, 449. 38  Article 44 of Law 2628/1953. 39  Law 3846/2010. 40  National Interprofessional Collective Agreement of 2006/2007. 41  Article 92 of Law 2725/1999.

The Concept of ‘Employee’: The Position in Greece 281

(f)

(g)

(h) (i)

special committees of the relevant sport organisations in order to achieve quick dispute resolution.42 Maritime employment contracts are regulated by special rules taking the particular features of their work into account. The basic source of these rules is the Private Maritime Law Code.43 The provisions of common labour legislation apply only secondarily. Finally, seamen’s work is regulated by special collective agreements.44 The position of private law employees in the public service differs from that of employees in the private sector. Special rules on pay and dismissal apply to them.45 Their legal status in many respects resembles that of civil servants. Labour law does not fully cover those working in agriculture or in raising of livestock.46 Finally, there are two specifically designated groups of persons who are legally deemed to be employed in a dependent way: tourist guides47 and cinema and television technicians.48 The law provides that such persons are deemed to be employed in a dependent way irrespective of the specific features of their work performance.

B.  The Establishment of a Specific Category of ‘Workers’ A category of ‘workers’ does not exist in Greece. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration A contract of employment is characterised by a relationship of personal dependence or subordination between the parties. In this regard, it is crucial to determine whether and to what extent a person is subjected to another

42 

ibid art 95. Law 3816/1958. 44  Law 3276/1944. Collective seafarers labour agreements are concluded following negotiations between shipowners and the seafarers unions. See the collective agreement for coastal passenger ships, which was ratified by Decree No 3525/15.01.2014. 45  Presidential Decree 410/1988. 46 Areios Pagos (Supreme Court) 614/1966, Επιθεώρηση Εργατικού Δικαίου (Review of Labour Law) 1967, 154; Areios Pagos (Supreme Court) 72/1975, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1975, 269; Areios Pagos (Supreme Court) 794/1995, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1996, 14. 47  Article 37 of Law 1545/1985. 48  Article 2 of Law 358/1976 and art 6 of Law 1597/1986. 43 

282  Costas Papadimitriou person’s power to direct and to exercise control. Pursuant to the established line of judicial decisions, the power of direction may cover work content, the mode of work performance, time, working period and place of work.49 In ‘measuring’ whether a person is sufficiently subordinated to justify the qualification of the relationship as one of employment, the Supreme Court applies the so-called ‘qualitative’ criterion. Accordingly, the Court50 puts aside the quantity of the relevant criteria ascertained in each case and highlights the ‘qualitative’ element, that is, the quality of the worker’s engagement and dependence which ‘necessitate protection by the rules of labour law’. This qualitative appreciation of the criteria may differ depending on the given case, and takes the type and nature of the work into account. The decisive criteria do not necessarily have to be fully met in an individual case. Moreover, the Supreme Court does not determine abstract criteria in advance that must be fully met in any given individual case. There is no single criterion among the many criteria that must be applied in the process that is truly indispensable. Instead, various criteria are used by the courts as indicative of the existence of an employment relationship. The core of any legal qualification of a contract in any event is an ‘overall general assessment’. In deciding individual cases, the courts take a ‘holistic view’ on whether a person qualifies as an ‘employee’.51 The elements required to determine personal subordination often vary from one case to the other. The freedom of a person to arrange his or her work and to decide upon his or her working hours is certainly of key importance. However, the extent of the necessary power to direct may vary from case to case with respect to location, time and work content. For instance, members of outdoor staff are typically free to determine their place of work. Even so, they may easily qualify as employees on the basis of considerations of work instructions as well as time restraints.52 In a similar vein, telework may entail considerable freedom with regard to working time. Still, teleworkers are often employees, as the employer may essentially determine their job content and give orders or control how their work is carried out.53 Likewise, persons such as artists, doctors or other highly skilled professionals are usually not subjected to instructions on how to perform their job. However, they may qualify as employees if in all other respects it can be said that the individual performs

Areios Pagos (Supreme Court) 177/1999, Ελληνική Δικαιοσύνη (Greek Justice) 1999, 1055. Areios Pagos (Supreme Court) 28/2005, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2005, 996; Areios Pagos (Supreme Court) 1688/2007, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2008, 18. 51 Areios Pagos (Supreme Court) 977/2000, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2002, 532. 52 Areios Pagos (Supreme Court) 1352/2009, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2010, 449. 53  Leventis and Papadimitriou (n 12) 217. 49 

50 

The Concept of ‘Employee’: The Position in Greece 283 work in a relationship of personal subordination.54 In short, the degree of subordination required depends on the characteristics of the concrete activities being carried out.55 The fact that the person forms part of the organisational structure of the undertaking is generally of little value, as it only constitutes a secondary indicator. B. Indicators The essential feature of employment is that a person (the employee) is directed by another (the employer). Hence, the presence of work instructions and control over the work being performed are the key elements of subordination.56 However, work instructions as such do not suffice to justify the qualification of a person as an employee, since a self-employed worker can also be the addressee of instructions. On the other hand, in the case of work requiring higher qualifications, instructions concerning the manner of work tend to be the exception.57 Another primary indicator of subordination is that work may be carried out within specific hours or at an agreed place. As a general rule, the Supreme Court denies employee status if the individual is proven to essentially be free in his or her decision as to when to perform the work.58 That the availability of a person is required under a contract, on the other hand, points to subordination.59 The fact that work is performed solely or primarily for the benefit of another in the sense that ‘an employee—unlike an entrepreneur—is not free to use his labour in accordance with objectives determined by himself, on his own authority and at his own risk’, but has to place his or her labour at the disposal of another person may also be indicative of an employment relationship.60

54 Areios Pagos (Supreme Court) 469/1988, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1969, 1; Areios Pagos (Supreme Court) 1855/1989, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1989, 605. 55  Leventis and Papadimitriou (n 12) 41. 56 Areios Pagos (Supreme Court) 473/1994, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1995, 270; Areios Pagos (Supreme Court) 668/1991 Επιθεώρηση Εργατικού Δικαίου (Review of Labour Law) 1993, 646. Leventis and Papadimitriou (n 12) 42. 57 Areios Pagos (Supreme Court) 669/1985, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1986, 219. 58 Areios Pagos (Supreme Court) 1657/1995, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1997, 955; Areios Pagos (Supreme Court) 1045/1997, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2001, 1102. 59 Areios Pagos (Supreme Court) 1657/1995, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1997, 955. 60  Areios Pagos (Supreme Court) 1494/1994, Ελληνική Δικαιοσύνη (Greek Justice) 1994, 339.

284  Costas Papadimitriou Another question is the existence of entrepreneurial risks. He or she who voluntarily bears such risks is to be qualified as a self-employed person.61 On the other hand, persons who either do not bear such risk or do so involuntarily are considered employees. As a general rule, work which is due under an employment contract must be carried out in person.62 According to Article 684 of the Civil Code, a contractor does not have the right to substitute himself or herself to perform the work. However, the parties to the contract are free to provide otherwise. In addition to all those indicators, there are quite a number of ‘subsidiary indicators’ for the existence of an employment relationship. Among them are travel payments by the person performing the work,63 the granting of annual leave64 and the payment of social security contributions.65 An employment relationship may be deemed to exist if the person places his or her entire working abilities at the disposal of another person and when any secondary activities are prohibited under the contract. Another element is the provision of tools or materials by the person requesting the work. Business registration, on the other hand, has been regarded by the courts as being of no relevance.66 C.  The Relevance of ‘Economic Dependence’ ‘Economic dependence’ is neither required nor in itself sufficient when determining ‘employee status’. The provisions of labour law are not extended to economically dependent workers. The only exception concerns collective agreements. Pursuant to Article 1 of Law 1876/1990, the latter shall also apply to persons who: [W]hile not bound by a dependent employment relationship, perform their work in a situation of dependence and require protection similar to that enjoyed by employees.

Therefore, associations of economically dependent persons or trade unions can conclude collective agreements with associations of persons for whom

Areios Pagos (Supreme Court) 1657/1995, Ελληνική Δικαιοσύνη (Greek Justice) 1997, 1550. of Thessaloniki 1116/1985, Επιθεώρηση Εργατικού Δικαίου (Review of Labour Law) 1985, 544. 63  Court of Appeal of Athens 9185/1996, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 1997, 959. 64  Court of Appeal of Athens 5833/1996, Δίκαιο Επιχειρήσεων και Εταιρειών (Law of Enterprises and of Companies) 1997, 394. 65  Areios Pagos (Supreme Court) 45/2001 Επιθεώρηση Εργατικού Δικαίου (Review of Labour Law) 2002, 672. 66 Areios Pagos (Supreme Court) 329/1990, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 190191, 283. 61 

62  Tribunal

The Concept of ‘Employee’: The Position in Greece 285 they perform work so that they obtain benefits provided to employees by collective bargaining. However, this possibility has never been used in practice. To our knowledge, such a special collective agreement has never been concluded, nor has a clause on specially economically dependent workers been inserted into a collective agreement. Therefore, to date, this option has only been of theoretical value. Notably, in Greece, economic dependence is also important as it constitutes one of the elements for establishing a presumption of an employment relationship (see section IX.A below). However, for tax purposes, it is provided67 that an individual is liable as an employee to pay taxes on his or her income if: (a) a written contract exists; (b) he or she has declared that a professional establishment has been set up at his or her residence; and (c) more than 75 per cent of his or her income is derived from one other person only for whom he or she provides services or if he or she does not provide services to more than three other persons. V.  THE PRINCIPLE OF PRIMACY OF FACTS

In Greece, the principle of ‘primacy of facts’ is endorsed. Τhe determining factor in the legal assessment of the relationship between the parties is therefore the ‘true nature’ of the contract, irrespective of the contractual qualification.68 The contractual qualification of the legal nature of the relationship does not bind the judge, who has the power to requalify the contract if the facts lead him or her to another conclusion and more specifically to a dependent employment status.69 VI.  QUALIFICATION IN FULL

A contract between two parties can either only be a contract of employment or another contract. There is no third option according to which only part of a contract qualifies as a contract of employment. On the other hand, an employee and an employer are perfectly free to conclude additional contracts which as such do not qualify as contracts of employment.70 Such contracts can be concluded at any time. In practice, some contractual relationships 67 

Article 12 of Law 4172/2013. Pagos (Supreme Court) 977/2000, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2002, 560. 69 Areios Pagos (Supreme Court) 672/2000, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2002, 547. 70  eg, an employee of the company can conclude a contract with his or her employer providing that during his or her free time, he or she will work as a commercial agent of the company. 68 Areios

286  Costas Papadimitriou other than those based on a contract of employment quite often exist. In any event, it is generally acknowledged that establishing an employment relationship as well as other contractual relationships between the same parties may not result in an evasion of employment law.71 VII.  LIMITS TO THE FREEDOM OF CONTRACT

Even if private autonomy plays an important role in labour relations, freedom of contract is limited by the provisions of labour law. For this reason, the legal concept of ‘employee’ is mandatory and cannot be disposed of by the parties to the contract. Consequently, if a person qualifies as an ‘employee’ on the basis of an objective legal assessment, the parties are not allowed to set this qualification aside by insisting that their contract is not a contract of employment. It is clear that the social protection of employees afforded by the mandatory employment law provisions cannot be circumvented by the parties labelling an actually existing employment contract differently and thereby, either consciously or subconsciously, disposing of any legal consequences associated with the existence of an employment relationship.72 However, in the opposite case (ie, where the parties choose a ‘contract of employment’, though the contract on the basis of an objective assessment is a ‘free service contract’), the designation of the contract by the parties usually prevails,73 taking into account the principle of favouring the employee. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Social dialogue mechanisms and collective bargaining do not play a particular role in defining employment relationships. The definition of such relationships is rather a question of law and jurisprudence. Collective agreement provisions cannot curtail the dependent status of the work and the application of labour law.

71 Areios Pagos (Supreme Court) 201/2015, Δίκαιο Επιχειρήσεων και Εταιρειών (Law of Enterprises and of Companies) 2016, 404. 72 Areios Pagos (Supreme Court) 451/2013, Επιθεώρηση Εργατικού Δικαίου (Review of Labour Law) 2013, 88. 73 Areios Pagos (Supreme Court) 1936/2008, Δελτίον Εργατικής Νομοθεσίας (Bulletin of Labour Law) 2008, 730.

The Concept of ‘Employee’: The Position in Greece 287 B.  Custom and Practice Deviations on the basis of custom and practice are not acknowledged in Greece. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions A legal presumption concerning the status of the individual exists. The presumption of self-employment74 was abolished in 201075 and the opposite presumption in favour of an employment relationship was introduced in an effort to fight bogus employment. In the event that the work is provided personally, solely or primarily for the same employer for nine consecutive months, it is presumed that the contract is a dependent employment contract. It is a rebuttable presumption and the employer has the possibility of proving that the worker is not subject to his or her instructions concerning workplace, time and manner of performance of work. In social security law, a rebuttable presumption exists with regard to employment. It is provided76 that if the relevant evaluation establishes that the distinction between dependent and independent work is ‘difficult’, it shall be considered that a dependent employment relationship exists, which is subject to the insurance of employees’ social security scheme (‘IKA’). B.  The Burden of Proof It is usually the task of the plaintiff to prove that the requirements for an employment relationship are being fulfilled.77 Thus, in practice, the plaintiff worker must produce evidence of his subordination to the instructions of the employer. However, as already mentioned above, a rebuttable presumption in favour of an employment relationship exists.78 X.  SPECIFIC PROCEDURES

Εmployment disputes may only be dealt with by the courts on the basis of the constitutional principle of access to justice. The competence of an 74 

Law 2639/1998. Article 1 of Law 3846/2010. 76  Article 2, para 1 Law 1846/1951. 77  Article 338 of the Greek Code of Civil Procedure. 78  A Stergiou, Απασχολούμκενος και μισθωτός στην κοινωνική ασφάλιση (Athens-Thessaloniki, Sakkoulas, 2005) 445 ff. 75 

288  Costas Papadimitriou a­ rbitration court cannot be established on the basis of a collective agreement or a labour contract. Arbitration clauses on individual labour disputes are prohibited.79 Financial disputes of professional athletes are referred to special committees of the relevant sport organisations in order to achieve a quick dispute resolution.80 The Labour Inspectorate (ΣΕΠΕ) can assume a mediating role.81 Its task is not only to implement social policy and supervise and control its enforcement, but also to mediate in order to resolve individual and collective disputes. The mediation procedure is informal and employees often request this form of intervention. Social security organisations and the tax law administration may intervene and conclude that an employment relationship exists for social security or tax purposes, despite the declarations of the parties that they have established an independent relationship. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons A category of ‘employee-like’ persons does not exist in Greece. However, social security law provides that a worker who performs work in the public sector under a contract of service and with conditions comparable to an employee is affiliated with the social security regime of employees.82 B.  Equality and Anti-discrimination Law All types of workers and self-employed persons fall within the scope of application of the law on discrimination on the grounds of sex.83 The law84 on discrimination on the grounds of racial or ethnic origin, religion or belief, disability, age or sexual orientation makes no distinction between categories of employment. It can therefore be concluded that all types of workers and self-employed persons are covered by the law.

79  Article 867 of the Civil Procedure Code: ‘each party has to prove the facts that are necessarily required to support their claim or counterclaim. Then the plaintiff bears the burden of proving the existence of the contract and its nature’. 80  Article 95 of Law 2725/1999. 81  Article 3 of Law 3996/2011. 82  Article 2, para 3 of Law 1846/1951. 83  Article 5 of Law 3896/2010. 84  Article 4 of Law 3304/2005.

14 The Concept of ‘Employee’: The Position in Hungary GYÖRGY KISS

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HERE IS NO explicit statutory (legal) definition of the term ‘­ contract of employment’ (munkaszerződés) in Hungarian labour law. Never­ theless, the Hungarian Labour Code (Munka Törvénykönyve, hereinafter LC)1 contains the title ‘employment contracts’. The definition of ‘employment relationship’ is summarised under this title (see below). In addition, case law has interpreted the definition of employee on the basis of various aspects.2 The LC determines the so-called mandatory content of contracts of employment. Section 45(1) of the LC stipulates that the parties must specify the employee’s personal base wage and job function in the employment contract. Legislation contains other features on the possible content of contracts of employment. Accordingly, the term ‘employment relationship’ must be defined in the employment contract. Failing this, the employment relationship will be considered to have been concluded for an indefinite duration.3 The workplace of the employee must also be defined in the employment contract. Failing this, the place where the employee usually carries out the

1 2012.

évi I. törvény a Munka Törvénykönyvéről. Judgement No BH2015 89: the contract of employment can be evaluated by the tax authorities from the perspective of taxation; BH2015 78: the general statement of work does not exclude the existence of an employment relationship; EBH12 MB: the company owner can simultaneously be an employee of the company; BH2009. 220: an analysis of the substantial content of the employment relationship; BH2003. 213: the nature or type of work. 3  LC, s 45(2). 2  See

290  György Kiss work will be considered the workplace.4 In the absence of an agreement to the contrary, all employment relationships are concluded on the basis of the general principle of full-time employment.5 In accordance with the content of the contract of employment, the mandatory (compulsory) elements are not convertible.6 Due to the binding nature of the content of employment contracts, it is not possible to agree otherwise on these elements—eg, personal wage and field of work—in the collective agreement. As regards the content of the contract of employment, reference must be made to section 19 of the LC. Under this provision, the parties may render the conclusion, amendment or termination of the agreement subject to specific, uncertain events (conditions) in the future. Still, any condition that would alter the employment relationship to the disadvantage of the worker or bring about the termination of the employment relationship may not be applied.7 The phrasing at the beginning of the cited sentence is uninterpretable in several aspects. In line with section 43 of the LC, which describes the relationship between the labour contract and the so-called employment relationship rule (statutes and collective agreement), this rule seems unreasonable. According to this provision: ‘Unless otherwise provided for by law, the employment contract may derogate from the provisions of Part Two and from employment regulations to the benefit of the employee. Such derogations shall be adjudged by comparative assessments of related regulations.’8 Apart from this, the parties to the contract of employment cannot use the different clauses and entitlements to alter the content of the employment relationship. In other words, parties do not have the possibility of utilising the principle of clausula rebus sic stantibus.9 Section 44 of the LC regulates the formal requirements of the contract of employment. Under this provision, the contract of employment may only be concluded in writing. The employee may only claim invalidity on the grounds of failure to conclude the contract in writing within a period of 30 days from the first day on which he or she commences work. This provision promotes the stability of the employment relationship. 4 

ibid s 45(3). ibid s 45(5). 6  In this context, it should be mentioned that the economic crisis demonstrated that labour law built on norms and labour contracts with binding (compulsory) content were not sufficiently flexible and could not adapt to the changes to satisfy the oft-mentioned flexicurity requirements extorted by the economic situation. 7  LC, s 19(1). 8 See the rejection of the so-called Rosinentheorie: B Detlev, Günstigkeitsprinzip im Arbeitsrecht (Berlin, Duncker & Humblot, 1994) 169–71. 9  See G Kiss, ‘Opportunities and Limits of Application Principles and Civil Code Rules in Hungarian Labour Law—Crisis Management with Means of Civil Law’ (2015) 4 European Labour Law Network—ELLN Working Paper 1–25. 5 

The Concept of ‘Employee’: The Position in Hungary 291 The contract of employment has a so-called ‘independent’ system of i­nvalidity. This regulation can be found in the LC and it is to some extent separate from the general rule of the invalidity of contracts, which is ­regulated in the Hungarian Civil Code.10 Under section 27(1), any agreement that infringes upon any employment regulation or is entered into by circumventing employment regulations, or that is obviously in contradiction to good morals will be null and void. It should be emphasised here that the expression ‘agreement’ concerns all types of agreements in principle, but in reality only covers the contract of employment. The term ‘employment regulation’ is defined in section 13 ‘as legislation, collective agreements and works council agreements, and the binding decisions of the conciliation committee adopted in accordance with Section 293’. Section 27(2), in connection with the above-mentioned principle, limits the free choice of contract, by stipulating that: Artificial [bogus] agreements shall be null and void, and if such agreement is intended to disguise another agreement, it shall be judged on the basis of the disguised agreement.

As a general rule, if an agreement is annulled, it will be considered void, unless the relevant employment regulation stipulates another legal consequence. The party concerned may allege the invalidity of an annulled contract without a time limit, and the court observes the nullity of the agreement of its own motion.11 Section 28 regulates the avoidance of concluding a contract of employment. Under this regulation, an agreement may be avoided if either party was acting under a misapprehension regarding any material fact or circumstance at the time of contract conclusion, provided that the mistake was caused by or could have been recognised by the other party. In addition, an agreement may be avoided if the parties had the same mistaken assumption regarding a material circumstance at the time of conclusion. The mistake will be considered to impact a material circumstance if the party, but for the mistake, would not have concluded the contract or would have done so only on fundamentally different contractual terms. The time limit for bringing an action for avoidance of concluding a contract is 30 days, commencing upon the recognition of the error or upon the cessation of duress. The statute of limitations applies mutatis mutandis to the time limit for bringing action for avoidance, with the exception that the right to avoidance terminates after six months. The other party must be notified in writing regarding the

10  See Act V of 2013 on the Civil Code (2013 évi V törvény a Polgári Törvénykönyvről), BOOK SIX; LAW OF OBLIGATIONS, Title VI Invalidity Chapter XVIII, Nullity and Avoidance, Chapter XIX Legal Consequences of Invalidity. 11  LC, s 27(3).

292  György Kiss e­ xecution of a legal statement for contestation within the time limit in the above sentence. If successfully challenged, an agreement will be void. The contract of employment—according to its type—is a dare-facere contract. This nature determines the legal consequences of invalidity. In accordance with the general rules, the rights and obligations arising from or in connection with an invalid agreement are to be treated as though they existed under a valid agreement. Unless the LC provides otherwise, employers must terminate—with immediate effect—any legal relationship created on the basis of an invalid agreement if the parties fail to abolish the cause of invalidity.12 Apart from this, employers are liable to pay their workers’ average pay covering a given period as would otherwise be due in the event of dismissal by the employer. Furthermore, the rules on severance pay also apply if the employment contract is declared invalid for reasons attributable to the employer and has to be terminated pursuant to section 29(1). If any part of an agreement is deemed invalid, the relevant regulations for employment relationships must be applied instead, unless the parties would not have concluded the agreement without the invalid part.13 Under section 30, in the event that the invalidity of an agreement results in damages, the relevant provisions of the LC on liability for damages are applicable.14 B.  Employment Relationship: Basic Definition The recent Hungarian Labour Code—Act I of 2012—came into force on 1 July 2012. This Code replaced Act XXII of 1992, the previous Labour Code (hereinafter PLC).15

12 

ibid s 29(1). example, the minimal wage provisions must be applied in the absence of agreement between parties. 14  Namely, the general provisions of the liability for damages include Act V of 2013 on the Civil Code. 15 In the PLC, no ‘one-sentence’ legal definition existed for ‘employment relationship’. Nevertheless, the LC introduced regulations for a method to enable an implicit definition of employment relationship. However, s 75/A of the PLC reads as follows: ‘(1) The type of contract underlying an employment relationship may not be chosen with a view to restricting or violating the provisions that provide for the protection of the employee’s rightful interests. (2) The type of contract, irrespective of the name, shall be chosen so as to best accommodate all applicable circumstances, such as the parties’ prior negotiations and their statements made at the time of contracting or during the performance of work, the nature of the work to be performed, and the rights and obligations set out under Sections 102–104.’ Sections 102–04 of the PLC referred to the above-contained essential elements (criteria) of the employment relationship. 13  For

The Concept of ‘Employee’: The Position in Hungary 293 The current Hungarian LC provides a definition of employment r­elationship under the title ‘Employment Contracts’. Section 42 reads as follows: An employment relationship is deemed to have been established by entering into an employment contract. Under an employment contract, the employee is required to work as instructed by the employer; the employer is required to provide work for the employee and to pay wages.

The substantive content of the employment relationship is explained in detail under the title ‘Performance of Employment Contracts’. Under the main components of the employment relationship, employers employ employees in accordance with the rules and regulations on contracts of employment, employment regulations and the provisions of other relevant legislation. Unless otherwise agreed by the parties, employers provide the necessary working conditions.16 Employees are required to appear at the place and time specified by the employer, in a condition fit for work and to be at the employer’s disposal in a condition fit for work during their working time for the purpose of performing work. Employees must perform work in person, with the level of professional expertise and workmanship that can be reasonably expected, and in accordance with the relevant regulations, requirements, instructions and customs. Employees must perform work in such a way that demonstrates the trust vested in them for the job in question, and they are to cooperate with their co-workers.17 The above-mentioned mutual duties and obligations are the main indicators of the employment relationship. These duties and obligations are interpreted by the Ministry of Employment and the Ministry of Finance.18 The primary criteria are: the obligation (of the employee) to perform the work in person; the obligation (of the employer) to offer employment; integration in the business, organisation and work arranged by the employer; and subordination as such. The secondary criteria are the right to direct; ­determination of the duration of work and the schedule of working time; determination of the place of employment/work; payment in kind (protection of wages); performance of work within the employer’s infrastructure (means of production); ensuring the conditions for occupational safety and health; and a contract in writing. This administrative directive was repealed with the release of the new Labour Code (Act I of 2012 on the Labour Code) in 2012, but its main principles have remained applicable. See in more detail section IV below.

16 

LC, s 51. ibid s 52. 18  7001/2005 (MK 170) joint administrative directive (együttes irányelv). 17 

294  György Kiss As regards the definition of ‘employment relationship’, Act LXXV of 1996 on Labour Inspection (törvény a munkaügyi ellenőrzésről19—­hereinafter referred to as LI) contains important provisions on the definition of ‘relationships covering employment’ (foglalkoztatásra irányuló jogviszony). This definition is a ‘genus-definition’, covering relationships based on a c­ ontract of employment, civil service relationships and public service relationships. The definition of a ‘relationship covering employment’ is relatively broad. Section 1(3) denotes ‘all relationships in which the subject matter of the service is work carried out to the employer against remuneration’. Due to the broad nature of this definition, it was necessary to clarify the above-mentioned type of employment. Section 1(4) specifies that, for the purpose of the LC, the following are not considered employment relationships: a contract of agency and a contract for employment (which are regulated under the Civil Code); work carried out on the basis of volunteer activity in the public interest; members of a cooperative on personal contributions to the cooperative on the basis of a contract for employment or a contract of agency and activity of commercial agents. Section 1(5) is important as regards the determination or qualification of the employment relationship. Under this provision: On the basis of the facts following an official inspection, the inspector is entitled to qualify a legal relationship between the employer and the person working for him, or serving as a basis for posting employees to perform work, as well as a relationship established by virtue of actual employment. For this, the employer shall provide all evidence on the basis of which it can be stated that the work was carried out for him by virtue of the legal relationship under (4) hereof, or without remuneration.

In connection with the definition of relationships covering employment, the labour inspection examines whether the proper form and incorporation of the mandatory content required for establishing an employment relationship and, furthermore, the provisions on the employer’s obligation to provide written information on the conditions of employment have been implemented. Chapter XV of the LC contains ‘Special Provisions Relating to ­Employment Relationships According to Type’. In other words, that chapter regulates forms of atypical employment, such as fixed-term employment relationships, on-call work, job sharing, employee sharing, simplified employment and occasional work relationships.20

19 1996. 20 

évi LXXV Törvény a munkaügyi ellenőrzésről. LC, ss 192, 193, 194, 195 and 201–02, respectively.

The Concept of ‘Employee’: The Position in Hungary 295 Chapter XVI contains special provisions on temporary agency work.21 In essence, the definitions provided therein are in accordance with the requirements of Directive 2008/104/EC. Nevertheless, the duration of ­ ­assignments is remarkable. Under section 214(2), the duration of ­assignments may not exceed five years, including any period of extended assignments and ­re-assignment within a period of six months from the time of termination of the worker’s previous employment, irrespective of whether the assignment was concluded by the same or by a different temporary work agency. Chapter XVII of the LC regulates specific employment relationships between school cooperatives and their members.22 A school cooperative (employer) and its full-time student members (employees) may enter into a fixed-term employment relationship in order for the student to perform work for a third party (client) with a view to supplying services to that third party.23 The legal status of working persons (students) is ‘employee’. This solution was controversial for several reasons. First, the relationship between temporary agency work and employment in the framework of school cooperatives was unclear: ‘In practice, school cooperatives function under the aegis of special temping agencies.’24 The current Hungarian LC has tried to distinguish between two forms of employment. However, despite all endeavours, the similarities were larger than the differences. Furthermore, alone the legal status of the above-mentioned ‘employee’ raised more difficulties which the Commission addressed (among others, see the right to paid annual leave). A new concept of the regulation was therefore developed. The essence of this solution is that the relationship between members of the school ­cooperative and the students is not considered an employment relationship. The members of the school cooperative are required to personally contribute/be personally involved in the school cooperative’s activity. The so-called ‘membership agreement’ is the legal framework of this ­personal contribution/involvement. The legal nature of this agreement is a contract of assignment.25 21 

ibid ss 214–22. ibid ss 223–26. 23 The client is entitled to give instructions to the employee and cooperates with the employer. He or she provides access to the employer’s representative at the place of work and makes available information for the employer on issues concerning the work. During the period of work performed by the employee, the customer will exercise and discharge the employer’s rights and obligations relating to compliance with the provisions on: occupational safety; the employment of women, young workers and persons with reduced ability to work; and working time, rest period and the records of these. 24  A Kun, ‘“Hungaricum” in Labour Law in the Field of Youth Employment’ in HA Cuesta (ed), Empleo Juvenil: un reto para Europa—Youth Employment: A Challenge for Europe (Cizur Minor, Arenzadi, 2016) 73. 25  The new regulation can be found in Act X of 2006 on Cooperatives (2006 évi X. törvény a szövetkezetekről). The regulation is based on Act V of 2013 on the Civil Code, which contains the basic provisions on cooperative societies. The school cooperative is a specific type of 22 

296  György Kiss Finally, it is worth noting that the concept of ‘employment relationship’ is not affected by the transfer undertaking under Hungarian law.26 Under section 36(1) of LC, the rights and obligations arising from employment relationships that exist at the time of the transfer of an economic entity (an organised grouping of material or other resources) by way of a legal transaction are transferred to the transferee. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition The Hungarian LC contains general statements on both the employee and the employer. Under section 34(1), ‘employee’ (munkavállaló) is defined as any natural person who works under a contract of employment. The definition of ‘employee’ is associated with the contract of employment and the employment relationship. In this context, the definition is interpreted in very broad terms.27 It is highlighted that the above-mentioned rules are cogent and, under section 35, no deviation from these provisions is permitted. B.  Employer: Basic Definition The Hungarian LC contains a general and abstract definition of ‘employer’. Section 33 states that an ‘employer’ (munkáltató) is any person who has the capacity to perform legal acts and who is party to an employment contract with employees. This is a fairly general or abstract definition involving mostly general criteria. Consequently, an employer may be: (i) (ii) (iii) (iv)

a natural person (who is not an individual entrepreneur/self-employed); an individual entrepreneur/self-employed person; a legal person; a state.

c­ ooperative. One of the features of cooperatives is a personal contribution by their ­members. The new regulation takes this requirement as a starting point. Section 10/B(1) states: ­‘The ­full-time student as a member of a school cooperative can make her/his personal contribution within the framework of services offered by school cooperatives to third persons ­(hereinafter: external service). The legal nature of this agreement is an assignment. The provisions of the Labour Code shall apply with respect to minimum wage and annual leave. 26 See Chapter VI of the LC: ‘Transfer of Employment Contracts upon the Transfer of Enterprise’. 27  On the broad definition of ‘employee’ in the EU, see R Rehbahn, ‘Die Arbeitnehmerbegriffe des Unionsrechts in der neureren Judikatur des EuGH’ (2012) 1 Europäische Zeitschrift für Arbeitsrecht 4–34. The broad interpretation of this concept is self-evident; therefore, no special practice has evolved in the Hungarian case law.

The Concept of ‘Employee’: The Position in Hungary 297 Act CXV of 2009 on Private Entrepreneurs and Sole Proprietorships, in turn, regulates the activity of individual entrepreneurs. Under section 16 of this Act, private entrepreneurs may employ employees under a contract for outworkers as specified in other legislation, contributing family members and students of special schools and vocational schools. Furthermore, Act V of 2013 of the Civil Code regulates the status of ‘legal person’.28 Legal persons may be established in a form defined by law to pursue activities and objectives that are not prohibited by law; any establishment made in violation of this provision is null and void. A legal person must have its own name and seat, its own assets separate from its members and founders, and a management and representative body—that is, all types of legal persons can act as employers. There are two Acts that cover the status of the state as employer. Act CXCIX of 2011 on Civil Servants regulates the legal status of employees employed by an administrative body. These employees carry out ancillary activities. Act XXXIII of 1992 on Public Servants provides for the conclusion of a contract of employment (instead of an appointment) with persons employed in higher management positions. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees The Hungarian LC provides a generalised definition for ‘employment relationship’. However, this does not mean that no other specific types of employment relationships exist. Sections 196–97 contain rules on teleworking (távmunka). Section 196(1) provides a legal definition of teleworking: ‘Teleworking’ shall mean activities performed on a regular basis at a place other than the employer’s facilities, using computers and other means of information technology (hereinafter referred to collectively as ‘computing equipment’), where the end product is delivered by way of electronic means. In the employment contract, the parties shall agree on the worker’s employment by means of teleworking.

In sections 198–200, the term ‘outworkers’ (bedolgozó) refers to so-called home workers. Section 198(1) provides a legal definition: Outworkers may be employed in jobs that can be performed independently, and that is remunerated exclusively on the basis of the work done. 28 Under s 3(1), all legal persons have legal capacity and are entitled to rights and have ­ bligations. The legal capacity of legal persons covers all rights and obligations that do not o inherently pertain solely to individual human beings. The provisions on the protection of ­personality rights also apply to the inherent rights of legal persons, unless such protection, by virtue of its very nature, can only be given to private persons.

298  György Kiss The employment contract must define the work performed by the employee, the place where the work is carried out, and the method and extent of any expenses covered. The employee’s home or another place designated by the parties is construed as the place of work. The significant feature is that in the absence of an agreement to the contrary, the employee shall carry out the work using his or her own means. For this reason, unless otherwise agreed, the employer’s right of instruction is limited to specifying the method and work processes to be used by the employee.29 Sections 204–07 deal with the ‘Employment relationship with public (owner) employers’ (köztulajdonban lévő munkáltató). The regulation provides a definition for ‘public (owner) employer’.30 The essence of this regulation is that the rules are stricter than for other employment relationships. Thus, in the collective agreement or in the contract of employment, no derogation from the regulations provided for in the LC on the duration of the notice period and severance pay is permitted. Sections 208–11 contain rules on ‘executive employees’ (vezető állású munkavállaló).31 The contract of employment may invoke the provisions on executive employees if the employee is in a position deemed to be of considerable importance in relation to the employer’s operation, or if the individual holds a post of trust and his or her salary is at least seven times the mandatory minimum wage. Collective agreements do not apply to executive employees. It is emphasised that no justification by the employer is required when the employment relationship of executive employees is terminated.32 There are no special provisions on the legal status of persons who are employed by close relatives. These persons are considered to be ­employees. Athletes can have a dual legal status. Their employment is regulated in Act I of 2004 on Sport.33 Athletes can conclude a contract of e­ mployment

29  As regards the regulation on ‘outworkers’, it must be mentioned that the legal nature of this form of employment was under discussion prior to the new LC’s entry into force. Previously, the legal status of outworkers was regulated by a decree. It was unclear whether this form of employment ought to be classified under labour or civil law. The current LC is unequivocal: the outworker is a specific type of employee, and any relationship that such a worker enters is an employment relationship established by a contract of employment. 30  ‘Public employer’ refers to a public foundation or business association in which the state, a municipal government, an association of municipal governments vested with legal personality, a multi-purpose micro-region association, a development council, a minority self-­government body, an association of minority self-government bodies vested with legal personality, a budgetary agency or a public foundation has majority control either on its own or collectively (s 204(1) of the LC). 31  ‘Executive employee’ shall mean the employer’s director and any other person under his or her direct supervision and authorised—in part or in whole—to act as the director’s deputy. 32  Section 210(1) of the LC states that when employment is terminated by the employer, the following shall not apply: a) s 65(3)(c); b) s 66(1–6); and c) s 68(2). These rules regulate protection against termination, prohibition and justification of termination. 33 2004 évi I. törvény a sportról.

The Concept of ‘Employee’: The Position in Hungary 299 or a contract of service with a sports club. The same solution can be applied to artists, performers and journalists. When the employer is a so-called s­tate-owned undertaking (eg, a theatre), the legal status of the ­artist is ‘­public servant’. B.  The Establishment of a Specific Category of ‘Workers’ No specific group of workers has been established under Hungarian labour law. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration In Hungary, the above-described unofficial indicator system (a joint administrative directive) was jointly published by the Ministry of Labour and the Ministry of Finance in 2005. General (primary and secondary) criteria were established for the purpose of determining the existence of an employment relationship (7001/2005 (MK 170)). This system has been heatedly debated.34 Most of the criticism is directed at the random selection and evaluation of indicators. There is no doubt that the indicator system contains a number of ambiguous elements. They can only be analysed in comparison to the regulations of the LC.35 The most important indicators are work instruction, work control and integration of the employee into the employer’s operations. Section 42(2) provides that under a contract of employment, the employee is required to follow the employer’s instructions. This aspect is regulated in section 54, which provides that employees shall refuse to carry out an instruction if it results in a direct and grave risk to the health of others or the environment. Employees may refuse to carry out an instruction if it violates employment regulations or if it resulted in a direct and grave risk to the life, physical integrity or health of the employee. An employee’s fundamental obligations are highlighted in section 52(1) (a) and (b). According to this regulation, employees must appear for work at the place and time specified by the employer in a condition fit for work.

34 

G Berke and G Kiss, Munkajogi ekommentar (Budapest, Complex Kiadó, 2012) 418–25. G Kiss, Munkajog, 8 (Budapest, Osiris, 2005) 80–85; T Gyulavári, Munkajog (Budapest, Eötvös Kiadó, 2012) 35–43. 35 

300  György Kiss This is a sui generis obligation—the so-called obligation of being at the employer’s disposal in a condition fit for work during their working time for the purpose of performing work.36 This passive obligation is relatively independent from the obligation to perform work, which has various ­characteristics. This passive obligation, in itself, expresses integration into the employer’s organisation. This is legal subordination or subordination by law. In this regard, it must be emphasised that voluntary, free commitment is the principal element of the contract of employment. This approach to the subordination of employees is important in terms of their economic independence (see section IV.C below). It should be highlighted that the Hungarian approach to work instructions, work control and integration is in line with those of other Member States.37 B. Indicators In addition to the main indicators discussed above, legislation and practice include others as well. The joint publication by the Ministry of Labour and the Ministry of Finance classifies numerous factors, which are not considered criteria of the contract of employment. Thus, pursuant to section 44, a contract of employment may only be concluded in writing. The employee may only allege the invalidity of the contract on the grounds of failure to put it in writing within a period of 30 days from the commencement of work. This is an important rule, but cannot be deemed a criterion of the contract. Failure to put the contract in writing is a cause for its invalidity.38 The contract of employment establishes a bilateral synallagmatic obligation. For this reason, the employer is required to pay wages. Under the above-mentioned joint document, this is a primary criterion: the contract of employment is null and void without this element. The joint document lays down the employee’s obligation to perform work in person. This element is also deemed a primary criterion, and the LC contains the same rule.39 Under the joint document, the employer’s obligation to employ the employee is another primary criterion and a crucial element of the employment relationship. This criterion is reinforced in the LC.40

36 

L Román, Munkajog—Elméleti alapvetés (Budapest, Tankönyvkiadó, 1989) 130–32. ‘Regulating the Employment Relationship in Europe: A Guide to ­Recommendation No 198’, Governance and Tripartism Department International Labour Office, Geneva ­European Labour Law Network (ELLN) March 2013, 36–41. 38  LC, s 44, second sentence. 39  ibid s 52(1)(c). 40  ibid s 51(1). 37  See

The Concept of ‘Employee’: The Position in Hungary 301 The joint document specifies several criteria considered to be secondary elements of the employment relationship. They include: (i) work to be carried out within specific hours or at an agreed place; (ii) the provision of tools/materials by the person requesting the work; (iii) coverage of travel expenses by the person requesting the work etc. C.  The Relevance of ‘Economic Dependence’ ‘Economic dependence’ has relevance in practice. Nevertheless, it should be emphasised that ‘economic equality’ between parties cannot always be identified in traditional private law relationships. It follows that the substantive feature of subordination is ‘legal dependence’. ‘Economic dependence’ is manifested in different legal institutions.41 V.  THE PRINCIPLE OF PRIMACY OF FACTS

The PLC emphasised that the contractual freedom of parties is not u ­ nlimited.42 The provisions referred to continue to be applied in case law.43 The rule highlights the importance of the primacy of facts. A similar regulation has not been included in the recent LC, but the principle of ‘primacy of facts’ is reinforced. Section 27(2) states that bogus agreements are null and void, and if such an agreement is intended to disguise another agreement, it is to be judged on the basis of the disguised agreement. However, this has not yet been developed in legal practice in related to the current LC. VI.  QUALIFICATION IN FULL

Under section 45(1), the parties must specify the employee’s personal base wage and job function in the contract of employment. These are the minimum mandatory elements of the contract of employment. In addition, the parties may agree on other issues as well. However, this possibility does not mean unlimited agreement options. The LC regulates two agreements that are closely linked to the employment relationship. Section 228 contains rules of the ‘non-competition a­ greement’ 41  These include, for example, protection of wages (ss 154–64 of the LC) and protection against dismissal (ss 65–67). 42  See s 75.A(1). 43  See BH2003 432 ‘If between the parties exists an employment relationship according to the content of contract of employment, the parties cannot exclude this contract from the scope of labour law. Namely, the principle of freedom of contract refers to determination of the content of contract, but not its denomination.’

302  György Kiss and section 229 covers so-called ‘study contracts’. These agreements are not evaluated as contracts of employment. For example, the amount of compensation for the term of the non-competition agreement may not be less than one-third of the base wage due for the same period. Apart from these contracts, the parties can conclude additional agreements that are covered by private law. Such agreements can be preferential support contracts (for the purchase of an apartment or various loan and grant agreements). These contracts can be linked to the employment ­relationship, but will not affect the content of contracts of employment. For example, the remuneration received under a ‘non-competition agreement’ is not considered a wage.44 However, there are contracts that the parties—as employers and ­employees—may not conclude. The same parties may not conclude both a contract for employment and a contract of employment for the same job, nor can they conclude two part-time contracts for the same job. These prohibitions are not regulated in the LC; they have been developed by jurisprudence.45 There are no relevant non-contractual relationships outside the scope of labour law that need to be taken into account. In this context, it should be noted that employee liability for damages is regulated in the LC. In this respect, the general provisions of liability for damages do not apply.46 The general rules are found in the CC. The employee’s liability is limited cum viribus and pro viribus.47 As mentioned in section VI.A above, there are many contracts that are covered by private law and can be concluded between the parties as employers and employees. However, a precondition to the conclusion of such contracts exists: these contracts may not be contrary to the purpose of the employment relationship. VII.  LIMITS TO THE FREEDOM OF CONTRACT

In Hungary, labour law belongs to the system of private law. Labour law constitutes a special component of private law. The most important characteristic of Hungarian labour law is the difference in content of the contract of employment and the employment relationship. The basis of the content of the contract of employment is the will of parties, while the basis of the content of the employment relationship—in addition to the will of parties— is the content of collective agreements and cogent rules of legislation. 44 

BH2015 M.7. M.13: the establishment of an agreement for personal contribution is not ­possible until a contract of employment with the same conditions has been concluded. 46  General provisions of liability for damages are regulated in the Hungarian Civil Code. 47  LC, ss 180–91. 45 EBH2012

The Concept of ‘Employee’: The Position in Hungary 303 As regards the freedom of contract, it should be emphasised that the parties are free to decide what type of contract they want to conclude. This can be a contract of employment, a contract for employment or a ­contract of service. If the parties want to conclude a contract of employment, their will only prevails within the limits prescribed by law. The contract of ­employment includes mandatory elements. The parties must agree on these components; a contract without an agreement on the basic wage and job function cannot be considered a contract of employment. At the same time, if the parties were to choose a contract of service as the foundation of their relationship, this would—on the basis of an objective ­assessment—qualify as a contract of employment; the will of the parties would be irrelevant. For this reason, it can be established that an indirect coercion as regards the choice of contract prevails in Hungarian labour law. This principle was reflected in section 75/A of the PLC. In summary, it can be concluded that parties cannot alter the legal nature of their contract of employment if their ‘new’ relationship features the criteria of an employment relationship. In this case, the parties establish a bogus contract of employment. There is an explicit principle in judicature that a contract is not evaluated on the basis of its title, but on the basis of its content. In practice, however, parties are not free to enter into employment relationships if they do not qualify objectively. In this respect, the following principles should be kept in mind. First, all work activities may be subject to a contract of employment. Second, certain work activities may be subject to contracts of employment and other types of contracts (lawyers, doctors etc). In this connection, it is important to note that parties may choose their type of contract. The content of a legal relationship is stated in the agreement. Third, there are certain work activities that can be exclusively performed on the basis of a contract of employment in accordance with the abovementioned indicators. However, in this case, the content of a legal relationship is identified by objective assessment and not by the title of the contract. Whereas the content of the contract of employment contains mandatory elements, the employee cannot waive his or her employee status under the contract of employment. Many legal institutions are linked to the legal status of the employee and do not exist in traditional private law. This includes the social supply systems,48 restrictions and prohibitions of dismissal by the employer,49 provisions for the protection of wages50 etc.

48  Act III of 1993 on the Social Supply System and the Social Administration (A szociális ellátásokról és a szociális igazgatásról). 49  LC, s 65. 50  ibid ss 154–65.

304  György Kiss VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners In Hungary, because of the respective mandatory features of the contract of employment, the latter can be considered a contract with inconvertible content—at least with regard to the substantial elements.51 For this ­reason, the social partners have less opportunity to substantiate the notions of ‘employee’, ‘contract of employment’ or ‘employment relationship’. These definitions are regulated in the LC and concretised in case law. This fact is reflected in the regulation of the LC on the content of collective agreements. Under section 277, the scope of a collective agreement may cover: (i) (ii)

the rights and obligations arising out of or in connection with employment relationships; the conduct of the parties relating to the conclusion, implementation and termination of the collective agreement, and the exercise of their rights and obligations.

Consequently, the collective agreement may not, as a general rule, regulate fundamental substantial concepts. B.  Custom and Practice A relevant custom or practice has not developed due to the existence of detailed regulations in Hungarian labour law. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions An employment contract is defined in the LC as a contract under which the employee is required to work as instructed by the employer, and the employer is required to provide work for the employee and to pay wages. However, no statutory legal presumption exists.

51 Kiss (n 9); G Kiss, ‘The Importance of Pacta Sunt Servanda and Clausula Rebus Sic Stantibus in Relation to the Alteration (Gestaltung) of the Content of the Employment ­Relationship—Crisis Management with Means of Labour Law; The Hungarian Lesson’, Paper to the Labour Law Research Network Conference, University of Amsterdam, 25–27 June 2015.

The Concept of ‘Employee’: The Position in Hungary 305 B.  Shifting of the Burden of Proof The provisions on the burden of proof in the LC are the same as the ­general rules of evidence provided under the Act on Civil Procedure (törvény a ­polgári eljárásról).52 Thus, in connection with the issuance of legal declarations, in the event of a dispute, the burden of proof as to whether the service of the process has been properly executed lies with the person issuing the legal declaration. As regards the legal status of the employee, the burden of proof does not shift.53

X.  SPECIFIC PROCEDURES

There are no specific procedures that bring about a binding or non-binding decision on the existence of a contract of employment or an employment relationship. Sections 27–29, which regulate the invalidity of the contract of employment, should be mentioned here. Part Four of the LC contains the rules on so-called labour disputes. Section 285(1) is a general rule. Under this provision, employees and employers may raise any claim arising from the employment relationship or covered by the Act, ie, trade unions and works councils may submit claims arising from this Act, a collective agreement or a works agreement to the court. The legal status of ‘employee’ may be verified by the Labour Inspectorate and the tax and social security authorities. These authorities may analyse the legal relationship on the basis of its content. The indicators of an employment relationship play an important role in this regard. The authorities are required to prove or disqualify the claim. The employee and employer may appeal against the authorities’ decision. The competencies of the Labour Inspectorate, tax administration and social security administration belong to the public administration. For this reason, the process is an administrative procedure.54

52 1952

évi III. törvény a polgári eljárásról. There is only one case in which the burden of proof is reversed. Act CXXV of 2003 regulates the requirements of equal treatment and the promotion of equal opportunity (2003 évi CXXV Törvény az egyenlő bánásmódról és az esélyegyenlőség előmozdításáról). Under s 19(1), in procedures initiated due to a violation of the principle of equal treatment, the injured party or the party entitled to assert claims of public interest must prove that: the injured person or group has suffered a disadvantage; and the injured party or group possesses the characteristics defined in s 8 of the Act. Under s 19(2), if the case described in s 19(1) has been proven, the other party shall prove that it has observed or, in respect of the relevant relationship, was not obliged to observe the principle of equal treatment. 54  See Act CLX of 2004 on the General Rules of Administrative Proceedings and Services (A közigazgatási eljárás általános és szolgáltatásáltalános szabályairól). 53 

306  György Kiss XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons The legal status of ‘employee-like’ persons is not regulated under the LC. There was an attempt to regulate the legal status as ‘worker’ during the discussions on the current LC, but the draft was rejected by both employers and trade unions.55 The subjects of the draft of the current LC covered persons working on the legal basis of a genuine contract for employment or a commission in the case of which legal subordination cannot be traced between the parties. Nevertheless, the basis of their cooperation is a legal dependency, which indicates the necessity of social protection on one side and the power of the client on the other. This arrangement of the relationship between an individual entrepreneur and his or her client is similar to the legal relationship that exists between an employee and the employer. Based on these considerations, the elements of social protection were specified as a first step: leave, the notice period, severance pay and liability for damages as well as provisions relating to the mandatory minimum wage.56 An individual entrepreneur works for another person—mostly or exclusively—in person, regularly and on a long-term basis.57 These criteria also characterise an employment relationship, but in the above-mentioned relationship, the right of the client to pass orders is not present and the client or customer does not organise the work of the individual entrepreneur. It should be noted that an individual entrepreneur performs work using his or her own equipment, but under the rules of the current LC, this is possible in the case of an employment relationship as well. The most important element of this regulation was the description of the indicators of economic dependence. The starting point was the limitations of the individual entrepreneur’s activity. The individual entrepreneur can 55 The drafted regulation was not in the employers’ interest, as it was regarded as just one reason for increased costs. The protection of economically dependent persons would have prevented an unbound form of employment—one without limitations. Apart from this, the employers were afraid of the consequences of collective labour law—with special regard to the extension of the scope of collective bargaining. Finally, this rule might have led to paying more attention to association opportunities. Understanding the reasons for the trade unions’ rejection is more difficult. One of the reasons for the rejection may be found in the arrangement of the current LC itself. It must be acknowledged that the trade unions’ position has significantly decreased compared to their previous status. For this reason, the trade unions adhere to the traditional concept of employee. So-called employee-like persons are not covered by trade unions. See G Kiss, ‘The Problem of Persons Having a Similar legal Status as Employees ­(Workers), and the Absence of Regulating This Legal Status in the Hungarian Labour Code— The “Third Estate” of the Labour Market’ in G Kiss (ed), Recent Developments in Labour Law (Budapest, Akadémiai Kiadó, 2013) 259–79. 56  Draft of the Labour Code, s 3(1). 57  ibid s 3(2).

The Concept of ‘Employee’: The Position in Hungary 307 only perform work for one costumer. This ‘entrepreneur’ may not carry out other gainful activity. This limitation is similar to the restrictions on employees. This rule is significant because it creates equivalence between legal and economic dependence, which is the basis of the necessity for social protection. In addition to the above-mentioned rules, the draft contained an explanatory regulation to prevent accidental abuse. For this reason, the draft laid down the definition of work ‘performed personally’ and ‘same person’. For the purposes of this draft, these were as follows: (i)

Work performed on behalf of a business organisation owned in majority by the person concerned or his/her relative shall qualify as work performed in person; (ii) The relatives of the recipient of the service/work and those engaged in a regular business relationship with the recipient of the service/work as well as those qualifying as associated businesses under the rules of taxation shall be regarded as a single person or entity.58

Finally, the legislator has incorporated social considerations. With a view to the fact that social necessity represents the basis of the regulation on the legal status of a ‘person with a status similar to employee’, provisions of subsections (1)–(3) were not to apply if the regular monthly income derived from this contract exceeded five times the mandatory minimum wage in force at the time of the performance of the contract.59 B.  Equality and Anti-discrimination Law The regulation on equality and anti-discrimination law was part of the LC until 2003. Act CXXV on equal treatment and the promotion of equal opportunities was established that year. In the field of employment, regulations under section 21 thereof on the requirement of equal treatment prevail. Under this rule, it is considered a violation of the principle of equal treatment when the employer inflicts direct or indirect negative discrimination upon an employee. In relation to this regulation, it is necessary to draw attention to the difference between ‘employment relationship’ and ‘other relationships related to employment’. Under the explanatory rules, ‘employment relationship’ means employment, a public service relationship, a civil service r­ elationship, a judicial service relationship, a legal service relationship, a prosecution ­service relationship, a professional and contracted service relationship and

58  59 

ibid s 3(3). ibid s 3(4).

308  György Kiss a professional foster parent relationship.60 These legal relationships belong to the sphere of labour law. In contrast to the above-mentioned relationships, those termed ‘other relationships related to employment’ or ‘other relationships aimed at employment’ include, among others, ‘relationships created pursuant to a contract for employment’ or an ‘assignment’. It is clear that the legislator sought to extend the requirement of equal treatment to traditional relationships in private law. This regulation makes no sense in this legal context. The solution would only be reasonable if the legal status of workers had also been regulated.

60 

ibid s 3(a).

15 The Concept of ‘Employee’: The Position in Iceland ELÍN BLÖNDAL AND INGA BJÖRG HJALTADÓTTIR

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

I

N ICELAND, THE employment relationship (ráðningarsamband) is considered to be based on the employment contract (ráðningarsamningur). There is no direct statutory or judiciary-based definition of ‘employment contract’ in Icelandic law. A common definition of ‘employment contract’ can be derived from judicial practice as a contract between the employer and the employee, where the employee obligates himself or herself to work for the employer, under his or her supervision and responsibility in return for wages.1 The principal difference between an employment contract and a service contract (verksamningur) is that the latter concerns the result of 1 VM Matthíasson, ‘Um ráðningarsamninga’ (1989) 4 Úlfljótur 367–95, 368; and the I­celandic Confederation of Labour, Stofnun ráðningarsambands og ráðningarsamningar. No clearly defined legal definition exists in statutes or judiciary practice and a substantiated legal definition was first published in 1974 by G Sæmundsson, ‘Vinnusamningar’ (1974) 24 Tímarit lögfræðinga 91–110, 101. Icelandic statutes have defined the scope and material clauses of employment contracts of manual labourers and untethered workers (ie, fishermen and craftsmen) through the centuries. The most recent Act on Employment Contracts of Agricultural Labourers is Act No 22/1928, which was restricted in terms of its scope to agricultural labourers only. The Act contains material rules for the employment contract, but no legal definition of ‘employment contract’. Article 6 of the Seamen’s Act No 35/1985 stipulates that employment contracts must be concluded in writing and provides for a defined minimum content for contracts, but contains no legal definition of the term ‘employment contract’. Other fields of employment are not bound by such specific statutes as regards the material elements of employment contracts. See G Sæmundsson, ‘Vinnusamningar’ (1974) 24 Tímarit lögfræðinga 91– 110, 101, www.asi.is/vinnurettarvefur/rettindi-og-skyldur/stofnun-radningarsambands/stofnunradningarsambands-og-radningarsamningar/#hvenaer-verdur-radningarsamband-til; LV Júlíusdóttir, Réttindi og skyldur á vinnumarkaði, 2nd edn (Reykjavik, Confederation of Icelandic Labour, 1997) 43; and H Stefansdóttir, Um ráðningasamninga (Reykjavik, Icelandic Federation of Employers, 1996).

310  Elín Blöndal and Inga Björg Hjaltadóttir the work, while the former concerns the work itself rather than the result thereof.2 Employment contracts have traditionally been found to be person-bound, subject to a condition of personal performance of the contractual obligation by both parties to the contract.3 No formal requirements are necessary to conclude a contract of employment. In accordance with customary law, an oral agreement is just as valid as a written agreement.4 The general statutory rules for the conclusion of contracts apply to the establishment of employment contracts5 just like the customary rules of contract law.6 A valid employment contract can also be based on conduct implying the intention to establish a contract of employment7 or the commencement of the performance of duties by an employee, eg, when a person starts working for an employer who hires him or her and pays him or her a salary.8 Even though a formal written employment 2 

See Sæmundsson (n 1). No clearly defined legal definition of the obligation for the performance of the employment contract in person exists in the statutes. In the Icelandic Supreme Court Case of 29 January 1960 (Trausti Jónsson and Hraðfrystihús Keflavíkur hf v Guðmundur Ibensson), the Court found that the seaman Ibensson was not obliged to work for the remainder of his fixed-term employment contract following a change in ownership of the vessel where he was contracted to work, as the change of ownership resulted in the termination of the contract. He received compensation for the remaining period of his contract. See Matthíasson (n 1). In the decision by the Supreme Court in Case No 318/2008 of 5 February 2009 (Árni Reynir Alfredsson v Þrotabú Tæki, tól og byggingavörur ehf), the Court found that an employee who was wrongfully dismissed from his position could not claim damages for loss of income as he had refused a position offered by a different employer with a comparable wage following the dismissal and claimed damages for loss of wages that he could have recovered by taking on the new post he was offered. Consequently, an employee refusing to continue working under an employment contract due to a change of employer ownership could not claim damages, as the Court found in 1960 (Trausti Jónsson and Hraðfrystihús Keflavíkur hf v Guðmundur Ibensson). That precedent cannot be considered applicable after the Court’s decision in Árni Reynir Alfredsson v Þrotabú Tæki, tól og byggingavörur ehf. No disputes on this issue have been decided by the Supreme Court since the implementation of Act No 72/2002, implementing Council Directive (EC) 2001/23 of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employee rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses [2001] OJ L 82 regarding an employee’s obligation to accept a change of employers through a transfer of undertaking. 4 As stated by the Supreme Court in Vogabúið ehf v Pétur Gíslason of 28 May 2014. The Court further stated that the party claiming that an oral contract has been concluded bears the burden of proving that statement. 5  The Act on Contracts, Agency and Void Legal Instruments No 7/1936 thus applies to the conclusion of employment contracts. 6  Competence to conclude a contract is necessary for the legal formation of a contract of employment, as set forth in arts 1–3 of Act 71/1997 on Legal Competence, and an assignation of competence is defined in ss 10–27 of the Act on Contracts, Agency and Void Legal Instruments No 7/1936. 7  The Icelandic Confederation of Labour, Ráðningarsamningar—form og efni, www.asi.is/ vinnurettarvefur/rettindi-a-vinnumarkadi/stofnun-radningarsambands/stofnun-radningarsambands-ogradningarsamningar/#radningarsamningar-form-og-efni. 8  The Icelandic Supreme Court has in repeated cases found an oral employment contract to be valid as to the extent that it can be proven in court, ie, Annáll ehf v Krisín Sigríður Jónsdóttir, 13 December 2001. 3 

The Concept of ‘Employee’: The Position in Iceland 311 contract is not a requirement to form an employment relationship, it is the most common form in practice. The general rule of not requiring formal employment contracts is not without exception, since legislation in some instances stipulates requirements for employment contracts to be concluded in writing, eg, the 1985 Seamen’s Act,9 the 1998 Local Government Act,10 the 2002 Foreign Nationals’ Right to Work Act11 and the 2005 Act on Temporary Work Agencies.12 Under collective agreements, the employer must provide employees who are hired for periods longer than one month and for more than eight hours per week, on average, with a written employment contract or a letter of engagement.13 These exceptions do not form a basis for the requirement of a written employment contract, but have an effect on the burden of proof of the agreed-upon terms of the employment contract, which should have been made in writing.14 Where a written employment contract is required by law or a collective agreement, a contract that has not been formalised can thus nonetheless be valid. In Iceland, employment contracts are most commonly concluded for an indefinite period and are valid until they are terminated by notice by one of the parties. An employment contract may also be valid for a definite period or for the duration of a specific assignment (a fixed-term contract).15 A fixed-term contract or a contract of assignment expires when the period has expired or because the work agreed upon has been concluded. The general rules regarding the termination of employment contracts do not apply

9 

Seamen’s Act No 35/1985, s 6. Local Government Act No 45/1998, art 54, s 2. 11  Foreign Nationals’ Right to Work Act No 97/2002, s 7(1). 12  Temporary Work Agencies Act No 139/2005, s 8. 13  This rule is based on Council Directive (EEC) 91/533 of 14 October 1991 on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship [1991] OJ L 288, which has been implemented in Iceland by collective agreements. The collective agreement on the implementation of Council Directive (EEC) 91/533 was amended in 2013 and now includes a liability clause against employers in breach of their obligation to inform employees of employment contract conditions. 14  See the Supreme Court Judgment in Case No 536/2015, in which a seafarer was injured while working. No written employment contract had been concluded despite a legal obligation to formalise the employment through a written agreement according to art 6(1) and (3) of the Seafarers Act No 35/1985. Since the employer had neglected to fulfil the obligation of concluding a written contract, the burden of proof as to the terms of the employment contract fell on the employer. The same rule has been applied in Supreme Court Decisions Nos 11/2011, 356/2015 and 10/2011. 15 Act No 139/2003 on fixed-term work, implementing Council Directive (EC) 1999/70 of 28 June 1999 concerning the Framework Agreement on Fixed-Term Work concluded by ETUC, UNICE and CEEP [1999] OJ L 175 defines a fixed-term employment contract as a contract for a finite period determined by objective causes (art 3 of Act No 139/2003 on fixed term-work). Fixed-term contracts have been common in the fisheries industry, where seamen and factory workers have often been hired for a specific fishing season). In Supreme Court decision in Case No 24/1986 of 3 March 1987 (Hagvirki hf v Hans Jörgen Einarsson), an oral fixed-term employment contract was proven to exist. The fixed term was for the duration of a specific part of a dam building project. 10 

312  Elín Blöndal and Inga Björg Hjaltadóttir to fixed-term contracts. They must therefore include a termination clause if they are to be terminated within the definite period.16 A contract of employment may either be void or voidable. The a­ nnulment rules of the 1936 Act on Contracts apply to employment contracts as well as to other forms of contract making a contract voidable in part or in whole.17 The annulment rules in the Act on Contracts contain material rules for the annulment of a contract entered into, inter alia, by unlawful means of duress, fraud, by taking advantage of another person’s distress, lack of knowledge or imprudence or dependence, or when the substance of a contract has changed from what was intended due to a misprint or other error on the part of the person concluding it. An annulment renders the contract as a whole non-binding towards a specific party or in general.18 The Act on Contracts additionally provides annulment rules that can render specific contract clauses invalid and non-binding or allows the court to amend the terms of a contract.19 A contract term that is in breach of law or is contrary to public mores can be set aside, in full or in part, or amended according to the Act on Contracts. An unlawful contract term can also lead to the annulment of the employment contract as a whole.20 An employment contract may be void in part if the terms of the contract are in violation of the terms of applicable collective agreements, establishing minimum wage requirements and other remuneration or benefits. The same applies to contracts that in any other way reduce the rights guaranteed to workers under the legislation.21 16  See Supreme Court Judgment in Case No 483/1998, where the Court found that a temporary employment contract for a fixed term could not be terminated in accordance with the termination procedures set forth in the applicable collective agreement or customary law since the employment contract itself only stated a period of validity, but contained no reference to the terms of termination of the contract during that period. As the employer had created the employment contract, any ambiguity in the terms was to the detriment of the employer. 17  The Act on Contracts, Agency and Void Legal Instruments No 7/1936, ss 28–37. 18  Act on Contracts, Agency and Void Legal Instruments No 7/1936, ss 28–35. 19  ibid ss 36–37. Section 36 provides that a contract may be set aside, in full or in part, or amended if it were to be considered unfair or contrary to good business practices to invoke the contract. Section 37 contains annulment rules on non-competition clauses in employment contracts. A pledge to not compete is not binding in light of all the circumstances that the commitment goes beyond what is necessary to avoid competition, or if it unreasonably restricts the freedom of employment of the person who agreed to this obligation. If the commitment is intended to remain in effect after the person’s employment at the undertaking comes to an end, the commitment shall not be binding if the person’s employment is terminated or if he or she is dismissed without being given adequate cause, of if the person lawfully relinquishes the position on the grounds that the person operating the undertaking has failed to meet his or her obligations. 20  Act on Contracts, Agency and Void Legal Instruments No 7/1936, s 36; Þ Örlyggson, ‘Efndir in natura’ (2000) 4 Tímarit lögfræðinga 285, 295–96; Supreme Court decision in Case No 255/1992. 21  Act 55/1980 on Employment Terms, s 1. Wages and other employment terms agreed in a collective agreement shall constitute the minimum terms for all wage earners in the relevant occupation within the area covered by the collective agreement. Employment contract terms that set lower wages and benefits are invalid and non-binding on the employee. The Supreme

The Concept of ‘Employee’: The Position in Iceland 313 B.  Employment Relationship: Basic Definition No statutory definition of the term ‘employment relationship’ exists in ­Iceland. The definition has evolved through judicial decisions. An employment relationship is in principle indispensably subject to the evidenced formation of a contract of employment between an employer and an employee.22 An exception to the principle is found in section 3(a) of the Act on Employee Rights under Transfer of Undertakings or Businesses. If a business or part thereof passes to another owner, the new owner assumes the rights and duties that exist under the employment relationship at the time of the transfer.23 Section 98(1) of the Insolvency Act stipulates a transfer of the employer’s obligations under employment contracts to the new legal entity formed at the time of insolvency of the employer.24 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition No general statutory definition of the term ‘employee’ (launamaður/ launþegi/starfsmaður) exists in Iceland. The term has, however, been defined in some Acts, eg, the Unemployment Insurance Act,25 the Act on Court, in its decision in Case No 351/1999, applied s 1 of Act 55/1980 to the effect that the law leaves scope for negotiations on wages and other contract terms between employers and employees limited to terms that are as beneficial or more beneficial than the terms set forth as a minimum in the relevant collective agreement, but that a determination of what is deemed to be equal to or better than shall be based on a holistic assessment of the agreed terms. See also Case No 17/2009 regarding the applicability of the minimum wage of the relevant collective agreement to employment contracts of parties that are not party to the collective agreement (employers that are not members of the association of employers that was party to the collective agreement). See further Supreme Court decision in Case No 118/2007 of 22 November 2007 (Íslensk erfðagreining ehf v Gildi lífeyrissjóði). See also E Blöndal and RM Sigurðardóttir, Labour Law in Iceland (Alphen aan den Rijn, Kluwer Law International, 2012) 47. 22 Supreme Court Decision in Case No 156/1955. The Court found that even though discussions had taken place with different parties on behalf of the municipality as to Mr ­Benediktsson’s employment with the municipality of Akranes, Mr Benediktsson had not provided sufficient evidence as to the legal formation of the contract of employment and could not make claims for payment of wages or compensation for breach of contract. 23 Act No 72/2002 on employee rights under transfers of undertakings or businesses. Act No 139/2005 on Temporary Work Agencies does not provide for any involuntary assignation of a contract of employment from the temporary work agency and the user undertaking if the temporary work agency lacks the required permission of the state authority as stipulated in s 10, sentence 1 of the German Act on Temporary Agency Work. 24  Insolvency Act No 21/1991, s 98(1). 25  Unemployment Insurance Act No 54/2006, s 3(a): ‘Employee: Any individual who carries out paid work in the service of others, for a minimum of 25 per cent of a full-time position each month and where social security contributions are paid based on the work in accordance with the law.’

314  Elín Blöndal and Inga Björg Hjaltadóttir Working Environment, Health and Safety in Workplaces26 and the Act on ­Withholding Taxes.27 The term ‘employee’ has been developed by the courts: ‘An employee is a person who is employed for and under the supervision of another person, and receives a salary or remuneration for his work.’28 In the field of labour law, the general definition developed by courts will normally be applied, although there are slightly different definitions within different branches of labour law. The provisions of laws and collective agreements on wages, working time and rights, such as holiday allowance rights, provisions on the termination by notice, and sickness and accident benefits apply to employees, but not to self-employed persons. Employees are individuals who work under the terms of an employment contract and under the control of the employer. Wages and other terms according to collective agreements, legislation and

26 Working Environment, Health and Safety in Workplaces Act No 46/1980, s 24 as amended by Act 65/2003 (6): ‘Employee in this act means any person who carries out paid work in the service of another. Trainees and interns are employees, even though they may carry out work without compensation, if their work is part of an organised education.’ 27  Act on Withholding Taxes No 45/1987, s 4: ‘Employee in this act means: 1. A person who receives compensation for work carried out by an employer. Additionally, any person receiving pension payments; 2. A person who is required to calculate payment for work carried out in an own enterprise or other own independent operations; 3) A person who is paid compensation, grants or any kind of compensation for legal claims or insurance benefits; 4. A person who receives royalties for intellectual property; 5. A person receiving a prize or reward or a taxable win in a lottery, competition or bet; 6. A person who has a limited taxation liability in Iceland and receives payments in accordance with section 5 (6) of Act No 90/2003 on income tax.’ 28 A general definition developed by the courts can be drawn from the decisions of the Supreme Court in cases concerning the differentiation between an employment contract with employees and service contracts with self-employed persons. The Supreme Court applies a holistic evaluation to determine whether a person is deemed to be an employee or a selfemployed person. The criteria the Court has consistently applied can be summarised as: (i) a requirement for the performance of work by a specific person (an indication of subordination); (ii) a clearly defined single assignment or a more general mandate to carry out assignments of a specific kind; (iii) the performance of work is determined by the party who is assigned the work and whether that party provides the equipment and facilities for the performance of work or whether the work is carried out under the supervision of an employer who provides the equipment and facilities (an indication of subordination); (iv) whether the party performing the work decides when the work is carried out or whether specific working hours have been proscribed (an indication of subordination); (v) whether there are regular and or fixed payments for the work provided or whether the payments are subject to the completion of specific assignments or milestones; (vi) whether the payments change in accordance with collective agreements; (vii) whether there is a defined period of notice for the termination of contract; (viii) whether the work relates to a key position or a part-time assignment; and (ix) who is responsible for paying the contributions and taxes on the salary. See the Court’s decisions in Cases No 153/2014 of 11 December 2014, No 1998/286 of 6 May 1999, No 456/1997 of 22 January 1998, No 255/1997 of 23 June 1997, No 250/1997 of 13 June 1997, No 381/1994 of 27 September 1994, No 3/1987 of 16 February 1988. See Confederation of Icelandic Employers, www.­ vinnumarkadur.outcome.is/vinnumarkadsvefur/radning-starfsmanna/verktakar--launamenn; and the Icelandic Confederation of Labour, Launamaður/verktaki, www.asi.is/vinnurettarvefur/ rettindi-a-vinnumarkadi/stofnun-radningarsamba nds/launamadur-verktaki.

The Concept of ‘Employee’: The Position in Iceland 315 the employment contract refer to the employee’s remuneration for the work he or she has performed for the benefit of the employer’s business.29 B.  Employer: Basic Definition There is no general statutory definition of the term ‘employer’ in Iceland, but there are examples of the term being defined within the scope of different acts.30 In the field of labour law, the employer has been defined as the party to an employment relationship who purchases work, whether this is an individual, company, limited company, institution, municipality or the state.31 The main duty of the employer is to provide work and pay wages for work carried out by employees as well as to pay for additional social security benefits in accordance with national legislation and collective agreements. Furthermore, the employer is duty bound by law to take certain measures to ensure the health, welfare and safety of his or her employees.32 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees The principal distinction between employees is made between those who work in the private sector and those who work in the public sector. In Iceland, government employees have a special position in the labour market and specific legislation (the 1996 State Government Employees Act) focusing on their rights and obligations applies to them.33 Similar rules apply to municipal employees through collective agreements based on the 2011 Local Government Act or through collective agreement terms

29 Icelandic Confederation of Labour, Launamaður/verktaki, www.asi.is/vinnurettarvefur/ rettindi-a-vinnumarkadi/stofnun-radningarsambands/launamadur-verktaki. 30  In the Act on Working Environment, Health and Safety in Workplaces, an employer is defined as a party that operates any form of undertaking/business. If the undertaking/business is operated jointly (joint venture, formal or informal) by two or more parties (persons, organisations or corporations), only one party shall be considered the employer within the scope of the Act; the other/others are employees, provided that they work in the undertaking. The Act defines personal responsibility within the scope of the Act of executive directors of companies. In the case of a public enterprise, the person in charge of the operation is considered to be the employer (Act on Working Environment, Health and Safety in Workplaces, No 46/1980, s 12(1–3)). This definition draws on the specific health and safety provisions of the Act on Working Environment, Health and Safety in Workplaces and does not correspond to the general definition of ‘employer’ within labour law. However, there is no clear precedent or statute clarifying the legal possibility of any form of joint employership in Icelandic law. 31  Júlíusdóttir (n 1) 43. 32  Blöndal and Sigurðardóttir (n 22) 50–51. 33  State Government Employees Act No 70/1996, www.althingi.is/lagas/144a/1996070.html.

316  Elín Blöndal and Inga Björg Hjaltadóttir c­ ontaining similar rules to those of the State Government Employees Act.34 No similar act (or labour code) exists for the private labour market. No distinction is made between white-collar and blue-collar employees in the Icelandic labour market.35 The term ‘public employee’ has historically been defined as a person who is appointed to carry out administrative tasks on behalf of the public in state, municipal or public institutions.36 After the introduction into law of the 1996 State Government Employees Act, all state employees can be defined as public employees, although there is a distinction regarding the right of their union to negotiate on their behalf under the Act on Collective Agreements of Public Employees. The right to strike of some groups of public employees is fully or considerably restricted.37 The concept of private sector employees is considered to include all employees of the labour market who are not public employees.38 Labour market legislation usually stipulates whether the provisions cover all private sector employees or only specific categories of workers. Specific categories include, in particular, seamen, foremen and vocational trainees. The 1985 Act on Seamen39 provides special rules on the employment of ­seamen. The Act contains provisions on seamen’s employment contracts, duration of employment, captain’s authority, salaries and other factors regarding employment conditions. The 2007 Act on Crews of Icelandic ­Fishing Boats, Coast Guard Ships and Cruise Ships40 provides additional 34  According to s 57 of the Local Government Act No 138/2011, the rights and duties of municipal employees as well as their wages and terms are determined in collective agreements and their employment contracts. See www.althingi.is/lagas/nuna/2011138.html. 35 Prior to the entry into force of s 1(1) of the 1996 State Government Employees Act No 70/1996, there was a distinction between white-collar and blue-collar employees of the state, with blue-collar employees not being afforded the rights under s 1(1) of the State Government Employees Act No 38/1954, not being defined as ‘public employees’. 36  Ríkiskassinn, orðskýringar, www.rikiskassinn.is/ordskyringar. Before the entry into force of s 1(1) of the 1996 State Government Employees Act No 70/1996, blue-collar employees were not defined as public employees, whereas white-collar employees holding administrative posts on behalf of the public were defined to be public employees of the state. Similar rules applied for most municipalities. Section 1 of Act No 94/1986 on collective agreements of public employees defines the scope of the employees covered by the act as ‘all employees who are members of trade unions who by sections 4 and 5 have a mandate to enter into collective agreements on their behalf and are employees of the state, state institutions, municipalities or their institutions with a set hourly, weekly or monthly wage, and whose employment is considered his/her principal employment.’ Sections 4 and 5 define trade unions that can negotiate with the state or with the municipalities, section 4 allowing for negotiations of unions that have entered into collective agreements with the state or municipalities and section 5 allowing for new unions to negotiate on behalf of their members under the Act, provided that they meet the minimum requirements of numbers of members and those members meet the requirements of a minimum percentage of total employees working for the employer in question. If these requirements are not met, trade unions can still negotiate with the state if they meet the requirements of Act No 80/1938 on Trade Unions and Labour Disputes. 37  Act No 94/1986 on collective agreements of public employees, ss 1 and 19. 38  Blöndal and Sigurðardóttir (n 22) 41. 39  Act on Seamen, No 35/1985. 40  The 2007 Act on Crews of Icelandic Fishing Boats, Coast Guard Ships and Cruise Ships No 30/2007.

The Concept of ‘Employee’: The Position in Iceland 317 provisions on the safety of ships and their crews.41 Until 2014, Icelandic tax legislation provided seamen with special tax concessions42 and there are still special provisions for seamen in the 2007 Social Security Act.43 The legal position of managerial employees is specific as they are in fact a mixture of ‘employer’ and ‘employee’. Managerial employees have a specific confidentiality obligation towards the employer, as they act on his or her behalf towards employees and have a supervisory function in relation to other employees on behalf of the employer. Therefore, the obligations of managerial employees are greater than those of other employees. These additional responsibilities and obligations are specifically found in the 1980 Act on Working Environment, Health and Safety in Work Places.44 Under the 2003 Wage Guarantee Fund Act,45 which guarantees payments to employees in relation to their outstanding claims in the event of employer insolvency, differentiation is made between different types of workers of the insolvent company as regards their outstanding claims. Claims by a managing director who is classified as an employee of an insolvent company do not qualify for liability under the Act.46 The same applies to the claims of an employee who was the owner, either alone or together with his or her spouse or other close associates, of a substantial share of the insolvent company and had a substantial influence on its operations.47 Vocational trainees are in fact both students and workers at the same time, and their legal status differs in many ways from other employees in the labour market. The general rules on vocational trainees are provided in the 2008 Upper Secondary School Act.48 Collective agreements often ­contain specific terms for employment of vocational trainees.49

41  Seamen are exempt from the 1980 Act on Working Environment, Health and Safety in Work Places, No 46/1980. 42  Act on Income Tax, No 90/2003, s 67(B). 43  Blöndal and Sigurðardóttir (n 22) 42. 44 Working Environment, Health and Safety in Workplaces Act No 46/1980, ss 20–23. A foreman in the context of the Act is defined as every person who, on behalf of the employer, holds the responsibility of monitoring employees’ work and the operation of the enterprise or parts thereof (s 20). The foreman is a representative of the employer and ensures that all equipment is in good and safe working order, and that there is a safe organisation of work in the workplace the foreman is responsible for (s 21). see Júlíusdóttir (n 1) 46; Blöndal and Sigurðardóttir (n 22) 42. 45  Wage Guarantee Fund Act No 88/2003. 46  Managing directors of companies fall within the definition of employee (see, eg, section II.A above). 47  Insolvency Act No 21/1991, art 112(3). 48  Upper Secondary School Act No 92/2008. Trainees who do not receive payment for their work can qualify as employees (see, eg, section II.A above). Section 28(2–3) of the Upper Secondary School Act introduces a requirement for a contract for vocational training for each trainee at the start of workplace training. 49 See, eg, Collective Agreement of Samiðn and Samtök atvinnulífsins, Chapter on pay and employment terms of vocational trainees, 88–89, www.samidn.is/images/adildarfelog/­ kjarasamningar/Kjarasamningur_2015_SA_og_Sami%C3%B0n_-_lokaskjal_4.5.2016.pdf.

318  Elín Blöndal and Inga Björg Hjaltadóttir The legal status of journalists, attorneys, certified accountants, clergy and health professionals is generally subject to the codes of ethics of each ­profession, which are administered by an ethics board. These professions carry out their professional duties under specific legal Acts.50 In section 24 of the Media Act, media publishing or broadcasting content must include a statement on editorial independence. This statement must contain information on disciplinary action or terminations of journalists, as well as on the conclusion of employment contracts.51 The Act on the Status and Governance of the National Church contains specific legal duties of church employees, their salaries and legal rights.52 B.  The Establishment of a Specific Category of ‘Workers’ No category of ‘workers’ exists in Iceland. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The status of employee/self-employed person is mainly defined by judicial rulings.53 When determining whether a worker is an employee or a selfemployed person, the determining or decisive factor is the nature or substance of the employment relationship, eg, the subordinated ­relationship between

50  Sections 13–14 of Act No 77/1998 on Attorneys stipulate disbarment proceedings and an ethics committee responsible for controlling compliance with legal provisions by attorneys and commencing disbarment procedures. Act No 79 on Certified Accountants contains similar provisions in section 15. Act No 34/2012 on Health Workers similarly makes requirements for granting licences to operate as health workers, and section 12 specifies procedures for recalling such licences. In all instances, these requirements and controlling committees are completely independent of an employment relationship. Act No 78/1998 on Policemen similarly stipulates the legal duties of policemen in terms of their work, special provisions on hiring policemen and a lower retirement age than generally applies to public sector employees. 51  Media Act No 38/2011, s 24(2c). Collective agreements apply to journalists and entail general labour market rules. 52  Act No 78/1997 on the Status and Governance of the National Church, s 60. Priests and specific parts of the clergy of the National Church receive their salaries from the state and are deemed to be public employees in accordance with Act No 70/1996. No specific legal status is granted by statute to employees of cooperatives, athletes, artists or domestic workers. A determination of their status as self-employed persons or as employees is made by assessing criteria cited in n 29 above. Act No 22/1928 on Agricultural Labourers contains specific material rules for the employment contract of agricultural labourers under 21 years of age; for older agricultural workers, general rules apply, as does the relevant collective agreement. 53  See, eg, n 29 above.

The Concept of ‘Employee’: The Position in Iceland 319 an employer and an employee. The definition of employee is implicit in the emphasis on subordination, under which an employee o ­ bligates ­himself or herself to work for the employer, under his or her supervision and responsibility in return for wages.54 The Supreme Court applies a holistic evaluation to determine whether a person is deemed an employee or a self-employed person.55 The subordination of a worker is an indicator that he or she is an employee.56 Control over the work is also an indicator of the existence of an employment contract and if the employer controls the work and work instructions, the worker is generally found to be an employee, as the employer determines the organisation of the work and its implementation. The requirement for the work to be carried out personally is an indicator that the worker is an employee.57 The fact that an employer provides facilities at no cost to the worker to carry out the work implies organisational integration. The provision

54 

See, eg, section II.A above. eg, n 29 above. In the Supreme Court decision in Case No 282/1991, a 17 year old (Þ) was hired as a sub-contractor by a main contractor (V). The young sub-contractor Þ notified the tax authorities of his status as a self-employed person, took out insurance for his work and turned in his tax return as a self-employed person. He was injured in a workplace accident when a cutting knife on a machine broke off and hit him in the eye. He lost his sight in that eye and claimed compensation as an employee. The machine was owned and provided by the main contractor V and had a deficient security feature that both parties knew of. The Court determined in a compensation case that an employment relationship had existed, since the work was carried out for a project V had taken on, and the work was fully carried out under V’s supervision, he provided the equipment used for the work and paid Þ an hourly rate for his work. This was given greater emphasis in the Court’s assessment than the fact that Þ had acted as a self-employed person in relation to the tax authorities and taken out insurance on his own. In Supreme Court Case No 286/1998, G worked for H for a 10-month period driving a truck and operating other large machinery in addition to conducting maintenance work, answering the phone in the repair shop and other tasks he was asked to do. He was paid as a self-employed contractor against invoices he issued. The relationship was deemed by the Court to be one of employment as no written contract existed and G had not worked for any other party than H during that period. He had furthermore performed the work he was requested to perform each day, driving, operating machines or working in the repair shop under H’s supervision. G had also used H’s premises and equipment to carry out the work. In a decision by the Internal Revenue Board (No 41/2012), A, who had carried out work for B for many years, was determined to have been self-employed and not an employee due to the fact that he could take on other projects, used his own equipment and paid for materials used for the work, he was not under the supervision of A when carrying out his work, he was not entitled to leave or sick days and the payments made did not resemble those made under an employment contract. 56  See, eg, n 29; and the Supreme Court Judgment in Case No 250/1997. 57 See, eg, n 29; Supreme Court decisions in Cases No 153/2014, No 1998/286, No 456/1997, No 255/1997, No 250/1997 and No 255/1997. Confederation of Icelandic Employers, Hvað er verksamningur/ráðningasamningur, www.vinnumarkadur.outcome.is/vinnumarkadsvefur/radning-starfsmanna/verktakar—launamenn; and the Icelandic Confederation of Labour, Launamaður/verktaki, www.asi.is/vinnurettarvefur/rettindi-a-vinnumarkadi/ stofnun-radningarsambands/launamadur-verktaki; Labour Court Judgment VII (1971–75) 248; and VM Matthíasson, Skaðabótaréttur (Reykjavik, Codex, 2005) 266. 55  See,

320  Elín Blöndal and Inga Björg Hjaltadóttir of work facilities is not an indicator for an employment relationship, but organisational integration may be deemed an indicator for an employment relationship based on case law.58 B. Indicators Specific working hours are an indicator of subordination and point towards the existence of an employment relationship.59 If the work being carried out is the individual’s primary occupation, it might indicate the existence of an employment relationship.60 A further indicator of an employment relationship is if the work performed by the worker is significantly intertwined with the general operation of the employer and is not linked to a certain task. The recognition of entitlements, employee rights and benefits indicate integration and support the assumption that an employment relationship exists.61 Periodic payments to the worker, especially if they resemble wage payments,62 are generally considered to be an indicator that he or she is an employee.63 If this remuneration is the sole or principal source of the individual’s income, the conclusion will more likely be that an employment relationship exists, although this indicator is not a primary indicator and must be viewed in correlation with other aspects of the relationship. If remuneration is paid in line with the progress of the work, it is a strong indicator for the existence of a contract of service. Formal criteria, such as business registration on behalf of the worker, could indicate that the individual is self-employed, yet the Supreme Court has not placed emphasis on this particular factor per se, but rather on the nature of the relationship.64 The position and perception of the parties negotiating a work contract may be an indicator for the existence of an employment relationship, although this is never a primary indicator.65 A worker’s association with a labour union would indicate that he or she is an employee, while a worker’s association with an employers’ association would indicate that he or she is self-employed.66 58 

See, eg, n 59.

59 ibid. 60 ibid. 61 ibid. 62 ibid. 63 ibid. 64 

See, eg, Supreme Court Decision in Case No 282/1991; see, eg, nn 29 and 59. eg, the Supreme Court Decision in Case No 282/1991, where Þ, who entered into a contract with V as a sub-contractor, was only 17 years old at the time the contract was concluded. No specific reasoning for the Court’s decision pertains to the young age of the party contracting for work, but the Court did specifically refer to the age of the worker in its decision. 66  Matthíasson (n 1) 370. 65  See,

The Concept of ‘Employee’: The Position in Iceland 321 If payments to a worker are decided with reference to a collective agreement, this often indicates the existence of an employment contract. Also, if the contract for work generally stipulates that collective agreements apply as regards the rights of the employee, then it can be presumed that an employment contract exists.67 V.  THE PRINCIPLE OF PRIMACY OF FACTS

When a distinction is made between an employment relationship and one of self-employment, the nature/substance of the relationship rather than the name or form of the contract is a determining factor. An interpretation based more on form would give leeway for an evasion of the minimum wage and term requirements of collective agreements and the mandatory provisions of employment law. The conclusion is based on a holistic assessment of the content of the contract, focused on its practical implementation as effected by the parties.68 Tax authorities have been very strict in applying income tax and salaryrelated expenses to contract payments they consider to be salary payments and not qualified as invoiced service payments with VAT. The strict implementation by the tax authorities may in some instances border on infringement of the right of freedom to contract for self-employed services.69 VI.  QUALIFICATION IN FULL

A contract between two parties may either be a contract of employment or any other contract. It is not possible under Icelandic labour law to qualify only a part of a contract as a contract of employment. An employer and an employee are free to contract for other commitments outside the scope of an employment contract, ie, the lease of a car or ­housing. Such agreements are assessed under tax law to determine whether

67 

Matthíasson (n 59) 266. eg, Supreme Court Judgment in Case No 381/1994, where the contract in question specifically stated that the plaintiff was considered to be a self-employed contractor. 69  See, eg, the decision by the Internal Revenue Board in Case No 41/2012, where the local tax authorities had revised taxation and demanded social security contributions be paid on contract payments between a contractor and a sub-contracting corporation A, as the contractual relationship should be deemed an employment relationship. The Internal Revenue Board annulled the decision of the local tax authorities and found the contractual relationship to be a service contract between two corporations, as the sub-contractor supplied its own equipment and materials for the work to be carried out, was free to contract for other assignments, payments were not typical for an employment contract, the work was not carried out under the supervision and control of the buyer, and no sickness or holiday benefits were paid. 68  See,

322  Elín Blöndal and Inga Björg Hjaltadóttir they constitute benefits to the employee that should be taxed.70 The Rental Act contains provisions on rental agreements for housing between an employer and an employee.71 Non-contractual legal relationships may also exist between an employee and an employer. In Icelandic law, it is a principal rule that an employer is responsible for the damage caused by his or her employees during working hours. This rule of the master’s responsibility (húsbóndaábyrgð) is nonstatutory, but several provisions of law assume its existence.72 The rule of the master’s responsibility implies that an employer may become liable for a damage caused by his or her employee in a culpable (saknæmum) ­manner.73 A non-contractual legal relationship may be formed if the employer sues an employee for damages he or she has caused. The 1993 Act on Tort contains special rules that modify the liability of an employee who causes damage (whether to a third party or to his or her employer) in the course of employment. Under the Act, the right of recourse of the employer or his or her liability against the employee only exists to the extent deemed equitable in light of the actual negligence, the employee’s position and other circumstances. The same limits apply to an employer’s claim against an employee for damaging tools or goods owned by the employer, or for other damage caused to the employer. Nevertheless, if the injured party makes a direct claim against the employee, the courts may reduce or suspend liability in light of arguments for loss distribution and social policy.74 VII.  LIMITS TO THE FREEDOM OF CONTRACT

Freedom of contract is a principal rule in Icelandic law. The rule states that parties to a contract may decide with whom to conclude contracts, are free to determine the content of such contracts and can decide whether to enter into a contract or not. As regards employment contracts, this rule is subject to severe limitations.75 Parties to an employment contract cannot alter the legal nature of that contract to circumvent obligatory social protection of employees afforded by statutes, collective agreements or case law (see section V above). Under Icelandic labour law, the freedom of employers to choose with whom they conclude an employment contract has certain limits based on

70 

Act on Income Tax No 90/2003, s 7(A). Rental Act No 36/1994, art 50. 72  Act on Tort No 50/1993. 73  Matthíasson (n 59) 257. 74  A Björnsson, ‘A Survey of Icelandic Tort Law’, Stockholm Institute for Icelandic Law 1957–2009, 306, available at www.scandinavianlaw.se/pdf/38-14.pdf. 75  Matthíasson (n 1) 375. 71 

The Concept of ‘Employee’: The Position in Iceland 323 collective agreements in the private sector, which in most instances include so-called priority clauses (forgangsréttarákvæði).76 In addition, there are general statutory limitations to the freedom of select workers.77 As regards restrictions on the content of employment contracts, legal provisions concerning the relationship between employers and workers are in general mandatory to ensure the rights of employees.78 Wages and other working terms agreed between the social partners shall be considered minimum terms for all wage earners in the relevant occupation within the area covered by the collective agreement. Contracts made between individual wage earners and employers on less favourable terms than those specified in the general collective agreement shall be void.79 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners In general, the role of social dialogue mechanisms and collective bargaining pertain to employee rights, wages and other benefits, and do not play a role in ascertaining the employee status in individual cases. Unions are mandated by statute to negotiate wages and other employment benefits.80 They do not hold a legal mandate to negotiate with employers’ associations on the concept of ‘employee’, and that concept has not evolved through negotiations between the social partners. 76  ibid 370. According to these clauses, the employer is obliged to provide employees who are members of trade unions which are party to a collective agreement with priority to work within the union’s district. Another example is the priority principle (forgangsréttur) of the Law on Gender Equality. Under this rule, which is based on case law, when two applicants for a job are equally qualified for a position and are of different genders, the applicant who is of the under-represented sex in the relevant job group shall be offered the job. The Supreme Court applied this rule in 1990 for the first time: Supreme Court Judgment No 339/1990. See also Supreme Court Judgment in Case No 431/1995. Icelandic Confederation of Labour, ASÍ, Forgangsréttarákvæði, www.asi.is/vinnurettarvefur/stettarfelog-og-vinnudeilur/kjarasamningar/ forgangsrettarakvaedi/. 77 According to the Act on Working Environment, Health and Safety in Workplaces, No 46/1980, Chapter X, it is a general rule that children (individuals who are under the age of 15 years or who are in compulsory education) may not be engaged in employment. 78  Júlíusdóttir (n 1) 43. 79  Act 55/1980 on Employment Terms and Mandatory Pension Insurance, s 1. Wages and other employment terms agreed in collective agreements shall constitute a minimum for the relevant job group in the geographical area covered by the agreement. Employment contract terms that set lower wages and benefits are invalid and non-binding on the employee. There is no statutory limitation to the freedom to negotiate more favourable rights for employees than is required by the provisions of collective agreements or legislation. This freedom does not entail other limitations than the general freedom of contracts. It is therefore limited by the annulment rules of contract law, which may lead to annulment due to the content of the contract. See section I.A above and Matthíasson (n 1) 378. 80  Act on Trade Unions and Labour Disputes No 80/1938, s 5(1).

324  Elín Blöndal and Inga Björg Hjaltadóttir National law stipulates certain basic principles concerning workers’ rights and duties. A typical feature of the current labour law is that it sets down certain minimum rights, while allowing labour unions and employers to agree on more favourable solutions through collective agreements. The considerable scope of social dialogue mechanisms and collective bargaining does not include defining employment relationships; they focus primarily on employee rights relating to wages and other benefits.81 B.  Custom and Practice The legal terms and foundations of the employment relationship have developed through court decisions. Deviations from those terms by the social partners on the basis of custom and practice can be made if no statutory rules apply. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions No presumptions apply in Iceland in social security law or employment law. The case law has developed a presumption in employment law as regards a shift in the burden of proof of the terms of an employment contract that should have been evidenced in writing.82 B.  The Burden of Proof In Iceland, the burden of proof is assessed in court cases.83 As regards the proof of whether an employment contract was concluded or not, the general rules apply. A party who makes a claim based on an employment contract bears the burden of proof that such a contract was indeed concluded.84 81  The most influential social partners on the private labour market in Iceland, the Icelandic Federation of Labour (ASÍ) and Business Iceland (SA), had negotiated protocols concerning pseudo-contracting. In the last few years, this topic has not been the subject of collective agreements, the main reason being that practice has been made clearer by case law, which the social partners seem to generally accept. 82 See, eg, section II.A above; Supreme Court Decision in Case No 3/1987 and Case No 536/2015. Since the employer neglected to fulfil the obligation of concluding the contract in writing, the burden of proof as regards the terms of the employment contract fell on the employer. 83  Act on Civil Procedure, No 91/1991, s 44. 84  See, eg, Supreme Court Judgment 1957:284; see also Matthíasson (n 1) 373.

The Concept of ‘Employee’: The Position in Iceland 325 If the facts indicate that an employment relationship exists and the worker is therefore an ‘employee’, the burden of proof shifts to the employer, who then has to prove that this is not the case. As regards proof of the content of the employment contract, similar rules apply, that is, the person who maintains that an employment contract entailed specific content would, in general, bear the burden of proof that this is the case.85 An exemption from the general rules applies (see section IX.A above) when a written employment contract has not been concluded despite such an obligation existing under law.86 As a general rule, there is a tendency to demand more proof from the employer than from employees, as employers are usually found to be in a better position to securely conclude agreements.87 X.  SPECIFIC PROCEDURES

In line with the general rules of administrative law, the tax authorities have the power to investigate and determine the real nature of employment relationships in order to ascertain tax payments. Numerous cases have gone before the tax authorities where this issue arises because of the difference in tax percentages and employee rights and benefits. No specific procedures are in place; these cases are administered by the tax authorities in accordance with the general procedural rules. Over the last few years, the tax authorities have emphasised strengthening the rules on registering in the Value Added Tax (VAT) register, and individuals are denied registration if they cannot demonstrate that they are self-employed.88 Social security authorities also have the authority to investigate and determine the real nature of the relationship in order to ascertain occupational injury benefits. The last instance of appeal within the administration is the Social Security Ruling Committee (Úrskurðarnefnd almannatrygginga).89 This procedure is not unique; it is in line with general procedural rules. Decisions made by authorities regarding the status of employment can be

85 

See, eg, Supreme Court Judgment 1987:729. eg, section II.A above; Supreme Court Decision in Case No 3/1987 and Case No 536/2015; Matthíasson (n 1) 373. 87  See, eg, Supreme Court Judgment in Case 1988:157. 88  If the tax authorities deem that the applicant is de facto in an employment relationship, he or she is denied VAT registration. Denial can be brought under review by the Internal Revenue Board (Yfirskattanefnd), the last instance of appeal within the administration. See the Act on Tax Ruling Committee, No 30/1992. This procedure is not unique; it is in line with general procedural rules. 89  Social Security Act No 100/2007. 86 See,

326  Elín Blöndal and Inga Björg Hjaltadóttir applied by the national courts,90 which can make a full assessment of the real nature of the relationship in a given case. In general, labour inspectorates do not play a specific role in ascertaining employee status. An exception to this general rule can be found in the 2007 Act on the rights and obligations of foreign companies posting employees to work in Iceland on a temporary basis.91 The legislation stipulates the requirement of an employment relationship between the employee and the employer for the full duration of the period of work in Iceland. Employers must provide the Directorate of Labour (Vinnumálastofnun) with all the relevant documents and information, including employment contracts, in order for the Directorate to supervise and ascertain whether the provisions of the law are being followed. If a union has grounds to suspect that collective agreements are not being honoured, it can request a copy of the employment contracts from the Directorate of Labour (section 14). The Directorate of Labour, in this sense in collaboration with the unions, discharges the role of labour inspectorates in these cases and can assess the nature of the employment relationships and whether individual employment contracts are in accordance with collective agreements. Unions have utilised this right and cases have been investigated following a substantiated instigation by a union. The 2005 Act on Temporary Work Agencies contains the same stipulations requiring agencies operating in Iceland to provide the Directorate of Labour with all the relevant material and information in order for them to assert that the agency is operating in accordance with the relevant legislation.92 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons No form of ‘employee-like’ persons is legally acknowledged in Iceland. Economically dependent workers are not specifically recognised under Icelandic labour legislation. B.  Equality and Anti-discrimination Law The Constitution93 ensures legal equality and human rights, irrespective of gender, religion, opinions, ethnic origin, race, colour, financial status, family 90 

Civil Code, s 24(1). Posted Workers Act No 45/2007. 92  The Act on Temporary Work Agencies, No 139/2005. 93  Constitutional Act No 33/1944, s 65. 91 

The Concept of ‘Employee’: The Position in Iceland 327 origin and status in other respects. The Icelandic Constitution guarantees equal rights of men and women (section 65). The Equality Act94 prohibits any kind of direct or indirect discrimination based on gender. Instructions to discriminate based on gender are considered to be unlawful discrimination. Sexual or gender-based harassment is considered to be unlawful discrimination, including any form of unbeneficial treatment of an individual resulting from that individual’s rejection of or subjection to sexual or gender-based harassment (section 24(1)). The Equality Act allows for specific measures of temporary priority standing of one gender over the other in specific circumstances with the aim of ensuring equal opportunity.95 The same applies if valid reasons support the hiring of an individual of a specific gender based on objective criteria connected to the position (section 24(2)). Accommodating the special needs of women due to pregnancy and childbirth does not constitute discrimination (section 24(3)). The Act contains specific rules to which employers must adhere in ­relation to their employees, ie, bans on discrimination regarding salaries and b ­ enefits, within the employment contract and in hiring, and a ban on the termination of employment if a complaint is brought by an employee (sections 24–27). Special obligations for employers are defined in section 18 as regards equal opportunity planning and recruitment to bring about a better ­gender balance within individual work groups, in section 19 regarding remuneration, in section 20 regarding recruitment, training and development, in section 21 regarding the work and family life balance and in section 22 regarding gender-based violence, harassment and sexual harassment.

94  Equality Act No 10/2008 as amended by Act No 162/2010, No 126/2011, No 62/2014 and No 79/2015. 95  Specific measures are defined as temporary measures that are meant to improve the standing or increase the possibilities of women or men with the aim of ensuring equal opportunities of both genders in a specific field, where one gender is lagging behind. It may be necessary to give one gender a temporary priority standing to reach an equilibrium (s 2(7)).

328 

16 The Concept of ‘Employee’: The Position in Ireland ANTHONY KERR

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HERE IS NO standard definition of the term ‘contract of employment’ in Irish law because it is defined differently in the various pieces of employment rights legislation.1 The most basic definition is that contained in section 1(1) of the Unfair Dismissals Act 1977, namely: ‘a contract of service or of apprenticeship, whether it is express or implied and (if it is express) whether it is oral or in writing’. Other statutes have a more expansive definition that covers temporary agency workers2 and, in the case of the Employment Equality Act 1998, includes a contract ‘whereby an ­individual agrees with another person personally to execute any work or service for that person’.

1  The relevant legislation includes the Redundancy Payments Acts 1967–2014, the Minimum Notice and Terms of Employment Acts 1973–2005, the Unfair Dismissals Acts 1977– 2015, the Protection of Employment Acts 1977–2014, the Protection of Employees (Employers’ Insolvency) Act 1984, the Payment of Wages Act 1991, the Maternity Protection Acts 1994 and 2004, the Terms of Employment (Information) Act 1994, the Adoptive Leave Acts 1995 and 2005, the Organisation of Working Time Act 1997, the Parental Leave Acts 1998 and 2006, the Employment Equality Acts 1998–2015, the National Minimum Wage Acts 2000 and 2015, the Protection of Employees (Part-Time Work) Act 2001, the Protection of Employees (Fixed-Term Work) Act 2003, the Protection of Employees (Temporary Agency Work) Act 2012 and the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (SI No 131 of 2003). 2  See, eg, s 2(1) of the Organisation of Working Time Act 1997, which defines a ‘contract of employment’ as a contract of service or apprenticeship, and ‘any other contract whereby an individual agrees with another person, who is carrying on the business of an employment agency to do or perform personally any work or service for a third person (whether or not the third person is a party to the contract)’.

330  Anthony Kerr As regards a civil servant, ‘contract of employment’ means such arrangements as are made by the Minister for Finance under section 17 of the Civil Service Regulation Act 1956 together with such further terms and conditions of service which apply to the civil servant concerned.3 The term ‘contract of service’ is not defined by statute and consequently it is left to the courts to determine in any given case whether the contract is one ‘of service’ or one ‘for services’. If it is the latter, the individual is regarded in law as being self-employed. This will have implications for the individual’s social insurability and revenue status as both are based on employment under a contract of service. The Supreme Court has confirmed that, in considering whether an individual is employed under a contract of service, the facts and the realities of the situation must be considered, irrespective of what the contract actually states or specifies.4 Keane J emphasises that while each case has to be determined in the light of its particular facts and circumstances, in general, an individual would be regarded as providing his or her services under a ‘contract of service’ ‘where he or she is performing those services for another person and not for himself or herself’.5 A further practical difficulty is presented by the wide variety of circumstances in which the issue of employment status may fall to be considered. The context in which the issue arises must have some bearing on how it is to be determined. In Phelan v Coilte Teo,6 for example, the High Court had to decide whether the company was vicariously liable for the serious personal injuries sustained by the plaintiff at his place of work. The injuries had been caused by the negligence of an individual engaged by the company ostensibly under a contract for services. He supplied his own tools and equipment and submitted monthly invoices in respect of work carried out, but did not carry any public liability insurance. As a matter of Irish law, the company could only be vicariously liable for the acts or omissions of those it employed under contracts of service.7 It is not unsurprising, given 3  See s 1A(3) of the Minimum Notice and Terms of Employment Act 1973 (as inserted by s 25 of the Civil Service Regulation (Amendment) Act 2005) and s 2A(3) of the Unfair D ­ ismissals Act 1977 (as inserted by s 22 of the Civil Service Regulation (Amendment) Act 2005). In Gilheany v Minister for Finance [1998] 4 IR 150, the High Court had held that a civil servant was not employed under a contract of employment. See also McGrath v Minister for Defence [2010] 1 IR 560, where the Supreme Court confirmed that there was no contractual relationship between a member of the defence forces and the minister. In Keith v Department of Justice and Equality UD 103/2014, the Employment Appeals Tribunal ruled that it did not have jurisdiction to hear a complaint of unfair dismissal brought by a former assistant film censor because he was a statutory office holder and thus was not an employee. 4  Henry Denny & Sons (Ireland) Ltd v Minister for Social Welfare [1998] 1 IR 34. See also the discussion in M Redmond, Dismissal Law in Ireland, 2nd edn (Dublin, Tottel, 2007) 35–49; M Regan (ed), Employment Law (Dublin, Tottel, 2009) 29–56; B Daly and M Doherty, Principles of Irish Employment Law (Dublin, Clarus Press, 2010) 39–75. 5  Henry Denny & Sons (Ireland) Ltd (n 4) 50 (Hamilton CJ and Murphy J concurring). 6  Phelan v Coilte Teo [1993] 1 IR 18. 7  See, most recently, the Supreme Court decision in O’Keeffe v Hickey [2009] 2 IR 302. For an insightful analysis of the subsequent decision of the European Court of Human Rights in this case, see R Keane (2015) 38 DULJ (ns) 172.

The Concept of ‘Employee’: The Position in Ireland 331 the level of control, that Barr J found the individual to be employed under a contract of service and therefore the company to be vicariously liable for the plaintiff’s injuries. However, it has to be questioned whether the same decision would necessarily have been reached had the issue of the individual’s employment status arisen in the context of unfair dismissal proceedings, as the court in Phelan was clearly influenced by a desire to ensure that the plaintiff received compensation for his injuries from the company’s insurer. There are no formal requirements for there to be a valid and enforceable contract of employment. As the definition in the Unfair Dismissals Act 1977 indicates, such a contract can be either ‘express or implied’ and/or ‘oral or in writing’. Consequently, a mere verbal agreement can give rise to an enforceable contract of employment. In some cases, however, the statutory definition requires the ‘employee’ to be over the age of 16 in order for there to be a valid and enforceable contract for the purposes of the relevant legislation.8 The Terms of Employment (Information) Act 19949 does not impose any obligation on employers to provide their employees with a written contract of employment. However, it does require an employer to provide each employee, within two months of commencement of their employment, with a statement ‘in writing’ of various particulars of the terms of his or her employment.10 These include: (i) The full names of the employer and the employee; (ii) The address of the employer in the State or, where appropriate, the address of the principal place of the relevant business of the employer in the State or its registered office; (iii) The place of work or, where there is no fixed or main place of work, a statement specifying that the employee is required or permitted to work at various places; (iv) The title of the job or nature of the work for which the employee is employed; (v) The date of commencement of the employee’s contract of employment; 8  See, eg, s 2(1) of the Redundancy Payments Act 1967; however, s 2(1) of the Organisation of Working Time Act 1997 and s 2(1) of the National Minimum Wage Act 2000 define an employee as a person ‘of any age’ who has entered into or works under a contract of employment. The employment of children (those under 16) and young persons (those over 16 but under 18) is regulated by the Protection of Young Persons (Employment) Act 1996 (implementing Council Directive 94/33/EC). 9 This Act implemented Council Directive 91/533/EC on an employer’s obligation to inform employees on the conditions applicable to the contract or employment relationship. 10  See s 3(1), as amended by s 44 of the National Minimum Wage Act 2000; s 4(1) of the 1994 Act further provides that where an employee is required to work outside of Ireland for a period of not less than one month, a further statement is required setting out the period of employment outside the state, the currency in which the employee is to be remunerated and the terms and conditions governing the employee’s repatriation. Failure to comply with these obligations can result in an award of compensation capped at four weeks’ remuneration: see s 7(2)(d) of the 1994 Act. Section 14(1) of the Unfair Dismissals Act 1977 requires an employer, not later than 28 days after he or she enters into a contract of employment with an employee, to give to an employee ‘a notice in writing setting out the procedure which the employer will observe before and for the purpose of dismissing the employee’.

332  Anthony Kerr (vi) (vii) (viii)

(ix) (x) (xi) (xii) (xiii) (xiv)

In the case of a temporary contract of employment, the expected duration thereof or, if the contract of employment is for a fixed-term, the date on which the contract expires; The rate or method of calculation of the employee’s remuneration and the pay reference period for the purposes of the National Minimum Wage Act 2000; That the employee may, under section 23 of the National Minimum Wage Act 2000, request from the employer a written statement of the employee’s average hourly rate of pay for any pay reference period as provided in that section; The length of the intervals between the times at which remuneration is paid, whether a week, a month or any other interval; Any terms or conditions relating to hours of work (including overtime); Any terms or conditions relating to paid leave (other than paid sick leave); Any terms or conditions relating to— (a) incapacity for work due to sickness or injury and paid sick leave, and (b) pensions and pension schemes; The period of notice the employee is required to give and entitled to receive (whether by or under statute or under the terms of the employee’s contract of employment); and Reference to any collective agreements which directly affect the terms and conditions of the employee’s employment.

Where a contract of employment is in breach of the law, such as where it contains a term designed to contravene income tax or social welfare ­legislation, the High Court has ruled that it is unenforceable.11 Consequently, claims founded upon an alleged breach of that contract must fail. Similarly, non-EU/EEA nationals who are, or have been, working without an employment permit, contrary to section 2 of the Employment Permits Act 2003, have no legal standing to invoke the protection of legislation such as the National Minimum Wage Act 2000, as their contract of employment is void by r­ eason of illegality.12

11 See Hayden v Sean Quinn Properties Ltd [1994] ELR 45, 53. This view was also taken by the Employment Appeals Tribunal when hearing claims for unfair dismissal: see Lewis v Squash Ireland Ltd [1983] ILRM 363. However, s 8(11) of the Unfair Dismissals Act 1977 (inserted by s 7 of the Unfair Dismissals (Amendment) Act 1993) now provides that where a dismissal of an employee is an unfair dismissal and a term or condition of the contract of employment contravened any provision of the income tax or social welfare legislation, ‘the employee shall, notwithstanding the contravention, be entitled to redress under this Act, in respect of the dismissal’. Section 8(12) (also inserted by s 7 of the 1993 Amendment Act) then imposes an obligation on the relevant adjudicative body to notify the Revenue Commissioners and/or the Minister for Social Protection of the matter. 12 See Hussein v Labour Court [2012] 2 IR 704. This decision is much criticised: see E Dewhurst ‘The Denial of Labour Rights to Irregular Immigrants under Irish Labour Law’(2012) 3 European Labour Law Journal 300 and ‘The Gap between Immigration and Employment Law in Ireland: Irregular Immigrants Fall through the Cracks’ (2013) 10 Irish Employment Law Journal 11. The Employment Permits (Amendment) Act 2014 now addresses this situation by amending the Employment Permits Act 2003 to permit foreign nationals, working

The Concept of ‘Employee’: The Position in Ireland 333 B.  Employment Relationship: Basic Definition No statutory definition exists for ‘employment relationship’, as the term employed throughout the employment rights legislation is that of ‘contract of employment’. In principle, an employment relationship can only result from a contract between the parties. That contract may either be one ‘of ­service’ or ‘for services’. If it is the former, the individual is an employee; if it is the latter, he or she is self-employed. Special provisions (considered below) apply to temporary agency workers who are ‘deemed’ to be employed under a contract of employment for the purposes of employment rights legislation. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition The basic statutory definition of ‘employee’ is that contained in section 1(1) of the Unfair Dismissals Act 1977, namely ‘an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment’. The ambit of those individuals who are covered by the relevant legislative provisions is therefore dependent on the definition in the relevant statute of the term ‘contract of employment’. Section 1(1) of the Unfair Dismissals Act 1977 also provides that the definition of ‘employee’ includes ‘in the case of the death of the employee concerned at any time following the dismissal, his or her personal representative’. In addition, the legislation now provides that references to an employee are to be construed as including a civil servant who holds office in the civil service of the government or in the civil service of the state.13 B.  Employer: Basic Definition The basic statutory definition of ‘employer’ is that contained in section 1(1) of the Unfair Dismissals Act 1977, namely ‘the person with whom the without an employment permit, to institute civil proceedings for monies due to recompense them for work done or services rendered: see s 4 of the 2014 Act inserting ss 2B and 2C into the 2003 Act. However, such persons remain disentitled to seek enforcement of their statutory employment rights: see Morais v Neylons Maintenance Services Ltd UD 417/2014. The High Court decision was reversed on appeal by the Supreme Court, albeit on technical grounds unrelated to this issue: see [2016] 1 ILRM 55; 35 ILLR 459. Murray J, however, did say that ‘traditional judicial dicta’ as to the unenforceability of contracts of employment tainted by illegality might have to be ‘reviewed or nuanced’ in light of the modern regulatory environment and applied with the principle of proportionality in mind. 13  The distinction between a civil servant of the government and a civil servant of the state was explored in McLoughlin v Minister for Social Welfare [1958] IR 1.

334  Anthony Kerr employee has entered into or for whom the employee works under (or, where the employment has ceased, entered into or worked under) a contract of employment’. In the case of the extended definition of ‘employee’ to include temporary agency workers in legislation such as the Organisation of Working Time Act 1997, the person who is liable to pay the wages of the individual c­ oncerned is ‘deemed’ to be that individual’s ‘employer’.14 The employer of individuals holding office under or in the service of the state (including a civil servant) is to be construed as including the state, a Minister of the Government, a Department or a Scheduled Office (such as the office of the Attorney General) for the purposes of the relevant legislation.15 The fact that within a group of companies an employee’s employment might involve persons who hold senior managerial positions in other companies within the group does not alter the legal position. Hence, in Whooley v Millipore Ireland Besloten Vennootschap and Millipore Corporation,16 the plaintiff was an employee of the first named defendant. The second named defendant was the parent company and was joined in the discrimination proceedings because it was alleged that it ‘at all material times controlled, directed and instructed’ the first named defendant in relation to the matters at issue. In striking out the proceedings against the second named defendant, Clarke J said that, notwithstanding that her employment involved persons who held senior managerial positions in other companies within the Millipore Group, which had relatively direct managerial control over her, the entity which was responsible for any discrimination was her employer, the first named defendant. The judge continued: If her employer, as a subsidiary within a group, allows personnel from other companies within the group to have a direct role with her in the context of her employment, then her employer is responsible for those persons. If a subsidiary permits such a structure to exist, then the subsidiary must bear responsibility for that structure and any acts carried out by personnel from other companies within the group as a result of such a structure are actions for which the subsidiary employer must bear responsibility.

For the purposes of Part II of the Industrial Relations Act 1990 (which concerns trade disputes), ‘employer’ is defined in section 8 of that Act as

14  See s 2(1) of the 1997 Act. Note, however, that s 13 of the Unfair Dismissals (­ Amendment) Act 1993 provides that, as respects the dismissal of a temporary agency worker, the worker is deemed to be an employee employed by the hirer/client for the purposes of the Unfair ­Dismissals Acts 1977–2015. 15  See s 1A(2) of the Minimum Notice and Terms of Employment Act 1973 and s 2A(2) of the Unfair Dismissals Act 1977 (as inserted by s 25 of the Civil Service Regulation (­ Amendment) Act 2005). 16  Whooley v Millipore Ireland Besloten Vennootschap and Millipore Corporation [2010] IEHC 314.

The Concept of ‘Employee’: The Position in Ireland 335 ‘a person for whom one or more workers work or have worked or normally work or seek to work having previously worked for that person’. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees At one time, legislation such as the Truck Acts 1831–96 drew a distinction between those employees engaged in ‘manual labour’ and those engaged in other work. The Conditions of Employment Acts 1936 and 1944, when in force, applied only to those employed in ‘industrial work’. Similarly, the Shops (Conditions of Employment) Acts 1938 and 1942, when in force, applied only to those employed in the retail trade or business. However, these distinctions have long ceased to have any relevance, save in one very limited respect. Section 3(2) of the Organisation of Working Time Act 1997 provides that the provisions of the Act relating to minimum rest periods and other matters relating to working time (such as weekly working hours) do not apply to individuals the duration of whose working time is determined by himself or herself. Otherwise, the legislation such as that dealing with minimum notice, payment of wages and unfair dismissal draws no distinction between manual labourers, clerical or retail workers, agricultural workers or managers. However, certain categories of ‘employee’ are excluded from the benefits of some of the employment rights legislation. For example, section 3 of the Minimum Notice and Terms of Employment Act 1973 provides that the Act does not apply to, inter alia: Employment by an employer of an employee who is the father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister of the employer and who is a member of the employer’s household and whose place of employment is a private dwelling house or a farm in or on which both the employer and employee reside.17

The Organisation of Working Time Act 1997 contains specific provision in section 32 relating to the maintenance of records and ministerial control of the

17  See also s 2(1)(c) of the Unfair Dismissals Act 1977, which excludes persons who are employed by a close relative who is a member of the household and whose place of employment is a private dwelling house or farm in or on which both the employee and the employer reside; s 3(2)(b) of the Organisation of Working Time Act 1997, which excludes relatives, who are members of the household, from the application of that Act; and s 5(1) of the National Minimum Wage Act 2000, which provides that that Act does not apply to the remuneration of a person who is the spouse, civil partner or close relative of the employer.

336  Anthony Kerr employment of ‘outworkers’. The term ‘outworker’ is defined in section 2(1) of the 1997 Act as meaning: [A]n employee who is employed under a contract of service to do work for his or her employer in the employee’s own home or in some other place not under the control or management of the employer, being work that consists of the making of a product or the provision of a service specified by the employer.

Special rules apply to those engaged in sea fishing or other work at sea. The High Court has held that those engaged in ‘share-fishing’ arrangements are ‘partners’ and thus are not ‘employees’.18 The employment conditions of ‘sea farers’ are regulated by the European Communities (Merchant ­Shipping) Regulations 2003 and 2014.19 As noted above, civil servants are not employed under a contract of employment; they are office holders, the nature of which was explained as follows by Kenny J: The characteristic features of an office are that it is created by Act of the National Parliament, charter, statutory regulation, articles of association of a company or of a body corporate formed under the authority of a statute, deed of trust, grant or by prescription; and that the holder of it may be removed if the instrument creating the office authorises this.20

None of the employment rights statutes expressly excludes clergymen or other religious persons from their scope, but the accepted view is that they do not work under a contract of employment.21 In Millen v Presbyterian Church of Ireland,22 the claimant, a minister of the church, requested a statement of his terms and conditions of employment under the Terms of Employment (Information) Act 1994. The Employment Appeals Tribunal held that the claimant did not have the status of ‘employee’ and that the statutory duty did not apply. The Tribunal endorsed the reasoning of the House of Lords in Davies v Presbyterian Church of Wales.23 18 See Director of Public Prosecutions v McLoughlin [1986] IR 355. As M Cousins has pointed out, the High Court’s attention does not appear to have been drawn to Donnelly and Byrne v Hanlon (1893) 27 ILTR 73, where a three-judge High Court (including Palles CB) held that those engaged in share-fishing were servants, not partners: see (1994) 16 DULJ (ns) 207, 211. 19  SI No 532 of 2003 (as amended by SI No 245 of 2014 and SI No 373 of 2014). 20  Glover v BLN Ltd [1973] IR 388, 414. For a detailed analysis of the employment status and conditions of civil servants, see G Hogan and DG Morgan, Administrative Law in Ireland, 4th edn (Dublin, Round Hall, 2010) 92–125. 21  See A Kerr, ‘Church and Labour Law in Ireland’ in Churches and Labour Law in the EC Countries (Madrid, European Consortium for Church and State Research, 1993) 134–40, citing Wright v Day [1895] 2 IR 337, where it was held that the relationship of employer and employee did not exist between the plaintiff chaplain and the defendant trustees of the chapel (including two Church of Ireland bishops). 22  Millen v Presbyterian Church of Ireland TE 11/1999; [2000] ELR 292. See also Representative Church Body v Frazer PW 27/2004; [2005] ELR 292. 23  Davies v Presbyterian Church of Wales [1986] 1 WLR 323. See, most recently, Preston v President of the Methodist Conference [2013] ICR 833, where the UK Supreme Court held

The Concept of ‘Employee’: The Position in Ireland 337 Lay people employed by a church or religious body, however, are employees.24 B.  The Establishment of a Specific Category of ‘Workers’ The Trade Union Acts 1871–1990 and the Industrial Relations Acts 1946–2015, which govern the law relating to industrial conflict and access to the state’s dispute resolution machinery, use the term ‘worker’, not ‘employee’. For the purposes of Part II of the Industrial Relations Act 1990, which relates to ‘trade disputes’, ‘worker’ is defined as ‘any person who is or was employed whether or not in the employment of the employer with whom a trade dispute arises’, but does not include a member of the Defence Forces or of An Garda Síochána.25 The High Court has ruled that a ‘fair issue of law’ arises as to whether an individual, who is not employed under a contract of employment, is a ‘worker’ for the purposes of this part of the 1990 Act.26 The definition in section 8 for the purposes of Part II of the 1990 Act ­differs considerably from that set out in section 23 of that Act, which defines ‘worker’ for the purposes of Part III of the 1990 Act and the Industrial ­Relations Acts 1946–2015 as meaning any person aged 15 years or more who has entered into or works under a contract with an employer: [W]hether the contract be for manual labour, clerical work or otherwise, whether it be expressed or implied, oral or in writing, and whether it be a contract of service or of apprenticeship, or a contract personally to execute any work or labour.

In Mythen Brothers Ltd v Building and Allied Trades’ Union,27 the Labour Court had to consider whether the union’s members, working as labour-only

that the claimant was not an employee of the Methodist Church, and Sharpe v Bishop of Worcester [2015] IRLR 663, where the English Court of Appeal held that a Church of England rector was neither an ‘employee’ nor a ‘worker’. 24 See O’Brien v Good Shepherd Convent UD 342/1991 (childcare worker); O’Neill v Fr Eugene McCarthy UD 371/1991 (kitchen assistant on a retreat); Heffernan v Sr Perpetus Lenihan UD 823/1991 (nurses aid in nursing home); Flynn v Power [1985] IR 648 (teacher in convent school). A priest may have, independently of his relationship with his church, a contract of employment with a third party: see, in the case of prison chaplains, Irish Prison Service v Morris FTD 3/2007. 25  See s 8 of the 1990 Act. A ‘trade dispute’ is there defined as a dispute between ‘employers and workers which is connected with the employment or non-employment or the terms or conditions of or affecting the employment, of any person’. The definition of ‘worker’ ensures that sympathetic or supportive industrial action is protected against civil liability. 26 See, eg, Daru Blocklaying Ltd v Building and Allied Trades’ Union [2012] 2 IR 619. See also the commentary to s 8 in A Kerr, The Trade Union and Industrial Relations Acts 5th edn (Dublin, Round Hall, 2015) 197–98. 27  Mythen Brothers Ltd v Building and Allied Trades’ Union REA 91/2005; [2006] ELR 237.

338  Anthony Kerr sub-contractors, came within the definition in section 23 and concluded that it was wide enough to include the engagement of a person under a contract of service or a contract for services. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The original and fundamental factor in determining employment status has always been whether an individual is under the control of another p ­ erson who directs as to how, when and where the work is to be carried out, ­bearing in mind that someone with specialist knowledge may not actually be directed in practice as to ‘how’ the work is to be carried out. So, in Roche v Patrick Kelly & Co Ltd,28 the Supreme Court asserted that though many ingredients might be present in an employment relationship, it was ‘undoubtedly true that the principal one, and almost invariably the determining one’ was the fact of the employer’s right to direct the employee ‘not merely as to what is to be done but as to how it is to be done’. Consequently, the courts have to look at the extent to which the individual has control over what is done, when and where it is done, and whether he or she has to do it personally. If the individual is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken, that should be determinative of ‘self-employed’ status (unless the provision is a sham).29 The ‘integration test’, which asks whether the work done for the employer is integrated into the business or is only accessory to it, was applied by the High Court in In Re Sunday Tribune Ltd30 in distinguishing between the employment status of a newspaper’s ‘regular columnist’ and a ‘regular contributor’. In the case of the former, her employment was ‘an integral part of the business of the newspaper’, whereas the latter’s was not. An essential criterion when assessing the legal nature of an employment relationship is ‘mutuality of obligation’. In Minister for Agriculture and

28  Roche v Patrick Kelly & Co Ltd [1969] IR 100, 108, per Walsh J (O Dalaigh CJ, Haugh, Budd and Fitzgerald JJ concurring). This case concerned the company’s civil liability under health and safety legislation. 29  Although the situation has not arisen for decision in Ireland, it is likely that the decisions of the English courts in Firthglow Ltd v Szilagyi [2009] IRLR 365 and Autoclenz Ltd v Belcher [2012] IRLR 820 would be applied. 30  In Re Sunday Tribune Ltd [1984] IR 505. This case concerned the ranking of creditors in a company liquidation. Employees enjoy preferential status over ordinary creditors: see s 621 of the Companies Act 2014.

The Concept of ‘Employee’: The Position in Ireland 339 Food v Barry,31 the High Court had to consider the employment status of temporary veterinary inspectors (TVIs) engaged by the minister at a meat processing plant. The plant closed and the TVIs sought statutory redundancy payments. This was refused because the TVIs were regarded by the minister as being self-employed and thus were not entitled to a redundancy lump sum under the Redundancy Payments Acts. The TVIs were all private veterinary practitioners who could and, for the most part, did continue in private practice alongside undertaking TVI work, for which they were paid an hourly rate fixed by agreement with the relevant trade union. Edwards J said that three questions had to be asked. The first was whether the relationship between each TVI and the minister was subject to just one contract or to more than one contract. The second involved the scope of each contract. The third involved the nature of each contract. He noted that there were various possibilities. It was possible that each TVI was employed under a single contract which might fall to be classified as either a contract of service or a contract for services. Another possibility was that on each occasion on which a TVI worked, he or she entered into a new contract that, depending on the circumstances, might fall to be classified as a contract of service or a contract for services. He continued: A third possibility is that on each occasion that the TVIs worked they entered a separate contract governing that particular arrangement, which might either be a contract of service or a contract for services, but by virtue of a course of dealing over a lengthy period of time that course of dealing became hardened or refined into an enforceable contract, a kind of over-arching master or umbrella contract … to offer and accept employment, which master or umbrella contract might conceivably be either a contract of service or a contract for services or perhaps a different type of contract altogether.32

Edwards J noted that this notion of an ‘umbrella’ or (as it is sometimes referred to) a ‘global’ contract had featured in English cases involving ­outworkers, casual workers and piece workers.33

31  Minister for Agriculture and Food v Barry [2009] 1 IR 215. When the case was remitted to the Employment Appeals Tribunal to consider the issue in light of the High Court ruling, the TVIs were found to be employed under contracts for services. The TVI’s appeal to the High Court was dismissed (see Barry v Minister for Agriculture and Food [2011] IEHC 43), but the Supreme Court has now remitted the case to the Tribunal for reconsideration: [2015] IESC 63. 32  Minister for Agriculture and Food v Barry (n 31) 229. 33  Airfix Footwear Ltd v Cope [1978] ICR 1210; O’Kelly v Trusthouse Forte plc [1983] ICR 728; Nethermere (St Neots) Ltd v Gardiner [1984] ICR 612; and Carmichael v National Power plc [1999] ICR 1226. See, more recently, Quashie v Stringfellows Restaurants Ltd [2013] IRLR 99 involving the employment status of lap dancers.

340  Anthony Kerr In considering these questions, regard had to be had in the first instance as to whether there was ‘mutuality of obligation’ between the parties. Edwards J elaborated on what was required as follows: The requirement of mutuality of obligation is the requirement that there must be mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer. If such mutuality is not present, then either there is no contract at all or whatever contract there is must be a contract for services or something else, but not a contract of service.34

Accordingly, this requirement provided an ‘important filter’. Where one party to an employment relationship contends that it amounts to a contract of service, it was appropriate in the first instance to examine the relationship in question to determine if mutuality of obligation is a feature. Edwards J continued: If there is no mutuality of obligation it is not necessary to go further: whatever the relationship is, it cannot amount to a contract of service. However, if mutuality of obligation is found to exist, the mere fact of its existence is not, of itself, determinative of the nature of the relationship and it is necessary to examine the relationship further.35

The absence of ‘mutuality of obligation’ means that a ‘volunteer’ is not engaged in a contractual relationship, whether one of service of for services.36 B. Indicators Because of concerns that there were increasing numbers of individuals categorised as being engaged under contracts for services when the indicators were that employee status was more appropriate, the government established the Employment Status Group in 2000, consisting of representatives of the social partners and various government departments, including the Revenue Commissioners. The Group decided against recommending any change in the legislative definitions, but instead issued a Code of Practice for Determining Employment or Self-Employment Status of Individuals, which was later updated in 2007.37

34 

Minister for Agriculture and Food v Barry (n 31) 230. ibid 230–31. See, most recently, McKayed v Forbidden City Ltd [2016] IEHC 722. 36  Commissioner of An Garda Síochána v Oberoi [2014] 3 IR 444, applied by the ­Employment Appeals Tribunal in Walsh v Irish Coast Guard UD 1137/2013; [2015] ELR 214. 37  The current iteration of the Code of Practice is available at www.revenue.ie, www.­welfare. ie and www.djei.ie. Because this Code is not a statutory Code of Practice under s 42 of the Industrial Relations Act 1990, there is no obligation on any of the adjudicative bodies, such as the Labour Court, to take its provisions into account. 35 

The Concept of ‘Employee’: The Position in Ireland 341 The stated purpose of the Code of Practice is to ‘eliminate misconceptions and provide clarity’. It sets out criteria drawn from the extensive case law38 as to whether an individual is an employee and emphasises that it is ‘important that the job as a whole is looked at, including working conditions and the reality of the relationship’. The Code provides, in relevant part, as follows: While all of the following factors may not apply, an individual would normally be an employee if he or she: (i)

Is under the control of another person who directs as to how, when and where the work is to be carried out. (ii) Supplies labour only. (iii) Receives a fixed hourly/weekly/monthly wage. (iv) Cannot sub-contract the work. (v) Does not supply materials for the job. (vi) Does not provide equipment other than the small tools of the trade.39 (vii) Is not exposed to personal financial risk in carrying out the work. (viii) Does not assume any responsibility for investment and management in the business. (ix) Does not have the opportunity to profit from sound management in the scheduling of engagements or in the performance of tasks arising from the engagements. (x) Works set hours or a given number of hours per week or month. (xi) Works for one person or for one business. (xii) Receives expense payments to cover subsistence and/or travel expenses. (xiii) Is entitled to extra pay or time off for overtime.

The Code goes on to provide that additional factors to be considered are that an individual could have considerable freedom and independence in carrying out work and still remain an employee; an individual who is paid by commission, by share, or by piecework, or in some other atypical fashion, may still be regarded as an employee; and that some employees work for more than one employer at the same time. While all of the following factors may not apply to the job, the Code provides that an individual would normally be self-employed if he or she: (i) Owns his or her business. (ii) Is exposed to financial risk, by having to bear the cost of making good, faulty or substandard work carried out under the contract. (iii) Assumes responsibility for investment and management in the enterprise. (iv) Has the opportunity to profit from sound management in the scheduling and performance of engagements and tasks.

38 

Such as Henry Denny & Sons (Ireland) Ltd (n 4) in particular. Code notes that the provision of tools or equipment might not have a significant bearing on coming to a conclusion that employment status may be appropriate, having regard to all the circumstances of a particular case. 39  The

342  Anthony Kerr (v)

Has control over what is done, how it is done, when and where it is done and whether he or she does it personally. (vi) Is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken. (vii) Can provide the same services to more than one person or business at the same time. (viii) Provides the materials for the job. (ix) Provides equipment and machinery necessary for the job, other than the small tools of the trade or equipment which in an overall context would not be an indicator of a person in business on their own account. (x) Has a fixed place of business where materials, equipment etc can be stored. (xi) Costs and agrees a price for the job. (xii) Provides his or her own insurance cover, eg, public liability cover etc. (xiii) Controls the hours of work in fulfilling the job obligations.

The fact that an individual might satisfy most indicators of employee status set out in the Code of Practice is not necessarily determinative. As the Employment Appeals Tribunal explained in the unfair dismissal case of McCotter v Quinn Insurance Ltd: [W]hether a worker is an employee or self-employed depends on a large number of factors. The Tribunal wants to stress that the issue is not determined by adding up the number of factors pointing towards employment and comparing the result with the number pointing towards self-employment. It is the matter of the overall effect, which is not necessarily the same as the sum total of all individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. When the detailed facts have been established, the right approach is to stand back and look at the picture as a whole, to see if the overall effect is that of a person working in a self-employed capacity or a person working as an employee in somebody else’s business. If the evidence is evenly balanced, the intention of the parties may then decide the issue. In summary, there is no single test. Each case must be considered in the light of its own particular facts.40

C.  The Relevance of ‘Economic Dependence’ The courts and other adjudicative bodies (such as the Labour Court and the Social Welfare Appeals Office) have emphasised, as does the abovementioned Code of Practice, that the overriding consideration will always be whether the individual performing the work or providing the service does so ‘as a person in business on their own account’. Consequently, the

40  McCotter v Quinn Insurance Ltd UD 242/2011; [2013] ELR 45. Similarly, in Minister for Agriculture and Food v Barry [2009] 1 IR 215, the fact that the TVIs satisfied 19 of the Code of Practice’s indicators of employee status did not prevent a finding that they worked under contracts for services.

The Concept of ‘Employee’: The Position in Ireland 343 extent to which an individual has the opportunity to benefit financially from the work or to be exposed to financial risk or loss is paramount. As the Supreme Court has pointed out, the inference that an individual is engaged in ­business on his or her own account: [C]an 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 dependent on the efficiency with which it is conducted by him or her.41

In Ó Coindealbhain v Mooney,42 the High Court had to consider the employment status of a branch manager of a Department of Social Welfare Employment Office. His terms and conditions provided, inter alia, that his remuneration would be made up of allowances and other payments related to the value of work done, that he should provide and furnish office facilities, and that he should employ a competent deputy and such clerical assistants as might be necessary. Blayney J had no doubt the branch manager was running his own business. He continued: His profit is the amount by which his remuneration exceeds his expenses; the lower he can keep his expenses the greater his profit. If he employs no one other than a deputy, and does a substantial amount of the work himself, his profit will be much greater than if he does little of the work himself and employs another person to do it instead. Similarly, the amount of his profit will also depend on how much rent he has to pay for his premises and how well he succeeds in keeping down his other expenses.43

In McAuliffe v Minister for Social Welfare,44 the High Court had to consider the employment status of two delivery men contracted by a wholesale distributor of newspapers to deliver the papers to retail shops and other such outlets. Each man owned their own delivery vehicle and was responsible for all outgoings including tax, insurance, repairs and fuel. They were remunerated on the basis of a sum per delivery run and were free to carry goods for

41  Per Keane J in Henry Denny & Sons (Ireland) Ltd (n 4) 50. See also the determinations of the Labour Court in Maher and O’Reilly v Department of Agriculture, Food and Rural Development DWT 22 and 32/2002 under the Organisation of Working Time Act 1997. In the former, a veterinarian was found to be employed under a contract of service, whereas in the latter, a veterinary inspector was found to be employed under a contract for services. The difference between the two cases lay in the finding that the latter was a ‘free agent with an economic independence of the person engaging the service’. 42  Ó Coindealbhain v Mooney [1990] 1 IR 422. This case concerned the manager’s position under income tax legislation. 43  ibid 432. See also Tierney v An Post [2000] 1 IR 536, where a similar finding was made concerning the employment status of postmasters in the context of disciplinary proceedings and the extent of their entitlement to fair procedures. 44  McAuliffe v Minister for Social Welfare [1995] 2 IR 238. This case concerned the men’s position under social welfare legislation.

344  Anthony Kerr other persons. Barr J concluded that both were employed under contracts for services. Similarly, motorcycle couriers, who provide their own motorbikes and meet the running costs thereof, have been found to be engaged under contracts for services.45 V.  THE PRINCIPLE OF PRIMACY OF FACTS

The extent to which the parties’ categorisation of the nature of the relationship is determinative of employment status has been considered by the Irish courts on a number of occasions. In the leading case of Henry Denny & Sons (Ireland) Ltd v Minister for Social Welfare,46 the employment status of a shop demonstrator for a food company was at issue. The written contract described her as an independent contractor engaged under a contract for services and stated that the provisions of the Unfair Dismissals Act 1977 did not apply to the contractual relationship between the parties. The Social Welfare Appeals Officer considered that he was required to consider ‘the facts and the realities of the situation on the ground irrespective of what the actual contract states or specifies’. The High Court and, on appeal, the Supreme Court upheld the Appeals Officer’s decision that the demonstrator was employed under a contract of service. Murphy J said that the provisions in the contract as to the demonstrator’s employment status were of ‘marginal’ value and continued: These terms are included in the contract but they are not contractual terms in the sense of imposing obligations on one party in favour of the other. They purport to express a conclusion of law as to the consequences of the contract between the parties. Whether [the demonstrator] was retained under a contract of service depends essentially on the totality of the contractual relationship express or implied between her and [the company] and not upon any statement as to the consequence of the bargain.47

VI.  QUALIFICATION IN FULL

An employer and an employee are not prohibited from entering into an a­ dditional contract, such as one of landlord and tenant in respect of

45  Securicor Omega Express Ireland v McCann Circuit Court, unreported, 20 March 2003 (Judge Hogan), an unfair dismissal complaint; Haugh v Keogh DWT 36/2012, a complaint under the Organisation of Working Time Act 1997. 46  Henry Denny & Sons (Ireland) Ltd (n 4), another social welfare case. 47  ibid 53.

The Concept of ‘Employee’: The Position in Ireland 345 accommodation. However, it would not be uncommon for a contract of employment to provide for ‘board and lodging’ as part of the employee’s remuneration.48 VII.  LIMITS TO THE FREEDOM OF CONTRACT

It follows from the principle of ‘primacy of facts’ that the parties cannot designate their relationship as something that it is not. In determining whether a contract is one ‘of service’ or ‘for services’, it is necessary to examine and consider what the real arrangement was, on a day-to-day basis, between the parties. A statement in a contract to the effect that an individual is engaged on a self-employed basis is merely a statement which might or might not be reflective of the actual legal relationship between the parties (see section V above). Aside from any label the parties may seek to attach to their relationship, it is becoming more common to find clauses being inserted into contracts which the parties never intended or envisaged would be carried out as written, such as the individual being entitled to engage one or more persons to carry out the work on his or her behalf or the individual not being obliged to provide his or her services on any particular occasion. If these terms bear no practical relation to the reality of the relationship, the courts are entitled to conclude that the document does not reflect the true agreement between the parties.49 It is also becoming more common for employers to insist that individuals providing specialist services (such as accountants and airline pilots) provide those services through a medium of a limited liability company.50 It is a standard provision in all employment rights legislation, such as the Unfair Dismissals Act 1977, that a provision in an agreement (whether a contract of employment or not) shall be ‘void’ insofar as it purports to exclude or limit the application of, or is inconsistent with, any provision of the relevant Act.51 48 The National Minimum Wage (National Minimum Hourly Rate of Pay) Order 2000 (SI No 95 of 2000) provides that the national minimum hourly rate of pay may include an allowance of €54.13 per week for ‘full board and lodgings’ or €21.85 per week for ‘lodgings only’. 49  See the cases at n 29 above. 50 In McCotter v Quinn Insurance Ltd UD 242 /2011; [2013] ELR 43, the claimant worked for the respondent insurance company as a regional claims manager. He was a director and 100 per cent shareholder in a company known as A1 Ltd, and payments were made to that company by the respondent for work carried out by the claimant. The Employment Appeals Tribunal found that the claimant was not an employee of the respondent. 51  See s 13 of the 1977 Act; see also s 37 of the Organisation of Working Time Act 1997. These sections ensure that employees cannot contract out of their statutory entitlements, but the High Court has confirmed that they do not preclude parties from lawfully agreeing to settle or compromise claims: Sunday Newspapers Ltd v Kinsella [2008] ELR 53.

346  Anthony Kerr VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Given the voluntary nature of collective bargaining in Ireland and the mandatory character of the established concepts, the issue of employment status cannot be decided or determined by the social partners. B.  Custom and Practice Deviations on the basis of custom and practice are not acknowledged in Ireland. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions No legal presumptions exist as to the employment status of an individual as regards the existence or non-existence of a contract of employment. B.  The Burden of Proof The general principle applied in all civil cases (including employment cases) is encapsulated in the Latin maxim ei incumbit probatio qui dicit, non qui negat. An individual who asserts that he or she was employed under a contract of employment must prove the existence of the necessary facts to establish the existence of such a contract. The burden of proof is on ‘the balance of probabilities’.52 X.  SPECIFIC PROCEDURES

As can be seen from the above, there are a wide variety of circumstances in which the issue of employment status can arise. It can affect the way in which tax and pay-related social insurance contributions (PRSI) are payable to the Collector General or the Department of Social Protection; the entitlement to social welfare benefits; the entitlement to employment rights, 52 

Best v Wellcome Foundation Ltd [1993] 2 IR 421.

The Concept of ‘Employee’: The Position in Ireland 347 such as that not to be unfairly dismissed; the applicability of the doctrine of vicarious liability and/or health and safety legislation, and thus the entitlement to compensation for personal injuries sustained in the workplace; the ranking of creditors where a company is in liquidation; and whether collective action is contrary to the Competition Act 2002. Consequently, the issue may fall to be decided by an Inspector of Taxes, a deciding officer in the Department of Social Protection, an adjudication officer of the Workplace Relations Commission (or the Labour Court on appeal), the Circuit Court hearing a personal injuries claim, the High Court hearing an application in the course of a company winding-up or the Competition and Consumer Protection Commission. There is no mechanism whereby the legal nature of an employment relationship can be ascertained in advance in any authoritative way. The Code of Practice suggests that if there is doubt as to whether an individual is employed under a contract of service (employee) or a contract for services (self-employed), the local Office of the Revenue Commissioners or SCOPE section of the Department of Social Protection should be contacted. Having established all of the relevant facts, a written decision as to employment status will then be issued. The Code of Practice continues: A decision by one Department will generally be accepted by the other, provided all relevant facts were given at the time and the circumstances remain the same and it is accepted that the correct legal principles have been applied to the facts established. However, because of the varied nature of circumstances that arise and the different statutory provisions, such a consensus may not be possible in every case.

The decisions of a deciding officer in the SCOPE section of the Department of Social Protection can be appealed to the Social Welfare Appeals Office and an Appeal Officer’s decision can be further appealed to the High Court on a point of law only.53 In McGloughlin v Central Bank and Financial Services Authority of ­Ireland,54 an issue arose in the claimant’s unfair dismissal proceedings as to his employment status. The Social Welfare Appeals Office had previously decided that he was employed under a contract of service, but the respondent submitted that that was only an ‘administrative determination’ and could be disregarded by the Employment Appeals Tribunal. The Tribunal noted that the Appeals Office’s decision had not been appealed to the

53 In addition to the Henry Denny and McAuliffe cases (cited and discussed above), see Castleisland Cattle Breeding Society Ltd v Minister for Social and Family Affairs [2004] 4 IR 150 and Electricity Supply Board v Minister for Social, Community and Family Affairs [2006] IEHC 59. 54  McGloughlin v Central Bank and Financial Services Authority of Ireland UD 1728/2009.

348  Anthony Kerr High Court and ruled that that decision was ‘final and conclusive’ as to the ­claimant’s employment status. The High Court, however, has now confirmed that such decisions are not binding and that issue estoppel does not arise. In National Museum of Ireland v Minister for Social Protection,55 Murphy J said that it would be far more efficient to have one body charged with the resolution of all issues relating to employment status, but the legislature ‘in its wisdom’ had seen fit to set up different statutory schemes to deal with different employment issues. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons The position of ‘commercial agents’ is governed by the European Communities (Commercial Agents) Regulations 1994,56 which define such a person as: A self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person, hereinafter called ‘the principal’, or to negotiate and conclude such transactions on behalf of and in the name of the principal.

Such persons are not employees and do not enjoy any individual or collective employment rights. They do, however, enjoy the right to be compensated upon termination of the agency relationship.57 B.  Equality and Anti-discrimination Law The Employment Equality Acts 1998–201558 apply to individuals employed or persons who seek to be employed under a ‘contract of employment’, a term which is defined by section 2 of the 1998 Act as including not just a contract of service or of apprenticeship but also any other contract whereby: (i)

55 

An individual agrees with another person personally to execute any work or service for that person (such as a labour only sub-contractor), or

National Museum of Ireland v Minister for Social Protection [2016] ELR 297, 314–15. No 33 of 1994 as amended by SI No 31 of 1997 implementing Council Directive 86/653/EC. 57  See I Higgins, ‘Commercial Agents and Compensation’ (2004) 4 Bar Review 145. 58  The Acts implement Ireland’s obligations under art 157 TFEU, Council Directive 2000/43/ EC, Council Directive 2000/78/EC and Parliament and Council Directive 2006/54/EC, and outlaw discrimination on the grounds of gender, age, race, disability, religion, sexual orientation, civil or family status and membership of the traveller community. 56 SI

The Concept of ‘Employee’: The Position in Ireland 349 (ii) An individual agrees with a person carrying on the business of an employment agency to do or perform personally any work or service for another person (whether or not the other person is party to the contract).

Furthermore, section 13A of the 1998 Act (inserted by section 7 of the Equality Act 2004) specifically extends the definition of ‘employee’ to ­ partners for the purposes of that Act (as amended). This is important ­ because a partnership, being a joint business venture, does not create an employment relationship.59

59 See Minister for Social Welfare v Griffiths [1992] ILRM 44, but note that a salaried partner in a firm of solicitors with no voting power and no real impact on major decisions affecting the practice was found by the Employment Appeals Tribunal to be an employee: see Casey v LK Shields UD 1823/2009; [2012] ELR 144.

350 

17 The Concept of ‘Employee’: The Position in Italy EDOARDO ALES

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HE DEFINITION OF ‘employee’ and of ‘employment relationship’ is and has always played a role in Italian labour law. Indeed, statutory provisions focus on the definition of ‘employee’ (lavoratore subordinato). The notions of ‘employment relationship’ and of ‘employment contract’ (rapporto/contratto di lavoro subordinato) are derived from doctrine and case law from the following legal provisions, which refer to the concept of ‘employee’ (lavoratore subordinato) and ‘self-employed’ worker (lavoratore autonomo): (i)

(ii)

1 

Article 2094 of the Italian Civil Code1 sets forth the definition of employee (ie, an individual performing work under the control and instructions of the employer and who receives a salary to perform his or her duties).2 Article 2222 of the Civil Code sets forth the definition of selfemployment (ie, an individual who perform his or her activities, mainly personally, without being under the control and instructions of an employer).3

Regio Decreto 16 March 1942, No 262, OJ n 79 of 4 April 1942. Dell’Olio, ‘La subordinazione nell’esperienza italiana’ (1998) ADL 697; L Spagnuolo Vigorita, Subordinazione e diritto del lavoro (Napoli, Morano, 1967); L Mengoni, Lezioni sul contratto di lavoro (Milan, Celuc, 1971); more generally, see L Nogler, The Concept of ‘Subordination’ in European and Comparative Law (Trento, Trento Law Department, 2009). 3 A Perulli, Il lavoro autonomo. Contratto d’opera e professioni intellettuali (Milan, Giuffrè, 1996). 2  M

352  Edoardo Ales When comparing the second part of Articles 2094 and 2222, the main feature of the contract of employment, ie, the legal element of subordination, in the sense of the subjection of the employee to the directive, control and disciplinary power of the employer, is absent in the concept of ­self-employment, as we will specify in section IV below.4 Despite the absence of a statutory definition of ‘contract of ­employment’ as well as the absence of formal requirements (with the exception of fixed-term and part-time work), it is worth noting the consequences of the invalidity of such a relationship. In this regard, Article 2126 of the Civil Code states that: The nullity or withdrawal of the employment contract has no effect for the period in which the relationship was in force, except that the invalidity is due to the unlawful object or motivation of the contract. If the work was performed in violation of rules established to protect the employee, he/she is in any case entitled to the payment of wages.

This provision therefore protects all employees, including illegal migrants, except in cases where the employment contract has an unlawful object or reason, which is reflected in the common intention of the parties to establish a relationship prohibited by the mandatory rules of law. B.  Employment Relationship: Basic Definition As outlined in the previous section, Italian labour and social security law does not provide a definition of the employment contract, only a ­definition of employee (lavoratore subordinato) as anyone who performs work in exchange for a wage in the view of cooperating within the company under the direction of the employer (Article 2094 of the Civil Code). Therefore, Article 2094 of the Civil Code recognises the following as the main elements of employment (subordinazione): payment of a wage, cooperation, eterodirezione (ie, subjection to the power of direction of the employer) and dependency:5 (i)

Payment of a wage6 is the main and essential obligation of the employer. It represents the remuneration for the employee’s activities and is a fixed and regular element in the employment relationship, whereas in the case of self-employment, remuneration is a variable element, depending on the results achieved by the worker.

4  G Ferraro, ‘Dal lavoro subordinato al lavoro autonomo’ (1998) Giornale di diritto del lavoro e delle relazioni industriali 429. 5  See generally M Pedrazzoli, Democrazia industriale e subordinazione. Poteri e fattispecie nel sistema giuridico del lavoro (Milan, Giuffrè, 1985). 6  See Corte di Cassazione, Labour Division, Judgment of 6 May 2010, No 10974.

The Concept of ‘Employee’: The Position in Italy 353 (ii)

Cooperation is a technical and organisational element of subordination, which is recognised in the cooperation of the employee with other employees and the employer. In the employment relationship, the relevance of this element is high because it represents the full integration of the employee into the workplace as organised by the employer. (iii) The eterodirezione7 is the most characterising element of the employment relationship, identifying the employee’s duty to comply with the employer’s power of instruction. It represents the technical and ­functional integration of the employee into the productive and organisational structure of the employer, who exercises his or her directive power, through orders, control and disciplinary sanctions. (iv) The element of dependency8 refers to the economic and social vulnerability of the employee in the sense that employment is the unique source of income. As will be explained in section IV below, in the eterodirezione element, the case law recognises distinctive criteria that can be used to identify the ­subordinate nature of the employment relationship. Specific provisions apply to agency work as regards the employer’s exercise of power. According to Article 35(6) of Legislative Decree No 81 of 2015,9 the user has directive power and control, whereas the provider may exercise disciplinary power under the user’s guidance. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition As outlined in section I.A above, the Civil Code contains a legal definition of ‘employee’. Article 2094 of the Civil Code defines the employee as a person who obliges himself or herself to act under the employer’s direction and control, receiving a salary to perform manual or intellectual tasks. As will be shown in section IV.A below, the definition of ‘employee’ entails specific characteristics of subordination, ie, the subjection of the employee to the directive, control and disciplinary powers of the employer. Another important feature of national legislation is the use it makes of wholly distinctive concepts of ‘worker/employee’ in occupational health and

7 

See Corte di Cassazione, Labour Division, Judgment of 6 May 1986, No 3038. See Corte di Cassazione, Labour Division, Judgment of 28 July 1995, No 8260. 9 Legislative Decree 15 June 2015, No 81, OJ of 24 June 2015, No 144, Ordinary Supplement No 34. 8 

354  Edoardo Ales safety law.10 This ensures that the employer’s duty to prevent harm and protect the employees is not affected by the type of contractual relationship used. To that end, the concept of ‘worker’ assumes preliminary importance. For the intents and purposes of the aforementioned Legislative Decree No 81 of 2015, ‘worker’11 is to be understood as any ‘person who, regardless of the type of contract, carries out a remunerated or unremunerated activity within a public or private organisation, even for the sole purpose of learning a trade, art or profession, excluding domestic workers and family members’. Thus, the concept of ‘worker’ is all-inclusive. This not only covers employees (regardless of the type of contract) but also workers who, although not employed by the employer, are nevertheless subject to his or her managerial authority (for instance, agency workers).12 It also covers those workers who have drawn up a contract for services with an employer, provided that the service, which is the object of such a contract, potentially (insofar as its provision is within the employer’s organisation) exposes them to occupational health and safety risks.13 B. Employer: Basic Definition Italian labour law does not provide for a definition of ‘employer’. An employer is generally understood to be any physical or juridical person who organises and uses somebody else’s work. The employer is thus the creditor of the employee’s work and organises their activity. Even if Article 2094 of the Civil Code expressly uses the term ‘entrepreneur’, the notion of ‘employer’ does not correspond to that of ‘entrepreneur’ since, in practice, it is possible that an employer does not assume this status on the basis of civil law (eg, domestic employer). Pursuant to Article 2239 of the Civil Code, the legislative provisions contained in Articles 2094 ff of the Civil Code, which refers to the employer/ entrepreneur, also applies to ‘employment relationships that are not inherent to the exercise of an enterprise’. In light of the above, it is interesting to note the peculiarity that arises from the regulation of so-called non-profit ideological enterprises ­(political

10 Legislative Decree 9 April 2008, OJ n 101 of 30 April 2008, Ordinary Supplement No 108. 11  See art 2(1)(a) of Legislative Decree No 81/2008. 12  See art 35(4) of Legislative Decree No 81/2015. See also P Pascucci, ‘Prime osservazioni sul Titolo I del d.lgs. 9 aprile 2008, n 81 in materia di tutela della salute e della sicurezza nei luoghi di lavoro’ (2008) WP CSDLE ‘Massimo D’Antona’, IT-73/2008, 35–42, www.olympus. uniurb.it/images/stories/pdf/nuovo_pascucci_n73-2008it.pdf. 13  See E Ales, A Giurini and L Miranda, ‘Italy: From Occupational Health and Safety to Well-Being at Work’ in E Ales (ed), Health and Safety at Work: European and Comparative Perspective (Dordrecht, Kluwer Law International, 2013) 203.

The Concept of ‘Employee’: The Position in Italy 355 parties, trade unions, churches etc). In fact, Article 4 of Act 11 No 108 of 199014 defined the notion of ‘non-entrepreneurial employer’ as somebody who ‘exercises non-profit political, trade union, cultural and religious activities’. With reference to Article 2239 of the Civil Code, ‘employer’ is broadly defined as any person for whom work-related tasks are carried out by a worker, following his or her directive, control and disciplinary powers. For the same reason indicated in the previous section and following the same line of interpretation, the Italian legislator also applies a broad concept of ‘employer’ with reference to health and safety at work legislation. Focusing on the function of managing safety at work, Legislative Decree No 81/2008 defines the employer as the individual who has full and effective power to organise the business operations. To that end, Article 2(b) of Legislative Decree No 81/2008 identifies a private sector ‘employer’ as the party in charge of the work relationship with the worker or, in any event, the party that, according to the type and set-up of the organisation for which the worker provides his or her services, is responsible for the organisation itself or for the relevant production unit, insofar as he or she exercises decision-making and spending power. In this respect, a judgment of the Criminal Division of the Corte di Cassazione15 upheld the macro-concept of ‘employer’, including anyone who de facto has assumed the role of employer.16 For health and safety purposes, the position of ‘employer’ vis-a-vis the workers reaches well beyond the existence of a formally defined employment relationship, regardless of the nature of the contractual relationship. It coincides with the full and effective exercise of an employer’s powers.17 More recently, the Italian legislator has acknowledged some new forms of work, which are worth mentioning in detail. The network contract: according to Article 3(4-ter) of Act No 33 of 2009,18 Italian legislation provides a specific regulation for network contracts among companies, which has been defined as a tool through which: [S]everal companies pursue the goal to increase, individually or collectively, their innovation capacity and their competitiveness on the market by committing

14 

Act 11 May 1990, No 108, OJ of 11 May 1990, No 108. See Corte di Cassazione, Criminal Division, Judgment of 22 September 2009, No 36878. 16  See C Lazzari, ‘Datore di lavoro e obbligo di sicurezza’, I Working Papers di O ­ lympus, No 7/2012, 3–9, www.olympus.uniurb.it/images/wpo/wpo7.12-lazzari.pdf; G Natullo, ‘Soggetti e obblighi di prevenzione nel nuovo Codice della sicurezza sui luoghi di lavoro: tra continuità e innovazioni’ (2009) WP CSDLE ‘Massimo D’Antona’, IT-91/2009, p 5, www.csdle.lex.unict. it/Archive/WP/WP%20CSDLE%20M%20DAntona/WP%20CSDLE%20M%20DAntonaIT/20110628-011112_natullo_n91-2009itpdf.pdf. 17  See Ales, Giurini and Miranda (n 13) 204. 18  Act of 9 April 2009, No 33, OJ of 11 April 2009, No 85, Ordinary Supplement No 49. 15 

356  Edoardo Ales themselves, on the basis of a common network programme, to cooperate in certain predetermined ways and domains related to the exercise of their activities or to exchange information on industrial, trade, technical or technological supplies or to jointly exercise one or more activities that fall within the object of their undertaking.19

Article 3(4-ter) also provides that under a network contract: [A] common fund may be established and a common body entrusted to manage, in the name of and on behalf of the participants, the execution of the contract or of individual parties thereof, may be appointed.

However, the common fund does not automatically acquire legal personality separately from that of one of the establishing parties. In fact, Article 3(4-quater), last sentence provides that, to that end, the contract has to be concluded by notary deed. The network contract shall furthermore include the name of each participant company as well as the strategic objectives and modalities under which the given objectives are pursued. Last but not least, the contract shall specify the network programme within which the rights and duties of the signing parties, the duration of the contract and the decision-making rules on matters of common interest are defined. Secondment of workers: Act No 99 of 201320 has introduced some labour law provisions strictly linked to the network contract, adding paragraph 4-ter to Article 30 of Legislative Decree No 276 of 2003,21 which regulates the secondment of workers. According to the new paragraph 4-ter: [I]f companies make use of secondment by concluding a network contract, the interest of the seconder is presumed on the basis of the existence of the network within the framework of provisions regulating the transfer of a single worker (Article 2013 of the Civil Code).

In fact, according to Italian legislation, secondment is only permitted if it is in the interests of the respective seconder and under the condition of temporality (Article 30(1) of Legislative Decree No 276 of 2003). According to Circular Letter No 35/2013 issued by the Ministry of Labour, ‘the interest of the seconder has to be presumed in case of network contracts’. Joint employership: the final part of Article 30(4-ter) of Legislative Decree No 276 of 2003, as introduced by Act No 99 of 2013, provides that: [J]oint employership of workers hired within the framework of provisions defined by the network contract is permitted among companies that are part of that network.

19  See Treu, Trasformazioni delle imprese: reti di imprese e regolazione del lavoro, Merc. Conc. Reg., 2012, 1, 7–8. 20  Act of 9 August 2013, n 99, OJ of 22 August 2013, No 199. 21  Legislative Decree 10 September 2003, No 276, OJ of 9 October 2003, No 235.

The Concept of ‘Employee’: The Position in Italy 357 The Italian legislator does not define the concept of joint employership—it refers to the provisions defined in the network contract. The absence of a legislative definition for joint employership has triggered a heated debate among scholars22 on the very notion of ‘joint employership’ (formal joint employership by companies of a network or joint exercise of managerial prerogatives and powers within a traditional, single-employer relationship) and the consequences of joint employership on the management of the employment relationship (joint and several liability among the companies of the network; allotment of the worker in terms of reaching the respective threshold; application of the last resort principle in the event of dismissal for economic reasons). Due to the lack of case law on this issue, reference is made to the abovementioned circular letter issued by the Ministry of Labour according to which (in the case of joint employership) managerial prerogatives and powers may be exercised by each signatory party of the network contract, and responsibilities and liabilities shall be distributed by the network contract, excluding a joint and several liability of the signatories to the network contract. Joint hiring: Act No 99 of 2013 has also added paragraph 3-bis to 3-quinquies to Article 31 of Legislative Decree No 276 of 2003, ­allowing companies bound by a network contract to jointly hire employees to ­perform work activities if at least 50 per cent of the companies operate in the a­ griculture sector. In that case, employers are jointly and severally liable for all labour and social security provisions that apply to regular ­employment relationships. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Various sub-types of employees exist in Italy to which specific rules apply. Although, on the one hand, the historical differentiation between bluecollar (operai) and white-collar (impiegati) workers has lost significance 22  See, among others: I Alvino, Il lavoro nelle reti di imprese: profili giuridici (Milan, Giuffrè, 2014); M Biasi, ‘Dal divieto di interposizione alla codatorialità: le trasformazioni dell’impresa e le risposte dell’ordinamento’ (2014) WP CSDLE ‘Massimo D’Antona’, IT-218/2014; MT Carinci, Utilizzazione e acquisizione indiretta del lavoro: somministrazione e distacco, appalto e subappalto, trasferimento d’azienda e di ramo Diritto del lavoro e nuove forme di organizzazione dell’impresa, 3rd edn (Turin, Giappichelli, 2013); MT Carinci (ed), Dall’impresa a rete alle reti d’impresa. Scelte organizzative e diritto del lavoro (Milan, Giuffrè, 2015); MG Greco, ‘Distacco e codatorialità nelle reti di impresa’ (2014) ADL 396 ff; O Mazzotta, ‘Gruppi di imprese, codatorialità e subordinazione’ (2013) RGL 19 ff; A Perulli, ‘Contratto di rete, distacco, codatorialità, assunzioni in agricoltura’ in L Fiorillo and A Perulli (eds), La riforma del mercato del lavoro (Turin, Giappichelli, 2014).

358  Edoardo Ales almost entirely, on the other hand, the category of managerial employees (dirigenti) continues to be of major importance. According to Article 2095 of the Civil Code and the prevailing case law,23 a dirigente is an employee who carries out his or her duties with a high degree of autonomy and relevant discretion. Dirigenti are not subject to the working time regulation and are not entitled to receive any additional compensation for overtime; however, the prevailing case law regards the preservation of their physical and mental health to be a general criterion in terms of workload limit.24 The termination of the employment relationship of dirigenti is regulated in Article 2118 of the Civil Code. In the event of dismissal, the employer must give notice within the period defined by the collective agreement, without having to indicate the grounds for dismissal; indemnity in lieu of notice is admitted. This indemnity, which amounts to the monthly salary paid during the notice period, is based on the last salary earned by the dirigente. However, collective agreements have introduced the possibility for dirigenti to contest the dismissal; in such cases, the dirigente may submit the dispute to arbitration. If the dismissal is found to be unjustified, the employer will be requested to pay a supplementary indemnity for unfair dismissal.25 According to Article 2119 of the Civil Code, in the event of justified resignation, the dirigente is entitled to the indemnity described above without working during the notice period.26 Non-managerial employees who carry out executive functions and play an important role for the development and implementation of the company’s goals within the defined company strategies belong to the category of middle-ranking managers/cadres (quadri) in organisations of a given size. According to Act No 190 of 1985,27 the latter: (i) (ii)

have decisional discretionary powers and managerial responsibilities in terms of the direction and coordination of resources and people, in divisions and service departments with special operational complexity; have decisional autonomy in defining and procuring projects that are crucial for the development and implementation of the company’s goals, control the economic and technical feasibility of the projects,

23  See Corte di Cassazione, Labour Division, Judgment of 20 May 2011, No 11200; and Corte di Cassazione, Labour Division, Judgment of 28 August 2003, No 12650. 24  Constitutional Court, Judgment of 7 May 1975, No 101. 25 See L Corazza, ‘Licenziamento del dirigente d’azienda e obbligo di specificazione contestuale dei motivi previsto dal contratto collettivo: verso la completa rarefazione delle tutele del dirigente’ (2009) RDL 817–23; G Pellacani, ‘Il licenziamento del dirigente. Riflessioni sulla coerenza ordinamentale di un microsistema eterotopico e prospettive di rimodulazione del paradigma protettivo’ (2009) 4/5 ADL 994–1020. 26 A Zoppoli, ‘Dirigente (privato e pubblico)’ in Enciclopedia del diritto—Annali, vol 5 (Milan, Giuffrè, 2012) 535. 27  Act of 13 May 1985, No 190, OJ of 17 May 1985, No 115.

The Concept of ‘Employee’: The Position in Italy 359 provide adequate support during the planning and realisation of the project, ensure their smooth implementation and are responsible for their outcome. Quadri are not subject to the working time regulation and are not entitled to receive any additional compensation for overtime. In the event of t­ermination of the employment relationship, quadri are subject to the protection regime to which the other employees are entitled as well. Moreover, in Italy the following special types of employees are also recognised.28 Homeworkers:29 home working is regulated in Act No 877 of 1973,30 which, more clearly than the previous Act of 1958,31 aims to guarantee homeworkers the same terms and conditions of work as those granted to workers who perform work at the employer’s premises. The law has adopted a relatively precise definition of ‘subordinate homeworkers’,32 including all workers who work in their home or at their own premises only with the help of family members (thus excluding salaried workers) for an entrepreneur, who provides assignments to be completed and gives instructions. If the entrepreneur makes available the premises for work, even if the worker rents the premises, he or she will be considered a regular employee of the enterprise,33 despite working under a telework scheme. Homeworking is prohibited for activities that require the use of materials that pose a hazard to health and safety, and entrepreneurs who have dismissed workers within the previous year due to reorganisation or restructuring of the enterprise (Article 2) cannot conclude homeworking contracts. In order to avoid fraud, homeworking is also prohibited when it is based on decentralisation (regardless of the form it takes) of work instruments for workers. Homeworkers are paid at a piece rate (Article 8), in accordance with fees stipulated in collective agreements. If no collective agreement exists, as is usually the case, the law assigns a joint (regional) committee (four representatives of the most representative trade unions and four representatives from employers’ organisations) to fix the piece rate. If this committee cannot reach an agreement within a fixed period, the director of the Regional Labour Office has the power to decide and must fix the rate

28 

F Santoni, Rapporti speciali di lavoro (Turin, Giappichelli, 1993). M Pedrazzoli, Il lavoro a distanza: lavoro a domicilio, Codice dei lavori (Milan, Giuffrè, 2001). 30  Act of 18 December 1973, No 877, OJ of 5 January 1974, No 5. 31  Act of 13 May 1958, No 264, OJ of 9 April 1958, No 85. 32  Article 1, as modified by art 1(2) of Act 16 December 1980, No 858, OJ of 20 December 1980, No 348. 33 See Corte di Cassazione, Labour Division, Judgment of 2 December 1988, No 6520. See also L Nogler, Il lavoro a domicilio. Art. 2128, Codice civile. Commentario Schlesinger, (Milan, Giuffrè, 2000) 72. 29 

360  Edoardo Ales according to the quality of the work carried out and the wages paid by the entrepreneur to regular workers or wages defined by collective agreements for similar jobs. Domestic workers:34 domestic work is regulated in Italy by means of a specific legislation and by collective agreements. The relevant Act No 339 dates back to 195835 and the first collective agreement was signed in 1974. Both legislation and collective bargaining cover the full range of domestic workers’ tasks, from providing care to babysitting, housekeeping and related services. However, Act No 339 only applies to domestic workers who work more than four hours a day for the same employer. It defines workers’ duties and rights such as tasks, rest times, holidays and notice period in the event of dismissal. Collective bargaining has also extended those rights to workers who fall outside the scope of the law, defining, moreover, the minimum conditions for in-house work, namely the requirement for decent and separate accommodation, as well as the right to two hours of rest each afternoon and guaranteed free Sundays. Minimum wage regulations exist for in-house workers from which no deductions may be made for in-kind payments, such as room and board. Instead, reimbursement is foreseen for in-house workers for the days on which they do not make use of room and board. Article 2118 of the Civil Code applies to the termination of the employment relationship of domestic workers.36 Apprentices:37 Legislative Decree No 81 of 2015 currently regulates apprenticeships, distinguishing between three types of apprenticeships. Type one encompasses youths between the ages of 15 and 25, giving them the opportunity to acquire professional qualifications and pursue a secondary education certificate, thus combining study and work (the so-called dual system). The employer must sign a protocol with the school the youth is attending, clearly defining the details of the study-work programme. The employer is not obliged to remunerate the time the youth attends class and shall only pay 10 per cent of the contractual wage when the apprentice is in company training (Article 43). Type two encompasses persons of any age, including beneficiaries of an unemployment scheme, who seek to acquire professional qualifications or who want to gain new qualifications. Therefore, specific grounds for

34 M Persiani, ‘Domestici (lavoro domestico)’ in Enciclopedia del diritto, vol 13 (Milan, Giuffrè, 1964). 35  Act of 2 April 1958, No 339, OJ of 17 April 1958, No 93. 36  See Corte di Cassazione, Labour Division, Judgment of 2 December 1981, No 1570. See also D Gottardi, ‘Voce Lavoro a domicilio’ in Digesto delle Discipline privatistiche. Sezione commerciale, vol 8 (Turin, Utet, 1992) p 182. 37  F Carinci, E tu lavorerai come apprendista, Quaderni di Argomenti di diritto del lavoro (Padua, Cedam, 2012).

The Concept of ‘Employee’: The Position in Italy 361 ­ ismissal related to the failure of the qualification programme is explicitly d provided for in the new regulation (Article 44). Type three encompasses youths between the ages of 18 and 29 who are pursuing a university-level degree, a PhD or a registered profession. In this case, the employer has to sign a protocol with the university the apprentice is attending, clearly defining and detailing the study-work programme (Article 45). The apprenticeship contract shall be concluded in writing in the interests of the employer, who must otherwise bear the burden of proof in the event that the worker files a claim alleging that the contract was a regular employment contract (for instance, due to lack of training) (Article 42). The apprenticeship contract is an open-ended employment contract with a minimum duration of six months. The training period may last up to five years (type three). At the end of the training period, the parties are free to terminate the employment relationship by notice. In the event that none of the parties terminates the contract within the notice period, the relationship will continue as a regular employment relationship (Article 41). Collective bargaining at the inter-branch level defines the terms and working conditions of apprentices, respecting, among other things, the following statutory principles: (i) piece work pay is prohibited; (ii) the apprentice may only work for a maximum of two positions under the worker assigned, who performs the tasks the apprentice aims to acquire during his or her training period; (iii) the appointment of a company supervisor; (iv) the extension of the training period in case of illness, work accident or occupational disease, or other involuntary grounds of suspension of work for a period of at least 30 days (Article 41). Companies can hire no more than two apprentices for every three regular employees working in the company. Companies that employ more than 50 workers cannot hire new apprentices if, within the 36 preceding months, they have not ‘stabilised’ at least 20 per cent of the apprentices already employed by the company, excluding those whose employment relationship has been terminated due to unsuccessfully completing the probation period or due to just cause. Apprentices hired in violation of that limit will be considered regular employees. Therefore, general dismissal law applies (Article 41). Athletes:38 Act No 91 of 198139 provides for a special set of regulations on professional sport. Two conditions (Article 2) qualify an individual as an athlete (ie, player, coach, athletic trainer and sport director) and as a professional: (a) authorisation of the national sport associations by the Italian Olympic Committee; and (b) receiving a salary for practising a sport.

38  39 

MT Spadafora, Diritto del lavoro sportivo, 2nd edn (Turin, Giappichelli, 2004). Act of 23 March 1981, No 91, OJ of 27 March, No 86.

362  Edoardo Ales When these conditions are met, the activity performed by the athlete is considered to be work activity (instead of amateur activity).Only the activity carried out by a professional player (Article 3) is considered to be performed under an employment contract in accordance with the law and in a presumptive way (which is hence the prevailing structure for the relationship), unless the following legal conditions of self-employment are present: (i) the activity takes place in a single or in a series of sporting events over a short period of time; (ii) the athlete is not bound by a contract to attend training or preparation sessions; (iii) the services provided do not exceed eight hours per week or five days per month or 30 days per year. For coaches, athletic trainers and sport directors, although they are always considered subordinate in practice, Act No 91 of 1981 does not recognise a legal presumption of subordination. For these athletes, in the absence of an agreement between the parties on the subordinate nature of the activity, the labour section of the Corte di Cassazione has interpreted this lack of legal presumption, specifying that the existence of subordination must be ascertained on a case-by-case basis, according to the criteria provided by general employment law.40 The employment relationship in sport has specific characteristics differentiating it from a common employment relationship. For example, in sport, the employment contract must be concluded in writing, otherwise it is null and void. The contents of the contract (Article 4) must reflect the contents of the standard contract drafted by the representatives of the employer and the athlete, and be approved by the relevant national sport association. The latter has tremendous influence in the collective bargaining process and in fact reviews every single contract to ensure that the relevant provisions are being complied with. As far as trade unions are concerned, there are several associations for each sport—for instance, the football trade unions are the AIC (Italian Association of Football Players), the AIAC (Italian Association of Coaches), the AIPAC (Italian Association of Athletic Trainers) and the ADISE (Italian Association of Sport Directors). Trade union activity not only deals with negotiation on pay (ie, the annual minimum wage), but other aspects of the relationship (reduction of restrictions, legal assistance and protection of players against insolvency of the club or exploitation of their image). With regard to players’ obligations, the sport activity must be performed (Article 4) according to the rules of the club, following its technical instructions and training schedule. The exercise of power by the management is stronger than that exercised in an ordinary employment relationship. In fact, the employer has the right to interfere and investigate the employee’s private life, while this is generally prohibited by the so-called Workers’ Statute

40 

See Corte di Cassazione, Labour Section, Decision No 11540 of 28 December 1996.

The Concept of ‘Employee’: The Position in Italy 363 (Act No 300/1970)41 in other employment relationships. Furthermore, audiovisual surveillance of workers’ activities and health checks of workers to verify their physical condition are permitted. As regards the unilateral termination of the employment relationship, Article 2118 of the Civil Code applies. Professional athletes are subject to social insurance for disability, old-age and survivor’s pensions (Article 9) managed by the Italian National Institute for Social Security (INPS). Workers are eligible for pension benefits after at least 20 years of contributions as of the ages of 52 (men) and 47 (women). Health assistance programmes for professional athletes are strictly regulated: health reports must be updated every six months by the club’s medical staff, and insurance policies covering any possible health risks related to the sport activity are also compulsory. Civil servants:42 Legislative Decree No 165 of 200143 regulates the work relationship of civil servants, stating that, despite some relevant exceptions, individual labour law applies to such employees as well. There are two types of exceptions. First, as regards the personal scope of application, certain special types of civil servants may be hired under administrative law provisions, ie, without the conclusion of an employment contract. Their work relationship is unilaterally regulated by the relevant administration and the administrative judge has competence in the event of disputes. They include, for instance, judges and university professors. Second, as regards workers who fall within the scope of application of individual labour law, the latter does not apply in full, primarily with reference to the provisions on the modification of the employment relationship into more favourable ones, with sanctions against employers who violate labour law regulations. The most prominent case is the transformation of fixedterm contracts into open-ended contracts, which does not apply to employment relationships in the public sector. The reason for this is misgivings about the legislature in the capacity of public administration to act as a ‘real’ employer, preventing favouritism of employees in an unjustified manner, taking into account that the economic consequences of unjustified favouritism will be borne by the public budget without affecting the financial position of the person acting as the employer. For this reason, the legislator decided to introduce other sanctions than those normally imposed against employers in the private sector, since they will not have any dissuasive effect on the public employer. On the other hand, a system of personal financial liability of the person acting as the

41 

Act of 20 May 1970, No 300, OJ of 27 May 1970, No 131. E Ales, Contratti di lavoro e pubbliche amministrazioni (Turin, Utet, 2007). 43 Legislative Decree 30 March 2001, No 165, OJ of 9 May 2001, No 106, Ordinary Supplement No 112. 42 

364  Edoardo Ales public employer has been established in order to prevent favouritism being shown towards employees. Legislative Decree No 165 of 2001 also provides for special rules on collective labour law in the public sector. B. The Establishment of a Specific Category of ‘Workers’ As will be explained in detail in section XI.A below, an important and interesting feature of Italian labour law is the protection of collaborazioni coordinate e continuative of workers who do not enjoy employee status, while being considered a special category of self-employed persons. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration As was mentioned in section I.B above, Article 2094 of the Civil Code ­establishes the main elements of the employment relationship: wage, collaboration, eterodirezione (ie, subjection to the directive powers of the employer) and dependency. Labour Court decisions44 have recognised the element of the eterodirezione as the distinctive feature for determining the existence of an ­employment relationship. Eterodirezione refers to the exercise of the employer’s directive power through specific instructions on how to perform the work strictly related to the employer’s power of control over the execution of the employer’s ­activity and the employer’s disciplinary power in case of non-compliance. The concept of ‘eterodirezione’ that has developed in recent years, a broad definition due to the emergence of new forms of work, which cannot be easily inserted into one of the two macro-categories of ‘employment’ and ‘self-employment’. In light of the above, the Italian Supreme Court has held that: One unfailing element of the employment relationship is subordination, intended as a lien of personal submission of the employee to the employer’s management power, which relates more to how the employee performs work rather than to the result of that work; on the contrary, the other elements of the employment

44 See Corte di Cassazione, Labour Division, Judgment of 1 February 2006, No 2249; Corte di Cassazione, Labour Division, Judgment of 10 February 2006, No 2904; Corte di Cassazione, Labour Division, Judgment of 9 October 2006, No 21646.

The Concept of ‘Employee’: The Position in Italy 365 relationship (such as collaboration, the observance of a certain working time, the continuity of the services rendered, the inclusion of the same services in the ­business organisation and coordination with the entrepreneurial activity, the lack of risk for workers and the salary) are incidental. These factors should be taken into consideration as a whole and, in any case, in relation to subordination.45

Therefore, the changing notion of ‘eterodirezione’ with reference to the new forms of work required legal scholars to find new methods to classify the employment relationship in cases that are not straightforward. In light of these changes, legal scholars46 have proposed two alternative methods to define and classify controversial cases as employment or selfemployment: the typological and the subsumptive. The first method proposes a synthesised approach, basing the assessment on approximations of facts of the given legal type, without all elements of that particular type having to be present to classify a contract as a contract of employment. The second method is an analytical approach to verify the presence of all elements of subordination, as provided in the abstract legal provision. B. Indicators Since the statutory distinction between employees and self-employed w ­ orkers is unclear, the courts apply various forms of tests to determine the degree of subordination. These tests incorporate some or all factors relating to: (i) the worker’s integration into the employer’s business and the employer’s level of control; (ii) the duration of the work relationship; (iii) working time; (iv) the place of work; (v) the degree of self-determination; (vi) the freedom to work for other employers; (vii) the worker’s investment in the business or absence of financial risk; and (viii) the fact that the worker has his or her own employees.47

45 

Corte di Cassazione, Labour Division, Judgment of 1 December 2008, No 28525. M Roccella, D Gottardi and F Guarriello (eds), Manuale di Diritto del Lavoro, 6th edn (Turin, Giappichelli, 2015) 42–44; M Persiani, Riflessioni sulla giurisprudenza in tema di individuazione della fattispecie lavoro subordinato, in Studi in onore di Francesco Santoro Passarelli (ESI, 1972) V, 2, 843; P Tesauro, ‘I criteri distintivi nella giurisprudenza’ in L Gaeta and P Tesauro (eds), Il rapporto di lavoro: subordinazione e costituzione (Turin, Utet, 1993), I, 81; Pedrazzoli (n 5) 307; L Nogler, ‘Metodo tipologico e qualificazione dei rapporti di lavoro subordinato’ (1990) RDL 182. 47  For the relevant case law of the Italian Supreme Court, see Corte di Cassazione, Labour Division, Judgment of 1 February 2006, No 2249; Corte di Cassazione, Labour Division, Judgment of 10 February 2006, No 2904; Corte di Cassazione, Labour Division, Judgment of 9 October 2006, No 21646; Corte di Cassazione, Labour Division, Judgment of 8 August 2008, No 21380. 46 See

366  Edoardo Ales C. The Relevance of ‘Economic Dependence’ Economic dependence, generally speaking, does not play a crucial role in determining subordination because this element may be present in certain self-employment relationships as well, eg, in coordinated work relationships according to Article 409 of the Civil Procedure Code48 and agency contracts (ex Articles 1742 ff of the Civil Code—see section XI.A below). Notwithstanding the above, the Constitutional Court, in its Decision No 30/1996,49 emphasised the condition of economic and social dependence of the employee to distinguish between subordination and self-employment. The Court in fact specified that such elements represent the basic criteria for distinguishing between subordination and association in participation with the conferral of personal work (now withdrawn by Article 53 of Legislative Decree No 81/2015). In this regard, the Constitutional Court identified ­economic and social dependence based on so-called strict subordination, ie, ‘a concept more incisive and different in quality’, representing a condition of employees of doppia alienità. Such doppia alienità takes place when the employee works in the business of another, but he or she is not the recipient of the output of the work because he or she does not have any power to manage the business and does not expect any economic profit from the business’ activity. V.  THE PRINCIPLE OF PRIMACY OF FACTS

According to the prevailing case law, each form of work (and thus also self-employment/bogus self-employment) and protection thereof (the social security regime and work conditions) depends upon its own facts.50 This means that although the parties define the relationship as one of self-employment, a worker is always entitled to protection arising from the work he or she has actually performed. The tendency of the courts is to use a broad definition of ‘employee’ for the purposes of protection. In light of the above, it is worth emphasising the interpretation of the Constitutional Court on the principle of primacy of facts. The Constitutional Court in fact identified areas of uncertainty of subordination in the 1990s and censured some decisions of the labour

48 

Royal Decree of 28 October 1940, No 1443, OJ of 10 October 1940, No 253. Constitutional Court, Judgment of 12 February 1996, No 30, in Massimario di Giurisprudenza del Lavoro, 155 (1996). See also Roccella, Gottardi and Guarriello (n 46) 51–52. 50 See Corte di Cassazione, Labour Division, Judgment of 11 February 2004, No 2622; Corte di Cassazione, Labour Division, Judgment of 17 December 1999, No 14248; Corte di Cassazione, Labour Division, Judgment of 23 November 1998, No 11885. 49 See

The Concept of ‘Employee’: The Position in Italy 367 courts that only gave relevance to the nomen iuris given to the contract of the parties. In this regard, Decision No 115/199451 established the principle that over-emphasis on nomen iuris and the contractual scheme adopted by the parties represents a subversion of the fundamental principles of labour law. Therefore, the exclusive focus on the name adopted for the contract is not a factor when classifying a relationship as one of employment or self-employment. In this regard, the Constitutional Court in its Judgment No 115/199452 underlined the fact that ‘when the concrete relationship and the modalities of work performance—eventually in contrast to the conditions agreed by the parties to the contract—are those typical of an employment relationship, only the latter can be the qualification of the contract’. Therefore, in controversial cases on formal and factual data, the second type prevails due to the public and constitutional value of protection of those who are subordinated, which cannot be eluded through an agreement that does not conform to the concrete modalities of its execution. According to such interpretation of the Constitutional Court, neither the legislator nor the parties can deny the juridical qualification of subordinate employment relationships that objectively are of such a nature because the result would be to disregard the fundamental principles, guarantees and rights established by the Constitution. According to the Constitutional Court, therefore, subordination as a specific economic and social relationship is not comparable with other relationships, even if they involve the performance of work. In light of the above, the principle of primacy of facts represents a constitutional principle in Italian labour law in accordance with Article 4 of the Constitution (the right to work). VI.  QUALIFICATION IN FULL53

Any contract between the parties shall be qualified in full under one of the existing legal typologies. The option according to which only a part of a contract can be qualified as an employment contract is not foreseen by the Italian legal order. On the other hand, an employee and an employer are perfectly free to conclude an additional contract which, as such, does not qualify as a contract of employment. Such a contract can be concluded at any time. 51 See Constitutional Court, Judgment of 31 March 1994, No 115, in Massimario di Giurisprudenza del Lavoro, 523 (1995). See especially Roccella, Gottardi and Guarriello (n 46) 48–51. 52  See also Constitutional Court, Judgment of 25 March 1993, No 121, in Diritto e Pratica del Lavoro, 1267 (1993). 53  Since this is not an issue for Italian labour law and practice, the following remarks stem from my personal reflection on the subject matter.

368  Edoardo Ales Apart from contractual relationships, non-contractual legal relationships often exist between the parties. For instance, according to Article 2043 of the Civil Code, the parties may be liable under tort law in the event that they cause damage to the other party. VII.  LIMITS TO THE FREEDOM OF CONTRACT

As has been underlined several times above, the legal concept of ‘employee’ as well as the legal nature of the employment relationship are mandatory and cannot be disposed of by the parties to the contract.54 However, in the opposite case (the parties choose a ‘contract of employment’, though the contract, on the basis of an objective assessment, is a contract of self-employment), the designation of the contract by the parties usually prevails. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The social dialogue mechanisms and collective bargaining do not play a role in ascertaining employee status in individual cases, since the mandatory concept of ‘employee’ cannot be disposed of by the parties to a collective agreement. Moreover, as mentioned above, according to the prevailing case law, each form of work (and thus self-employment/bogus self-employment as well) and its protection (social security regime and work conditions) depends upon the actual facts. Collective bargaining is mainly used to regulate bogus self-employment, disguised work and undeclared work.55 Collective bargaining is regarded as a benchmark for determining the appropriate salary and social s­ ecurity

54  M D’Antona, ‘Limiti costituzionali alla disponibilità del tipo contrattuale nel diritto del lavoro’ (1995) ADL 43; Roccella (n 46) 48–51; E Ghera, ‘Subordinazione, statuto protettivo e qualificazione del rapporto’ (2006) Giornale di diritto del lavoro e delle relazioni industriali 1; M Grandi, Rapporto di lavoro, Enciclopedia del diritto, XXXVIII (Milan, Giuffrè, 1987) 322; M Pedrazzoli, ‘Sulla cosiddetta indisponibilità del tipo lavoro subordinato: ricognizione e spunti critici’ (2008) Aa.Vv., Scritti in onore di Edoardo Ghera (Bari, Cacucci, 2008) 861. 55  On undeclared work in general, see A Bellavista, Il lavoro sommerso (Turin, Giappichelli, 2000). See also the recent analysis of E Ales, ‘Del lavoro sommerso o, meglio, “non dichiarato”: una tipizzazione giuridica fondata sul concetto di ‘attività remunerata’ (2014) Diritti Lavori Mercati 11.

The Concept of ‘Employee’: The Position in Italy 369 coverage of the worker (bogus self-employed, disguised workers) on a progressive basis (the so-called ‘contratti di riallineamento’ or ‘contratti di regolarizzazione’).56 The unions conclude ‘shop-level agreements’ with employers. By means of such shop-level agreements, the parties (ie, the employer and the trade unions) determine which workers were involved in bogus self-employment, disguised work or irregular work. This option allows employers to retroactively benefit from an amnesty, but also forces them to hire such workers under an employment relationship in the future.57 B. Custom and Practice Deviations on the basis of custom and practice are not acknowledged in Italy. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions Article 74 of Legislative Decree No 276 of 2003 provides for a legal presumption to prevent the work performed by members of the employer’s family being subject to labour, social security and taxation schemes. This Article states that with specific regard to farming, the temporary services rendered by relatives and relatives-in-law until the fourth degree of kinship may not be considered as autonomous or subordinate work. This is the case if the services are rendered by way of moral obligation. Moreover, it is worth noting that Articles 69 and 69 bis of Legislative Decree No 276 of 2003 provided for legal presumptions58 against bogus self-employment and disguised work. The Articles were repealed by Legislative Decree No 81 of 2015 (see section XI.A below).

56  A Bellavista, ‘I contratti di riallineamento retributivo e l’emersione del lavoro sommerso’ (1998) 1 Rivista Giuridica del Lavoro 93; R De Luca Tamajo, ‘I contratti di riallineamento retributivo’ (1999) 3 Rivista giuridica del lavoro e della previdenza sociale 87; G Ferraro, ‘Strumenti di emersione del lavoro sommerso: i contratti di riallineamento retributivo’ in M Biagi (ed), Mercati e rapporti di lavoro: commentario della legge 24 giugno 1997 n 196, norme in materia di promozione dell’occupazione (Milan, Giuffrè, 1997). 57  B Caruso, ‘Lavoro sommerso e ruolo del sindacato’ (1999) 3 Rivista giuridica del lavoro e della previdenza sociale 79. 58 As regards the nature of the presumption contained in art 69, see, among others, Tribunale di Milano, Judgment of 20 March 2012, Il lavoro nella giurisprudenza, 727 (2012).

370  Edoardo Ales B. The Burden of Proof No specific provision on the burden of proof exists in Italy.59 Hence, according to the general principle contained in Article 2697 of the Civil Code (‘an individual who wants to enforce a right in court has to prove the facts that constitute the basis of that right’), the employee has the ­burden of proving the facts of his or her claim, ie, subjection to the employer’s directive, control and disciplinary powers. In practice, this leads to the requirement to produce extensive evidence of the existence of the requirements provided for in Article 2094 of the Civil Code, even if, according to Article 421 of the Civil Procedure Code,60 labour courts have the power to admit ex officio new evidence61 (within the limits of the facts already alleged by the parties). Thus, by exercising these powers ex officio, the role of the judge in labour disputes is more prominent than in ordinary civil proceedings, which may give an advantage to the employee. X.  SPECIFIC PROCEDURES

Legislative Decree No 149 of 201562 substantially reforms the labour and social security inspection system, establishing the National Labour Inspectorate (Ispettorato Nazionale del Lavoro), a public body that is now in charge of the inspection previously carried out by the inspection bodies of the Ministry of Labour and Social Affairs and of the Social Security ­Bodies (INPS and INAIL). Local Health Authorities (Aziende Sanitarie Locali) remain in charge of inspecting compliance with occupational health and safety laws. In order to help the parties in an employment relationship avoid uncertainties that may lead to an incorrect qualification of the relationship, Italian legislation, through Legislative Decree No 276 of 2003, has introduced a procedure of certification of labour contracts63 which can be carried 59 

A Vallebona, L’onere della prova nel diritto del lavoro (Padua, Cedam, 1988). L De Angelis and D Borghesi, Il processo del lavoro e della previdenza (Turin, Utet, 2013). See Cassazione civile, Sezioni Unite, Judgment of 17 July 2004, No 11353. 62  Legislative Decree of 14 September 2015, OJ of 23 September 2015, No 223, Ordinary Supplement No 53. 63  See E Ghera, ‘La certificazione dei contratti di lavoro’ in L De Luca Tamajo, M Rusciano and L Zoppoli (eds), Mercato del lavoro. Riforma e vincoli di sistema (Napoli, Editoriale Scientifica Napoli, 2004) 277; L Nogler, ‘Clausole generali e certificazione dei contratti di lavoro’ in M Marinelli and L Nogler, La riforma del mercato del lavoro (Turin, Utet Giuridica, 2012) 253 ff; G Perone, ‘Certificazione e tecniche di qualificazione dei contratti di lavoro’ in G Perone and A Vallebona (eds), La certificazione dei contratti di lavoro (Turin, Giappichelli, 2004), 403 ff; P Tullini, ‘Certificazione dei contratti di lavoro’ in E Gragnoli and A Perulli (eds), La riforma del mercato del lavoro e i nuovi modelli contrattuali (Padua, Cedam, 2003) 819 ff; S Ciucciovino (ed), La certificazione dei contratti di lavoro. Problemi e questioni aperte (Turin, Giappichelli, 2014). 60 

61 

The Concept of ‘Employee’: The Position in Italy 371 out (at the behest of both parties) either by labour authorities or by independent bodies (Commissioni di certificazione) established, among others, by universities and chaired by a labour law professor. As a consequence, the certified contract will produce a presumption of a proper qualification of the employment relationship (as employed, coordinated self-employed, self-employed or sub-contracting) to be used before the labour, health, social insurance and tax authorities in case of inspection. Only a court decision may revert that presumption. The subject matter of Certificazione may be the following: (i) all work and procurement contracts; (ii) waivers and settlements; (iii) the internal regulation of cooperative societies for contracts concluded with workers. If requested, the Commissioni di certificazione provide advice and support both to the employer and employee in the case of the conclusion and execution of or changes to the work or procurement contract. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons Due to the lower cost in terms of social security contributions and regulatory constraints, the ‘collaborazioni coordinate e continuative’ (coordinated work relationships) have become particularly desirable. Such work relationships are mostly personal and of a non-subordinate nature pursuant to Article 409(3) of the Civil Procedure Code, the provision which was introduced into the Italian labour law system in 1973 (a reference was already contained in Law No 741/1959).64 However, behind the screen of independent work carried out in connection with the client’s activity, characterised by conditions of socio-economic dependence (hence the widespread scholarly term of ‘para-subordinate work’),65 there were often hidden relationships that could be categorised as relationships of subordination. Legislative Decree No 276/2003 has intervened in this field, taking an anti-fraud view and providing the possibility of agreeing on coordinated

64 

Act of 14 July 1959, No 741, OJ of 18 September 1959, No 225. Santoro Passarelli, Il lavoro ‘parasubordinato’ (Milan, Franco Angeli, 1979); P Sandulli ‘Lavoro autonomo e parasubordinazione’ in P Rescigno (ed), Trattato di diritto privato, vol 15 (Turin, Utet, 1986); MV Ballestrero, ‘L’ambigua nozione di lavoro ­parasubordinato’ (1987) Lavoro e diritto 41; S Leonardi, ‘Il lavoro coordinato e continuativo: profili giuridici e aspetti problematici’ (1999) Rivista giuridica del lavoro e della previdenza sociale 501. 65 G

372  Edoardo Ales self-employed work relationships only within the framework of a projectrelated work contract (contratto di lavoro a progetto)66 in order to ensure— or, at least, that is the intention of the legislator—their authentic nature of non-subordinate relationships. Subsequently, Act No 92/2012,67 with an even more marked attempt to prevent circumvention, sought to strengthen the project worker’s autonomy through the formalisation of data considered relevant for this purpose, also on the basis of well-established case law.68 In order to fight abuse of project work, the amendment provided that: (i)

the project shall be specified and clearly oriented towards the final result; (ii) the project cannot coincide with the employer’s core business; (iii) the project worker’s activity cannot consist of repetitive and very low-skilled work; (iv) when project workers (technically speaking, coordinated self-employed workers) cover a position which is de facto equivalent to that of an employee, the self-employment contract has to be reclassified as an employment contract from the commencement of the relationship; (v) the lack of a specific project will lead to the transformation of the project work relationship into an open-ended employment contract; (vi) remuneration to be paid to project workers cannot be lower than that paid to subordinate comparable workers employed in the same sector, as fixed by collective agreements signed by the comparatively most representative social partners at the inter-sectoral, sectoral and even local levels, if so decided by inter-sectoral or sectoral agreements.69 The amendment of 2012 also sought to fight the abuse of so-called ­partite IVA (self-employed with a VAT number),70 which were often used by Italian companies to mask an ordinary employment contract. It stated that self-employed workers with a VAT number were considered, unless proven otherwise, as being in a continuous and coordinated self-employed

66 A Perulli, ‘Il lavoro a progetto tra problema e sistema’ (2004) Lavoro e diritto 92; M Pedrazzoli, ‘Tipologie contrattuali a progetto e occasionali. Commento al Titolo VII del D. lgs. 276/2003’ (2004) WP CSDLE ‘Massimo D’Antona’, IT-94/2004, www.csdle.lex.unict. it/Archive/WP/WP%20CSDLE%20M%20DAntona/WP%20CSDLE%20M%20DAntonaIT/20111230-095550_pedrazzoli_n13-2004itpdf.pdf. 67  Act of 28 June 2012, No 92, OJ of 3 July 2012, No 153, Ordinary Supplement n 136. See on that point G Santoro Passarelli, Le novità normative sul lavoro a progetto e sulle prestazioni di lavoro autonomo rese dalle partite Iva nella legge n 92/2012, in F Carinci and M Miscione (eds), Commentario alla riforma Fornero, Diritto e pratica del lavoro, 2012, suppl n 33, 137; P Passalacqua, La nuova disciplina del lavoro autonomo e associato (Turin, Utet, 2012). 68 See, among others, Tribunale di Torino, Judgment of 10 May 2006; Tribunale di Piacenza, Judgment of 15 February 2006; Tribunale di Torino, Judgment of 5 April 2006. 69  Passalacqua (n 67). 70 M Miscione, ‘Lavoro accessorio, partite iva, contratto d’inserimento e stage’ (2012) Il Lavoro nella giurisprudenza 14.

The Concept of ‘Employee’: The Position in Italy 373 r­ elationship (project work) if at least two of the following conditions were met: (i) the relationship lasted for at least eight months per year; (ii) the worker received more than 80 per cent of his or her income from this work relationship; and (iii) the position included a permanent workplace at the ­company’s premises. Such a presumption did not apply if the work: (i) was characterised by theoretical knowledge acquired through specific training or practical skills acquired on the job; (ii) was carried out by someone whose annual income from self-employed work is not lower than 1.25 times the minimum income level taken into account in order to decide whether someone is subjected to social security contributions; (iii) was carried out within the exercise of ­ professional activities which requires registration in public registries ­(barristers, accountants etc).71 The transformation of self-employed contracts into coordinated and continuous self-employed relationships implied the application of all regulations provided for project work (Articles 61–69 of Legislative Decree No 276/2003), including the transformation into an open-ended employment contract in the case of a lack of a specific project. Furthermore, in the event of violations of these legal requirements, companies had to pay social security contributions provided by law for project workers, which is higher than those for self-employed workers. Legislative Decree No 81 of 2015 removed the articles of Legislative Decree No 276 of 2003 regulating project-related work contracts and the presumptions regarding self-employed workers with a VAT number. ­Moreover, according to Article 2 of Legislative Decree No 81 of 2015,72 the regulation of the employment relationship (including dismissal law), from 1 January 2016, also applies to coordinated work relationships consisting mainly of personally and continuously performed activities, organised by the client (ie, the employer), with reference also to the time and place of work. On the other hand, the parties to a coordinated work relationship may request the Certification Commission to exclude that relationship from falling within the scope of Article 2. In any case, Article 2 of Legislative Decree No 81 of 2015 does not apply to: (i)

coordinated work relationships for which collective agreements signed by the most representative trade unions at the national level, taking

71 Santoro Passarelli (n 67); Carinci and Miscione (n 67); Passalacqua (n 67); Miscione (n 70). 72 P Tosi, ‘L’art. 2, comma 1, d.lgs. n 81/2015: una norma apparente?’ (2015) ADL 6; A Perulli, ‘Un jobs act per il lavoro autonomo: verso una nuova disciplina della dipendenza economica’ (2014) WPCSDLE ‘Massimo D’Antona’, IT-235/2014, http://csdle.lex.unict.it/docs/ workingpapers/Il-lavoro-autonomo-le-collaborazioni-coordinate-e-le-prestazioni-organizzatedal-committente/5442.aspx.

374  Edoardo Ales into account the productive and organisational needs of that sector, provide specific economic and normative regulations; (ii) coordinated work relationships performed within the framework of professional activities exercised by registering to a register (bar); (iii) coordinated work relationships performed by members of boards of directors; (iv) coordinated work relationships performed in favour of clubs ­organising amateur sport activities. Article 409(3) of the Civil Procedure Code shall continue to apply to coordinated work relationships that do not fall within the scope of Article 2, ensuring that the same judicial protection provided to subordinate employment relationships applies to coordinated work relationships as well. B. Equality and Anti-discrimination Law Formal and, above all, substantial equality (ie, the duty of the public authority to remove any obstacle preventing the economic and social development of the human being) are basic principles of Italian law. They are laid down in Articles 2 and 3 of the Italian Constitution. As far as employment relationships are concerned, Article 37 of the Constitution asserts the equal treatment principle between men and women at work. The same must be guaranteed for young workers. The first Italian ordinary anti-discrimination legislation (above all genderoriented) dates back to the 1960s (Act No 7 of 196373 on the unlawfulness of dismissal on the ground of marriage). Act No 1204 of 197174 confirmed maternity rights at work and the so-called Equality Act (Act No 903 of 1977)75 implemented the EC Equality Directives issued in 1976.76 At present, Legislative Decrees No 151 of 2001,77 No 215/2003,78 No 216/200379 and No 198/200680 provide comprehensive and effective

73 

Act of 9 January 1963, n 7, OJ of 30 January 1963, n 27. Act of 30 December 1971, n 1204, OJ of 18 January 1972, n 14. 75  Act of 9 December 1977, n 903, OJ of 17 December 1977, n 343. 76  See M Barbera, ‘Discriminazione e pari opportunità’ in Enciclopedia del Diritto, Annali, vol 7 (Milan, Giuffrè, 2014). 77 Legislative Decree of 26 March 2001, n 151, OJ of 26 April 2001, n 96, Ordinary Supplement 93: maternity, paternity and parental leave. On this, see E Ales, ‘Maternità e congedi parentali’ in Enciclopedia del Diritto, Annali, vol 9 (Milan, Giuffrè, 2016). 78  Legislative Decree of 9 July 2003, n 215, OJ of 12 August 2003, n 186: Implementation of Directive 2000/78/EC establishing a general framework for equal treatment in employment and occupation. 79 ibid. 80 Legislative Decree of 11 April 2006, n 198, OJ of 31 May 2006, n 125, Ordinary Supplement n 133: Code of Equal Opportunities between Men and Women. 74 

The Concept of ‘Employee’: The Position in Italy 375 legal protection against discrimination, covering all grounds prohibited under EU anti-discrimination Law, adding to those a specific emphasis on freedom of association and trade union action (Articles 15 and 16 of Act No 300 of 1970). Anti-discrimination law applies both to employees and self-employed workers. In order to enhance substantial equality, it also recognises and supports equal opportunities and affirmative actions, above all, in terms of gender.

376 

18 The Concept of ‘Employee’: The Position in Latvia KRISTĪNE DUPATE

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

L

ATVIAN LAW PROVIDES two definitions of ‘employment contract’ (darba līgums). Article 2178 of the Civil Code stipulates that ‘through an employment contract, one party undertakes to work for the other party in return for remuneration’.1 However, the importance of this definition has more of a formal than a practical nature. This norm was adopted in 1937, ie, at a time when employment relationships were regulated by the Civil Code. However, since Latvia regained its independence in 1991, a special law that regulates employment relationships, ie, the Labour Code, has applied.2 Accordingly, Article 2179 of the Civil Code explicitly states that the relevant provisions are applicable to employment contracts only insofar as they are not regulated otherwise by other laws governing employment relationships. A reverse/analogous reference is provided by the Labour Code. Pursuant to Article 28(3): The provisions of the Civil Code shall apply to contracts of employment, unless provided otherwise by this Code and other regulatory laws that govern employment relationships.

The definition of an employment contract currently applicable in practice is provided in Article 28(2) of the Labour Code. Pursuant to this Article: Through an employment contract, the employee undertakes to perform specific work, subject to specified working procedures and instructions of the employer,

1  2 

Civil Code (Civillikums) OG No 41, 20 February 1937. Labour Code (Darba likums) OG No 105, 6 July 2001.

378  Kristīne Dupate while the employer undertakes to pay the agreed remuneration and to ensure fair and safe working conditions that are not harmful to the employee’s health.

The definition of ‘employment contract’ is elaborated in much more detail in the Labour Code than in the Civil Code. This is because the definition in the Civil Code only refers to one element that is characteristic of an employment contract, namely, remuneration for work. Consequently, the Civil Code definition does not, in principle, differ from the definition of a service agreement. At the same time, the Labour Code definition is more modern as it not only includes conventional characteristics, such as subordination and remuneration, but also refers to the specific obligations of an employer with regard to subordination, namely, definition of the specific tasks and work procedures as well as the provision of health and safety protection measures. Article 39 of the Labour Law provides that an employment contract should be considered as having been concluded from the moment the employer and employee reach an agreement on the given work, remuneration, compliance with internal employment conditions and employer instructions. According to the Labour Code, an employment contract must be concluded in written form.3 However, the absence of a written form does not make an employment contract void; a verbal employment contract has the same legal consequences as a written one if one of the parties has started to perform the agreed tasks.4 In addition, an employee has the right to request that his or her contract is made in writing.5 Article 40(2) of the Labour Code implements the requirements of Directive 91/533/EEC6 and requires that written employment contracts must provide the following essential information on the employment contract: (1) the employee’s given name, surname, personal identification number, place of residence, as well as the employer’s name, surname (business name), registration number and address; (2) the date of commencement of the employment relationship; (3) the expected duration of the employment relationship (if the employment contract has been entered into for a specified period of time); (4) the workplace (the fact that the employee may work in various premises if his or her duties are not expected to be performed at one particular workplace); (5) the trade, profession, specialisation (hereinafter occupation) of the employee in conformity with the Classification of Occupations and the general description of the contracted work; (6) the amount of work remuneration and the timing of payment; (7) the agreed daily or weekly working time; (8) the length of annual paid leave;

3 

ibid, art 40(1). ibid, art 41(1) and (2). 5  ibid, art 41(1). 6  Council Directive (EEC) 91/533 of 14 October 1991 on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship [1991] OJ L 288. 4 

The Concept of ‘Employee’: The Position in Latvia 379 (9) the term for giving notice of termination of the employment contract; and (10) the applicable provisions of the collective agreement and working procedure regulations to the employment relationship. An employment contract will only be considered void if it contravenes the normative acts, for example, the Labour Code itself or the health and safety requirements stipulated in the Labour Protection Code.7 According to general contract law, a contract or transaction will be considered void if the object of the contract is ‘an impermissible or indecent action, which is contrary to religion, laws or moral principles, or which intends to circumvent the law’.8 If the conclusion of an employment contract that is contrary to the ­normative acts was initiated by the employer, the employer is obliged to conclude a new valid employment contract or, if this is not possible, to pay the employee compensation to the amount of six months’ average pay.9 If an employment contract contains separate void conditions, the validity of the rest of a contract is not affected.10 No provision of the Labour Code precludes an employment contract to be considered void by the parties to the contract themselves; however, in practice, a dispute on the validity of the contract usually arises and is brought before a court, which declares the employment contract to be fully or partially void. B.  Employment Relationship: Basic Definition Currently, employment relationships are regulated by the Labour Code. The latter does not provide an explicit legal definition of the concept of ‘employment relationship’. However, the substance of the concept of ‘employment relationship’ follows from the statutory definition of ‘employee’. Pursuant to Article 3 of the Labour Code: An employee is a natural person who, on the basis of an employment contract, performs specific work under the guidance of an employer in exchange for an agreed remuneration.

Consequently, under Latvian labour law, an ‘employment relationship’ exists if work is performed: (1) under the supervision of an employer; and (2) in return for remuneration. This implies that the definition of an employment contract and that of an employee contain two identical characteristics. Latvian labour law does not provide a specific definition of an employment relationship with regard to employment at a temporary work agency or in case of a transfer of undertaking. 7 

Labour Protection Code (Darba aizsardzības likums) OG No 105, 6 July 2001. Civil Code, art 1415. 9  Labour Code, art 42(1). 10  ibid art 42(2). 8 

380  Kristīne Dupate The same characteristics of an ‘employment relationship’ are generally applicable in fields other than labour law, especially in the field of tax and social security law. Exceptions are discussed in detail below (see sections II.A and IV.B). In essence, the exceptions refer to the fact that there are certain groups of persons whose status under the definition of ‘employment relationship’ is unequivocal under social security laws11 (like Members of Parliament who are not per se subordinated to an employer). These persons are considered to be employees for the purposes of social security laws. Tax laws,12 on the other hand, provide more extensive criteria to distinguish between employees and self-employed persons. According to tax law, a contract under which there is no subordination, but the given economic activity does present the single source of income for the contractor may be considered an employment relationship.

II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition The basic definition of an employee is provided in Article 3 of the Labour Code, which stipulates that an employee is a natural person who, on the basis of an employment contract, performs work in exchange for remuneration under the supervision of an employer. Since the Labour Code is applicable to all employees, ie, persons employed under an employment contract, the respective definition is applicable to all employees. The same applies with regard to different strands of the Labour Code, like collective rights, health and safety, and dismissal. First, all mentioned strands are generally regulated by the Labour Code itself. Second, specific laws regulating collective disputes13 or health and safety,14 for example, in detail are understood as providing the same definitions as stipulated by the Labour Code, unless provided otherwise. The Labour Protection Code15 provides an extended definition of ‘employee’ and covers not only employees as defined in the Labour Code, but also state officials and trainees. However, in the Latvian legal system, this definition is (in practice) applicable to persons employed

11  Law on State Social Security (Likums Par valsts sociālo apdrošināšanu) OG No 274/276, 21 October 1997. 12  Law on Personal Income Tax (Likums Par iedzīvotāju ienākuma nodokli) OG No 32, 1 June 1993. 13  Labour Dispute Law (Darba strīdu likums) OG No 149, 16 October 2002. 14  Labour Protection Code (Darba aizsardzības likums) OG No 105, 6 July 2001. 15  ibid, art 1(13).

The Concept of ‘Employee’: The Position in Latvia 381 under other civil and public law contracts. As stated/explained by the Constitutional Court of Latvia: The concept of ‘employee’ in the Latvian legal system is used not only within the meaning of the labour law, but also has a wider meaning. It, first of all, follows from the Constitution, with Article 107 stipulating: ‘Every employed person has the right to receive commensurate remuneration for work performed, which shall not be less than the minimum wage established by the State, and has the right to weekly holidays and paid annual leave.’ The concept of ‘employee’ provided in Article 107 of the Constitution covers not only employees who are employed on the basis of an employment agreement regulated by the labour law, but also other persons in employment relationships.

The Constitutional Court in this particular case continued by stating that a member of a municipal council is employed because he or she is entitled to remuneration as stipulated by the law on the remuneration of state and municipal officials and employees, and is considered an employee under the Law on Statutory Social Security. In addition, the Court stressed that legal doctrine stipulates that the concept of ‘employee’ covers not only persons who are employed on the basis of an employment contract, but also other persons who are subject to statutory social security. Consequently, according to the Court, the concept of ‘employee’ might also be applicable to the posts and professions established by other legal instruments other than an employment contract.16 In addition, a definition of ‘employee’ is provided in the Law on State Social Security. Article 1(2) stipulates that an employee is: [A] person, who on the basis of an employment contract, performs specified work in exchange for remuneration under the supervision of an employer.

However, the definition provided by Article 1(2) of the Law on Statutory Social Security also names specific professions and posts that are considered as falling under the concept of ‘employment relationship’ for the purposes of statutory social security, eg, civil servants, Members of Parliament and board members of a capital company.17

16 The decision of 7 November 2013 of the Constitutional Court of Latvia (Satversmes tiesa) in Case No 2012-24-03, para 16.2.1. 17 ibid art 1 stipulates: ‘The following terms are used in this Law: … 2) employee: a) a person who, on the basis of a contract of employment for an agreed remuneration, performs specific work under the management of an employer, except an employee of a microenterprise, c) a member of the Saeima, a local government councillor, a member of the Cabinet, a member of the board of directors, council of a commercial company, head clerk, controller, a volunteer probation officer of the State Probation Service, as well as another person holding a position which gives the right to remuneration, if the remuneration has actually been determined, d) a person who has entered into a work-performance contract, a sharecropping contract or a carriage contract provided for in Part IV, Chapter 15 of the Civil Law and has not registered to pay income tax for an economic activity, e) an official of an institution of the Ministry of the Interior system and Prisons Administration with a special service rank, or a

382  Kristīne Dupate It follows that the definition of ‘employee’ under social security law, like that under the Constitution, is considerably broader because it covers not only those persons employed on the basis of an employment (civil law) contract, but also those who work in public service and those who perform duties based on the provisions in law and not necessarily under the supervision of anyone (for example, Members of Parliament). On the contrary, it excludes employees employed by micro-tax undertakings who are subject to a different taxation regime as well as in terms of contributions to state social security. The definition of ‘employee’ is also broader under health and safety legislation. Article 1(13) of the Labour Protection Code stipulates that an employee is: [A]ny natural person employed by an employer, including State civil servants and persons employed during production or training practice.

This implies that an employee within the meaning of this law might also be a self-employed person or an employee of another employer. Such a definition is required by Directive 89/391/EEC.18 B.  Employer: Basic Definition Article 4 of the Labour Code provides: Within the meaning of this law, an employer refers to any natural or legal person or partnership with a legal capacity, who, on the basis of employment contract, employs at least one employee or pays for the work of an employee. military person of a unit subordinate to the Ministry of Defence, f) a State civil servant, g) an authorised representative of a foreign merchant, who not being in an employment relationship with such merchant, represents those activities that are associated with the branches of the foreign merchant, h) a convicted person who is employed while serving a sentence of imprisonment, i) an employee of a micro-enterprise, j) a person who is employed by a foreign taxpayer with a permanent representation in the Republic of Latvia, as well as a person who is leased to a domestic taxpayer by a foreign taxpayer—a lessee, k) a person who has entered into a contract for work performance, sharecropping contract or carriage contract provided for in Part IV, Chapter 15 of the Civil Law and in respect of which at least one of the features determined in Section 8, Paragraph 2.2 of the Law on Personal Income Tax has been determined, l) an employee of a micro-enterprise that provides labour force ensuring services within the meaning of Section 17.2. of the Law On Personal Income Tax; m) a member of the board of directors of a capital company who performs duties without remuneration in a capital company that has a turnover in the relevant month of the taxation year and has no employees or has employees whose mandatory contributions are less than the amount of the minimum monthly wage stipulated by the Cabinet, and for whom the turnover in the pre-taxation year was higher than the amount of the minimum monthly wage stipulated by the Cabinet multiplied by 3.3 and by 12 months, and did not have any employees or had employees whose mandatory contributions were less than the amount of the minimum monthly wage stipulated by the Cabinet.’ 18 Council Directive (EEC) 89/391 of 12 June 1989 on the introduction of measures to encourage improvements in the safety and health of workers at work [1989] OJ L 183.

The Concept of ‘Employee’: The Position in Latvia 383 This definition, by analogy to the interpretation given by the Constitutional Court of Article 107 of the Constitution, could be interpreted more broadly, ie, in order to qualify as an employer, a person does not have to have the mutual obligations deriving from an employment contract. Such mutual obligations might also derive from statutory provisions, as is the case, for example, with regard to civil servants.19 Social security laws provide for a broader definition of ‘employer’, ie, they consider a lessee an employee, while the Labour Code’s definition considers a person who has concluded an employment contract with an employee to be an employer.20 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees In Latvia, there are only a few groups/categories of employees to whom different regulations apply. For instance, a different legal regime applies to members of the board of directors of capital companies, unless their factual employment conditions correspond to the status of an employee, as well as to priests and other religious employees in churches in terms of access to the post and dismissal related to religious belief and compliance with the ethos of an organisation. There is no separate legal regulation for such groups of employees, as is the case, for example, for domestic workers, athletes, artists, journalists and teleworkers. The members of the board of directors of capital companies21 may be employed on the basis of any civil law contract, even if the features of their employment relationship fully correspond to those of a regular employment contract. Until 1 January 2015, Article 44(3) of the Labour Code explicitly allowed the employment of a member of a board of directors of a capital company on the basis of any type of civil law contract, such as a proxy agreement or a contract for services,22 irrespective of whether the employment ­relationship 19 

See n 16. 1 of the Law on State Social Security stipulates: ‘1) employer—a legal or ­natural person, partnership with legal capacity, a taxpayer of other European Union Member States, the Swiss Confederation or European Economic Area Member States (hereinafter other Member State) or a branch of a merchant (permanent representation) of other Member State or a lessee who uses the services of micro-enterprises that provide labour force, ensuring services within the meaning of Section 17.2 of the Law on Personal Income Tax, as well as domestic taxpayers—a lessee leased by a foreign taxpayer who employs an employee or pays for the work of an employee’. 21  According to art 134 of the Commercial Code, a capital company is a limited liability company or a joint-stock company. 22  According to the Civil Code. 20  Article

384  Kristīne Dupate factually corresponded to the features of a regular employment relationship. The presumption will be that an employment contract has been concluded.23 Article 44(3) was repealed by amendments to the Labour Code adopted on 24 October 2014.24 The explanatory note of the respective amendments simply states that future relationships between a capital company and members of a board of directors will be regulated by commercial law only.25 However, commercial law26 still does not regulate the status and type of such relationships. As described above, such situations involving specific aspects relating to employment may lead to breaches of EU law. In other words, the conclusions of the Court of Justice of the European Union (CJEU) in the Danosa case are not reflected in Latvian law. Conversely, the link between the Labour Code and commercial law has been completely repealed by the recent amendments. According to the Religious Organisations Law,27 these organisations have full discretion to elect and revoke clergy from their posts in accordance with the statutes of the organisation, and the Labour Code is not applicable to them. However, the Labour Code is applicable to other employees of the church, although it takes the exceptions stipulated therein into account, for example, that religious organisations may request a person to hold certain religious beliefs if such a belief is an objective precondition for the performance of the work.28 The Supreme Court has held that churches are given discretion under the Labour Code to request certain categories of employees to hold certain religious beliefs and to act in conformity with the ethos of the given religious organisation. However, the Labour Code does not provide churches with broad discretion in relation to other employer obligations. Specifically, in the case of dismissal of a religious employee on the grounds of disloyalty, the Labour Code is applicable. It envisages the right of an employer to dismiss an employee on the grounds of disloyalty, and a court usually has competence to review the validity of the dismissal on the ground of disloyalty. If the employer is a church, the court does not have the competence to review whether the religious employee acted disloyally, but the church is still obliged to observe other material and procedural p ­ rovisions

23  ‘Tiesu prakse lietās par individuālajiem darba strīdiem’ (‘Case Law in Cases on Individual Employment Disputes’), Supreme Court of Latvia, 2010/2011, available in Latvian at http://. at.gov.lv/lv/judikatura/tiesu-prakses-apkopojumi/civiltiesibas. 24  Amendments to the Labour Code (Grozījumi Darba likumā), OG No 225, 12 November 2014. 25  The explanatory note to legilsative proposal No 756/Lp.11, available in Latvian at http:// titania.saeima.lv/LIVS11/saeimalivs11.nsf/0/1016FA82F40AC4EFC2257BC50037F713? OpenDocument#b. 26  See the Commercial Code. 27  Religious Organisations Law (Reliģisko organizāciju likums) OG No 146, 26 September 1995. 28  Labour Code, art 29(10).

The Concept of ‘Employee’: The Position in Latvia 385 of dismissal stipulated in the Labour Code.29 Such a regulation reflects the requirements of Directive 2000/78/EC, ie, prohibition of discrimination on the grounds of religion or belief in employment and special exceptions from this principle for service in religious organisations.30 B.  The Establishment of a Specific Category of ‘Workers’ No different categories of employees exist under Latvian labour law. ­Latvian law does not distinguish, for example, between ‘workers’ and ‘employees’ or ‘white-collar workers’ and ‘blue-collar workers’. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The main characteristic of an employment contract is subordination. The Labour Code stipulates that subordination means the obligation of an employee to comply with the employer’s orders and instructions relating to the work.31 The criteria are stipulated in the legal provisions in an abstract way and the assessment of the nature of the relationship depends on the assessment of each individual case by the courts. The national courts have determined that the following indicators demonstrate subordination: instructions of the employer in the performance of particular tasks, compliance with a particular working regime32 and the existence of a defined working time.33 Integration in an undertaking may also be an indicator of subordination. For example, in Case No 176/2005, the Senate of the Supreme Court held that the work of a driver of a passenger bus at a company providing public transport services for a municipality

29 The decision of the Senate of the Supreme Court of Latvia (9 March 2011) in Case No SKC-762/2011, available in Latvian at www.at.gov.lv/lv/judikatura/judikaturas-nolemumuarhivs/senata-civillietu-departaments/klasifikators-pec-lietu-kategorijam-ar-tezem/ 11-nolemumi-kas-izriet-no-darba-tiesiskajam-attiecibam. See also ‘Tiesu prakse lietās par individuālajiem darba strīdiem’ (n 23). 30  Council Directive (EC) 2000/78 of 27 November 2000 establishing a general framework for equal treatment in employment and occupation [2000] OJ L 303. 31  Labour Code, art 28(2). 32  The decision of the Supreme Court in Case No 437/2008 (26 November 2008), ­available in Latvian at http://.at.gov.lv/lv/judikatura/judikaturas-nolemumu-arhivs/senata-civillietudepartaments/hronologiska-seciba_1/2008. 33  The decision of the Supreme Court in Case No 176/2005 (9 March 2005), available in Latvian at http://at.gov.lv/lv/judikatura/judikaturas-nolemumu-arhivs/senata-civillietu-departaments/ hronologiska-seciba_1/2005.

386  Kristīne Dupate was not considered to be a provision of services (a contract for services), but, on the basis of the factual circumstances, was work performed under an employment contract, namely, the performance of work with a bus belonging to an undertaking and the obligation to comply with a particular ­working regime. B. Indicators When assessing the type of a contract, the national courts take the regularity of payment of remuneration into account, in particular in cases involving board members of capital companies.34 As regards specific groups of employees, the courts primarily focus on factors indicating the stability and regularity of the relationship—including the uninterrupted and regular performance of tasks and the workload.35 The fact that an employer provided certain social protection may also be an indicator of the existence of an employment relationship, for example, the fact that a board member of a capital company was granted sick leave and sick pay.36 The courts also consider the fact that work has been performed using the tools (equipment) of the employer to be an indicator,37 which is an indication of the employee’s integration into the undertaking and of organisational dependence. The indicators of an employment relationship are only specified in tax law (for the purposes of distinguishing between employed and selfemployed persons);38 thus, in the context of civil law, such legal regulation is not applicable. Consequently, since disputes on the existence of an

34 The decision of the Supreme Court in Case No 437/2008 (26 November 2008), a­ vailable in Latvian at http://.at.gov.lv/lv/judikatura/judikaturas-nolemumu-arhivs/senatacivillietu-departaments/hronologiska-seciba_1/2008. 35 The decision of the Supreme Court in Case No 437/2008 (26 November 2008), ­available in Latvian at http://.at.gov.lv/lv/judikatura/judikaturas-nolemumu-arhivs/senatacivillietu-departaments/hronologiska-seciba_1/2008. 36 The decision of the Supreme Court in Case No 437/2008 (26 November 2008), ­available in Latvian at http://.at.gov.lv/lv/judikatura/judikaturas-nolemumu-arhivs/senatacivillietu-departaments/hronologiska-seciba_1/2008. 37 The decision of the Supreme Court in Case No 176/2005 (9 March 2005), ­ available in Latvian at http://.at.gov.lv/lv/judikatura/judikaturas-nolemumu-arhivs/senata-civillietudepartaments/hronologiska-seciba_1/2005. 38  Article 8(2)2 of the Law on Personal Income Tax provides: ‘It shall be considered that a natural person (payer) acquires income in respect of which salary tax shall be paid if at least one of the following features has been determined: 1) the payer has economic dependence upon the persons to whom he or she provides services; 2) the assumption of financial risk in the fulfilment of non-profit-making work or in the case of debt; 3) the integration of the payer in an undertaking to which he or she provides his or her services. Integration in an undertaking within the meaning of this Section is the existence of work or recreational areas, a duty to observe the internal procedures and regulations of the undertaking and other similar features; 4) the existence of actual holidays and leave for the payer and the procedures for the

The Concept of ‘Employee’: The Position in Latvia 387 employment relationship are considered to be civil disputes, the courts do not refer to the provisions (criteria and indicators) stipulated by the Law on Personal Income Tax. However, the indicators included in the Law on Personal Income Tax fully coincide with those that the courts have defined in the case law on employment disputes. C.  The Relevance of ‘Economic Dependence’ To date, the Latvian courts have not ruled on the relevance of economic dependence; however, such an indicator is provided in tax law and is most likely of relevance to determine ‘employee’ status. V.  THE PRINCIPLE OF PRIMACY OF FACTS

Latvian law covers the content of an agreement, not its label. In addition, the Supreme Court of Latvia has stressed the importance of assessing the content of a contract in disputed employment relationships, given that the employee is the weaker party.39 VI.  QUALIFICATION IN FULL

Latvian law does not envisage the possibility of concluding mixed contracts, ie, a contract stipulating different types of relationships in addition to regular employment. This follows from the definitions provided by the Labour Code. However, according to the Civil Code, it is not prohibited to conclude any other type of contract between the two parties outside of the employment relationship. VII.  LIMITS TO THE FREEDOM OF CONTRACT

The Labour Code contains mandatory legal norms. It follows that in the event that the characteristics of the factual relationship correspond to those

t­aking thereof in association with the internal procedures and regulations of the undertaking or the work schedule of other natural persons employed in the undertaking; 5) the work of the payer occurs under the management or control of other persons, and the payer does not have the possibility of involving his or her personnel in the implementation of work or to use sub-contractors; or 6) the payer is not the owner of fixed assets, material or other assets used in the economic activity (this criteria does not apply to personal automobiles or separate personal equipment used for the implementation of work tasks).’ 39  The decision of the Supreme Court in Case No 437/2008 (26 November 2008), ­available in Latvian at http://at.gov.lv/lv/judikatura/judikaturas-nolemumu-arhivs/senata-civillietudepartaments/hronologiska-seciba_1/2008.

388  Kristīne Dupate of a regular employment contract, the parties are not allowed to agree on any other type of contractual relationship other than one of employment. In addition, such an employment contract must comply with the provisions of the Labour Code. Any agreement, regulation or collective agreement providing less favourable rights than those provided in the normative acts are void.40

VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Social partners are not allowed to deviate from the mandatory legal norms. The latter, on the other hand, do not provide any discretion to the social partners to define the status of the parties to an employment relationship.

B.  Custom and Practice Custom and practice are not considered to be a source of labour law in the Latvian legal system.

IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions No doctrine on the rebuttable presumption has yet been elaborated under Latvian labour law.

B.  The Burden of Proof No special rules on the burden of proof exist under the Labour Code r­ elating to proof of employment relationship. Consequently, it is for the party claiming the existence of such a contract to provide evidence.

40 

Labour Code, art 6(1).

The Concept of ‘Employee’: The Position in Latvia 389 X.  SPECIFIC PROCEDURES

The State Labour Inspectorate has the right to inspect workplaces and to request the employer to conclude an employment contract with the i­ ndividual found to be working for the employer without an employment contract.41 The State Labour Inspectorate has such competence to fight unregistered employment. The decision of the State Labour Inspectorate represents an administrative act. It may be contested before the administrative courts under an administrative procedure. At the same time, an employee wishing to conclude an employment contract in writing must submit a claim before a regular court under a civil procedure. So far, there has been no case law on whether the regular courts base their judgment on the decision of the State Labour Inspectorate or whether they provide their own assessment. Latvian law does not regulate whether a court in civil disputes is bound by the ­decision or judgment adopted under administrative procedure.42

XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons No category of ‘employee-like’ persons exists under Latvian law.

B.  Equality and Anti-discrimination Law Equality and non-discrimination obligations are provided expressis verbis in labour law.43 The scope of the equality and non-discrimination ­protection does not considerably go beyond the requirements under the EU ­gender equality and non-discrimination directives. The only difference is that protection against discrimination in general is provided for more than the six areas (sex/gender, ethnic origin/race, religion or belief, disability, age and sexual orientation) covered under EU law. The Labour Code lists such non-discrimination grounds as social or financial status and leaves the list open, ie, ‘and other circumstances’. As explained above (section II.A), not

41 State Labour Inspectorate Law (Valsts darba inspekcijas likums) OG No 104, 9 July 2008. 42  K Torgāns (ed), Commentaries to the Civil Procedure Law, 3rd edn (Rīga, Tiesu Namu Aģentūra, 2006) 181. 43  See, eg, Labour Code, arts 7 and 29.

390  Kristīne Dupate all ­persons in employment are covered by the Labour Code—specifically, persons employed in the public service/sector, who are covered by special public service laws.44 However, such special laws contain an explicit reference that the relevant provisions of the Labour Code on equal treatment are applicable.45

44 See, eg, Law on the State Civil Service (Valsts civildienesta likums), Official Gazette No 331/333, 22 September 2000; Law on Service in the System of the Interior and Imprisonment System (Iekšlietu ministrijas sistēmas iestāžu un Ieslodzījuma vietu pārvaldes amatpersonu ar speciālajām dienesta pakāpēm dienesta gaitas likums), Official Gazette No 101, 30 June 2006; Military Service Law (Militārā dienesta likums), Official Gazette No 91, 18 June 2002; Home Guards of Republic of Latvia Law (Latvijas Republikas Zemessardzes likums), Official Gazette No 82, 26 May 2010; Law on Orphan’s Courts (Bāriņtiesu likums), OG No 107, 7 July 2006. 45  See, eg, State Civil Service Law (Valsts civildienesta likums), OG No.331/333, 22 September 2000, art 2(4).

19 The Concept of ‘Employee’: The Position in Lithuania TOMAS DAVULIS

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HE LABOUR CODE of 24 June 20021 provides a definition of ­‘contract of employment’ (darbo sutartis). Pursuant to Article 93 of the Labour Code:

[A]n employment contract shall be an agreement between an employee ­(darbuotojas) and an employer (darbdavys), whereby the employee undertakes to perform work of a certain profession, speciality, qualification or to perform specific duties in accordance with the work regulations established at the work place, and the employer undertakes to provide the employee with the work specified in the contract, to pay him the agreed wage and to ensure working conditions specified in labour laws, other regulatory acts, the collective agreement (kolektyvinė sutartis) and by agreement between the parties.

According to Article 95 of the Labour Code, the parties must agree on the essential conditions in every employment contract: the employee’s place of work (enterprise, establishment, organisation, structural division etc) and job functions, ie, on work of a certain profession, speciality, qualification, or specific duties. In addition, the parties shall agree on the conditions of remuneration for work (system of remuneration for work, amount of wages, payment procedure etc). Other conditions of the employment contract may also be accepted by agreement between the parties, unless labour laws, other regulatory acts or the collective agreement prohibit this (probation, combination of professions etc). In respect of certain types of employment 1  Labour Code of the Republic of Lithuania (Lietuvos Respublikos darbo kodeksas) State Gazette, 2002, No 64-2569.

392  Tomas Davulis contracts, labour laws and collective agreements may also provide other essential conditions, which shall be agreed by the parties when concluding such an employment contract (agreement on the term of the contract, the nature of seasonal work etc). According to Article 94 of the Labour Code, the parties may not establish working conditions that are less favourable to the employee than those provided by Labour Code, laws, other regulatory acts and the collective agreement. If the conditions of the employment contract are contrary to the Labour Code, laws or the collective agreement, the provisions laid down in the Labour Code, laws, regulatory acts or the collective agreement shall apply. Labour dispute resolution bodies shall settle any dispute concerning the application of the conditions of the employment contract. The contract of employment must be concluded in writing and registered in a special record book within the company. There is an approved form for the contract of employment, although this is not compulsory. An employer shall be responsible for the proper conclusion of the contract. Pursuant to Article 99 of the Labour Code, illegal work refers to work performed without the prior conclusion of an employment contract, although the characteristics of an employment contract are present, or without reporting the recruitment of persons to the regional office of the State Social Insurance Fund Board (Valstybinio socialinio draudimo fondo administravimo įstaiga) in accordance with the procedure prescribed by law. ‘Proper conclusion’ of the contract of employment means that the contract includes the conditions prescribed in Articles 95 and 99 of the Labour Code and other requirements depending on the type of employment contract. If these requirements are not met, the work will be qualified as illegal. Illegal work presents an administrative liability for the employer according to the Code of Administrative Offences,2 unless the employer’s actions amount to criminal liability. According to Article 41(3) of the Code of Administrative Offences, the employer or any authorised persons will be fined between €868 and €2,896 for each illegally employed person. The principle of ‘content over form’—in other words, the real actions of the parties to the contract rather than their intentions or the title of the contract—is a decisive factor for determining the existence of a contract of employment, ie, whether it is a fictitious employment (bogus selfemployment). Individuals may conclude any written contract or agree on any other type of arrangement to conceal an employment relationship. Both of these cases are considered to be illegal work. Pursuant to Article 1.87 of the Civil Code of 18 July 2000,3 when a transaction is made to cover up 2 Code of Administrative Offences of the Republic of Lithuania (Lietuvos Respublikos administracinių teisės pažeidimų kodeksas) State Gazette, 1985, No 1-1. 3  Civil Code of the Republic of Lithuania (Lietuvos Respublikos civilinis kodeksas) State Gazette, 2000, No 74-2262.

The Concept of ‘Employee’: The Position in Lithuania 393 another transaction, ie, if the parties’ intent is to make a transaction that diverges from the simulated transaction, the rules applicable to the intended transaction shall apply. Four institutions4 carry out monitoring and prevention of illegal work. Authorised officers of these institutions have the right to draw up protocols on the existence of illegal work and to impose a fine. The employer may appeal to an administrative court. Moreover, the case law has established a general principle that all inaccurate and unclear provisions of the contract shall be interpreted in favour of the employee.5 In a 19 June 2008 ruling in Case No 3K-3-318, the Supreme Court of Lithuania stated that an employer, by not providing for a probation period in the contract of employment, violated the obligation to properly conclude the contract of employment. In such disputes, the decision must be in favour of the employee, ie, the probation period will be deemed to have verified that the employee is suitable for the given post, unless the employer can prove otherwise. Theoretically, the contract of employment can only be deemed null ex nunc. This may be the case if the parties were not even entitled to enter into a contract of employment because of defects on the part of the employee (eg, when a minor concluded a contract without the consent of his or her parents) or because statutory law prescribes requirements for the agreed activity. In such rare cases, the contract of employment shall be terminated, but the employee retains the right to be remunerated for his or her work. The Labour Code covers different types of employment contracts and allows the government to govern the specificities of concluding, executing and terminating such contracts. These types of contracts are for fixedterm, temporary, seasonal, and secondary work. Fixed-term employment contracts are a distinct category of employment contracts, which can be sub-divided into three groups—common fixed-term employment contracts, short-term contracts and seasonal employment contracts: (a) A fixed-term employment contract (terminuota darbo sutartis) may be concluded for a specific period of time or for the period of the performance of the given work, but not exceeding five years. The term of an employment contract may be determined by a specific date or by the occurrence, change or cessation of specific circumstances. (b) A short-term employment contract (trumpalaikė darbo sutartis) shall be an employment contract concluded for a period not exceeding two

4 The State Labour Inspectorate of the Republic of Lithuania (Lietuvos Respublikos valstybinė darbo inspekcija), the Financial Crime Investigation Service (Finansinių nusikaltimų tyrimų tarnyba), the police (policija) and the State Tax Inspectorate (Valstybinė mokesčių inspekcija). 5  Case No 3K-3-318/2008 of the Supreme Court of Lithuania.

394  Tomas Davulis months on special grounds like the substitution of an absent employee, urgent temporal need of workforce etc. A short time employment contract is regulated by Resolution No 1043 of 19 August 2003 of the Government.6 (c) A seasonal employment contract (sutartis dėl sezoninio darbo) may be concluded for the performance of seasonal work (ie, work that, due to natural and climatic conditions, is not performed all year round, but during certain periods (seasons) not exceeding eight months (within a successive 12-month period) and is entered in the list of seasonal jobs). Seasonal jobs are regulated by Resolution No 154 of 7 March 1994.7 Seasonal workers have the status of ‘employee’, but pursuant to the nature of this type of contract, different regulations on holidays and working hours apply to seasonal workers. Pursuant to Article 109(2) of the Labour Code, it is prohibited to conclude a fixed-term employment contract if the work is of a permanent nature, except in cases when this is provided by law (such cases include pedagogical ­workers8 and heads of companies (also called directors) because they are elected to their post)9 or collective agreements.10 Since no statutory safeguards exist against the misuse of fixed-term contracts, these exceptions may allow situations that are not in conformity with the Directive. Compared with other types of contracts, short-term contracts and seasonal contracts provide the employee with additional possibilities11 to terminate the contract (eg, if idle time in the company lasts for more than 14 days or the employee is absent from work for seven days) prior to the expiration of the term, whilst termination of common fixed-term employment contracts is more problematic.

6  Lietuvos Respublikos Vyriausybės nutarimas Nr 1043 ‘Dėl atskirų darbo sutarčių ypatumų patvirtinimo’, State Gazette, 2003, No 81(1)-3690. 7  Lietuvos Respublikos Vyriausybės nutarimas Nr 154 ‘Dėl sezoninio darbo’, State Gazette, 1994, No 19-313. 8  According to art 65(1) of the Law on Science and Study, lecturers and researchers are appointed for five years. 9 According to art 109(3) of the Labour Code, a fixed-term employment contract with employees who are elected to their posts shall be concluded for the term they have been elected for, while a fixed-term employment contract with employees, who are appointed to their posts by elective bodies, except for municipal councils in accordance with the laws or regulations of the enterprise, establishment or organisation, shall be concluded for the term of office of these elective bodies. 10  As yet, there are no examples of this. 11  According to Resolution No 1043 of 19 August 2003 (Lietuvos Respublikos Vyriausybės nutarimas Nr 1043 ‘Dėl atskirų darbo sutarčių ypatumų patvirtinimo’), these contracts can be terminated prior to the expiration of the term: (1) by notice of the employee five calendar days in advance; (2) when the work was suspended due to production-related reasons or a reduction in work; (3) due to the absence of the employee, when the employee is sick for more than one month (in seasonal work)/due to absence of the employee, when the employee is sick for more than seven calendar days (for short-term work).

The Concept of ‘Employee’: The Position in Lithuania 395 Employees who have secondary jobs (antraeilės pareigos) work for another employer on the basis of a separate contract of employment while their initial contract of employment is still valid. Resolution No 1043 of 19 August 2003 requires the second employer to observe the 12-hour daily rest period and establishes a set of procedural requirements, such as the obligation to obtain a certificate from the first employer on the employee’s actual working hour schedule. The Labour Code provides for the possibility to introduce a specific regulation for different types of contracts. Pursuant to Article 117 of the Labour Code, the characteristics of employment contracts with workers who work on farms and other agricultural entities (darbo sutartis su ūkininkų ūkių ir kitų žemės ūkio subjektų darbuotojais), employees from special purpose enterprises whose operations, if disrupted, will have particularly grave consequences for society and nature (darbo sutartis su specialiosios paskirties įmonių darbuotojais), as well as of contracts concluded in other cases specified by law shall be based on collective agreements and legal acts regulating such employment contracts in accordance with the procedure prescribed by the Labour Code and other laws. However, this provision has thus far never been applied. B.  Employment Relationship: Basic Definition While the Labour Code does not provide for a definition of ‘employment relationship’, based on the statutory definition of ‘contract of employment’, the civil12 and administrative13 courts have confirmed three main objective criteria to determine the existence of an employment relationship (ie, not result-oriented work performance (provision of services), the agreed remuneration and subordination). The qualification of the relationship shall be issued following an assessment of the nature of the work performed by the person. If these three conditions are met, the relationship between the parties shall be considered one of ‘employment’. Statutory law, with the exception of the Law on Tax Administration,14 does not stipulate that the substance rather than the form of the contract shall be decisive when assessing the labour relationship between the parties to the contract. However, the Law on Income Tax15 defines the employment relationship and other forms of labour relationships as well as relationships in which 12 

Case of the Supreme Court of Lithuania No 3K-3-387/2006. Case Law of the Higher Administrative Court of Lithuania on illegal work, 14 July 2015. 14  Law on Tax Administration (Lietuvos Respublikos mokesčių administravimo įstatymas), State Gazette, 2004, No 63-2243. 15  Law on Income Tax (Lietuvos Respublikos gyventojų pajamų mokesčio įstatymas), State Gazette, 2002, No 73-3085. 13  Approved

396  Tomas Davulis work is carried out under a contract of employment and any other activity which basically conforms to a contract of employment between an employer and employee (agreement in terms of pay, workplace, work functions, work discipline etc). Furthermore, the Civil Code is directly applicable to employment relationships as regards the liability of an employer for damage caused by the employees or liability arising from the exercise of hazardous activities. The Civil Code may also be applicable in a subsidiary manner where there is a lack of labour law regulations. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition The uniform legal definition of employee in the Labour Code is used in all areas of labour law. Pursuant to Article 15 of the Labour Code: [A]n employee is a natural person with general legal capacity in employment relationships pursuant to Article 13 of this Code (ie a person who has reached 16 years of age) and is employed under a contract of employment for remuneration.

The national courts use the statutory definition in their practice and do not suggest any interpretation of the definition. In social security and tax legislation, alongside the definition of ‘employee’ is the notion of ‘persons working under a similar arrangement as an employment relationship’. Public servants, judges, politicians, military etc are included under this term, but are not considered ‘employees’ stricto sensu. There are some restrictions to employing persons who are under 18 years of age.16 Another exception applies to youth who are between 14 and 16 years of age—they are allowed to be employed if special safety and health regulations are implemented.17 B.  Employer: Basic Definition According to Article 16(1) of the Labour Code, an employer as a legal ­person may be an enterprise, agency, organisation or any other o ­ rganisational structure, irrespective of the form of ownership, legal form, type and nature of activities, and has general legal capacity in employment relationships

16  Government Resolution No 138 of 29 January 2003 lists prohibited types of work for employees under the age of 18 years. The Resolution also provides for requirements for health and safety at work. 17 According to Government Resolution No 138 of 29 January 2003, persons who are between 14 and 16 years of age are allowed to carry out light work.

The Concept of ‘Employee’: The Position in Lithuania 397 ­ ursuant to Article 14 of this Code.18 It follows that a registered branch p office of a foreign legal person, which performs all or part of the legal person’s functions, may also be an employer. Groups of companies or joint employment are covered by this definition as well. According to Article 2(5) of the Law on Temporary Work,19 a temporary work agency is defined as a natural legal person or other organisational structure which conforms to the requirements of an employer and concludes employment contracts or employment relationships with temporary agency workers, and assigns them to a user undertaking where he or she works temporarily under the user undertaking’s supervision and direction. According to Article 16(2) of the Labour Code, an employer may also be any natural person if he or she possesses legal capacity under the Civil Code. The aim of the legislator is to include as many persons as possible within the definition of ‘employer’. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees As a general rule, a distinction is made between employees (regulated by the Labour Code) and public servants, despite the fact that there is a link between them based on Article 5 of the Law on Public Service,20 laws and other legal acts regulating employment relationships. Social security regulations apply to public servants insofar as their status and social security scheme is not regulated by the Law on Public Service. The positions of public servants are grouped into three categories (A, B and C) and divided into 20 grades, where 20 is the highest grade and 1 is the lowest. The law consolidates the remuneration of civil servants according to grade. Qualification ratings (I, II and III) have also been introduced. Bonuses may be paid for a certain qualification rating. The provisions of the law are not applied to persons providing public services and performing technical functions. However, the legislator may deprive persons who fulfil the criteria of ‘employee’ of the status of ‘employee’. By virtue of different laws, some 18 Article 14. General Legal Capacity of Employers in Employment Relationships: ‘1. Employers shall acquire general legal capacity in employment relationships from the moment of their establishment. 2. Employers shall acquire employment rights and assume employment obligations as well as exercise the above rights and fulfil the above obligations through their bodies and administration. The said bodies shall be established and act in accordance with laws and the regulations of employers. Owners of individual (personal) enterprises, farmers and employers-natural persons may exercise employment rights and fulfil employment obligations themselves.’ 19 Law on Temporary Work (Lietuvos Respublikos įdarbinimo per laikinojo įdarbinimo įmones įstatymas), State Gazette, 2011, No 69-3287. 20  Law on Public Service (Valstybes tarnybos istatymas), State Gazette, 1999, No 66-2130.

398  Tomas Davulis categories of workers such as public servants, professional athletes, trainees of notaries and advocates are covered by a special regime—they are not considered employees stricto sensu, but work in a special public service or civil type of contractual relationship.21 The heads of companies are considered employees by law, but, in accordance with the practice of the Supreme Court of Lithuania, are deprived of some of the available rights in the event of dismissal or as regards their liability against the company.22 The members of supervisory boards or administrative boards may be employed under an employment contract, but there is no legal requirement for this—their relationship with the company may be of a purely civil law nature. As regards professional athletes, the Law on Physical Culture and Sport formally stipulates the civil law nature of contracts of professional athletes and allows trainers to work as self-employed workers. B.  The Establishment of a Specific Category of ‘Workers’ There are no specific groups, only sub-types of employees (see section III.A). IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration As a general rule, the courts evaluate the legal nature of contractual ­relationships between the parties and confirm the existence of an employment relationship if all three conditions (remuneration, non-result-oriented performance of work and subordination) are present.23 The Supreme Administrative Court of Lithuania provides a rather broad and flexible definition of subordination: ‘the dependency may be purported in various ways, ie, an employee works under the instructions of the employer as regards working time, work organisation, work discipline, work performance, technologies, etc’.24 This allows the courts to evaluate

21  While their status is regulated by other laws (eg, the Law on Civil Service, the Law on Notaries and the Law on Physical Culture and Sport), they are not covered by the rights under the Labour Code or social security laws. 22  Case of the Supreme Court of Lithuania No 3K-3-157/2010. 23  Case of the Supreme Court of Lithuania No 3K-3-387/2006. 24  Case Law of the Supreme Administrative Court of Lithuania on Illegal Work, 14 July 2005. The Supreme Administrative Court is an appeals court for decisions issued by the Labour State Inspector.

The Concept of ‘Employee’: The Position in Lithuania 399 the given situation by taking a number of different features into account without giving priority to either of them. This creates some difficulties in terms of which of the listed criteria shall be considered primary (essential) or subsidiary (non-essential). By evaluating the degree of subordination, the court must take the nature and characteristics of the activities to be performed by the employee into account. An employee is not independent while performing his or her duties. He or she has to conform to the employer’s regulations (rules of work performance) because the employer is responsible for organising the technological process of work.25 Integration of the worker into the enterprise as a criterion is not sufficiently elaborated in Lithuanian labour law. B. Indicators The State Labour Inspectorate has issued an internal document with a shortlist of indicators that potentially prove the existence of illegal work. Some of these indicators are related to the dependency criteria, such as agreement on or mode of remuneration, mode of payment, the work performer’s scope of suffering commercial losses, the party providing the equipment and materials for work, the instructions for work performance, and correspondence of the agreed activities to the usual activities of the employer. The Supreme Administrative Court of Lithuania has issued case law on illegal work.26 According to the Court, illegal work is work carried out in violation of the substantive provisions of the employment contract, although not all features of the employment contract are provided in Article 93 of the Labour Code (eg, an agreement on wages). C.  The Relevance of ‘Economic Dependence’ In Lithuania, three types of economically active individuals may potentially fall under the category of ‘economically dependent workers’, namely self-employed individuals (savarankiškai dirbantys asmenys), individuals employed under authors’ contracts (asmenys, dirbantys pagal autorinį sutartį) and individuals working in unofficial employment (asmenys, dirbantys neoficialiai). The decisive factor distinguishing them from regular employees is subordination. The doctrine on the ‘economic dependence’ of self-employed persons is not properly developed in Lithuania—if w ­ orkers

25  Case Law of the Supreme Administrative Court of Lithuania on Illegal Work, 14 July 2005. 26 ibid.

400  Tomas Davulis truly perform work independently but with a high degree of economic dependence on one client, they are considered to be self-employed and not employees. V.  THE PRINCIPLE OF PRIMACY OF FACTS

In Lithuania, the principle of primacy of facts is recognised. According to the established position of the Supreme Administrative Court of Lithuania, if all three conditions (remuneration, non-result oriented work performance, subordination) are met, an employment contract exists despite the fact that either party of the contract named it a civil contract.27 In one case, the Court stated that an employee worked as a designer and carried out various types of work, not simply one single project under a copyrights contract. The working hours and remuneration were also set. The copyrights contract was thus qualified as a contract of employment by the Court. VI.  QUALIFICATION IN FULL

As a general rule, a contract between two parties can only be either a contract of employment or another type of contract. There is no option according to which only part of a contract can be qualified as a contract of employment, except for employment contracts with the head of a company. The Supreme Court of Lithuania has stated that the relationship between the head of a company and the company is of a dualistic nature both under civil and labour law. The head of a company is not only in an employment relationship, but is also in a civil relationship with the company. Therefore, certain rules28 regulating the termination of contract (notice period, protection against dismissal) do not apply in their fullest scope.29 Furthermore, in the newly introduced voucher system for the performance of work in forestry and farming services,30 persons are excluded from the scope of labour law (they are not considered workers) and do not fall within the scope of the Labour Code, despite the fact that these activities might have the features of an employment relationship. However, they lack continuity (ie, they cannot be performed for more than 60 days) and

27 

Case of the Supreme Administrative Court of Lithuania No N-62-121-08. provisions of the Labour Code regulating the notice of termination of the employment contract, when the employer initiates the termination in the absence of any fault of the employee. 29  Case of the Supreme Court of Lithuania No 3K-3-157/2010. 30 Law on the Voucher System for Performing Work in Forestry and Farming Services (Žemės ūkio ir miškininkystės paslaugų teikimo pagal paslaugų kvitą įstatymas), State Gazette, 2012, No 136-6965. 28  eg,

The Concept of ‘Employee’: The Position in Lithuania 401 require a certain type of knowledge. Furthermore, the service recipient is only required to make health insurance contributions to the service provider. In practice, these vouchers may also be used for temporary replacements for absent workers. Apart from contractual relationships, non-contractual legal relationships may also exist between the parties if they are not related to employment. For example, the Civil Code regulates tort liability of employees and of the employer, ie, under Article 6.264 of the Civil Code, an employer shall be liable for compensation for damage caused by the employees during the performance of (official) duties to a third party. Where in cases established by law the employer and employee are jointly liable for compensation of damage, the employee shall be liable towards the employer exclusively in the event of intentional harm or negligence. The parties to an employment contract can be engaged in other civil-type relationships, including loans, student loans and non-competition agreements. The Supreme Court of Lithuania has stated that despite the civil nature of non-competition agreement, parties of an employment relationship within the scope of labour law are free to enter into such agreements according to the rules of the Civil Code.31 In media and entertainment activities, the parties to the contract of employment tend to conclude an additional contract on intellectual activities or an agreement on authorship, ie, to create works of science, literature and art. The fight against this duality of such relationships was reinforced by the government with the introduction of an increase in taxation on the results of intellectual activities. Since 2009, authors and their contracting party are obliged to pay contributions to the public health insurance and social insurance schemes, which are almost equal to those paid by parties to contracts of employment. VII.  LIMITS TO THE FREEDOM OF CONTRACT

The parties must enter into a contract of employment if the features of an employment relationship exist, ie, in such a case, the parties cannot conclude a civil contract instead of an employment contract, as it would otherwise be considered illegal work. The parties can enter into a contract of employment instead of a copyrights contract considering that the level of taxation applies to both types of contract. In practice, it is unusual for the parties to conclude/choose a contract of employment over a copyrights contract, although it could be considered a contract for services on the basis of an objective assessment, because labour law is more rigid than civil law. 31 

Case of the Supreme Court of Lithuania No 3-3-415/2007.

402  Tomas Davulis The legal concept of ‘employee’ is mandatory and cannot be disposed of by the parties to the contract. Despite the fact that the statutory definition of ‘employee’ is imprecise, when a relationship exists on the basis of an objective legal assessment and qualifies as an ‘employment relationship’, the parties are not allowed to set this qualification aside by insisting that their contract is not a contract of employment and the person is not an employee. According to Article 136 of the Labour Code, an employment contract must be terminated without notice in the event that an employee is unable to perform the specified duties or work in accordance with an opinion of the medical commission or of the commission determining a disability, when, in the case of an employee who is between the ages 14 and 16, one of his or her parents or the child’s statutory representative, his or her attending paediatrician or his or her school demand the employment contract to be terminated, and when an employee is deprived of special rights to perform certain work in accordance with the procedure prescribed by laws. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Neither the legal concept of ‘employee’ nor the legal concept of ‘contract of employment’ or ‘employment relationship’ can be disposed of by the parties to a collective bargaining agreement. No case law on this issue is available. B.  Custom and Practice Deviations based on custom and practice are recognised in Lithuania. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions Generally, no presumptions are acknowledged in statutory labour law, except the assumption that the employer is responsible for the proper conclusion of the contract of employment32 and the presumption that discrimination exists. The Supreme Court of Lithuania has stated that the interpretation of

32 

Labour Code, art 99.

The Concept of ‘Employee’: The Position in Lithuania 403 the content of a probation clause shall be made in favour of the employee, not the employer,33 if the will of the parties is unclear. B.  The Burden of Proof According to Article 178 of the Code of Civil Procedure,34 the parties must provide evidence of the circumstances upon which their claims are based. The criterion of the extent of the burden of proof is considered a reasonable person standard (bonus pater familias).35 The burden of proof is defined in the case law. For example, the Supreme Court of Lithuania has stated that in cases of invalid dismissals, the burden of proof of the employee’s disciplinary violation lies with the employer (the defendant). The burden of proof regarding reasons for absence from work and their relevance lies with the employee (the plaintiff).36 X.  SPECIFIC PROCEDURES

The State Labour Inspectorate of the Republic of Lithuania, the Financial Crime Investigation Service, the police and the State Tax Inspectorate carry out controls and aim to prevent illegal work. All authorised officers from these institutions have the right to draw up protocols on the existence of illegal work and to impose a fine. The employer may appeal these protocols to an administrative court. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons There are no ‘employee-like’ persons under Lithuanian labour law. No case law or doctrine on this issue exists. Collective labour law rights, health and safety rules or employees’ social insurance rights are not extended to persons who are not employees, because collective agreements are only applicable to employees. Public servants enjoy these rights by way of analogy of the law, with some restrictions imposed in separate pieces of legislation. Self-employed persons are subject to special social insurance rules.

33 

Case of the Supreme Court of Lithuania No 3K-3-318/2008. Code of Civil Procedure (Lietuvos Respublikos civilinio proceso kodeksas), State Gazette, 2002, No 36-1340. 35  Case of the Supreme Court of Lithuania No 3K-3-213/2012. 36  Case of the Supreme Court of Lithuania No 3K-3-153/2009. 34 

404  Tomas Davulis B.  Equality and Anti-discrimination Law The Constitution of 25 October 199237 establishes the general principle of equality in Article 29 and provides for the right to fair remuneration for work, where the concept of ‘fair remuneration’ also includes the principle of non-discrimination.38 Despite the fact that the Constitution contains a clause on the direct effect of constitutional provisions, the Constitutional Court has not yet examined the possibility of relying on them in disputes between private persons (horizontal effect). In accordance with this constitutional provision, Article 2 of the Labour Code mentions the principle of fair remuneration and the general principle of the equality of employees among the principles of labour law, irrespective of, inter alia, gender, marital and family status as well as (since 2012) the intention to have children. However, as regards the practical implementation of these principles, consideration of special laws on equal treatment is indispensable. In respect of employment conditions or in-service training and promotion opportunities, employees working under fixed-term employment contracts may not be treated in a less favourable manner than employees working under employment contracts of indefinite duration.39 The Law on Equal Opportunities of Women and Men40 and the Law on Equal Opportunities41 introduce central concepts and provide basic rules, define the scope of their application, and establish the mechanisms of supervision and enforcement. According to Article 5 of the Law on Equal Treatment and Article 5 of the Law on Equal Opportunities for Women and Men, any discrimination—whether direct or indirect—in employment on the grounds of sex, age, sexual orientation, disability, racial or ethnic origin, religion or beliefs is prohibited. However, there are neither regulations nor case law on the application of equal treatment rules for self-employed or agency workers.

37 Constitution of the Republic of Lithuania (Lietuvos Respublikos Konstitucija), State Gazette, 1992, No 33–1014. 38  Ruling of 18 December 2001 of the Constitutional Court of the Republic of Lithuania. 39  Labour Code, art 109(5). 40  Law on Equal Opportunities of Women and Men (Lietuvos Respublikos vyrų ir moterų lygių galimybių įstatymas), State Gazette, 1998, No 112-3100. 41 Law on Equal Opportunities (Lietuvos Respublikos lygių galimybių įstatymas), State Gazette, 2003, No 114-5115.

20 The Concept of ‘Employee’: The Position in Luxembourg JEAN-LUC PUTZ

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract In Luxembourg, no statutory definition of ‘contract of employment’ (­ contrat de travail) exists. According to the Labour Code, the contract of employment is a sub-category of the ‘service contract’ (contrat de louage de services et d’ouvrage) as defined by the Civil Code,1 more specifically of the contract of ­‘hiring workers’ (le louage des gens de travail qui s’engagent au service de quelqu’un). Aside from the prohibition of indefinite (lifelong) contracts, the Civil Code does not provide any regulation of this type of contract.2 What distinguishes a contract of employment is the fact that the contractor is an employee (salarié), a concept which is not, however, defined by law.3 A frequent definition that is found in judgments and that is often referred to is as follows: ‘a contract by which a person obliges him-/herself to place his/her work service at the disposal of another person whilst being subordinate to him/her in exchange for remuneration’ (‘la convention par laquelle une personne s’engage à mettre son activité à la disposition d’une autre, sous

1 

Civil Code (Code Civil), art 1779. art 1780: ‘One person may engage his services only for a time or for a specified ­undertaking’—‘On ne peut engager ses services qu’à temps, ou pour une entreprise déterminée’. 3  Article L 121-1 CT: ‘Without prejudice to other existing legal provisions, the service contract mentioned in Article 1779 1 of the Civil Code is governed by this title as far as employees are concerned’—‘Sans préjudice des dispositions légales existantes, le contrat de louage de services et d’ouvrage visé par l’article 1779 1° du Code civil est régi, en ce qui concerne les salariés, par les dispositions du présent titre’. 2 ibid

406  Jean-Luc Putz la subordination de laquelle elle se place, moyennant rémunération’).4 Thus, three essential criteria set apart the ‘employment contract’: (i) work performed by an employee; (ii) remuneration paid by an employer; (iii) a relationship of subordination (lien de subordination). These three elements are ‘irreducible’;5 if one of these three is not given, no employment contract exists. In most cases, the first two conditions are not difficult to determine, whereas the third condition is often ambiguous. Contracts of employment need to be made in writing.6 However, even if there is no written contract, the employee can prove that an employment contract has been in place by any other means (especially based on testimonies).7 Oral contracts (contrat oral) can thus also have a legal effect. Even a c­ ertain conduct implying an intention to establish a contract of employment (contrat tacite) may suffice. A contract of employment can be void according to the general rules of civil law. A contract that breaches law or is contrary to bono mores (bonnes moeurs) will be declared void. Administrative irregularity among the contractors does not, however, invalidate the contract; an employment contract can thus exist even if the employer has no business licence or if the foreign employee has no work permit.8 Furthermore, the rules on absence of intention or ill intent (vices du consentement) apply. For example, a contract will be declared void because the candidate did not reveal to his future employer that he operates a rival firm.9 The same decision was taken for an employee who concealed that his state of health made it impossible to fulfil the contract.10 An admissible rescission leads to the contract being ineffective from the very beginning. However, as it is impossible to undo the contract retroactively if the parties have already started performing it, remuneration is due for the period already worked. In practice, actions to have an employment contract declared null and void are rare.

4  See, eg, CSJ, III, 26 March 1998, no 21131; CSJ, VIII, 15 May 2003, no 26894; CSJ, VIII, 9 October 2003, no 27505; CSJ, III, 22 April 2004, no 27606; CSJ, III, 24 March 2005, no 29163; CSJ, III, 13 July 2006, no 29737; CSJ, VIII, 20 November 2008, no 33406; CSJ, VIII, 27 November 2008, no 32887; CSJ, VIII, 5 March 2009, no 32539, 32540, 32541, 32542 and 32543; CSJ, VIII, 19 March 2009, no 33544; Cour adm, 16 June 2011, no 27974C; CSJ, 5 June 2014, no 39339; CSJ, III, 29 January 2015, no 39785; CSJ, VIII, 12 February 2015, no 41182. 5  CSJ, VIII, 14 June 2007, no 31341. 6  Article L 121-4(1) CT. 7  Article L 121-4(4) of the Labour Code. 8  CSJ, 15 October 1987; CSJ, 27 May 2014, no 39490. 9  CSJ, III, 24 January 2013, no 37944. 10  CSJ, 10 July 2014, no 39759.

The Concept of ‘Employee’: The Position in Luxembourg 407 B.  Employment Relationship: Basic Definition The concept ‘employment relationship’ (relation de travail) is sporadically used in the Labour Code. There is no statutory definition of it. Some court decisions refer to the concept of ‘employment relationship’ and define it essentially by requiring that it be a relationship of subordination. However, Luxembourg labour law resolves the qualification problem primarily by defining the ‘employee’ rather than the concept of ‘employment relationship’. No employment relationship exists unless a contract of employment has been concluded. In some cases, for example, in the event of a transfer of undertaking, the consensual aspect of the contract may seem fictitious. However, the relationship between an employer and an employee is necessarily contractual. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition As far as ‘labour law’ is concerned, the Labour Code contained a legal ­definition of the concept ‘white-collar employee’ (employé privé), but it was abolished with the introduction of the Single Social Status.11 ­Luxembourg labour law thus does not provide a (general)12 statutory definition of ‘employee’ that can be applied throughout the entire legal system or even throughout labour law. ‘Social security’ law refers to ‘persons performing a professional activity in exchange for remuneration on behalf of someone else’ (‘personnes qui exercent … contre rémunération une activité professionnelle pour le compte d’autrui’).13 ‘Tax law’ defines ‘salaried revenue’ (revenus d’une occupation salariée) as an income earned from carrying out a ‘dependent activity’ ­(occupation dépendante).14

11 Formerly, art L 121-1(2) CT included a definition of the term ‘employé’: any person c­ arrying out a task on the basis of a stable agreement or continuously on behalf of others and in exchange for remuneration (‘toute personne qui … exécute sur la base d’un engagement durable ou d’une façon continue pour le compte d’autrui et contre rémunération … un travail’). In legal practise, this definition was nearly never referred to. 12  There are some provisions defining ‘employee’ (salarié) or ‘worker’ (travailleur), but have a limited scope of application, for example, art L 611-2 CT. 13  See art 1(1) (health insurance), art 85(1) (accident insurance), art 170 (1) (pension fund) and, by reference, art 352 (nursing insurance) of the Social Security Code. However, art 1 of the Statutes of the Employer’s Mutual insurance (Mutualité des Employers) explicitly refers to the Labour Code to define the concept of ‘employee’; this makes sense as this insurance covers the share of sick pay the employer has to pay until health insurance takes over the payments. 14  Article 95(1) of the Income Tax Law (loi sur l’impôt sur le revenu (LRI)).

408  Jean-Luc Putz As these definitions are only of limited usefulness, the courts have had to fill the gap. Court cases involving labour disputes are the most numerous and thus provide the most detailed definition. Court cases on social security disputes are far less frequent than labour disputes. Cases dealing with social security issues tend to deviate from the wording of the law (‘on behalf of someone else’) and adopt the definition developed by the labour courts. They also refer to the concept of subordination15 and use the same approach and indications to qualify it. Thus, subordination is—as in labour law—defined as the employer’s right to give orders, to supervise their execution and to penalise failures and mistakes.16 Labour law, social security law and tax law each consider themselves independent of other branches of law. They thus separately define all of their legal concepts without being bound to definitions used or decisions that have been taken in other branches. Nevertheless, there is some overlap, as each branch acknowledges that an individual is or is not recognised as being an employee. One typical example of this overlap is the numerous decisions issued by labour courts stating that an affiliation with social security is an indication that an individual must be considered an employee according to labour law, but it is not a decisive criterion.17 Existing or lack of social security affiliation is often referred to by litigants, but is rarely decisive and us usually mentioned in court decisions as a supplementary element. Specific case of managers: in the specific case of officially nominated company managers, such as a director (gérant) or a manager (administrateur), notable differences exist in tax, labour and social security legislation. Because of their more administrative approach, both social security and tax law have specified criteria for companies’ management. Labour law takes a more flexible approach, focusing on the actual functions of the individual rather than on his or her formal function in the company. A court decision, for example, determined that a managing director (administrateur-délégué) was not in an employment relationship; an affiliation as ‘employee’ was not considered relevant, because being affiliated as an employee is not incompatible with the functions of a company manager.18 In tax law, all income related to the execution of day-to-day administration (gestion journalière) earned by managers (or persons carrying out

15  CSJ, cassation (social), 28 April 1983, no 13/83; CSJ, cassation (social), 13 March 2003, no 16/03; CSAS, 11 May 1994, no 87/94; CSAS, 13 October 2004, no 2004/0152; CAAS, 18 October 2004. 16  CSJ, cassation (social), 9 May 1974, no 206; CSAS, 17 February 1993, no 30/93; CSAS, 11 May 1994, no 87/94; CAAS, 18 October 2004. 17  See below section IV.B (formal indicators). 18  CSJ, 29 January 2004, no 22342.

The Concept of ‘Employee’: The Position in Luxembourg 409 similar functions) in incorporated companies (sociétés par actions), limited liability companies (société à responsabilité limitée), cooperative companies and other organisations is taxed as employee income. Social security law entails a more complex set of rules. An individual will be considered self-employed if he or she is:19 (i)

an associate in various partnerships or of a limited liability company holding more than 25 per cent of the capital, or is a manager (or similar) of an incorporated company (société anonyme) or different types of companies in charge of day-to-day management (gestion journalière); (ii) and that company’s activity falls into the commercial, handicraft, industrial or agricultural sector, or is a non-commercial, mainly intellectual, activity; (iii) and the business licence (autorisation d’établissement) is issued on behalf of the respective individual. Associates and managers who do not meet these criteria may be considered employees by the social security system if they have signed an employment contract. As no written rules are in place, labour law takes a more flexible approach towards managers. In litigation practice, this question arises very frequently. The fact of holding a legal function within a company in general20 and the fact of holding a management position in an incorporated company21 or a management position in a limited liability company22 are not as such incompatible with an employment relationship. The conditions that must be met to be considered an employed worker are as follows.23

19 

See arts 1(4) and 85(1) of the Social Security Code. 3 December 1998, no 22770; CSJ, VIII, 22 January 2004, no 27451; CSJ, III, 13 July 2006, no 29737. 21 CSJ, III, 8 April 2002, no 24868; CSJ, III, 23 January 2003, no 25581; CSJ, VIII, 9 October 2003, no 27505; CSJ, III, 9 February 2006, no 28060 (deputy chairman); CSJ, III, 1 February 2007, no 29638; CSJ, VIII, 20 November 2008, no 33406; CSJ, III, 1 February 2007, no 29638. 22  CSJ, III, 1 March 2007, no 31354. 23  For example, these persons have not been considered to be employed workers: a manager owning 50 per cent of the company, the company being registered at his private mailing address (CSJ, VIII, 22 January 2015, no 41209); an appointed executive (administrateur-délégué) who is only required to respect the instruction of the board of directors and of the shareholders (CSJ, VIII, 22 January 2004, no 27451), even if he holds no shares (CSJ, cassation (social), 13 March 2003, no 16/03). Dealing with suppliers, buying and selling goods is considered part of the functions of an executive as the statutory manager (CSJ, 29 January 2004, no 22342). An appointed executive who holds nearly all shares (CSAS, 13 October 2004, no 2004/0152; CSAS, 26 June 2002, no 2002/0096). However, the opposite decision was taken in a case in which he had only minority participation (CSJ, 11 January 2007, no 30875). 20 CSJ,

410  Jean-Luc Putz The conclusion of a separate24 and non-fictitious25 contract: its purpose must not be limited to attaining tax advantages, circumventing corporate law26 or obtaining other types of benefits.27 There must be real subordination:28 for instance, the simple fact of having to respect the decisions of the board of directors (conseil d’administration) or receiving instructions from a parent company does not suffice.29 The fact that the worker has to provide an account of his or her actions and decisions does not suffice either, as any regular statutory manager has to do so.30 The chairman of the board of directors31 or the managing director32 (administrateur-délégué) cannot be subordinated to the company he or she manages. However, a simple member of the board, managing a hotel, can be an employee, especially if he or she has to regularly report to the board.33 In another case, where a father and his son were the managing directors (administrateur-délégué) of a company, a subordination was considered possible.34 Real35 and effective36 work must be performed (emploi effectif): this work must consist of specific technical functions that differ from the ­functions a person would or could do in the role of a statutory manager.37 It was decided that the administrative handling of invoices, business accountancy and the recovery of debts are tasks that can be performed either by a manager or by an employee; the type of work is thus not decisive to establish an employment relationship.38 The same decision was taken for tasks related to human resources and customer relations.39 The administrative courts have dealt with a series of cases in which ­re-employment benefits (aide au réemploi) were declined by the job c­ entre (Agence pour le développement de l’emploi), which argued that the ­applicant

24 

CSJ, VIII, 15 May 2003, no 26894. III, 23 January 2003, no 25581; CSJ, III, 1 February 2007, no 29638; CSJ, III, 18 October 2012, no 38507; CSJ, III, 2 May 2013, no 46472. 26  CSJ, III, 6 June 2013, no 37024. 27  Trib adm, 12 July 2011, no 27457 (aide au réemploi). 28  CSJ, VIII, 15 May 2003, no 26894. 29  CSJ, VIII, 15 May 2003, no 26894. 30  CSJ, VIII, 22 January 2004, no 27451. 31  CSJ, VIII, 1 March 2012, no 37003. 32  CSJ, III, 6 June 2013, no 37024; CSJ, III, 5 February 2015, no 38666. 33  CSJ, III, 5 July 2012, no 37687. 34  CSJ, III, 19 January 2011, no 36806. 35  CSJ, III, 29 January 1998, no 21033; CSJ, III, 23 January 2003, no 25581; CSJ, VIII, 15 May 2003, no 26894; CSJ, III, 9 February 2006, no 28060; CSJ, VIII, 10 July 2008, no 32804. 36  CSJ, VIII, 22 January 2004, no 27451; CSJ, III, 1 March 2007, no 31354. 37  CSJ, III, 8 April 2002, no 24868; CSJ, VIII, 22 January 2004, no 27451; CSJ, III, 29 January 2004, no 26419; CSJ, III, 13 July 2006, no 29737; CSJ, 11 January 2007, no 30875; CSJ, III, 1 March 2007, no 31354; CSJ, III, 1 February 2007, no 29638; CSJ, III, 2 February 2012, no 37945. 38  CSJ, III, 12 February 2015, no 40632. 39  CSJ, III, 6 June 2013, no 37024. 25 CSJ,

The Concept of ‘Employee’: The Position in Luxembourg 411 could not simultaneously be an employee and an executive director. The administrative judges adopted the same position as the civil judges and referred to the same criteria, requiring a separate contract with an effective work contract and real subordination.40 The specific case of athletes and coaches: athletes or sport coaches of ­officially approved federations or affiliated sport clubs are not to be considered employees if:41 (i) (ii)

it is not their primary and regular activity; and if the annual remuneration does not exceed 12 times the monthly minimum wage.

By contrast, however, when these conditions are not met, it does not necessarily imply that the individuals are in fact employees; the level of subordination must instead be determined. Even if labour law does apply, athletes and sport coaches are subject to certain derogations.42 There are two reasons for limiting the scope of application of labour law in the sport industry:43 (i) (ii)

The contractual framework of the employment contract was considered unsuitable for the sport industry and sport associations, the latter requiring more freedom to choose their athletes and coaches. Labour laws were considered to have been ‘designed to protect the worker who earns the necessary income from working to make a ­living’, whereas only a very limited number of athletes and coaches in Luxembourg earn their living in sports.

B.  Employer: Basic Definition The concept of ‘employer’ (employeur) is not defined legally. The courts do not attempt to define the term ‘employer’; the definition indirectly derives from the term ‘employee’. The employer is the other party to the employment contract—the party the employee is subordinated to. In the rare cases

40  Cour adm, 16 June 2011, no 27974C; Cour adm, 17 April 2012, no 29701C; G Castegnaro, ‘Gérant ou salarié: sous quelles conditions?’ Legiwork ID 16304. 41  Article L 121-1(3) CT; according to the Constitutional Court (Cour Constitutionnelle), this differentiation is objectively justified and thus does not violate the constitutional principle of equal treatment; Cour Constitutionnelle, 25 March 2011, no 62/11. 42 Special labour law rules allow fixed-term contracts without being limited in terms of recurrence and duration of these contracts (art L 122-5(7) CT; art 2 du règlement grand-ducal du 11 juillet 1989 portant application des dispositions 5, 8, 34 et 41 de la loi du 24 May 1989 sur le contrat de travail). Elite sportsmen and some other persons linked to the sport sector can benefit from a special sports holiday (congé sportif; art L 234-8 CT). 43  Projet de loi no 4766, Commentaire des articles, ad art 22, p 45.

412  Jean-Luc Putz where a definition of the employer is contributed by the law44 or the courts, it is of no significant use. Both natural and legal persons may qualify as an employer. Entities without legal personality cannot be employers, for example, a group of companies or a non-registered association. There usually is only one employer in an employment relationship; the same person cannot be hired by two or more employers under the same contract. However, the Luxembourg Court of Appeals recently adopted the theory of ‘co-employment’ (coemploi), a judicial creation of the French courts. The main purpose of this concept is to determine which companies can be held financially liable as ‘employers’ for damages or salaries due to an employee. Normally, this liability is limited to the company or legal person qualifying as an ‘employer’. However, if the apparent employer is only an empty shell without any power of decision or autonomy (coquille sans reel pouvoir ni autonomie) because another company exercises excessive influence (emprise excessive), the dominant company can be sued as a joint debtor.45 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Different sub-groups of employees can be differentiated, along with some specific categories of employees: (1) Employees and workers. Labour law and social security law (yet not tax law) traditionally classified employees as either white-collar employees (employés privés) or blue-collar workers (ouvriers), reflecting the differentiation between manual and intellectual work. This differentiation was abolished by the introduction of a Single Social Status (statut unique).46 Differentiating between the two was considered not only to be outdated politically, but to be unconstitutional as it violated the principle of equal treatment. There has been no case law declaring the differentiation to be illegal. The political debate on this issue is over 40 years old and was progressively implemented and finalised in 2009. Another argument brought forward in favour of a unified status was the fact that EU legislation, which is increasingly influencing national labour law, does not differentiate between different categories of workers. 44 

For a legal definition, see, eg, art L 611-2 of the Labour Code (Code du Travail). CSJ, III, 6 June 2013, no 38105. 46  Loi du 13 mai 2008 portant introduction d’un statut unique pour les salariés du secteur privé; Reference: Mémorial A no 60, 15 May 2008. 45 

The Concept of ‘Employee’: The Position in Luxembourg 413 Most of the provisions of the new law came into effect on 1 January 2009. Some temporary provisions prevailed until 2013. (2) Executives (managerial employees; cadres) are considered a sub-­category of ‘employees’. A legal definition was recently introduced, which is very restrictive and aims to prevent abuses in qualifying employees as ­executives. Executives are now defined as:

Employees earning—in consideration of the time required to accomplish their work—considerably more than the employees paid according to the collective agreement or some other pay scale, under the condition that this remuneration corresponds to a real power of decision or the nature of the assigned task implies a precisely defined authority, a substantial independence in organization and far-ranging independence in terms of working hours, specifically that no predefined schedule needs to be respected.47

Being qualified as an ‘executive’ has two major legal consequences: rules on working time are not applicable, which means that (1) an executive is not required to be present at fixed hours, (2) an executive’s working time is not limited to eight hours a day and 40 hours a week, and (3) an executive is not entitled to payments for overtime (heures supplémentaires). The second legal consequence is that collective agreements do not apply to executives, unless explicitly stated. (3) Employees in the public sector are in an employment relationship that is governed by the same rules as in the private sector. Special laws complement the general regulations of the Labour Code for civil servants (employés de l’Etat);48 moreover, certain aspects of the civil servant status are also applicable to them. For all other state employees, special collective agreements apply. (4) Home workers (travailleur à domicile) are not a specific category in Luxembourg’s labour law.49 Based on the European Framework Agreement on Telework, the more restrictive category of ‘teleworkers’50 47  Articles L 162-7(3) and L 211-25(4) CT: ‘travailleurs disposant d’une rémunération nettement plus élevée que celle des employés privés couverts par la convention collective ou barémisés par un autre biais, tenant compte du temps nécessaire à l’accomplissement des fonctions, si cette rémunération est la contrepartie de l’exercice d’un véritable pouvoir de direction effectif ou dont la nature des tâches comporte une autorité bien définie, une large indépendance dans l’organisation du travail et une large liberté des horaires du travail et notamment l’absence de contraintes dans les horaires’. 48  Loi du 27 janvier 1972 fixant le régime des employés de l’Etat. 49  Except for the fact that they are excluded from the rules on working time (art L 211-2 CT). 50  According to art 2 of the Convention, ‘telework’ is defined as: ‘a special form of organising or accomplishing a task in the context of an employment contract using information and communication technologies to carry out outside the employer’s premises—and specifically at the employee’s residence—work that could have been carried out in the employer’s premises. The following cumulative criteria are thus decisive: a task performed using information and communication technologies; a task performed in a place other than the employer’s ­premises,

414  Jean-Luc Putz (télétravailleurs) was introduced in 2006. The concept was introduced based on a special convention concluded between employer and employee representatives and has since been declared generally applicable.51 Teleworkers are not a separate category, but rather a sub-category of ‘employees’ to whom the some special rules apply. All the general labour law regulations thus apply and, in addition, some specific measures were introduced on aspects, such as how telework can be introduced in a company, and how to maintain social contact between the teleworkers and their colleagues. (5) Agency workers (intérimaires) are another category of workers. Luxembourg’s labour law provides a complete set of rules to protect such workers,52 mainly concerning the form and duration of the contract, cases in which agency workers can be hired, and the shared responsibilities between the employer and the hiring company. (6) Concerning apprenticeship and internship, a global framework on professional training (formation professionnelle) recently completely modified the existing rules on apprenticeship.53 This modification was overdue, as the former legislation had remained unchanged since 194554 and was in many aspects not only outdated but also discriminatory (especially towards women and the marital status). The new regulation differentiates between apprenticeship (apprentissage) and internship (stage de formation) as well as between two levels of diploma can then be obtained. The rules on contracting, execution and termination of a contract of apprenticeship have been adapted. Contracts of apprenticeship are autonomous contracts55 governed by their own rules on contracting,

specifically at the employee’s residence; a task carried out on a regular and usual basis’ (‘Le télétravail est une forme d’organisation et/ou de réalisation du travail, utilisant dans le cadre d’un contrat de travail les technologies de l’information et de la communication, de sorte que le travail, qui aurait également pu être réalisé dans les locaux de l’employeur, est effectué de façon habituelle hors de ces locaux et plus particulièrement au domicile du salarié. Les trois critères cumulatifs suivants sont partant déterminants d’une relation de télétravail:—une prestation de travail au moyen des technologies de l’information et de la communication,—une prestation de travail effectuée dans un endroit autre que dans les locaux de l’employeur, plus particulièrement au domicile du salarié,—une prestation de travail effectuée de manière régulière et habituelle de cette façon’). 51  Règlement grand-ducal du 1er mars 2012 portant déclaration d’obligation générale de la convention relative au régime juridique du télétravail conclue entre l’Union des Entreprises Luxembourgeoises, d’une part et les syndicats OGB-L et LCGB, d’autre part. 52  Articles L 131-1 ff CT. 53  Loi du 19 décembre 2008 portant réforme de la formation professionnelle; Reference: Mémorial A no 220 du 30 décembre 2008, p 3274. 54  Arrêté grand-ducal du 8 octobre 1945 portant révision de la loi du 5 janvier 1929 sur l’apprentissage, which was integrated in 2006 as the first part of the Labour Code. 55  Article L 111-3(1) CT.

The Concept of ‘Employee’: The Position in Luxembourg 415 execution and termination. Apprentices are traditionally considered a separate category rather than a sub-category of employees. Indeed, many differences exist: the purpose of the contract is not (in theory) to provide work services for remuneration, but to acquire professional training and experience. Apprentices are paid an apprenticeship ­premium (indemnité d’apprentissage) that is fixed by decree. The new regulation now clearly states that the general rules for employment contracts apply to a number of aspects, such as recreational leave (annual holiday), the protection of young workers, occupational health, protection in case of pregnancy and protection against dismissal in case of sickness.56 (7) Students and scholars can enter a normal employment relationship. Special provisions facilitate the hiring of students and scholars during school holidays for a maximum of two months per year. This type of employment relationship is governed by specific contractual rules,57 a lower minimum wage and a different social security statute, as contributions for health and pension insurance are not due.58 General labour law rules are applicable, with a few exceptions, such as annual leave and some limitations for work on Sundays and holidays that would normally apply to adolescents.59 (8) National legislation introduces different types of special contracts to integrate or re-integrate people into the labour market. These rules have been subject to regular reforms in the past. Currently, the following contracts exist: the professional reinsertion internship (stage de réinsertion professionnelle), the employment insertion contract (contrat d’initation à l’emploi) and the employment support contract (contrat d’appui-emploi). The ‘employer’ is referred to as ‘promotor’ (promoteur) and must appoint an instructor (tuteur). The general rules on employment contracts are explicitly stated not to be applicable.60 These contracts are not generally considered a specific form of employment contract, but as a specific type of contract. Indeed, the differences compared to a classic employment relationship are important: the purpose is not (only) to provide work services, but to instruct and (re-)integrate the beneficiary, the duration is limited, the salary is fixed and partially paid by public funds, in some cases, the employment office (Administration de l’Emploi) acts as a contracting party, specific rules on contract ­termination apply etc.

56 

ibid, art L 111-3(2). ibid, art L 151-3. 58  ibid, art L 151-6. 59  ibid, art L 151-7. 60  Articles L 543-6 and L 543-23 CT. 57 

416  Jean-Luc Putz (9)

Public authorities aim to integrate disabled persons (travailleurs handicapés) in the ordinary (‘first’) employment market61 as far as possible. They are considered to be regular employees,62 have the same rights and obligations, but they (or their employer) benefit from various types of public assistance. A special type of contract to work in a protected workshop (atelier protégé) is only concluded for those who are unable to enter a normal workplace; nevertheless, their employment relationship is governed by the general rules of labour law,63 with the exception of some special provisions. (10) Resident and commuting workers are a very significant category in Luxembourg, as a large part of the active population does not reside within the national borders. While this makes no difference in labour law, it implies some differences in social security law, for example, concerning unemployment insurance. (11) Seafarers, ie, people working on ships navigating under the Luxembourg high sea flag, are ruled by a completely separate set of provisions64 under a so-called maritime employment contract (contrat de travail maritime). (12) Other categories of workers that are partially subject to specific rules are domestic workers (domestique, gens de maison), workers in agriculture and viniculture, workers in the hotel and restaurant industry etc. B.  The Establishment of a Specific Category of ‘Workers’ A category of ‘workers’ does not exist in Luxembourg. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

Amongst the three elements that define the employment contract, subordination is the most important one. Courts consider subordination to be the ‘essential’ or ‘characteristic’ element of the employment contract.65

61 

ibid, arts L 562-1 ff. CSJ, 15 February 1996, nos 17794 and 17848. 63  Arricle L 563-3 CT. 64  Articles 72 ff of the Law of 9 November 1990. 65  CSJ, 9 January 1997, no 18786; CSJ, III, 26 March 1998, no 21131 (‘fundamental difference’—‘la différence fondamentale’); CSJ, 4 January 2001, no 24644 (‘essential element’— ‘élément essentiel’); CSAS, 13 October 2004, no 2004/0152 (‘élément essentiel’); CAAS, 18 October 2004 (‘élément essentiel’); TA Lux, 13 October 2006, no 2860/2006 (‘élément le plus caractéristique’); CSJ, III, 12 July 2007, no 30830 (‘characteristic element’—‘élément caractéristique’); CSJ, VIII, 19 March 2009, no 33544 (‘critère essentiel’). 62 

The Concept of ‘Employee’: The Position in Luxembourg 417 S­ ubordination is not only considered a criterion to identify the employment contract, but also as the reason justifying the application of the protective rules of labour law.66 A.  Criteria: Work Instructions, Work Control and Integration The courts have elaborated different definitions of ‘subordination’. The most common definition defines it as the employer’s right:67 (i) (ii) (iii) (iv)

to give orders and instructions to the employee; to supervise the implementation of these orders and instructions; to verify the achieved results; to sanction their non-execution.

Control over the work and work instructions is thus an important part of subordination. In particular, the right to decide the place, time and conditions of work68 belongs to the employer’s right to give orders. A relationship can also be qualified as subordinated and thus as an employment relationship by the following criteria: acts of authority;69 the employer’s right to give orders;70 the fact that the employer gives orders;71 the fact that the employee has been given72 and has to respect precise instructions and guidelines;73 precise directives and deadlines for the work to be completed;74 the fact that the employee has been assigned a precise task.75 Integration (intégration organisationnelle) of the worker is not typically referred to as a criterion defining an employment relationship in Luxembourg. One court decision did not consider integration into the work environment to be a decisive criterion,76 whereas another deemed that the fact of working within an organised facility can be considered an element of

66 

CSJ, 12 December 1991; TA Lux, 13 October 2006, no 2860/2006. See, eg, CSJ, cassation (social), 9 May 1974, no 206; CSJ, 14 May 1993, no 1856/93; CSJ, 4 January 2001, no 24644; CSJ, VIII, 22 January 2004, no 27451; CSJ, III, 22 April 2004, no 27606; CSJ, III, 24 March 2005, no 29163; CSJ, VIII, 28 April 2005, no 29348; CSJ, VIII, 19 October 2005, no 31164; CSJ, VIII, 27 November 2008, no 32887; CSJ, VIII, 19 March 2009, no 33544; CSJ, VIII, 11 November 2010, no 34700; CSJ, 4 February 2010, no 34422; CSJ, VIII, 24 June 2010, no 33520; Cour adm, 16 June 2011, no 27974C. 68  CSJ, VIII, 28 April 2005, no 29348. 69  CSJ, 15 November 1991. 70  CSAS, 11 May 1994, no 87/94. 71  CSJ, cassation (social), 9 May 1974, no 206; CSJ, III, 14 January 1999, no 21267; CSJ, III, 30 October 2003, nos 26602 and 26862; CSJ, III, 20 December 2007, no 32258. 72  CSJ, III, 24 May 2007, no 30644. 73  CSJ, III, 6 November 2003, no 26971; CSJ III, 24 May 2007, 31536. 74  CAAS, 6 November 1965, no 206 A II 8/59. 75  CSJ, III, 17 April 2008, no 32969. 76  CSJ, 11 January 1996, no 16689. 67 

418  Jean-Luc Putz subordination.77 A health professional, for example, argued in the Labour Court that he should be considered an employee, as he was required to work within the fixed structure of the hospital (limited opening hours, reporting obligations etc).78 The claim was rejected because despite these organisational constraints, the claimant was free to organise his schedule and was paid directly by the health insurance. The same decision was taken for a nurse; the fact that she had to carry out tasks according to a working plan was not considered decisive.79 While court decisions converge on the basic concept of subordination, divergences emerge when it is applied to specific cases. The courts agree that subordination does not require rigid or fixed criteria (critères rigides et immuables) and depends on the type of work.80 Certain types of work require technical independence, such as nursing,81 just like other jobs imply some autonomy, such as commercial agents,82 chefs83 or teachers.84 Whereas some decisions require the employer’s control to be effective and permanent,85 others argue that the employer’s control does not necessarily have to be effective and constant.86 The fact that the employer is not present most of the time and does not systemically give orders,87 that the employee has some freedom to organise his or her work88 or that there are no regular controls89 does not mean that there is no subordination. On the other hand, the fact that the ‘employer’ was far away and that the contracting parties only met three times a year and had phone contact only every two months convinced the Court of Appeal that there was insufficient control by the employer to characterise the relationship as being one of subordination.90 Thus, some court decisions use the concept of ‘legal subordination’ (subordination juridique) or ‘legal dependence’ (état de dépendance juridique), referring to the employee’s obligation to execute orders,91 even if he or she does not receive any in his or her day-to-day practice. 77 

CSJ, III, 28 January 1999, no 22192. CSJ, VIII, 2 December 2010, nos 35694 and 35695. 79  CSJ, III, 30 January 2014, no 38757. 80  CSJ, III, 26 March 1998, no 21131; CSJ, III, 28 January 1999, no 22192; CSJ, VIII, 25 March 2004, no 28212; CSJ, VIII, 6 January 2005, no 28778; CSJ, VIII, 14 June 2007, no 31341. 81  CSJ, III, 28 January 1999, no 22192. 82  CSJ, III, 24 October 1996, no 18511. 83  CSJ, 5 June 2014, no 39339. 84  CSJ, III, 4 December 1997, no 18843 (religious education). 85  CAAS, 18 October 2004; CSJ, cassation (social), 9 May 1974, no 206. 86  TA Lux, 26 March 1974, no 14329; CSJ, III, 24 October 1996, no 18511. 87  CSJ, VIII, 27 November 2008, no 32887. 88  CSJ, III, 27 February 2003, no 26541; CSJ, III, 1 March 2007, no 31354. 89  CSJ, III, 17 April 2008, no 32969. 90  CSJ, III, 10 July 2014, no 39227. 91 TA Lux, 26 March 1974, no 14329; CSJ, III, 15 June 2000, no 23534; TA Lux, 13 O ­ ctober 2006, no 2860/2006; CSJ, 5 June 2014, no 39339. 78 

The Concept of ‘Employee’: The Position in Luxembourg 419 On the other hand, the fact of having to respect certain rules and orders is common to most contracts, and thus does not unambiguously indicate that subordination is a given. Many court decisions consider, for example, that the normal regulations to be observed in clubs and associations92 or in hospitals93 are insufficient to conclude that an employment relationship has been established. Subordination is thus a very flexible and subjective concept. B. Indicators The courts have drawn up multiple criteria in favour or against the existence of an employment contract that can be referred to as indications. It is on the basis of multiple such indications (‘faisceau d’indices’,94 ‘présomptions précises et concordantes’)95 that the courts make their decision. An analysis of the judgments reveals that assessments are carried out individually in every case in which uncertainties about qualification arise. ­Elements or indications that have been considered important in one case might be considered insufficient in another. The courts proceed on a case-­by-case basis and carry out a detailed analysis of the given situation. ­Ultimately, the judge’s conception of what an employment relationship entails prevails. Cases in which the Court of Appeal arrives at a different conclusion from the court of first instance are thus not uncommon. Freedom to choose the place and time of work is considered an important element to determine the existence of an employment contract,96 as subordination is essentially defined as the employer’s right to have the employee’s work services at his disposal and to give instructions detailing the obligations related to those work services.97 Many court decisions consider the fact that a person has to respect fixed working hours an essential element of the employment contract;98 others, however, consider this criterion to be ­insufficient.99 By contrast, some courts consider that flexible and 92  CSJ, III, 22 April 2004, no 27606; CSJ, III, 16 June 2005, no 29794; CSJ, III, 24 March 2005, no 29163; CSJ, III, 15 February 2007, no 30392; CSJ, III, 8 March 2007, no 31067. 93  CSJ, III, 18 November 2004, no 26317. 94 CSJ, 10 February 1994, no 14537; CSJ, III, 27 February 2003, no 26541; CSJ, VIII, 15 May 2003, no 26894; CSJ, VIII, 28 April 2005, no 29348; CSJ, VIII, 14 June 2007, no 31341. 95  CSJ, 9 January 1997, no 18786; CSJ, III, 14 December 2000, no 23104; CSJ, 4 January 2001, no 24644; CSJ, VIII, 22 January 2004, no 27451; CSJ, VIII, 28 April 2005, no 29348. 96  CSJ, VIII, 15 July 2010, no 33835. 97  eg, CSJ, 6 November 2003, no 26971. 98  CSJ, III, 4 December 1997, no 18843; CSJ, III, 14 January 1999, no 21267; CSJ, III, 30 October 2003, nos 26602 and 26862; CAAS, 18 October 2004; CSJ, VIII, 27 November 2008, no 32887; CSJ, VIII, 19 March 2009, no 33544. 99 CSJ, III, 24 October 1996, no 18511; CSJ, III, 29 January 1998, no 21033; CSJ, III, 28 January 1999, no 22192; CSJ, 29 January 2004, no 22342; CSJ, VIII, 25 March 2004, no 28212; CSJ, VIII, 6 January 2005, no 28778.

420  Jean-Luc Putz a­ utonomous working hours can be,100 but do not need to be,101 a criterion for self-employment. In fact, the requirements for subordination will depend on the type of work that is performed.102 For executives in particular, the courts take a less restrictive view and consider them to be employees, even if they can and must have considerable freedom in terms of working hours. Some decisions determine that a fixed or predetermined place of work qualifies as an element of the employment contract,103 whereas others consider it an insufficient characteristic.104 Autonomy and freedom of decision in general is sometimes referred to in the judgments. They have been considered relevant criteria to determine the existence of an employment relationship: if the worker does not have the right to do what he or she wants with the money he or she collects;105 if the receipts are issued in somebody else’s name;106 if the worker may only sell a limited type of goods and cannot decide to sell other goods;107 if the worker cannot decide how to sell the goods;108 if the worker has no shares in the company’s capital;109 and if the worker has to first obtain someone else’s agreement110 or needs written authority111 before signing contracts. Indicators against an employment relationship are as follows: if the worker himself or herself takes the initiative to perform the work;112 if the worker has the right to reject certain tasks;113 if participation in the work is voluntary;114 if, as a result of a disagreement, the worker collects the client’s payments himself or herself;115 and if the worker personally guarantees (cautionnement) the contracts he or she signs.116 The fact that the equipment and materials are provided by the employer is a convincing indication of the existence of an employment relationship. However, court decisions on this particular issue are scarce. One decision considered the fact that the client/employer had paid for the materials used by the worker not to be a decisive element.117 Other judgments took the

100 

TT Lux, 17 October 1986, no 2979/86; CSJ, 11 January 1996, no 16689. CSJ, 21 June 1990; CSJ, 22 March 2007, no 31721; CSJ, III, 17 April 2008, no 32969. 102  CSJ, 26 March 1998, no 21131. 103  CSJ, III, 30 October 2003, nos 26602 and 26862; CAAS, 18 October 2004. 104  CSJ, III, 28 January 1999, no 22192; CSJ, VIII, 25 March 2004, no 28212. 105  CSJ, III, 14 January 1999, no 21267. 106  CSJ, cassation (social), 9 May 1974, no 206. 107  CSJ, III, 6 November 2003, no 26971; CSJ III, 24 May 2007, 31536. 108  TA Lux, 13 October 2006, no 2860/2006. 109  CSJ, III, 1 March 2007, no 31354. 110  CSJ, III, 24 May 2007, no 30644. 111  CSJ, III, 20 December 2007, no 32258. 112  CSAS, 10 June 1992, no 93/92. 113  CSJ, 11 January 1996, no 16689. 114  CSJ, III, 28 February 2002, no 25152. 115  CSJ, III, 18 November 2004, no 26317. 116  CSJ, III, 12 July 2007, no 30830. 117  CSJ, III, 28 January 1999, no 22192. 101 

The Concept of ‘Employee’: The Position in Luxembourg 421 opposite view.118 They claimed that the client’s/employer’s authority and thus the criterion of subordination weaken if the employee is the owner of his or her own work equipment.119 Another ruling decided that the fact that the employee has to use his or her own equipment is not decisive if these are of limited value.120 A more recent decision considered the fact that a taxi driver owned his own vehicle was an important indicator against the existence of an employment relationship; according to the judges, it is difficult to imagine that a taxi driver driving his own vehicle would accept subordination to an employer, as the employer usually provides all work equipment.121 An employment relationship supposes that the work is performed personally. In an employment contract, the obligation to work is always a personal work obligation,122 especially because the identities of the contractual partners are always considered decisive contractual elements (intuitu personae). It is thus never possible for an employee to replace himself or herself with another person or to simply be assisted in the execution of his or her tasks. Some court cases have considered this to be a decisive criterion, especially in order to negate self-employment. The simple fact that the contract allows an ‘employee’ to hire his or her own employees is insufficient to assert that no employment relationship exists; this clause may also be considered invalid because other criteria indicate that an employment relationship is in fact given.123 Other court decisions, however, state that the fact that the individual has hired another124 (or is entitled to do so)125 demonstrates that he or she is self-employed. Thus, if an employee were allowed or obliged to employ other employees, the courts will take all other circumstances of the contract and the activity into consideration to arrive at a decision, namely either that the clause or order requiring the individual to hire ‘sub-employees’ is invalid or that the given individual is in fact not an employee, but a self-employed person acting as an employer. A person cannot simultaneously be an employee and an employer.126 The question of exclusivity is sometimes referred to. Some court decisions deemed this a necessary element;127 other decisions state that the employment

118 

CAAS, 6 November 1965, no 206 A II 8/59. TT Lux, 17 October 1986, no 2979/86. 120  CAAS, 6 November 1965, no 206 A II 8/59 (‘matériel modeste’). 121  CSJ, VIII, 24 June 2010, no 33520. 122  CSJ, 14 January 1999, no 21267; CSJ, cassation (social), 9 May 1974, no 206; CSAS, 11 May 1994, no 87/94. 123  CSJ, III, 6 November 2003, no 26971; CSJ III, 24 May 2007, 31536. 124  CSJ, 10 February 1994, no 14537. 125  CSJ, 20.10, 1994; CSJ, 22 April 2010, no 34342. 126  CSJ, 28 October 2004, no 28908. 127  CSJ, III, 16 June 2005, no 29794. 119 

422  Jean-Luc Putz relationship does not need to be the worker’s only and exclusive activity.128 It has also been claimed that the fact that the worker does not have to work exclusively for one person is an element in favour of the existence of selfemployment.129 However, a more recent decision stated that an exclusivity clause can be found in both employment contracts and in service contracts; exclusivity was thus rejected as an indicator qualifying the relationship as one of employment.130 As remuneration is one of the three essential components of the employment contract, the existence of compensation in general is often referred to by the claimant who seeks to have his or her status as an employee acknowledged. However, the courts generally consider that the simple fact that compensation has been paid to be insufficient in determining the existence of an employment contract.131 The arguments brought forward by the courts are that a payment as such is not distinctive of subordination;132 it is not the only element and is not an essential element of an employment contract,133 since it is found in any contract.134 Especially if the amount paid is low, the courts may consider it an indication against an employment relationship.135 If no compensation can be proven, no employment relationship can theoretically exist, because remuneration is an indispensable element thereof; it is at least an indication against an employment relationship.136 However, the judges can, even if it has not been proven that compensation has been paid or agreed upon, deem that the nature of the task implies compensation, as it is unlikely to have been paid voluntarily.137 The fact of regular or periodic payments is referred to in some court ­decisions as an element confirming an employment relationship.138 The regularity of the payment may refer either to a given time period (periodic

128 

CSJ, III, 26 March 1998, no 21131. CSJ, 11 January 1996, no 16689. 130  CSJ, VIII, 15 July 2010, no 33835. 131 CSJ, 4 January 2001, no 24644; CSJ, 29 January 2004, no 22342; CSJ, VIII, 20 N ­ ovember 2008, no 33406. 132  CSJ, VIII, 9 December 2004, no 28637. 133  CSJ, III, 4 December 1997, no 18843. 134 Company managers, in particular, are also paid fees (CSJ, VIII, 22 January 2004, no 27451). 135  CSJ, 4 January 2001, no 24644 (‘dérisoire’); CSAS, 11 May 1994, no 87/94 (‘sommes modiques’). 136  CSJ, III, 11 July 2002, no 25653. 137  CSJ, III, 6 May 1999, no 22672 (‘tout travail mérite rémunération’); CSJ, III, 28 ­February 2008, no 32389. 138  CSJ, cassation (social), 9 May 1974, no 206; CSJ, III, 27 September 2000 (ordonnance de référé); CSJ, III, 2 April 2009, no 33010. 129 

The Concept of ‘Employee’: The Position in Luxembourg 423 payment) or to an amount (fixed salary). However, at least as many decisions have considered this not to be a convincing element,139 as the law confirms that employed persons can be paid on the basis of time, piecework, by commissions or as a percentage.140 Self-employed workers can also be paid a regular or fixed fee. Thus, periodic payments do not allow a clear-cut conclusion as regards the worker’s status. The fact that a pay slip (décompte de salaire) is issued is an element to which rulings often refer to corroborate the status of an employee.141 A large number of pay slips indicates that regular work was performed in exchange for recurring remuneration.142 If no pay slips are issued, this may be used as an argument against the existence of an employment relationship.143 By contrast, if the worker is paid on the basis of a bill or invoice, he or she is unlikely to be regarded as an employee.144 Payment of social contributions by the employer may corroborate the employee’s status.145 If the worker pays the contributions himself or herself, he or she is likely to be considered self-employed.146 Deducting income tax (retenue d’impôt) may be an indication in favour of an employee relationship,147 but is not a decisive element.148 The fact that an employee is granted certain entitlements, such as annual leave or public holiday payments, can be a strong argument in favour of the existence of an employment contract. However, court decisions do not often refer to such entitlements. For example, the following elements have been regarded as indications for the existence of an employment relationship: earning a ‘thirteenth salary’149 (treizième mois), benefiting from a ‘family bonus’ (prime de ménage) and being entitled to pay during sick leave.150 Nevertheless, another court decision deemed that benefiting from a complementary pension scheme is not a decisive element.151 Having to

139 CSJ, VIII, 15 May 2003, no 26894; CSJ, VIII, 10 July 2008, no 32804; CSJ, III, 20 December 2007, no 32258. 140  CSJ, III, 26 March 1998, no 21131; TA Lux, 13 October 2006, no 2860/2006. 141 CSJ, III, 8 June 2000, no 22283; CSJ, III, 27 February 2003, no 26541; CSJ, III, 30 ­October 2003, nos 26602 and 26862; CSJ, III, 24 May 2007, no 30644; CSJ, III, 1 March 2007, no 31354; CSJ, III, 17 April 2008, no 32969; CSJ, III, 2 April 2009, no 33010; CSJ, 28 October 2004, no 28908; CSJ, III, 19 January 2011, no 36806. 142  CSJ, VIII, 16 December 2010, no 35833. 143  CSJ, 14 May 1993, no 1856/93. 144  CSAS, 05 February 2001, no 2001/0011. 145  CSJ, III, 27 February 2003, no 26541; CSJ, III, 24 May 2007, no 30644. 146  CSJ, VIII, 20 November 2008, no 33406. 147  CSJ, III, 1 March 2007, no 31354. 148  CSJ, III, 29 January 1998, no 21033; CSJ, VIII, 22 January 2004, no 27451. 149  CSJ, III, 9 February 2006, no 28060. 150  CSJ, III, 27 February 2003, no 26541. 151  CSJ, VIII, 22 January 2004, no 27451.

424  Jean-Luc Putz request annual leave152 or not153 can be a decisive element in determining the ­existence of an employment relationship. Formal criteria or indicators are theoretically not decisive, as the contractor’s intention is not decisive for qualifying their contractual relationship.154 Nevertheless, formal criteria can be taken into consideration by the courts. In practice, they are often the only available elements of evidence. The label (dénomination) the parties assign to their contract is not decisive.155 However, the court can take into consideration that the contract is156 or is not157 labelled an ‘employment contract’. The contractual clauses as such are not decisive either.158 However, the court can evaluate the contract to determine the parties’ initial intention.159 If the evaluation of the contract reveals the typical obligations related to an employment contract, it is an indication in favour of an employment relationship.160 The fact that either the employer or the employee refers to labour law, for example, in a contractual clause or in a letter of dismissal or voluntary termination, is an argument that is often brought forward by the parties. Some court decisions consider that such references are an insufficient element161 or that the absence of references to labour law demonstrates that the parties did not intend to enter an employment relationship.162 Nevertheless, many decisions consider these references to be an essential aspect for determining the parties’ real intention and thus consider such references to be an element in favour of the existence of an employment relationship.163 Likewise, respecting labour law procedures (registered letter, giving grounds for a notice, respecting a notice period) is an indication in favour of the existence of an employment contract.164

152 

CSJ, III, 24 May 2007, no 30644; contra CSJ, III, 29 January 1998, no 21033. CSJ, 11 January 1996, no 16689. 154  See below section IV.B. 155  CSJ, 10 February 1994, no 14537; CSJ, 9 January 1997, no 18786; CSJ, III, 26 March 1998, no 21131; CSJ, III, 15 June 2000, no 23534; CSJ, 4 January 2001, no 24644; CSJ, VIII, 15 May 2003, no 26894; CSJ, VIII, 22 January 2004, no 27451. 156  CSJ, III, 27 February 2003, no 26541; CSJ, III, 20 December 2007, no 32258. 157  CSJ, III, 8 March 2007, no 31067. 158  CSJ, III, 28 February 2002, no 25152. 159  CSJ, III, 28 January 1999, no 22192; CSJ, VIII, 25 March 2004, no 28212; CSJ, VIII, 6 January 2005, no 28778; CSJ, III, 9 February 2006, no 28060. 160 CSJ, III, 8 June 2000, no 22283; CSJ, III, 27 February 2003, no 26541; CSJ, III, 6 November 2003, no 26971; CSJ III, 24 May 2007, no 31536; CSJ, III, 24 May 2007, no 30644. 161 CSJ, VIII, 15 May 2003, no 26894; CSJ, VIII, 6 January 2005, no 28778; CSJ, III, 1 February 2007, no 29638. 162  CSJ, III, 8 March 2007, no 31067. 163 CSJ, III, 27 September 2000 (ordonnance de référé); CSJ, III, 27 February 2003, no 26541; CSJ, III, 30 October 2003, nos 26602 and 26862; CSJ, III, 6 November 2003, no 26971; CSJ III, 24 May 2007, 31536; CSJ, III, 17 April 2008, no 32969. 164  CSJ, VIII, 21 October 2004, no 28212; CSJ, III, 19 January 2011, no 36806. 153 

The Concept of ‘Employee’: The Position in Luxembourg 425 An argument brought forward in most litigation cases is social security affiliation. Many judgments consider such affiliation an element in favour of the existence of an employment relationship,165 confirming the parties’ intention to enter into an employment contract.166 However, the judges have emphasised that it is not a decisive criterion,167 especially because it in no way characterises subordination.168 It must therefore be corroborated by other elements.169 By contrast, a lack of affiliation is generally considered a valid indication against the existence of an employment relationship.170 The existence or lack of a business licence (autorisation d’établissement) or registration in the commercial register (registre de commerce) would be a convincing argument, but it is hardly ever referred to in court rulings.171 The fact that a certificate of employment (certificat de travail) has been issued is an element in favour of the existence of an employment contract.172 The parties’ attitude may also be an interesting indicator for the judges.173 Other indicators found in individual cases include the company’s name consisting of the worker’s name or initials,174 the worker having to wear a uniform or specific outfit,175 the worker being listed on the payroll176 etc. C.  The Relevance of ‘Economic Dependence’ Only a very small number of court decisions refer to the economic dependence of the worker. Some isolated judgments applied it as a criterion to

165 CSJ, III, 4 December 1997, no 18843; CSJ, III, 1 March 2007, no 31354; CSJ, III, 24 May 2007, no 30644; CSJ, III, 20 December 2007, no 32258; CSJ, III, 17 April 2008, no 32969; CSJ, III, 2 April 2009, no 33010; CSJ, III, 19 January 2011, no 36806. 166  CSJ, III, 14 December 2000, no 23104. 167 TT Lux, 17 October 1986, no 2979/86; CSJ, III, 29 January 1998, no 21033; CSJ, 4 January 2001, no 24644; CSJ, III, 23 January 2003, no 25581; CSJ, VIII, 22 January 2004, no 27451; CSJ, 29 January 2004, no 22342. 168  CSJ, VIII, 9 December 2004, no 28637. 169  CSJ, 14 July 2011, no 36396. 170  CSAS, 28 March 1974, no G82/72; CSAS, 10 June 1992, no 93/92; CSJ, 14 May 1993, no 1856/93; CSJ, III, 18 June 1998, no 21083; CSJ, VIII, 10 July 2008, no 32804. 171  CAAS, 6 November 1965, no 206 A II 8/59. 172  CSJ, III, 24 May 2007, no 30644; CSJ, III, 2 April 2009, no 33010. 173  These attitudes have been taken into consideration in court decisions: introducing oneself as the head of the business and giving orders (CSJ, VIII, 10 July 2008, no 32804); having repeatedly insisted on independent status (CSAS, 5 February 2001, no 2001/0011); waiting for nine months until claiming a salary (CSJ, VIII, 25 October 2007, no 31698); consciously creating the appearance of an employment contract (CSJ, III, 9 February 2006, no 28060); qualifying oneself as self-employed, especially as regards voluntary contract termination (démission) (CSJ, III, 18 June 1998, no 21083). 174  CSJ, VIII, 10 July 2008, no 32804. 175  CSJ, VIII, 27 November 2008, no 32887. 176  CSJ, III, 9 February 2006, no 28060.

426  Jean-Luc Putz c­onclude that an employment relationship existed.177 Other decisions explicitly stated that economic dependence does not imply a relationship of subordination and thus did not consider this criterion to be decisive.178 Economic dependence is therefore not an autonomous criterion, but only a typical side-effect of subordination. V.  THE PRINCIPLE OF PRIMACY OF FACTS

This principle of ‘primacy of facts’ is fully recognised in Luxembourg. Indeed, labour courts invariably state that neither the form nor the label of the contract, nor any other formal element is decisive to qualify the employment relationship. Formal elements can only be an indication and are not binding or decisive as such. The real nature of the contract is decisive. Public institutions, such as the labour inspectorate, social security institutions or tax authorities, can also question the nature of the contract and investigate the facts. The parties’ intentions (volonté des parties) do not matter; they cannot freely qualify their relationship, either in labour law179 or social security law.180 Even the fact that the parties did not want to enter into any contractual relationship at all is irrelevant.181 However, the judge can refer to the parties’ intentions as one element amongst several others to form an ­opinion.182 In a very specific case, two parties intended to transfer a business and the potential acquirer started working for the business to gain ­knowledge of the job and to become acquainted with the company. The court took into consideration the parties’ intention and concluded that— although regular work was performed—no employment relationship existed; the work relationship was qualified as a sui generis agreement.183

177  CAAS, 6 November 1965, no 206 A II 8/59 (‘subjectedness of the economically weak person’—‘état de sujétion de la personne économiquement la plus faible’; ‘humble social ­condition’—‘modeste condition sociale’); CSAS, 26 June 1981, no 6 23/81; (‘the subordinated relationship and economic dependence characterising the relationship between the worker and his employer’—‘lien de subordination et de dépendance économique qui est celui d’un ouvrier … envers son patron’); TA Lux, 13 October 2006, no 2860/2006. 178  CSJ, 10 February 1994, no 14537; CSJ, 20 October 1994. 179 TA Lux, 26 March 1974, no 14329; TT Lux, 17 October 1986, no 2979/86; CSJ, 10 February 1994, no 14537; CSJ, 9 January 1997, no 18786; CSJ, III, 14 January 1999, no 21267; CSJ, III, 28 January 1999, no 22192; CSJ, 4 January 2001, no 24644; CSJ, VIII, 22 January 2004, no 27451; CSJ, VIII, 25 March 2004, no 28212; CSJ, III, 22 April 2004, no 27606; CSJ, VIII, 6 January 2005, no 28778; CSJ, VIII, 24 June 2010, no 33520; CSJ, 14 July 2011, no 36396. 180  CAAS, 18 October 2004. 181  CSJ, VIII, 19 March 2009, no 33544; CSJ, VIII, 27 November 2008, no 32887. 182  CSJ, III, 18 November 2004, no 26317. 183  CSJ, VIII, 11 November 2010, no 34700.

The Concept of ‘Employee’: The Position in Luxembourg 427 It is up to the court to determine the parties’ real intentions184 and how the contract was in fact implemented. Only the practical factors are d ­ ecisive for the classification of an employment relationship.185 The courts have full competence to assess the facts and qualify the contract (­appréciation ­souveraine).186 The judges will only consider how the contract is really executed. A contract or relationship between two parties may thus be ­ requalified by a court in both ways. The principle of primacy of facts also implies that the qualification can change over time if the way in which the contract is executed shows an increasing or diminishing subordination. For example, a person who qualified as an employee for several years will have to be considered self-employed if he or she de facto or de jure becomes the managing director and takes all managerial decisions. A change in qualification of the contract is possible even if the type of performed tasks remains the same.187 VI.  QUALIFICATION IN FULL

The qualification of the employment contract can only be assessed in full; it is not possible to determine that the relationship only partially qualifies as an employment relationship. As long as a contractual agreement falls within the scope of the employment relationship, it is part of the employment relationship, especially if it deals with the work that has to be performed or with the remuneration that has to be paid. One court, for example, rejected an employer’s argument that an employee was liable according to a separate ‘deposit agreement’ for the goods he had to supervise and safeguard. For liability questions, the courts generally refer to contractual liability if the tort has some link with the employment relationship. Liability under tort law could apply for incidents outside the scope of the employment contract. Other contracts between the employer and the employee can exist simultaneously, but remain independent. For example, a rental agreement for an apartment is normally completely independent from the working contract; specific rules only apply if the employer provides housing for free. Furthermore, it is possible for an individual to simultaneously be an employee and part of a body of a company (such as a member of the board or a director). In that case, two different contractual relationships exist with the company. They have to be dealt with separately; especially in case of misconduct, it must be decided in what function (employee or director) the person acted. 184 

CSJ, III, 28 February 2002, no 25152; CSJ, VIII, 15 May 2003, no 26894. CSJ, VIII, 15 May 2003, no 26894; CSJ, VIII, 22 January 2004, no 27451. 186  CSJ, 9 January 1997, no 18786; CSJ, 4 January 2001, no 24644; CSJ, VIII, 15 May 2003, no 26894; CSJ, VIII, 22 January 2004, no 27451; CSJ, VIII, 6 January 2005, no 28778. 187  CSJ, 22 April 2010, no 34342. 185 

428  Jean-Luc Putz Another example would be a marriage contract, which does not preclude the co-existence of an employment relationship between the same ­contractors.188 The question that arises here is whether legal relationships other than the employment relationship exist; for example, whether someone can simultaneously be a spouse and an employee, which may raise issues with regard to the issue of subordination. A specific case that the Court of Appeal had to deal with was that of a person who ran an accounting firm (fiduciaire) working, inter alia, for a company as an independent accountant, but simultaneously as a subordinated part-time employee of the company; both contractual relationships could effectively co-exist.189 VII.  LIMITS TO THE FREEDOM OF CONTRACT

The legal nature of the contract is beyond the parties’ control. Contractors cannot dispose of the concepts of ‘employment contract’ or ‘employee’. Social protection would be too easy to circumvent if it were possible to agree that labour law does not apply. It is not possible for the parties to agree that a free service contract must be considered an employment contract. This seems obvious as far as third parties are concerned, especially social security institutions. A frequent problem arises in case of insolvency procedures, when the former managers request special benefits and guarantees for their employees, arguing that they signed an employment contract and are affiliated with the company as such; in many cases, the administrative body or liquidator challenges the employment status and it is up to the courts to decide. Even if the litigation is limited to the contracting parties, the judges will not hesitate to requalify an apparent ‘employment contract’. One of the reasons is that the labour courts only have competence to determine whether an employment relationship exists, and the court’s Constitution Act is not at the disposal of the contracting parties. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The legal definition of ‘employee’ and of ‘subordinated work’ is mandatory for the social partners. Collective agreements do not attempt to define the

188  189 

See, eg, CSJ, VIII, 13 November 2014, no 39503. CSJ, 4 February 2010, no 34422.

The Concept of ‘Employee’: The Position in Luxembourg 429 employment relationship or status of the employee. No specific need seems to have existed for this. The most common instrument of collective bargaining is collective agreements (convention collective). On a theoretical basis, it seems ambiguous to define an employment relationship on the basis of a collective agreement. According to the law, a collective agreement has to define its own scope of application;190 however, this provision refers to the professional and geographical scope, not the personal scope. In fact, the rules on collective bargaining and collective agreements only apply to employees who are bound by an employment contract as ‘defined’ by law.191 Hence, if a collective agreement defined the employee to a considerable extent, this clause could be declared invalid because it goes beyond the legally determined scope of application. Collective bargaining cannot go beyond the statutory boundaries by extending or redefining the concept of employee and thus the scope of application of labour law. The main purpose of collective agreements is to define the working conditions of employees,192 not the concept of the employee as such. Collective agreements are useful as regards the regulation of specific categories of workers, such as interim workers.193 Agreements in the framework of the cross-industry social dialogue (accords en matière de dialogue social interprofessionnel) in particular can be used to regulate atypical employment contracts (formes dites atypiques de travail).194 Nevertheless, these atypical contracts must be employment contracts. For example, an agreement within the framework of the crossindustry social dialogue regulates all forms of telework (télétravail).195 190  Article L 162-12(1) CT: ‘Collective agreement and subsidiary agreements must define their professional and territorial scope of application, otherwise they are null and void’—‘La convention collective de travail et les accords subordonnés fixent, sous peine de nullité … 2. leur champ d’application professionnel et territorial’. 191  ibid, art L 161-1(1): ‘The purpose of this title is to regulate, by collective agreements, the employment relationship and the working conditions of the workers that are bound to the employer by an employment contract as defined by title II of this book’—‘Le présent titre a pour objet la réglementation, par voie de convention collective de travail, des relations et conditions de travail des salariésliés à un employeur par un contrat de travail au sens du titre II du présent livre’. 192  ibid, art L 161-1(2) CT. 193  Grand-ducal decree of 10 June 2014 declaring that the collective agreement of 28 March 2014, applicable to workers of temporary work agencies, and signed by the FES and the Trade Unions OGB-L and LCGB, is generally binding (Règlement grand-ducal du 10 juin 2014 portant déclaration d’obligation générale de la convention collective de travail du 28 mars 2014 applicable aux travailleurs intérimaires des entreprises de travail intérimaire, conclue entre la Fedil Employment Services (FES), d’une part et les syndicats OGB-L et LCGB, d’autre part). 194  Article L 165-1(1) CT. 195  Grand-ducal decree of 1 March declaring that the agreement on the legal framework of telework, signed by the Luxembourg Union of Entrepreneurs and the Trade Unions OGB-L and LCGB, is generally binding (Règlement grand-ducal du 1er mars 2012 portant d ­ éclaration d’obligation générale de la convention relative au régime juridique du télétravail conclue entre l’Union des Entreprises Luxembourgeoises, d’une part et les syndicats OGB-L et LCGB, d’autre part).

430  Jean-Luc Putz Tripartite negotiations (government, employee and employers’ representatives) are institutionalised in Luxembourg and play an important political role, especially as regards changes to labour and social security law. The questions of narrowing or extending the concept of ‘employee’ could be the object of tripartite negotiations and decisions, but until now, this issue has not yet been regarded as a priority. No major efforts have been made by the trade unions to extend their operational range by including half-independent, half-employed persons. B.  Custom and Practice Deviations on the basis of customs and practice are not known in Luxembourg. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions There are no general presumptions in labour law for or against an employment relationship. However, according to different judgments, the existence of a work contract in due form creates a rebuttable presumption. Indeed, many court decisions state that if a written employment contract exists, this creates the appearance of an employment relationship (contrat de travail apparent) and thus it will be up to the employer to prove that it is fictitious.196 A written contract shifts the burden of proof.197 As regards agency workers (travailleur intérimaire), if a temporary employment contract (contrat de mission) is concluded, it is deemed to be an employment contract; this presumption is non-rebuttable.198 There is no 196 CSJ, 3 December 1998, no 22770; CSJ, VIII, 9 October 2003, no 27505; CSJ, VIII, 21 October 2004, no 28212; CSJ, III, 3 November 2005, no 28865 (‘contrat de travail apparent’); CSJ, III, 9 February 2006, no 28060 (‘contrat de travail apparent’); CSJ, III, 1 February 2007, no 29638. 197  CSJ, 5 June 2014, no 39339: ‘By principle, the apparent regularity of a written employment contract is not sufficient as such to prove that the labour jurisdiction is competent, but only shifts the burden of proof. Thus, if a written apparent contract is provided, the appellant company has to prove that it is fictitious and that no subordination exists between the parties’—‘Il est de principe que l’apparence de régularité d’un contrat de travail écrit n’établit pas en elle-même la compétence des juridictions du travail, mais ne fait que renverser la charge de la preuve. Il s’ensuit que les parties étant en présence d’un contrat de travail apparent, il incombe à la société appelante d’en établir le caractère fictif et l’absence de lien de subordination entre les parties’. 198  Article L 131-6 CT.

The Concept of ‘Employee’: The Position in Luxembourg 431 case law on this subject. However, the presumption seems to be of limited practical use because it mainly refers to the label of the contract, which is easy to change. Indeed, no legal principle prohibits placement agencies for independent professionals. In the end, the question about determining whether a specific relationship involves a self-employed person or an employee remains. It is worth mentioning that some court decisions consider that specific types of work, such as cleaning services,199 are typically performed under an employment contract, and that they deduce from the type of work as such that an employment contract exists. This approach could be considered a type of rebuttable presumption. For other professions, such as sales staff or architects,200 a court has found that their work does not imply subordination as such; for them, the type of work is thus not a crucial element. In social security law and tax law, presumptions in the form of fixed criteria exist for associates and managers (see above), which are basically nonrebuttable. In labour law, non-rebuttable presumptions exist for and specific groups of persons, such as athletes or artists (see above). The presumption for travelling salesmen has been abolished.201 For many professions, the law explicitly states that they can be performed either in the function of self-employment or as an employee; thus, no presumption exists and no deduction can be made from the type of work. B.  The Burden of Proof According to the general principles of procedural law,202 every litigating party has to prove the claims being made. Claimants who invoke the employee status have to prove it; this principle is unambiguously adhered to by the courts.203 Thus, if the claim is based on an employment contract and

199 

CSJ, III, 6 May 1999, no 22672. CSAS, 30 April 1997, no 59/97. 201 Before the introduction of the Single Social Status, travelling salesmen, commercial ­representatives and agents/brokers (‘voyageur’, ‘représentant’ and ‘agent’) were considered to be employees, even if they were working for multiple employers and regardless of their method of remuneration, unless they personally headed an industrial or commercial facility (former art L 121-1(2) no 6 CT). 202  Article 58 of the Civil Procedure Code (Nouveau Code de Procédure Civile): ‘every litigating party has to prove the facts required to win its claim’; ‘Il incombe à chaque partie de prouver conformément à la loi les faits nécessaires au succès de sa pretention.’ 203  CSJ, 14 May 1993, no 1856/93; CSJ, 10 February 1994, no 14537; CSJ, 9 January 1997, no 18786; CSJ, 3 December 1998, no 22770; CSJ, III, 14 December 2000, no 23104; CSJ, 4 January 2001, no 24644; CSJ, III, 11 July 2002, no 25653; CSJ, III, 23 January 2003, no 25581; CSJ, VIII, 15 May 2003, no 26894; CSJ, VIII, 22 January 2004, no 27451; CSJ, VIII, 6 January 2005, no 28778; CSJ, VIII, 28 April 2005, no 29348; CSJ, III, 9 February 2006, no 28060; CSJ, VIII, 14 June 2007, no 31341; CSJ, VIII, 24 June 2010, no 33520. 200 

432  Jean-Luc Putz the opposite party disputes the existence of such a contract, the claimant— which can either be the employee or the employer—bears the burden of proof. In practice, since most claims are directed by an employee against an employer, the burden of proof mostly lies with the employee. In many cases, witnesses need to be heard. To be admissible, the motion to take evidence (offre de prevue) must be sufficiently detailed204 and refer to crucial facts and events reflecting that a relationship of subordination exists.205 X.  SPECIFIC PROCEDURES

There is no specific procedure to bring about a binding or non-binding decision on the existence or absence of a contract of employment. Contracts cannot be qualified ex ante. The decision as to whether subordination existed or not will always have to be dealt with ex post if a specific claim is brought before the court.206 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons Luxembourg legislation does not include the concept of ‘de facto economically dependent persons’ and no such category of persons has been developed by the courts. Labour law either applies or it does not apply. There is no ‘in-between’ or partial application of protective rules for dependent persons. As mentioned above, economic dependence is not considered a crucial element. There is no noteworthy political will to change the current status quo. Some statements of the present government indicate that the idea of an intermediate category was rejected. The Luxembourg government (especially in its contribution to the Green Book),207 and the Minister of Labour in particular,208 explicitly rejected any third category or intermixture.

204 

CSJ, 11 February 2010, no 34850. CSJ, 14 July 2011, no 36396. 206  Most of the cases are dealt with by the labour courts. However, social security courts may investigate such an issue in social security law cases and civil and administrative courts in tax law cases. 207 Contribution du Gouvernement du Grand-Duché de Luxembourg au Livre Vert du 30 mars 2007. 208  See, eg, Discours du ministre du Travail et de l’Emploi François Biltgen à l’occasion de la 91e Conférence internationale du travail du 19 juin 2003. 205 

The Concept of ‘Employee’: The Position in Luxembourg 433 The concept of ‘economically dependent persons’ is considered to be artificial, since such persons are in a subordinated position and should thus be considered workers. Dependent self-employed persons are viewed as means to bypass the law and not as a new category of working persons that should be recognised by law. It is thus likely that the classic bipolar classification of ‘self-employed worker’ or ‘employee’ will be maintained in the future. It seems worth noting that the government was aware that too many artists were artificially hired as self-employed artists (artiste indépendant) in the entertainment industry, although they were in fact subordinated. In order to give an incentive to employers to offer artists an employment relationship, a law was passed permitting unrestricted use of fixed-term contracts (contrat à durée déterminée) for all occasional workers in the entertainment industry (intermittents du spectacle). Since the ECJ ruled that this legislation does not comply with EU law on fixed-term work,209 it must be modified in the near future. B.  Equality and Anti-discrimination Law According to the Labour Code, the rules on non-discrimination apply to all workers.210 The rules are only applicable to subordinated workers in an employment relationship. However, a more general framework on nondiscrimination211 with a similar set of rules is applicable to all citizens and thus also covers trainees, apprentices, volunteers etc.

209 C-238/14

Commission v Luxembourg [2015] ECR—not yet published. Articles L 241-2 and L 251-2 CT. 211  Loi du 13 mai 2008. 210 

434 

21 The Concept of ‘Employee’: The Position in Malta LORNA MIFSUD CACHIA

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HE EMPLOYMENT AND Industrial Relations Act 20021 (hereinafter ‘EIRA 2002’) defines ‘contract of service’ and ‘contract of employment’ as:

[A]n agreement (other than service as a member of a disciplined force) whether oral or in writing, in any form, whereby a person binds him-/herself to render service to or to perform work for an employer in return for wages, and in so far as conditions of employment are concerned, includes an agreement of apprenticeship.2

This is the basic definition of what a contract of service amounts to and, indeed, is one of the cornerstone definitions of Maltese employment law. No formal requirements exist for concluding a contract of employment,3 even though the employee must be informed about his or her terms and 1  Employment and Industrial Relations Act 2002, Chapter 452 of the Revised Edition of the Laws of Malta. 2  ibid, art 2(1). 3  Under Maltese law, there is no provision requiring a contract of employment to be concluded in writing. Where the law requires that a contract be made in writing, Maltese law specifically states so. Examples include lease agreements (Civil Code, Chapter 16 of the Revised Edition of the Laws of Malta, art 1531A), for the purposes of the Promises of Marriage Law (Chapter 5 of the Revised Edition of the Laws of Malta), any promise, contract or agreement therein referred to (Civil Code, Chapter 16 of the Revised Edition of the Laws of Malta, art 1233(g)) or the assignment of debts and rights agreement (Civil Code, Chapter 16 of the Revised Edition of the Laws of Malta, art 1470(1)). However, nowhere does Maltese law specify that a contract of employment or service must be concluded in writing. On the contrary, reg 4 of the Information to Employees Regulations 2003 very clearly specifies that: ‘In those cases where no written contract of employment has been signed between the employer and the employee.’

436  Lorna Mifsud Cachia c­ onditions of employment,4 even if he or she does not have a written contract of employment. However, a worker can be engaged verbally and in that case, the employee will still enjoy employee status,5 and failure to provide the employee with a written statement on the terms stipulated in the Information to Employees Regulations 20036 does not mean that the employment relationship does not come into effect. What constitutes a contract of employment or service in accordance with the EIRA 2002 is clearly the relationship of subordination with the employer, the performance of services or work for the employer in return for wages and the binding of the employee to the employer.7 This definition reflects the elements identified by the decision of the then European Court of Justice in Lawrie-Blum.8 The Employment Status National Standard Order 20129 (hereinafter ‘the Order’) lays down other criteria that determine whether a person is an employee or otherwise. Indeed, when five out of eight criteria listed in the Order apply to a relationship between a person who is nominally selfemployed and another person, who is the recipient of the service of the nominally self-employed person, then that person shall be considered to be employed for all intents and purposes of Maltese law.10 The relationship would be one of indefinite duration and hence, for all intents and purposes of the law, the relationship would be regulated by an indefinite contract.11 The Order stipulates that an indefinite contract is the same as that of other comparable full-time employees and that should there not be comparable full-time employees, then the sectoral legislation shall apply to that particular contract. In other words, there is no discriminatory treatment between any employee who is deemed to be one in accordance with the Order and any employee initially hired as an employee.12 The effects of the invalidity of a contract are not regulated in the EIRA 2002, but in the Civil Code provisions on the general articles about the validity of contracts.13 The EIRA 2002 speaks of the invalidity of certain provisions in employment contracts. Certain provisions cannot be included in contracts, as they will otherwise be considered null and void. For instance, a contract of employment cannot stipulate how the employee shall spend the 4 

Information to Employees Regulations 2003 (Subsidiary Legislation 452.83), recital 4. Since Maltese law does not make it mandatory for a contract of employment be in writing, it follows that even a verbal engagement amounts to an engagement which is valid under law. 6  Article 4. 7  This clearly results from the definition of ‘contract of employment’ or ‘contract of service’ in the art 2(1) EIRA 2002. 8  Case C-66/85 Deborah Lawrie-Blum v Land Baden-Württemberg [1986] ECR 2121. 9  Employment Status National Standard Order 2012, SL 452.108. 10  ibid, r 3(1). 11  ibid, r 4. 12 ibid. 13  Civil Code, arts 960 ff (Chapter 16 of the Revised Edition of the Laws of Malta). 5 

The Concept of ‘Employee’: The Position in Malta 437 wages earned14 and no provision shall be made for the employee to receive compensation by way of a salary in a currency that is not legal tender in Malta.15 Furthermore, no employer may include a provision in a contract by means of which he or she retains the power to terminate the employment relationship of a woman who becomes pregnant (such provision would be null and void).16 Should these clauses be included in a contract, it does not render the entire contract null—only those particular clauses would be null and void. On the other hand, the contract can be invalid on the grounds specified in the Civil Code. The Civil Code lists four conditions that are essential for the validity of a contract:17 (i) (ii) (iii) (iv)

the capacity of the parties to conclude a contract;18 the consent of the party obliging itself;19 the subject matter of the contract;20 lawful consideration.21

Consent of the contracting parties is also a condition for the validity of a contract. Hence, consent vitiated by violence,22 fraud23 or error24 is held to not have been validly given and may lead to the nullity of the agreement. The Civil Code speaks about agreements in general, but the element of consent, which gives the contract validity, is crucial for entering agreements. The subject matter of an agreement is also regulated by the Civil Code and may not be an illicit subject matter, or prohibited by law or contrary to morality or public policy,25 but, generally speaking, can refer to a future

14 

EIRA 2002, art 12. ibid art 11(1). 16  ibid art 40. 17  Civil Code, art 966. 18 ibid art 966(a). The Civil Code defines individuals who are competent to conclude a contract as not being under any legal incapacity to conclude a contract (art 967(1)) and minors (art 967(3)(a)) fall under this category. However, this is where civil law and employment law diverge because under Maltese law, a minor may be engaged in employment as long as he or she has achieved compulsory school age. However, once compulsory school age has been attained, a minor may be engaged in employment (Education Act 1988, Chapter 327 of the Revised ­Edition of the Laws of Malta, art 128(1). Article 2 of the Education Act 1988 defines compulsory school age to be between five years and 15 years, and, accordingly, a person shall be deemed to be of compulsory school age if he or she has reached the age of five years, but does not exceed the age of 16 years or has not yet completed the last year of secondary school. 19  Civil Code, art 966(b). 20  ibid, art 966(c). 21  ibid, art 966(d). 22  ibid, art 978. 23  ibid, art 981(1). 24  ibid, art 974. There may be two types of error: an error of law (art 957) and an error of fact (art 976). An error of law does not deem the contract void unless it was the principle inducement thereof (art 957), whilst for an error of fact to give rise to a void contract, it must relate to the substance of the subject matter itself (art 976(1)), whilst an error of a person shall not void the contract unless the person’s motivation has been the principle inducement thereof. 25  Civil Code, art 985. 15 

438  Lorna Mifsud Cachia event.26 The subject matter of an employment contract must be legally valid because an employee cannot be engaged for an illegal purpose, such as criminal activities, and cannot be requested to carry out unlawful activities lawfully (for example, a shop assistant cannot be requested by his or her employer to not give customers a valid fiscal receipt, and if he or she is requested to do so and the employment contract is terminated because he or she refused, the termination may be challenged in the Industrial Tribunal). Finally, consideration is one aspect of the contract of employment covered by employment law. Remuneration is the causa of the contract, that is, the engagement of a worker in exchange for the payment of a salary which is fully regulated in the EIRA 2002. To this end, the limitations discussed above27 determine the reimbursement specified in the employment contract. The EIRA 2002 makes no reference to the Civil Code about the essential requirements for the validity of an employment contract, but there is no reason to believe that the mandatory conditions for the validity of a contract as defined in the Civil Code should exclude employment contracts. Indeed, employment contracts are generally considered special types of contracts that require higher degrees of protection and hence there is no reason to believe that the Civil Code’s contract provisions do not apply to the EIRA 2002. In reality, the possibility of an employment contract being invalid based on any of the grounds specified is, in itself, quite low, but should any of the conditions required for the validity of a contract as specified in the Civil Code be missing or invalid, the contract will be declared either null and void or annullable (depending on the circumstances). It should be noted that the Order specifically addresses situations in which consent is presumed. It addresses situations whereby the relationship is one of apparent self-­ employment when in fact the relationship is one of employment.28 This essentially means that the Order addresses issues of simulation where a contract of self-­ employment is simulated and replaces a contract of employment.29 B.  Employment Relationship: Basic Definition In Maltese law, no definition of ‘employment relationship’ exists. There is, however, a definition of the term ‘employment’ with reference to trade disputes30 and it is defined as follows: ‘Employment’ in relation to a trade dispute includes any relationship whereby one person does work or performs services for another (other than a service as a member of a disciplined force).31 26 

ibid, art 984(1). See nn 15 and 16. Regulation 3 of the Order. 29 ibid. 30  EIRA 2002, art 2(1). 31  ibid, art 2(1). 27  28 

The Concept of ‘Employee’: The Position in Malta 439 In spite of there being no definition of ‘employment relationship’, Maltese law envisages the existence of an employment relationship, even if there is nominally no employer or employee. This transpires very clearly from the Order, which has truly revolutionised the concept of ‘employment relationship’ to the extent that one may argue that it has gone as far as intervening between two consenting parties and has withdrawn the parties’ consent and replaced it with the provisions of the Order itself. This in itself runs counter to the element of consent which forms the main foundation of the Maltese legal system. Be that as it may, Maltese law does not provide for a definition of ‘employment relationship’. Indeed, it is submitted that once the law identifies an employer and an employee and that a contract of employment exists between them, based on either the EIRA 2002 or the Order, an employment relationship is also deemed to exist. There is also no definition of ‘employment relationship’ in subsidiary legislation. For instance, in the Temporary Agency Workers Regulations,32 the concept of ‘employment relationship’ defines the existence of a temporary agency worker, but does not include a definition of ‘employment relationship’.33 The definition of ‘temporary agency worker’ is as follows: A worker who has entered into a contract of employment or an employment relationship with a temporary work agency and who is assigned, whether on a regular or on an irregular basis, to a user undertaking to work temporarily under its supervision and direction.34

Even more interestingly, the Transfer of Business (Protection of Employment) Regulations of 200335 does not include a definition of ‘employment relationship’, yet provisions relative to the existence of an employment relationship exist, with regulation 3B stipulating the following obligations: The transferor shall effect payment and settle any dues owed to the employees affected by the transfer in relation to the employment relationship with the transferor in respect of any wages, pro rata bonuses and weekly allowances due up to the end of the relationship with the transferor, by the next pay date falling immediately after the transfer of the undertaking or part of the undertaking, which would have been the next pay date had the employees concerned still been in an employment relationship with the transferor.

Whilst the regulations do not define the term ‘employment relationship’, the obligations of the transferor arising from this provision (and the corresponding rights of the relative workers) are also created with direct reference to the ‘employment relationship with the transferor’. This essentially means that if no formal employment relationship exists, there are

32 

Subsidiary Legislation 452.106. EIRA 2002, art 2(1). 34 ibid. 35  Subsidiary Legislation 452.85. 33 

440  Lorna Mifsud Cachia no o ­ bligations incumbent on the transferor in terms of this provision.36 It should, however, also be noted that in accordance with the Order, any nominally self-employed persons who fulfil five of the eight criteria set out in the Order37 are to be considered employees for all intents and purposes of the law. This essentially means that the obligations contained in regulation 3B of the Transfer of Business (Protection of Employment) Regulations of 2003 would still apply to such nominally self-employed persons. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition The EIRA 2002 defines an employee as follows: Employee means any person who has entered into or works under a contract of service, or any person who has undertaken personally to execute any work or service for, and under the immediate direction and control of another person, including an outworker, but excluding work or services performed in a professional capacity or as a contractor for another person when such work or service is not regulated by a specific contract of service.38

Furthermore, a formally ‘self-employed’ person can be deemed to be an employee based on the Order. Indeed, as has already been submitted, the Order states that even if such a ‘self-employed’ person fulfils five of the eight criteria specified in Regulation 3 of the Order, he or she would literally become an employee ‘in substance and by definition’. Hence, under Maltese law, the concept of ‘employee’ is three-pronged: (i) as defined in the EIRA 2002; (ii) as distinct from the concept of ‘worker’ in industrial disputes; (iii) as determined by means of satisfying five out of the eight criteria specified in the Order.39 When a person is deemed to be an ‘employee’ in accordance with the Order, the employer is obliged to grant him or her all the rights and conditions of work comparable employees would be granted.40 Hence, the employer 36 Article 3B was added by means of Legal Notice 483 of 2014, and Legal Notice 483 of 2014 has amended these regulations. This amending legal notice includes the notion of ‘employment relationship’ without in any manner mentioning or stipulating any previous notion. It is quite unfortunate because whilst a practitioner can understand what is meant by ‘employment relationship’, laws should be written in a manner which are uniform and constant, and the use of terms which would not have been hitherto defined may bring about a lack of uniformity in the interpretation of the same, leading to a strong diminution in legal certainty. 37  Regulation 3. 38  EIRA 2002, art 2(1). 39  See section IV.A and accompanying notes. 40  Regulation 5.

The Concept of ‘Employee’: The Position in Malta 441 is under an obligation to treat that particular person like he or she would other comparable employees, and if there are no comparable employees, to treat him or her according to the applicable minimum conditions of employment specified in the EIRA 2002.41 In other words, the employer cannot discriminate between employees who have been hired as employees and individuals who are considered employees only based on the application of the Order, and irrespective of whether the individual is ‘presumed’ to be an employee (in terms of the Order) or whether he or she is engaged as one, no difference shall be made in the conditions of employment applicable to their particular post.42 Furthermore, in situations where the employment status of a person is deemed to be one of employment in accordance with the Order, the employer shall be bound to issue a letter of engagement or a signed statement listing all the relevant information on the conditions of his or her employment (as specified in the Information to Employees Regulations). The Order also lays down the respective timeframe for the provision of such information and the date on which such timeframes commence.43 Other legislative acts also define the concept of ‘employee’. However, the main income tax instruments do not, which is quite interesting in itself because it demonstrates that the major fiscal legislative acts want the rules to remain as broad as possible. Indeed, the Income Tax Act 194944 and the Income Tax Management Act 199445 do not define what an employee or, indeed, employment is. Interestingly, however, the Social Security Act of 198746 defines a contract of service as follows: ‘Contract of service’47 means an agreement between two persons, whether written, oral or implied, whereby one of the parties (herein called the ‘employee’), who shall always be a physical person, shall be under an obligation to render to the other party (herein called the ‘employer’) services by way of a master and servant relationship for definite hours at a specified wage, salary, remuneration in kind or any other benefit or privilege, subject to the right of the employer to

41 

Regulation 5(b). Regulation 5. 43  With regard to probation periods of employment, the Order distinguishes between those providers of services who have entered into a relationship for the provision of services prior to the entry into force of the Order and those who are deemed to be recipients of services afterwards. In the former case, the probation period shall be deemed to have lapsed, unless the employer proves otherwise, whilst in the latter case, a contract of indefinite employment shall be deemed to have commenced when the provider of the services is engaged to provide the services (in a self-employed capacity), and hence the probation period starts from that date. 44  Income Tax Act 1949 (Chapter 123 of the Revised Edition of the Laws of Malta). 45  Income Tax Management Act 1994 (Chapter 372 of the Revised Edition of the Laws of Malta). 46  Social Security Act 1987 (Chapter 318 of the Revised Edition of the Laws of Malta). 47  ibid, art 2. 42 

442  Lorna Mifsud Cachia exercise ­control, supervision, direction, and any form of disciplinary action over the employee as to the method of performance of his duties.

This definition again features all of the elements required in the employer– employee relationship and the Lawrie-Blum description of what essentially amounts to an employment relationship resonates throughout this definition. The Order also addresses the elements of employment found in civil law contracts. The problem here was that some employers used such contracts to evade the payment of social security contributions and for the worker to work without assuming any social security obligations for him or her. However, if a civil law contract meets five out of the eight criteria listed in the Order, that contract would still be considered a contract of employment and would hence entail the same obligations related to the payment of social security contributions arising out of an employment relationship. The Public Administration Act of 200948 also makes use of the word ‘employee’, though no definition is provided. The definition of ‘public employee’ is as follows: ‘Public employee’ includes public officers and employees of government agencies and government entities, and for the purpose of section B, section C and paragraph 27 of the Code of Ethics, a person shall continue to be regarded as a public employee for three years following his retirement, resignation or dismissal from public employment.

As can be concluded from the above, whilst the concept of ‘employee’ is a recurrent theme in Maltese law, the definition of what constitutes an employee is not fully clear. Needless to say, the traditional notion of ‘employee’ is that described in the EIRA 2002, but the Order also broadens the scope of application of the term. B.  Employer: Basic Definition The EIRA 2002 defines an ‘employer’ as follows: ‘Employer’ includes a partnership, company, association or other body of persons, whether vested with legal personality or not.49

There is no other specification as to what an employer actually is. Needless to say, an employee has to have an employer and therefore it would appear that the nature of the employer is intimately linked to the existence of an employee, which, of course, is interesting from a juridical point of view

48 Public Administration Act 2009 (Chapter 497 of the Revised Edition of the Laws of Malta). 49  EIRA 2002, art 2.

The Concept of ‘Employee’: The Position in Malta 443 and also from an atypical contract point of view, because if a person is not considered to be an employee (by the ‘real’ employer), by definition there would be no employer—with disastrous consequences for the nature of the employment relationship (and this is being submitted without prejudice to what the Order provides). As discussed earlier, under the Social Security Act,50 just as the employee is defined by his or her contract of service with the employer, so is the employer defined by his or her contract of service with the employee. Indeed, the definition of ‘employer’ is ‘inserted’ (as it were) into the following definition of ‘contract of service’: An agreement between two persons, whether written, oral or implied, whereby one of the parties (herein called the ‘employee’), who shall always be a physical person, shall be under an obligation to render to the other party (herein called the ‘employer’) services by way of a master and servant relationship for definite hours at a specified wage, salary, remuneration in kind or any other benefit or privilege, subject to the right of the employer to exercise control, supervision, direction, and any form of disciplinary action over the employee as to the method of performance of his duties.51

It is quite telling that the concept of ‘employer’ for social security law in Malta is defined by his or her relationship with the employee, and this also implies that no employer would be an employer (even if registered as an employer) if, even transitorily, he or she has no employees. This distinction is important because it means that no obligations which bind an employer who has no employees would arise out of the fact that he or she is an employer. Furthermore, from a purely pragmatic point of view, this definition is important because it differentiates between employers who have employees and employers who may be registered as such, but, for any given period of time, do not have any employees. Put succinctly, it is the existence of a contract of service that ‘creates’ an employer. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees There are various sub-types of employees in Malta. First, there is a clear distinction between a public sector and a private sector employee. Both are ‘employees’ in the broad sense of the term, but there are stark differences between the two. First, their mode of recruitment differs. Whilst a private sector employee is directly recruited by the employer, a public employee has to undergo a 50  51 

Social Security Act, 1987, Chapter 318 of the Revised Edition of the Laws of Malta. ibid, art 2(1).

444  Lorna Mifsud Cachia selection process which is concluded on the basis of a recommendation of the Public Service Commission to the Prime Minister in whom the power is vested to make appointments to public offices.52 The Public Service Commission is established by Chapter X of the Constitution of Malta53 and in the exercise of its functions it shall: (a) seek to maintain a high standard of competence, efficiency and integrity in the public service; and (b) uphold the principles of justice, fairness, merit, equality of opportunity, impartiality, and freedom from discrimination, patronage or favouritism.54

Needless to say, the recruitment procedure in the private sector is not regulated in such a manner. A private sector employer is bound to observe the law in all stages of the recruitment process, but the employer does not need any authorisation from the state to employ one individual over another.55 However, the differences between these two categories of workers do not stop at recruitment. A public sector employee is furthermore subject to the Public Service Management Code,56 whilst an employee in the private sector is regulated by the general laws of the state and the employer’s policy. The public sector employee’s employment relationship falls more under public policy and order, whilst the employee in private sector employment is much more regulated by a contract, which, however, has to be subject to Maltese labour law. The law also makes a stark difference between public sector and private sector employees in the performance of their duties. Indeed, subtitle II of Title III57 of the Criminal Code58 stipulates the following: Whosoever by violence or threats compels a public officer to do or not to do any act appertaining to his office, shall, on conviction, be liable to imprisonment for a term from one to five years and to a fine (multa) of not less than four thousand euro (4,000) and not more than ten thousand euro (10,000).59

The term ‘public officer’ is defined as follows: ‘The general expression “public officer” includes not only the constituted authorities, civil and military, but also all such persons as are lawfully appointed to administer any part 52 

Constitution of Malta, art 110. ibid arts 109–15. 54  Article 3 of Subsidiary Legislation Const 01 of the Public Service Commission General Regulations. 55  Indeed, the employer needs to have a PE number, that is, an ‘employer number’ and hence he or she has to be registered to be able to employ employees. However, the employer does not need authorisation to employ one employee over another. However, the recruitment of a public sector employee is subject to such scrutiny. 56 https://opm.gov.mt/en/PublicService/Pages/Public-Service-Management-Code.aspx (last accessed 8th March, 2017.) 57  Of Outrage and Violence against Public Officers. 58  Criminal Code (Chapter 9 of the Revised Edition of the Laws of Malta). 59  ibid, art 91. 53 

The Concept of ‘Employee’: The Position in Malta 445 of the executive power of the Government, or to perform any other public service imposed by law, whether it be judicial, administrative or mixed.’ The law protects public officers from being compelled to discharge the duties of the office in a manner in which they do not want to. Article 95 refers to ‘persons lawfully charged with a public duty’ and usually such persons are public officers (though the Criminal Code does not state this). This subtitle in the Criminal Code generally aims to protect public officers from any undue interference in the performance of their duties, as well as from any unlawful and undue consequences of them discharging their duties. There is no such protection of employees in the private sector. Indeed, no special laws on the protection of employees in the private sector exist. Even though the ratio legis of such protection is clearly in favour of public officers, Maltese law undoubtedly differentiates between public sector and private sector employees. There are other differences as well, including benefits to which employees of the different sectors are eligible; family-friendly measures, for example, are generally more available to public sector employees than to employees in the private sector60 due to operational issues. In short, Maltese law establishes two sub-categories of workers: public sector and private sector employees. Other laws distinguish between different groups of (private) workers. Many sectors are regulated by different wage regulation orders issued by the Wage Council. Each wage regulation order contains specific provisions which apply to a particular sector. Such provisions cover vacation leave, minimum wage, waiting time (if, for example, a worker has to ‘wait’ on the employer’s premises in order to be assigned work,61 jury service and so on). Examples of wage regulation orders include the Transport Equipment, Metal and Allied Industries Wages Council Wage Regulation Order 1977,62 the Cinemas and Theatres Wages Council Wage Regulation Order 1976,63

60  Chapter 5 of the Public Service Management Code lists all family-friendly measures available to all public sector employees. However, employees in the private sector do not benefit from such comprehensive family-friendly measures. A basic set of rights exists, such as protection of mothers and of pregnant employees (as stipulated in the Protection of Maternity (Employment) Regulations 2004 (SL 452.991)), entitlement for maternity leave allowance (as stipulated in the Social Security Act 1987 (Chapter 318 of the Revised Edition of the Laws of Malta)) and urgent family leave (as stipulated in the Urgent Family Leave Regulations, 2004 (SL 452.88)). However, it is widely acknowledged that employment in the public sector is more amenable to family-friendly measures than employment in the private sector due to the differences in resources within the two sectors. 61  One such provision is found in the Textiles and Allied Industries Wages Council Wage Regulation Order 1977. 62  Subsidiary Legislation 452.52. 63  Subsidiary Legislation 452.43.

446  Lorna Mifsud Cachia among others.64 It must be emphasised that the workers in the sectors covered by wage regulation orders are employees who fall within the applicability of the EIRA 2002, but these sectors are further regulated by the Wages Council wage regulation orders. This effectively means that the law recognises that special provisions are applicable to these workers, but that they are still workers as much as all other workers employed in other sectors. B.  The Establishment of a Specific Category of ‘Workers’ The EIRA 2002 makes specific reference to the term ‘worker’ as distinct from ‘employee’, stating: ‘Worker’ has the same meaning as ‘employee’, but for the purposes of Title II of this Act, ‘worker’ means an employee who works or normally works or seeks to work (a) under a contract of employment; or (b) under any contract (whether explicit or implied and, if explicit, whether oral or in writing), whereby he/she undertakes to do or personally perform any work or services for another party to the contract who is not a professional client of his/her; or

64  The full list of wage regulation orders is as follows: LN 99 of 1977—Agriculture and Allied Industries Wages Council Wage Regulation Order; LN 29 of 1980—Beverage Industries Wages Council Wage Regulation Order; LN 51 of 1977—Canning Industry Wages Council Wage Regulation Order Wages Council Wage Regulation Order; LN 45 of 1976—Cargo Clearance and Forwarding Agents' (Burdnara) Employees Wages Council Wage Regulation Order; LN 130 of 1976—Cinemas and Theatres Wages Council Wage Regulation Order; LN 98 of 1977—Clay and Glass Products Wages Council Wage Regulation Order; LN 27 of 1980—Construction Wages Council Wage Regulation Order; LN 7 of 1976—Domestic Service Wages Council Wage Regulation Order; LN 55 of 1977—Electronics Industry Wages Council Wage Regulation Order; LN 68 of 1991—Food Manufacture Industries Wages Council Wage Regulation Order; LN 124 of 1977—Hire (Cars or Private Buses) Wages Council Wage Regulation Order; LN 115 of 1977—Hospitals and Clinics Wages Council Wage Regulation Order; LN 43 of 1990—Hotels and Clubs Wages Council Wage Regulation Order; LN 118 of 1977—Jewellery and Watches Wages Council Wage Regulation Order; LN 111 of 1977—Laundries Wages Council Wage Regulation Order; LN 116 of 1991—Leather Goods and Shoes Industries Wages Council Wage Regulation Order; LN 97 of 1973—Paper, Plastics, Chemicals and Petroleum Wages Council Wage Regulation Order; LN 88 of 1977—Printing and Publishing Wages Council Wage Regulation Order; LN 15 of 2001—Private Cleaning Services Wages Council Wage Regulation Order; LN 60 of 1977—Private Schools Wages Council Wage Regulation Order; LN 264 of 2000—Private Security Services Wages Council Wage Regulation Order; LN 127 of 1975—Professional Offices Wages Council Wage Regulation Order; LN 34 of 1969—Public Transport Wages Council Wage Regulation Order; LN100 of 1977—Seamen Wages Council Wage Regulation Order; LN 6 of 1996—Sextons and Custodians Wages Council Wage Regulation Order; LN 117 of 1977—Textiles and Allied Industries Wages Council Wage Regulation Order; LN 115 of 1991—Tobacco Manufacture Industry Wages Council Wage Regulation Order; LN 101 of 1977—Transport Equipment, Metal and Allied Industries Wages Council Wage Regulation Order; LN 22 of 1978—Travel and Insurance Agencies Wages Council Wage Regulation Order; LN 32 of 1989—Wholesale and Retail Trades Wages Council Wage Regulation Order; LN 50 of 1977—Woodwork Wages Council Wage Regulation Order.

The Concept of ‘Employee’: The Position in Malta 447 (c) in employment under or for the purposes of a department of Government, otherwise than as a member of a disciplined force, in so far as any such employment does not fall within paragraph (a) or (b) of this definition, and in relation to a trade dispute to which an employer is a party, ‘worker’ includes any worker, even if not employed by that employer.65

However, this definition is limited to the context of industrial disputes. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The Order clearly states that in consideration of the employment status of any person who is usually self-employed and hence not considered to be an employee, it shall be presumed that an employment relationship exists, that the person for whom the service is provided is the employer, and that the provisions of the EIRA 2002 and of the regulations or orders issued thereunder apply to that relationship if at least five criteria out of eight are fulfilled. The eight criteria are as follows:66 (i)

The employee depends on one single person for whom he or she provides the service for at least 75 per cent of his or her income over a period of one year. (ii) He or she depends on the person for whom the service is provided to determine what work is to be done, and where and how the assigned work is to be carried out. (iii) He or she performs the work using the equipment, tools or materials provided by the person for whom the service is provided. (iv) He or she is subject to a working time schedule or minimum work periods established by the person for whom the service is provided. (v) He or she cannot sub-contract his or her work to other individuals to substitute himself/herself when carrying out work. (vi) He or she is integrated into the structure of the production process, the work organisation or the company’s or other organisation’s hierarchy. (vii) The person’s activity is a core element in the organisation and pursuit of the objectives of the person for whom the service is provided. (viii) He or she carries out similar tasks for existing employees, or in the event that work is outsourced, he or she performs tasks similar to those formerly carried out by employees. When these criteria are examined, it becomes very clear that many of them are a consequence and implication of subordination. Furthermore, 65  66 

EIRA 2002, art 2(1). Regulation 3.

448  Lorna Mifsud Cachia it also becomes clear that the Order seeks to distinguish between what ­constitutes a self-employed relationship and an employment relationship. But then again, it is very clear that the law moves beyond the individual contracting parties’ intention and focuses on the form of the result of the contract. However, it is submitted that it would be inaccurate to state that the law thwarts the parties’ intention because in most of these relationships, the parties’ intentions are not complementary. So-called self-employed persons often accept a particular position under ‘self-employed’ conditions because they have no choice. It may hence be argued that the legislator thwarts the ‘employer’s’ intention and not that of the parties. Yet, be that as it may, given that the legislation aims at eliminating precarious employment and that the legislator needs to protect the labour market somehow, it is clear that the primary aim is to look beyond formalities and examine the actual elements of the relationship and declare that an employment relationship indeed exists without a contract of service having been concluded or even the consent and mutual intention to establish one between the parties. Hence, a brief review of the criteria reveals that points (ii)–(vii) above are reflections of subordination and various expressions of it, whilst criteria (i) and (viii) are reflections of what distinguishes a real self-employed person from one who is essentially an employee. Each criterion can be examined separately. However, five out of the eight criteria need to be fulfilled for a person to be presumed to be an employed person. Technically speaking, there is no requirement for work instructions, work control and integration in the definition of ‘contract of employment’ provided by the EIRA 2002. However, these requirements are reflected in some of the criteria listed in the Order. The Order states that one of the criteria to determine whether a person should be considered an employee or otherwise is that ‘he depends on the person for whom the service is provided to determine what work is to be done, and where and how the assigned work is to be carried out’.67 Hence, this criterion is recognised as one of the criteria to determine whether a relationship is one of employment or self-employment. However, this criterion can be absent from a relationship which is still considered to be one of employment. The reason for this is that this criterion can be absent if others are present. Work control and integration are two other criteria that can be gleaned from the list of criteria established by the Order. Other criteria include the following: (i)

67  68 

He or she is subject to a working time schedule or minimum work periods established by the person for whom the service is provided.68 Employment Status (National Standard) Order 2012, reg 3(1)(b). ibid, reg 3(1)(d).

The Concept of ‘Employee’: The Position in Malta 449 (ii)

He or she is integrated into the structure of the production process, the work organisation or the company’s or other organisation’s hierarchy.69 (iii) His or her activity is a core element in the organisation and the pursuit of the person’s objectives for whom the service is provided.70 (iv) He or she carries out similar tasks as existing employees, or in the event that work is outsourced, he or she performs tasks similar to those formerly undertaken by employees.71 B. Indicators The above-mentioned criteria72 of the Order are possible indicators of an employment relationship, but are not necessarily required in an employment relationship. If an employment relationship (as understood in the terms of the EIRA 2002) is bereft of many of the criteria listed in the Employment Status National Standard Order, it is still considered to be an employment relationship (if the elements of the definition are satisfied), but if a selfemployed person has a relationship with another and this relationship fulfils five out of the eight criteria, then that relationship is considered to be one of employment. Hence, a contract of employment cannot display at least five of the eight criteria specified in the Order, but any five of the criteria listed in the Order ‘change’ (as it were) a self-employed contract into one of employment. This is an interesting aspect of the way the law treats different ‘categories’ of workers, that is, workers who are employees in accordance with the EIRA 2002 (because they have a contract of employment which satisfies the elements included in the definition of ‘contract of employment’) and those who are not, by definition, employees, but who are nonetheless considered to be ‘employees’ in accordance with the Order. C.  The Relevance of ‘Economic Dependence’ ‘Economic dependence’ is a requirement of the Order (though by no means exclusive) because one of the criteria to determine whether a person is an employee or self-employed is whether ‘he depends on one single person for whom the service is provided for at least 75 per cent of his income over a period of one year’.73 This, essentially means that economic dependence is

69 

ibid, reg 3(1)(f). ibid, reg 3(1)(g). 71  ibid, reg 3(1)(h). 72  As contained in reg 3 of the Order. 73  ibid, reg 3(1)(a). 70 

450  Lorna Mifsud Cachia one possible factor that must be taken into consideration for a self-employed person to be deemed to be employed, but, as with all other criteria, it is by no means mandatory or, indeed, exclusive. V.  THE PRINCIPLE OF PRIMACY OF FACTS

The Order takes facts rather than form into consideration. Regardless of what form the contractual relationship takes, the law requires facts to be given precedence. It is very clear in this regard because it clearly states that: Subject to the provisions of sub-article (2), when considering the employment status of a person who is nominally self-employed and is prima facie not considered as an employee, it shall be presumed that there is an employment relationship and that the person for whom the service is provided is the employer and that the provisions of the Act and of the regulations or orders issued thereunder apply to that relationship if at least five of the following criteria are satisfied in relation to the person performing the work.74

The law makes sufficiently clear that regardless of the form of the relationship between the principal and the service provider, if five out of the eight criteria are fulfilled, the relationship in question is one of employment. Hence, in accordance with the Order, the facts of each case are taken into consideration to determine the nature of the relationship, not the actual ‘label or ‘form’ of the relationship. In short, one has to look beyond the form of the relationship and instead focus on the substance of the relationship. It is irrelevant whether the relationship is one of ‘self-employment’ in form because what essentially matters are the actual elements of that relationship. The Order thus creates primacy of facts over the type of relationship that exists between the two parties. VI.  QUALIFICATION IN FULL

Under Maltese law, there are certain provisions that have to be in line with the EIRA 2002; if they are not, they are held to be null and void. Hence, it is submitted that prohibitions to alter certain provisions of a contract of employment indicate that some parts of the employment contract cannot be subject to other laws, most notably, to civil law. The EIRA 2002 states that the following provisions included in an employment contract would be null and void: (i)

74  75 

not paying the entire amount of wages earned by, or payable to, any employee in legal tender in Malta;75 ibid, reg (3)(1). EIRA 2002, art 11(1).

The Concept of ‘Employee’: The Position in Malta 451 (ii) any stipulation in the contract as to how wages are to be spent;76 (iii) any stipulation to convert a contract for an indefinite term into a fixed-term contract of employment;77 (iv) any condition in a contract of service which empowers the employer to terminate the employment of a female employee who gets married or becomes pregnant.78 In other words, there are certain conditions of employment that cannot be modified by an agreement between the parties and that must be in line with labour law. Under Maltese law, it is not possible to have a non-contractual relationship that falls within the scope of labour law. In order for a relationship to fall within the scope of Maltese employment law, it has to be contractual. No other types of legal relationship would fall under Maltese employment law. The EIRA 2002 requires a contract, even if it is just concluded orally, to exist. VII.  LIMITS TO THE FREEDOM OF CONTRACT

Under Maltese law, if a contract is in fact an employment contract, it shall be deemed to be an employment contract, irrespective of how the parties have labelled the contract. In other words, even if the legal nature of the contract involves independent contractors, if five of the criteria listed in the Order are satisfied, the contract will be deemed to be one of employment. The reasons for this are described in detail above.79 Furthermore, regulation 8 of the Order states that any conversion of a contract of employment or a contract of service into a contract for service shall not have any legal effect for the purposes of the EIRA 2002 unless it has been authorised by the Director. The Director as referred to in the Order is the individual responsible for employment and industrial relations. Unless such authorisation is obtained, and if it is refused once sought, the employment status of the person concerned shall be considered unchanged and the status applicable prior to the authorisation request shall continue to apply. In other words, if the Director deems that insufficient grounds exist to warrant the conversion of a contract of employment into one for service, that is, a contract of self-employment, the individual concerned shall continue to be deemed an employee. This essentially means that the parties cannot simply convert an employment agreement into one for service, ie, into a civil law

76 

ibid, art 12. ibid, art 33. 78  ibid, art 40. 79  Employment Status National Standard Order 2012, reg 3. 77 

452  Lorna Mifsud Cachia contract, without said authorisation, and this imposes a very clear limitation on the parties’ freedom of contract. Under Maltese law, parties are not prohibited from entering into a contract of employment or into an employment relationship, even if it does not qualify objectively.80 However, three issues need to be considered in this regard: (i)

If a contract is simulated (and hence the parties declare that they are entering into an employment agreement when they are in fact entering into another type of agreement), that contract could be scrutinised.81 (ii) If a contract is falsely entered into or declared to be an employment agreement when it is not (in order to obtain certain benefits, such as bank loans, for example), then that contract could also entail criminal liability.82 (iii) Under fiscal law, the employer would have to pay employee contributions which would otherwise not be payable if the employee were not in the employment of the employer.83 Hence, whilst there is no prohibition from a purely labour law perspective for a person to enter into an employment relationship when in fact the objective elements that make up such a relationship are missing, one has to consider this question from the point of view of other laws as well. Under Maltese law, not only can employee status not be waived, it is imputed to any relationship that fulfils the criteria of the employment status as stipulated in the National Standard Order, which essentially means that even if the ‘worker’ renounced the status at the onset of the relationship, he or she will be deemed to be an ‘employee’ on the basis of the law, irrespective of how he or she labels his or her relationship with the employer. One very important aspect of the Order is that it determines the date to be considered the effective date of employment84 and also regulates issues that are usually intrinsic to an employment relationship.85 In other words, it also creates a ‘commencement date’ of the employment relationship. It states that a person who, by virtue of the Order, is considered to be an employee shall be deemed to be covered by an indefinite contract of employment.86 The date of engagement shall be considered the date of the initial continuous provision of services,87 and the seniority and any notice period

80 Indeed, there is no regulation in Maltese law prohibiting parties from concluding an employment relationship in spite of the fact that it does not qualify objectively as such. 81  Civil Code, Chapter 16 of the Revised Edition of the Laws of Malta, arts 987–91. 82  Criminal Code, Chapter 9 of the Revised Edition of the Laws of Malta, art 308. 83  Social Security Act 1987, Chapter 418 of the Revised Edition of the Laws of Malta. 84  Regulation 4(2). 85  Regulation 4(5). 86 Ibid. 87  Regulation 4(2).

The Concept of ‘Employee’: The Position in Malta 453 due in case of redundancy are to be calculated accordingly,88 ie, in terms of the EIRA 2002.89 It is also interesting to note that the term ‘continuous provision of services’ includes those contracts where the work performed is essentially the same, and where the period between one contract and a subsequent one does not exceed a period of six months; the periods between such contracts shall be taken into account.90 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The social partners can advise on whether to amend, fix, change or adapt the notions of ‘worker’ or ‘employee’. They are represented in the Malta Council for Economic and Social Development (MCESD) established by the Malta Council for Economic and Social Development Act 2001.91 The MCESD has an advisory role and issues opinions, advice and recommendations to the Maltese government on matters of economic and social relevance.92 It is highly likely that any such changes and amendments would be discussed in the MCESD and any recommendation adopted would be passed on to the relevant government body with a view to these then being adopted in legislative instruments with the final objective of being enacted as law. However, the social partners themselves do not have such power and the MCESD, being a consultative and advisory body, does not have any such powers either. However, the MCESD has been termed a catalyst in bringing together the government, social partners and civil society. B.  Custom and Practice Custom and practice play a very important role in the workplace. The law is the lowest common denominator, and custom and practice then beef up the labour law system. A notable example (though by no means the only one) of this is the system of ‘warnings’. The EIRA 2002 states that the termination of an indefinite contract without giving notice and without raising liability to make the payments stipulated in the act if the cause giving rise to the termination is valid and sufficient.93 The law does not mention any warnings that need to be issued to the employee. However, practice—supported 88 

Regulation 4(2). EIRA 2002, art 36. 90  Proviso to reg 4(2). 91  Chapter 431 of the Revised Edition of the Laws of Malta. 92  ibid art 5. 93  EIRA 2002, art 36(14). 89 

454  Lorna Mifsud Cachia by the Industrial Tribunal—has always required three warnings to be issued (with a third warning being decisive and justifying termination) prior to terminating the employment relationship. This has far-reaching effects. First, warnings are issued by employers to prove that the termination was for a good and sufficient cause. Hence, should the question of whether a termination is based on good and sufficient cause arise before the Industrial Tribunal, the employer can defend his or her decision by also quoting the number of warnings issued to the employee. The Industrial Tribunal takes such warnings into consideration to determine whether the termination is based on good and sufficient cause. Furthermore, it has also argued that some roles and positions are so sensitive that they do not require a warning for summary termination and, in spite of the absence of such a warning, the termination was for a good and sufficient cause, given the gravity of the error committed by the employee.94 The fact that the Industrial Tribunal takes warnings issued into consideration despite the fact that the law does not provide for this shows that custom and practice do have a bearing on labour law in Malta.95 IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions Regulation 3(1) of the Employment Status (National Standard) Order 2002 states that: [W]hen considering the employment status of a person who is nominally selfemployed and is prima facie not considered an employee, it shall be presumed96 that an employment relationship exists and that the person for whom the service is provided is the employer and that the provisions of the Act and of the regulations

94  The Industrial Tribunal has discussed warnings in a number of cases, including, but not limited to: F Aitchison v PZM Fishfarm Ltd (27 October 1997); Paul Mamo v Vassallo Builders Ltd (15 April 1996); Sunny Borg v Malta Fish Farming (11 June 2003); Reanto Briffa v Diplomat Hotel Limited (6 January 1997); Jos Grech v LJC Ltd (6 August 2003); Michael Carabott v AX Construction Ltd et (2 March 2006); Romina Debono v Toly Products Ltd (12 May 2000); Multa Joseph v Coastline Hotel Ltd (6 May 2011). 95 A very recent case at the Industrial Tribunal again discussed the issue of ‘warnings’ at length and stated: ‘where there is a disciplinary case against an employee, even after the employee has been formally warned, this warning must be registered in writing, also for for future reference when other disciplinary cases against the employee would need to be taken’ (extract translated from Maltese and extracted from Trade Dispute decision number 2429 dated 14 July 2016 in the names Felix Grech u Anthony sive Tony Debono eżerċenti l-kummerċ bl-istes ta’ Debtrans Garage. In this particular case, no such warnings had ever been given or, indeed, registered, and the Industrial Tribunal declared that the termination of employment was not for a just and sufficient cause, and hence found in favour of the employee. 96  Emphasis added.

The Concept of ‘Employee’: The Position in Malta 455 or orders issued thereunder apply to that relationship, if at least five of the already discussed eight criteria apply.

Irrespective of the term used for the relationship (private contractors, for example, or even self-employment), the relationship shall be deemed to be one of employment. The Order does not state whether the presumption is rebuttable, but ­regulation 3(3) states that: [A]ny person in a relationship which would by virtue of the presence of such criteria automatically be considered an employment relationship may, before entering into such a relationship, submit a written request to the Director to exempt such a relationship from being considered an employment relationship, and the Director may exempt that relationship in writing if it is considered that specific grounds exist relating to that activity to exempt it from this requirement, including that the activity being carried out is an uncommon occurrence or of very short duration.

It is arguable whether this makes the presumption a juris tantum or a juris et de jure because if it were a juris tantum presumption, then the Director would have no alternative but to exempt the relationship should certain grounds exist. The Order uses the term ‘the Director “may”’.This essentially means that the Director may, even if faced with certain grounds and evidence, not give the exemption to which this Regulation applies. Hence, it is submitted that the presumption is indeed a juris et de jure and can only be exempt on the basis of the Director’s discretion, and thus is unrebuttable. In contrast, it may also be argued that given that this exemption exists in the law, the law itself recognises that the presumption is rebuttable because it can be defeated. However, it is submitted that the law does not state that the presumption is no longer effective if certain grounds exist, but that the Director may exempt the relationship. The word ‘exemption’ in itself shows that the legislator sought to ensure that the relationship would still be considered as one of employment to which, however, labour law (and all relative laws, such as fiscal law) would not apply. It is thus further submitted that the presumption under Maltese law is unrebuttable, but that the relationship itself may be exempted by the Director. This, in itself, is, in the writer’s view, a very strong statement being made by the Order, namely that the Order favours employment relationships above all others (if the criteria are satisfied in terms of the law) and that the rights of employees, even those who nominally are not employees, should be protected. It is against this background that the question whether the presumption is rebuttable or otherwise becomes important. Indeed, in real and practical terms, the question whether this presumption, as stipulated in the Order, is rebuttable or not is of little consequence. One could term such analysis as ‘hair-splitting’. However, it is submitted that laws are not only enacted for what they say. Principally they are, of course. But laws are also enacted for the message they seek to convey. They are a reflection of expectations, the mores of

456  Lorna Mifsud Cachia society. The way in which the terminology in the Order has been couched, the exceptional nature of the granting of exemptions and the actual fact that the nature of the relationship does not change, but is simply an ‘exemption’, go to show that the legislator aimed to really drive the message home that self-employed persons should not be the rule but an exempted exception (as it were) and that the Maltese economy should strive to remove this falsehood from its workplaces. This is, perhaps, the strongest consequence of the fact that the presumption of the employment relationship appears to be unrebuttable. B.  The Burden of Proof The Order shifts the burden of proof on the actual status of the worker on the employer by placing an obligation on him or her to declare why he or she is treating the ‘employee’ differently than is provided for in the Order. The procedure, it must be submitted, is quite laborious. The person providing the service may request the receiver of the service to give him or her a written statement asserting that the receiver of the service may have treated the person rendering the service in a manner which infringes the Order. Such a statement must also contain the reasons for the difference in treatment.97 This essentially means that it is the receiver of the service who has to justify the difference in treatment from the provisions of the Order and to provide valid grounds, essentially, on which he or she is basing this difference in treatment. Indeed, the provider of the service does not need to prove anything. All he or she needs is to submit a written note to the receiver of the service. However, it is submitted that this procedure, whilst of course shifting the onus of proof onto the receiver of the service, is quite self-defeating, because it unrealistically expects that an employee, who was (most probably) ‘forced’ (due to economic, personal or family reasons) to accept ‘self-employment’, which in fact and in accordance with law is an employment relationship, to request the receiver of the service to admit that he or she is wrong (basically) and to give reasons for this is quite selfdefeating and, quite frankly, unrealistic. Hence, whilst the law shifts the onus of proof onto the receiver of the service, it is questionable how much actual force this provision will have in the long term. Indeed, the statement can be used as evidence against the employer/receiver of the service in any subsequent proceedings before the Industrial Tribunal and, again, this might have the opposite effect to the one intended—that is, of forcing the employer to not share any information with the individual at all (even though the Order states time limits and consequences) or indeed provide sufficient information as to make himself or herself impervious to any legal

97 

Regulation 11.

The Concept of ‘Employee’: The Position in Malta 457 consequences, but still admit to nothing. In other words, this provision does little to improve the worker’s lot. Hence, in order for any such shift of the onus of proof to be effective, it must be spurred by third-party involvement. In the case of Malta, the Director himself or herself could write to the employer (receiver of the service) requesting that his or her treatment be justified upon application from the worker rather than leaving the procedure merely in the hands of the employee and the employer. X.  SPECIFIC PROCEDURES

As submitted earlier, the Director may be requested to exempt a particular relationship from the application of the presumption of employment. Furthermore, the Director may authorise any application to convert a contract of employment into one of service and has the discretion to refuse such an application.98 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons Under Maltese law, apprentices are not fully fledged employees, but are still afforded some protection also provided to other employees. Indeed, the definition of ‘contract of employment’ includes agreements for apprenticeship insofar as conditions of employment are concerned, and one characteristic for determining whether an agreement is one of employment is remuneration. Hence, the economic factor is always taken into consideration, even with reference to apprentices. However, such relationships do not necessarily involve ‘dependence’. B.  Equality and Anti-discrimination Law Maltese labour law is in line with EU law in this respect and has adopted all legislation relating to equality and anti-discrimination. Hence, discrimination against part-time employees,99 fixed-term employees,100 pregnant women,101 homosexual,102 lesbian103 and transgender workers,104 on the

98 

Regulation 8 of the Order. Part-Time Employees Regulations, 2003, Subsidiary Legislation 452.79. Contracts of Service for a Fixed Term Reglations, 2007, Subsidiary Legislation 452.81. 101  Protection of Employment (Maternity) Regulations, 2004 Subsidiary Legislation 452.91. 102  Equal Treatment in Employment Regulations, 2004 Subsidiary Legislation 452.95. 103 ibid. 104 ibid. 99 

100 

458  Lorna Mifsud Cachia basis of race, religion, political creed and other grounds of discrimination have been eliminated by law.105 Disabled employees are also protected in the Equal Opportunities (Protection of Disability) Act 2000.106 The gender pay gap is a challenge which, although addressed legislatively,107 still exists in Malta.108

105  ibid. Part IV of the Industrial Relations Act, 2002 contains specific provisions relating to ‘Protection against Discrimination Related to Employment’ and sets out articles aimed at combating victimisation, discrimination and harassment and, inter alia, established the remedies available to workers when they are the victims in such circumstances. 106  Chapter 413 of the Revised Edition of the Laws of Malta and, specifically, Part IV of this Act establish, inter alia, the prohibition of discrimination against disability. 107  EIRA 2002, arts 26 ff. 108 Gender Pay Gap Statistics, http://ec.europa.eu/eurostat/statistics-explained/index.php/ Gender_pay_gap_statistics.

22 The Concept of ‘Employee’: The Position in Montenegro VESNA SIMOVIC-ZVICER

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HE MONTENEGRIN LABOUR Law1 does not provide a definition of ‘employment contract’ (ugovor o radu). However, it includes provisions on its mandatory written form as well as its mandatory content.2 Thus, Article 21 provides that a contract of employment shall be considered to have been concluded upon the signing by the employee and the employer or a person authorised by the employer. It is worth noting that an employee, unlike an employer, may not authorise another person to sign an employment contract on his or her behalf.

1  See Montenegrin Labour Law (Official Gazette of Montenegro, Nos 49/2008 of 15 August 2008, 59/2011 of 14 December 2011, 66/2012 of 31 December 2012 and 31/14 of 24 July 2014). 2  According to art 23 of the Labour Law, a contract of employment shall contain: (1) the name and headquarters of the employer; (2) the first and last names, and place of residence or stay of the employee; (3) the citizens’ central register number of the employee or personal identification number in the case of a foreign citizen; (4) the type and degree of professional qualification of the employee or the level of education and occupation; (5) the type and description of jobs to be performed by the employee; (6) the place of work; (7) the duration of the employment relationship (fixed-term or a contract for an indefinite period); (8) the duration of the fixed-term contract of employment; (9) the date of commencement of work; (10) working hours (full-time, part-time or reduced hours); (11) the amount of the basic salary, level of pay and elements determining work performance, wage compensation, increased salary and other earnings of the employee; (12) the timeframe for the payment of salary and other benefits to which an employee is entitled; (13) the method of using break during work, daily and weekly breaks, annual holiday, public holidays and other leave from work in accordance with the law and the collective agreement.

460  Vesna Simovic-Zvicer This is also evident in the practice of the Supreme Court, ie, that an employment contract is not considered legal if it has not been signed by the employee.3 In addition, the Labour Law provides general and special conditions for the conclusion of employment contracts.4 General conditions in the private sector include overall good health and having reached the age of 15 years.5 Special conditions may be defined by a special law, other regulations or by the Act of the Employer (Systematisation Act). As regards persons who are younger than 18 years of age, it is provided that they can be employed in workplaces at which their health, morals and education are not at risk, ie, if such work is not prohibited by the law. Under the Montenegrin Labour Law, two conditions need to be met to employ persons under the age of 18: (1) a certificate from a competent medical authority that states their ability to perform tasks for which they conclude an employment contract and that such activities are not harmful to their health; and (2) obtaining written consent from a parent, adoptive parent or guardian.6 The employment contract, as a general rule, is concluded for an indefinite period. The exceptions to this rule are provided in law.7 Pursuant to Article 25(5) of the Labour Law: [A]n employee who has concluded a fixed-term contract of employment shall have the same rights, obligations and responsibilities arising from and based on the 3 

Decision of the Supreme Court of Montenegro, Rev 986/14, of 20 November 2014. person who intends to conclude an employment contract is obliged to submit evidence to the employer of compliance with the conditions of work in jobs for which the employment contract is determined by the Systematisation Act. An employer may not require information from the person about his or her family or marital status and plans for a future family, or submission of documents and other evidence which is not directly relevant for the performance of work for which he or she is concluding the employment relationship, the employment the contract or statement on the termination of the employment contract by that person. In addition, an employer may not decide the establishment of an employment relationship based on proof of pregnancy. Here, however, an exception is provided for jobs involving a significant risk to the health of the woman and child as determined by a competent medical authority. See art 18 of the Labour Law of Montenegro. 5  See art 16 of the Labour Law. These conditions apply to all employees in the private sector, while for public sector employees, in addition to overall good health, general terms and conditions for the establishment of an employment relationship, also include: citizenship, legal age (18 years), prescribed level of educational qualification, that the person is not convicted of a criminal offense that makes him or her unfit to work for a state body and against whom no criminal proceedings for a criminal offense are conducted ex officio. See art 32 of the Law on Civil Servants and State Employees (Official Gazette of Montenegro Nos 39/11 of 4 August 2011, 50/11 of 21 October 2011, 66/12 of 31 December 2012). 6  See art 17 of the Labour Law. 7  According to ibid art 25: ‘(1) A contract of employment may be concluded for a fixed term for the purpose of performing certain jobs whose duration is predetermined for objective reasons or due to the occurrence of unforeseeable circumstances or events. (2) An employer may not conclude one or more contracts of employment referred to in Paragraph 1 of this Article with the same employee if their duration, continuous or with interruptions, is longer than 24 months. (3) An interruption of less than 60 days shall not be considered an interruption in accordance with Paragraph 2 of this Article. (4) Paragraph 2 of this Article determines that a fixed-term contract of employment may last longer than 24 months only if it is necessary for 4  A

The Concept of ‘Employee’: The Position in Montenegro 461 employment relationship for the duration of the contract as an employee who has concluded a contract of employment for an indefinite period.

In respect to fixed-term employment contracts, the Labour Law also provides rights to protection, which means that when the employment contract is concluded for a definite period contrary to the limitations prescribed by the Labour Law or if, after the expiration of the employment contract, an employee continues working for the employer, the fixed-term employment contract shall be transformed into an employment contract for an indefinite period if he or she accepts such employment.8 The Montenegrin legal system is characterised by a hierarchy of regulations, which implies that the general acts of lower legal force (such as collective agreements and contracts of employment) must comply with the acts of higher legal force (such as a law), ie, they cannot entail unfavourable conditions. The same holds for the relationship covered by the employment contract, individual acts and general legal acts. Consequently, if certain provisions stipulate less favourable working conditions/terms of employment or establish a narrower scope of rights, they will be null and void,9 which means that they will not have legal effect. This arises from the Constitution of Montenegro, which provides that the law must be in compliance with the Constitution and with ratified international agreements, and that the other regulations must be in compliance with the Constitution and the law (individual legal acts must be in compliance with the law).10 The nullity of the contract of employment shall be determined in proceedings before the competent court (lower court). Consequences of the invalidity of the contract are not regulated in the Labour Law, but in the Law on Obligations, which does not provide specifics about the ­consequences of the nullity of the contract of employment in relation to the nullity of the other agreements.11 the purpose of substituting a temporarily absent employee, for the performance of seasonal jobs or work on a specific project until the completion of the project in accordance with the law and collective agreement.’ 8  See art 26 of the Labour Law. In relation to this is the judgment of the Supreme Court of Montenegro, Rev No 1166/13 of 17 December 2013. 9  See art 4 of the Labour Law. 10  See art 145 and 148 of the Constitution of Montenegro (Official Gazette of Montenegro, No 1/07 of 25 October 2007 and 38/13 of 2 August 2013). 11  According to the Law on Obligations, in the case of nullity of the contract, each party is obliged to return to the other all that was received under such a contract, and if this is not possible, or if the nature of the performance prevents restitution, adequate compensation must be paid in accordance with the prices at the time of the court decision, unless the law specifies otherwise. If the contract is null and void because its content is contrary to compulsory regulations or public morality, the court may reject, in whole or in part, a request to restore what the other side has given, and may decide how the other party shall be compensated on the basis of a prohibited agreement before the appropriate humanitarian organisations or institutions on the territory where that party has its headquarters, domicile or residence. The court shall take into account the good faith of both parties, the significance of risks to property or interests, as well as morals. See art 102 of the Law on Obligations.

462  Vesna Simovic-Zvicer B.  Employment Relationship: Basic Definition Under the Labour Law, the ‘employment relationship’ (radni odnos) is a relationship between an employee and an employer and is established by a contract of employment in accordance with the law and collective agreement.12 The Law contains a rather poor definition of the employment relationship, from which only its purpose and subjects can be derived. However, other provisions of laws cover the key elements for the existence of an employment relationship, such as voluntariness, paid work (remuneration), involvement (integration) in the employer’s organisation and subordination. Voluntariness, as a key element of the concept of ‘employment relationship’, is not explicitly stated in the Labour Law, but is inferred from the contractual nature of employment. More specifically, it derives from the Law on Obligations,13 which, in terms of reasons for nullity and disputability of the contract, applies to the employment relationship.14 This also implies that any lack of will of either of the contracting parties will result in the cancellation of the employment contract.15 Paid work is one of the essential features of the existence of an employment relationship, verified by the amount of the basic salary, the level of pay and elements determining work performance, wage compensation, salary raises and other earnings, as well as deadlines for their payment. These are key elements of the content of an employment contract.16 As regards integration into the organisation as a key element of the concept of employment, it should be noted that an employment relationship is only considered to have been established when the employee commences work on the basis of a previously signed employment contract. Hence, two conditions need to be met in order to establish an employment relationship: to sign an employment contract and to start working. If the employee does not commence working on the date stipulated in the employment contract, it is considered that he or she has not concluded an employment contract, unless he or she is unable to work for justified reasons in accordance with the collective agreement or if an employer and employee agree otherwise.17 These justified reasons are stipulated in the General Collective Agreement,18 12 

See art 3 of the Labour Law. Official Gazette of Montenegro, No 47/2008 of 7 August 2008. 14  Thus, under art 19 of the Law on Obligations, the contract shall be deemed to have been concluded when the parties agree on the key elements of the contract. 15  In terms of the Law on Obligations, lack of will, such as coercion and threat, misconceptions about the key elements of the contract and fraud are reasons for termination of the contract. See arts 53–59 of the Law on Obligations. 16  See art 23(11) and (12) of the Labour Law. 17  See art 27(2) of the Labour Law of Montenegro. 18  The General Collective Agreement applies to all employees and employers in the territory of Montenegro (private and public sectors), unless a special law provides otherwise. 13 

The Concept of ‘Employee’: The Position in Montenegro 463 which in Article 4 provides that the employer may allow an employee to commence work after the date specified in the employment contract if the reasons for this relate to the death of a relative up to the third degree of kinship;19 hospitalisation; responding to an invitation of a state authority; or traffic disruption caused by a natural disaster (earthquake, flood etc). In this case, the employee shall, within 24 hours prior to the date of the commencement of work stipulated in the contract, inform the employer of the reason for not commencing work on that date. An employee shall commence work when the reason referred to in paragraph 1 of this Article has ceased, or within seven working days in the event of the death of an immediate family member.20 In the event of a change in status or a change of employer,21 the transferee shall, in accordance with the law, take over the transferor’s employees and shall respect all of the employees’ rights and obligations under the contract of employment in force on the day of the transfer. The transferor shall inform the employees of the transfer in writing no later than five days prior to the transfer. The transferee shall conclude a contract of employment with the employees within five days of the transfer. The new contract of employment may not diminish the scope of rights the employees enjoyed in the previous contract of employment with the transferor for the duration of the obligations under the respective collective agreement. The transferor shall terminate the contract of employment with an employee who refuses to conclude a new contract of employment with the transferee or declares that he or she does not accept the conclusion of a new contract of employment with the transferee within the given time period. Subordination is one of the key elements of the employment relationship, the degree of which depends on the nature of the employer’s activities or a description of the duties and tasks carried out by the employee. Provisions on disciplinary liability indicate the existence of subordination in the employment relationship. The Labour Law provides that an employee who does not fulfil his or her work duties or fails to comply with decisions made by the employer shall be responsible for any violation of his or her duties in accordance with the law, collective agreement or employment contract.22 According to Montenegrin legislation, the working hours and duration of employment are irrelevant for the term of employment, even though the 19  Members of the immediate family for the purposes of this collective agreement include: spouse, children (legitimate, illegitimate, adopted and foster children), parents, brothers and sisters. 20  This deadline in the event of the death of an immediate family arises from/is correlated with art 72(3) of the Labour Law, which provides for the right to paid leave in the event of the death of an immediate family member of the employee. 21  See art 87 of the Labour Law. 22  See ibid art 124(2).

464  Vesna Simovic-Zvicer duration of work and the employee’s working hours must be included in the employment contract. In a similar vein, the duration of working hours as a feature of the employment contract is not essential for the existence of an employment relationship, but it is important for the exercise of rights arising from employment, given that they are exercised in proportion to the time spent at work. However, the law provides the lower limit of the duration of working hours, ie, an employment contract cannot be concluded for working hours of less than a quarter of full-time work or 10 hours per week.23 ­Part-time work should, however, be distinguished as a form of reduced working hours. The latter may be applied in the case of arduous working conditions (such as particularly difficult and strenuous work and work that may be detrimental to employee health). In this case, the working hours are reduced in proportion to the harmful effects on human health or the work capacity of the employee, but not less than 36 hours per week.24 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition According to the Labour Law, an employee (zaposleni) is a natural person who works for an employer and enjoys the rights and obligations arising from the employment relationship under the employment contract.25 A similar definition is contained in the Law on Mandatory Social Insurance, which defines an employee as a natural person who works for an employer and enjoys the rights and obligations arising from an employment relationship on the basis of a contract of employment or other provisions.26 From these definitions, it follows that the employment relationship has the character of an inter partes relationship and that the employee is a person who performs work for another, ie, for the employer in exchange for remuneration. The Law on Prohibition of Harassment at Work also applies to persons who remain outside an employment relationship, such as persons attending professional training; pupils and students attending practi­ cal training; ­volunteers; persons performing certain tasks while serving a 23 

See ibid art 46. with reduced working hours shall be determined by the Systematisation Act in accordance with collective agreements, and employees who are assigned to them shall have the same rights based on employment as an employee who works full time. In addition, the Law asserts that they cannot work overtime or may not conclude employment contracts for such jobs with another employer. See art 47 of the Labour Law. 25  See ibid art 15(2). 26  See art 4(4) of the Mandatory Social Insurance. 24 Jobs

The Concept of ‘Employee’: The Position in Montenegro 465 sentence of imprisonment or corrective measures; persons in voluntary and public works, works organised in the common interest, labour activities and competitions; and any other person taking part in the work of the employer.27 B.  Employer: Basic Definition As in the case of ‘employee’ (poslodavac), the Labour Law also provides a definition for ‘employer’. An employer is a national or foreign legal person or part of a foreign legal person, or a physical person who concludes a contract of employment with an employee.28 It should be noted that it is of no relevance for the definition of the employer whether the employee performs tasks at its premises or not. However, it is important that the employee is subordinate to the employer in terms of compliance with obligations under the employment contract, as well as with those arising from the Labour Law and other legal acts. One example of this is agencies for temporary assignments of employees.29 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees One of the specificities of Montenegrin legislation is the fact that managers have the status of ‘employee’.30 According to Article 29 of the Labour Law, managers conclude an employment contract with the competent representative of the employer or with the employer directly. The rights, obligations, responsibilities and other matters relating to the status of civil servants and state employees are regulated in the Law on Civil Servants and State Employees. According to this Law, civil servants are persons who are employed by a state body to perform tasks related to exercising the competency of that body as stipulated in the Constitution, laws and other regulations. Civil servants shall also perform tasks related to information technology, finance, accounting and other tasks of an administrative nature for a state body. State employees are persons

27 

See art 3 of the Law on Prohibition of Harassment at Work. See art 15(1) of the Labour Law. 29  See ibid art 43a–43g. 30  A manager may establish an employment relationship for an indefinite period or for a fixed term. Employment for an indefinite period referred to in s 1 of this article may last until the expiry of the term for which the manager was appointed or until his or her dismissal. See art 29 of the Labour Law. 28 

466  Vesna Simovic-Zvicer who are employed by a state body to perform administrative-technical and ancillary tasks. Special employment conditions and legal status are also characteristic for seafarers who travel internationally, sign an employment contract with the ship owner, ship operator or company, and their rights and obligations are, in addition to the Law on Safety of Maritime Navigation, also regulated by international conventions.31 Employees in the church service also represent a distinct category. In principle, labour law is fully applicable to them. However, churches can fix special loyalty duties due to their right to self-determination which is guaranteed under the Constitution in Article 14.32 Athletes also have a specific legal status. They conclude an employment contract with a sports club and the contract type depends on whether they are hired as professional athletes or amateurs. Professional athletes conclude an employment contract with a sports club and all rights deriving from an employment relationship apply to them, while amateurs conclude a scholarship agreement or a contract of sports activities with a sports club without concluding an employment contract. Montenegrin legislation recognises two categories of artists: artists and independent artists. According the Law of Culture,33 artists are persons who create original works of art or persons who interpret art and other works, and have the status of employee in cultural institutions. Independent artists, on the other hand, are persons who are engaged in artistic or cultural activities, which is their primary occupation and earn an income from the cultural activity without being employed. The status of independent artists is regulated by the Law on Culture, which stipulates the procedure for acquiring the status of a freelance artist. According to Article 64 of the Law, an independent artist generates income from his or her work, provides services etc. Independent artists enjoy the right to health, pension and disability insurance, and the contributions shall be provided to the state budget. According to the Labour Law, trainees have the status of employees. Thus, Article 39 stipulates that an employer may sign a contract with a person who is employed as a trainee to achieve a specific level of education or professional qualification in accordance with the law and collective agreement.

31 See Law on Safety of Maritime Navigation of 27/12/2013 (Official Gazette of Montenegro, No 62/13 of 31 December 2013). 32  Religious communities are separate from the state. Religious communities are equal and free to perform religious rites and religious affairs. 33  Official Gazette of Montenegro Nos 49/08, 16/11, 40/11 and 38/12.

The Concept of ‘Employee’: The Position in Montenegro 467 B.  The Establishment of a Specific Category of ‘Workers’ A category of ‘workers’ does not exist in Montenegro. Instead, the term ‘employee’ is used for those persons to whom the Labour Law applies, while the terms ‘civil servant’ and ‘state employee’ are used for persons to whom the Law on Civil Servants and State Employees applies.34 IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The provisions of the Labour Law35 and the General Collective A ­ greement36 governing the liabilities of an employee require the existence of subordination between the parties to the employment relationship. The latter implies, among other things, the organisation of work and the employer’s operations, as well as the conditions and rules of the employer with regard to meeting contractual and other obligations arising from the employment relationship. The degree of subordination within the relationship between the employer and employee depends on the nature of the employer’s activities or a description of the duties and tasks. Thus, as a general rule, subordination is less pronounced in labour relationships in which employees perform highly specialised professional activities (doctors, professors, artists etc). As regards involvement in the organisation as an essential feature of the concept of ‘employment’, it should be noted that the employment relationship is only considered as having been established once the employee commences work based on the previously signed employment contract. In order for an employment relationship to be established, two conditions need to be fulfilled: signing an employment contract and the commencement of work. If the employee does not commence work on the date stipulated in the employment contract, it is deemed that no employment contract has been concluded, unless he or she is unable to commence work for ­justified reasons 34  According to art 2 of the Law on Civil Servants and State Employees, a civil servant is a person who is employed by a state body to perform duties under the jurisdiction of that body in accordance with the Constitution, laws and other regulations, as well as persons employed by a state body and perform tasks related to information technology, materials and finance, accounting and other administrative tasks. A state employee is a person who is employed by a state body to perform administrative, technical and auxiliary tasks. 35 An employee shall respect the organisation of work and the employer’s operations as well as the conditions and rules of the employer with regard to meeting contractual and other obligations arising from the employment relationship. See art 13(2) of the Labour Law. 36  Workers who do not fulfil their duties or fail to comply with the decisions of the employer are accountable for violation of duty. See art 35 of the General Collective Agreement.

468  Vesna Simovic-Zvicer in accordance with the collective agreement or if the employer and employee agree otherwise.37 These justified reasons are stipulated in the General Collective Agreement,38 which in Article 4 provides that the employer agrees to the commencement of work by the employee after the date stipulated in the employment contract if the reasons for not commencing work relate to the death of a relative up to the third degree of kinship; hospitalisation; responding to an invitation by a state authority; or traffic disruption caused by a natural disaster (earthquake, flood etc). In this case, the employee shall inform the employer 24 hours prior to the commencement date stipulated in the employment contract about the reason for not commencing work on that date. Specifics on the integration into the undertaking apply to employees who are temporarily assigned. The temporary assignment of employees refers to the following subjects: (i) temporary work agencies, which are deemed to be the employer; (ii) employees; and (iii) another employer, the user undertaking to whom the employees shall be assigned, which is typical for employers who carry out cyclical activities and who assign employees for specific jobs only. An assignment of employees is based on two documents: an agreement regulating the relationship between the agency and the employer (the user undertaking);39 and the employment contract the employee signs with the temporary work agency. An assigned employee is employed by the agency with which he or she concludes an employment contract for a fixed or indefinite period.40 However, although temporary agencies are treated as

37 

See art 27(2) of the Labour Law of Montenegro. The General Collective Agreement applies to all employees and employers in the territory of Montenegro (private and public sectors), unless a special law provides otherwise. 39  This agreement contains the following elements: the number of employees assigned to the user undertaking; the period for which the employee is assigned; the place of work; the tasks that will be performed by the employee; the applicability of safety measures at the workplaces where the employee will be carrying out tasks; the manner and time in which the user undertaking is required to provide the agency with the calculation of his or her income, as well as regulations that will be applied by the user undertaking to determine the employee’s income; and the responsibility of the agency if an employee who is assigned to work does not meet the obligations. 40 It is important to note that in order to prevent the abuse of this mechanism, the Labour Law provides for cases in which an agreement on a temporary assignment cannot be concluded, namely: (1) the substitution of employees who are striking at the user undertaking in accordance with the Labour Law; (2) the assignment of an employee to perform tasks initially performed by employees who have been made redundant by the user undertaking in the last 12 months; (3) the performance of work that lies within the scope of the agency’s activity; and (4) performance of work in other cases established by a collective agreement that is binding (art 43b(3)) for the user. In order to prevent abuse by the employer-user, the Labour Law provides for the obligation to inform the union on the number and reasons for engagement of temporary work employees at least once every six months (art 43f(2)). 38 

The Concept of ‘Employee’: The Position in Montenegro 469 e­mployers in relation to employees who are assigned (temporary agency workers), the Labour Law provides certain exceptions in order to more effectively protect their rights. Specifically, it is envisaged that an assigned employee’s remuneration cannot be lower than that of an employee of the user undertaking for the same or similar jobs that require the same qualification or level of education and occupation. It is worth noting that the assigned employee’s remuneration shall be paid by the agency, which is obliged to pay the remuneration, even if the user undertaking does not submit a calculation of the contracted remuneration to the agency or fails to settle its obligations to the agency. During the time that the employee is not assigned to the user undertaking, he or she is entitled to remuneration in accordance with the law and the employment contract.41 The protection of employee rights is provided on the basis of the a­ gency’s obligation to inform the employee of the content of the agreement and to deliver an agreement upon his or her request no later than the date of the commencement of work at the user undertaking. In addition, considering that the agency is an employer, the employee will—if some of the rights of employment are at risk at the user undertaking—have the right to protection by the agency.42 However, this provision should not be interpreted narrowly, as it relates to the internal protection of employee rights, which is provided by the employer, in this case the agency. It certainly does not exclude the right to external protection procedures which include the protection of rights by the Labour Inspectorate, protection before the agency for the peaceful settlement of labour disputes and before the competent court. B. Indicators The existence of subordination in employment indicates the obligation of the employee to respect the organisation of work and the employer’s operations, as well as the employer’s conditions and rules with regard to meeting contractual and other obligations arising from the employment relationship.43 Furthermore, the provisions relating to disciplinary liability44 indicate the existence of subordination in employment.

41 

See art 43c of the Labour Law. See ibid art 43d. 43  See ibid art 13(1). 44  ibid art 124(2) provides that an employee who does not meet his or her work duties or fails to comply with the decision made by the employer shall be responsible for any violation of his or her duty in accordance with the law, collective agreement or employment contract. 42 

470  Vesna Simovic-Zvicer Thus, the Labour Law provides that an employee who fails to meet his or her work obligations due to his or her own fault or fails to act upon the employer’s decisions shall be held responsible for breaching his or her work obligation in accordance with the law, collective agreement and contract of employment. Moreover, the penalty for breaching work obligations is a fine, though the employment relationship may be terminated for serious breaches of work obligations in accordance with the collective agreement and the contract of employment. The decision on the penalty for breaches of work obligations shall be issued by the employer, and this decision is final.45 C.  The Relevance of ‘Economic Dependence’ The Montenegrin Labour Law does not introduce economic dependence as an element that characterises the relationship between the employee and the employer. This element may, however, be inferred from other provisions of labour laws. For example, remuneration is one of the key elements of the existence of an employment relationship, considering that the amount of the basic salary, level of pay and elements determining work performance, wage compensation, increased salary and other earnings of the employee as well as deadlines for their payment are essential features of the content of the employment contract.46 V.  THE PRINCIPLE OF PRIMACY OF FACTS

Montenegrin law is governed according to the principle of primacy of facts when evaluating the legality of the employment relationship. Notably, the Labour Law provides for an exception to the principle of voluntariness. Specifically, the Law contains protective measures for employees who commence work without concluding an employment contract. In this sense, it is envisaged that if the employer does not conclude an employment contract with the employee in writing, it is considered that the employee has been employed for an indefinite period as of the day of commencement of work. Bearing in mind that employment is voluntary, the condition is that the employee has accepted employment.47 On the other hand, limitations are imposed on the free will of the employer, which are justified on the basis of the protective character of labour legislation. Accordingly, the employer is obliged to conclude an employment contract with the employee 45 

ibid arts 24–26. ibid art 23(11) and (12). 47  ibid art 22. 46 

The Concept of ‘Employee’: The Position in Montenegro 471 for an indefinite period within three days from the date of commencement of work. This legal solution is supported by the decisions of the Supreme Court of Montenegro.48 VI.  QUALIFICATION IN FULL

The Labour Law provides for a contractual form of employment. This implies that there is no possibility for the relationship between an employer and an employee to be regulated by some other form of contract (such as a contract for service). However, there is a possibility for full-time employees to conclude an agreement on additional work. Such a contract of employment ceases to apply upon the expiry of the contracted period or upon termination of the contract by either party. Furthermore, the contract on the performance of additional work for the same employer implies that the employee cannot perform the tasks provided for in the original contract. An employee may also conclude an additional contract which as such does not qualify as a contract of employment (eg, an agreement for the provision of accommodation and subsistence, a loan agreement or leasing of an apartment). VII.  LIMITS TO THE FREEDOM OF CONTRACT

Although Montenegrin labour law allows for the introduction of voluntary key elements in the contract of employment, there are limits to the freedom of contract. These limits are determined by the Labour Law, which stipulates that the contract cannot contain less favourable provisions than the collective agreement and the law. Thereby, the protective character of labour legislation is reflected in terms of forecasting of minimum labour rights through legislation and collective agreements. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners In Montenegro, the present system of collective bargaining covers all three levels: the state level, the business level and the employer level. Under the 48  The judgment of the Supreme Court of Montenegro (Rev No 583/14 of 22 October 2014) states that the fact that employees who came to work did not sign an employment contract cannot affect the legality of the employment relationship.

472  Vesna Simovic-Zvicer Labour Law, collective agreements and contracts of employment may not contain provisions that stipulate a narrower scope of rights or less favourable terms of employment than the rights and conditions provided by the Law. On the other hand, collective agreements and contracts of employment may stipulate a broader scope of rights and more favourable terms of employment than those defined by the Law.49 B.  Custom and Practice Deviations on the basis of custom and practice do not exist in Montenegro. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions The Labour Code provides that employment contracts, as a rule, are concluded for an indefinite period. The Labour Law provides for protective measures. Thus, if a contract of employment does not specify the duration of employment, it shall be considered a contract for an indefinite period. If the employee continues working for the employer following the expiry of the period for which the contract was originally concluded, the employee shall be considered to have concluded a contract of employment for an indefinite period if he or she accepts such employment.50 On the other hand, the Labour Code provides that an employee shall be entitled to the rights and obligations based on the employment relationship from the day of the commencement of work. Should an employee fail to commence work on the day established by the contract of employment, it shall be considered that he or she failed to establish an employment relationship, unless he or she was prevented from doing so for justifiable reasons in accordance with the collective agreement or unless otherwise arranged between the employer and the employee. B.  The Burden of Proof Labour disputes shall be settled in accordance with the rules of the civil procedure pursuant to which the burden of proof, as a general rule, rests on the plaintiff (ie, the employee, if he or she initiated dispute resolution). 49  50 

See ibid art 4(1) and (2). See ibid art 26.

The Concept of ‘Employee’: The Position in Montenegro 473 An exception to this rule is disputes on the termination of employment, in which case the Labour Law provides expressis verbis that the burden of proving the validity/justifiability and legality of the reasons for the dismissal lies with the employer.51 X.  SPECIFIC PROCEDURES

The Labour Inspectorate supervises the implementation of the acts that regulate the rules, obligations and responsibilities of employees.52 In its supervisory duties, the Labour Inspectorate can implement three kinds of measures: (i)

Preventive measures such as advising employers and employees on to the implementation of acts regulating employment relationships. Within the scope of such preventive measures, the Labour Inspectorate calls attention to irregularities and makes recommendations for their removal in order to avoid corrective and repressive measures, and informs employees about obtaining and protecting work-related rights. The significance of these measures is reflected in the rising awareness of employers and employees on the rights and obligations related to work, thereby decreasing the scope of irregularities and violations in the labour market. (ii) When corrective measures are authorised by a labour inspector in the case of irregularities in the implementation of laws, other general acts and the employment contract, the employer must eliminate those irregularities within a specified term. (iii) Repressive measures that are implemented for the most serious breaches of regulations and imply pecuniary fines and a temporary prohibition of the employer’s activities. The pecuniary fine is provided by laws whose implementation is subject to control of the Labour Inspectorate. The Labour Law, among other things, provides for pecuniary fines for employers who fail to conclude a contract of employment or a special contract with an individual prior to the commencement of work, who fail to conclude contracts of employment for an

51 

See ibid art 143d(2). January 2012, the Labour Inspectorate was organised as a special body within the Ministry of Labour and Social Welfare. Following the adoption of the Act on Organisation and Way of Work of the State Administration (Official Gazette of Montenegro, No 5.12 of 23 January 2012), the Labour Inspectorate is now organised within the Administration for Inspection Affairs, which has the status of an independent body of administration and which, in line with art 33 of the above-mentioned Act, is in charge of the inspection and supervision of adherence to labour laws in the labour market. 52  Until

474  Vesna Simovic-Zvicer indefinite period, who fail to transform fixed-term contracts of employment into contracts of indefinite duration and who fail to deliver a copy of the registration form to the employee for mandatory social insurance.53 It should be noted that in the above-mentioned cases, the pecuniary fine is imposed for a misdemeanour, while in the case of not delivering a copy of a completed registration form for compulsory social insurance to the employee, the labour inspector can decide to impose an immediate pecuniary fine (‘mandatory fine’). As regards prohibition of the employer’s activities, the Law on Labour Inspection defines cases in which the labour inspector is obliged to temporarily prohibit the employer from carrying out any activities. This is the case in the following situations:54 (i)

an employment contract was not concluded with a person who has been working; (ii) no full-time employment contract was concluded, although the employee continues working for the employer following the expiration of the period for which a part-time employment contract was concluded; (iii) no employment contract with a foreigner was concluded (a foreign citizen and a person without citizenship) under the terms established by a separate law; (iv) a person with whom a labour contract or special type of labour contract was concluded was not registered for mandatory social insurance (health, pension and disability and unemployment insurance) in accordance with the law; (v) contributions for mandatory social insurance were not paid for the person with whom an employment contract or special type of employment contract was concluded; (vi) payment of all outstanding wages, compensation of wages and other forms of income were not made, which the employee earned up to the day of the termination of the employment relationship, as well as the payment of contributions for mandatory social insurance in accordance with the law.

XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons The category of ‘employee-like’ persons does not exist in Montenegro. 53  54 

See art 172(5), (6), (7) and (8) of the Labour Law. See art 5 of the Law of Labour Inspection.

The Concept of ‘Employee’: The Position in Montenegro 475 B.  Equality and Anti-discrimination Law The Labour Law prohibits direct55 and indirect56 discrimination in ­relation to employment requirements and the selection of candidates for the performance of a particular job; the terms of employment and all rights arising from an employment relationship; education, training and professional improvement; promotion at work; and termination of the contract of employment. Provisions of a contract of employment introducing discrimination on any of the grounds referred to in this Law shall be null and void.57 While provisions on non-discrimination only apply to employees and persons seeking employment, the Law on Prohibition of Harassment at Work also applies to persons remaining outside employment relationships, such as persons attending professional training, pupils and students attending practical training, volunteers, persons performing certain tasks while serving a sentence of imprisonment or corrective measures, persons in voluntary and public works, works organised in the common interest, labour activities and competitions, and any other person taking part in the work of the employer.58

55  Direct discrimination pursuant to this Law shall include any treatment based on any of the grounds referred to in this Law (ie, on the grounds of gender, birth, language, race, religion, colour of skin, age, pregnancy, health condition or disability, nationality, marital status, family responsibilities, sexual orientation, political or other belief, social background, financial status, membership in political and trade union organisations (art 5)), whereby a person seeking employment and an employed person is placed in a less favourable position in comparison to other persons in the same or a similar situation. See art 6(1) of the Labour Law. 56  Indirect discrimination pursuant to this Law exists when a certain provision, criterion or practice places or would place a person seeking employment and an employed person in a less favourable position in comparison to other persons on the basis of his or her particular characteristics, status, orientation or belief. See ibid art 6(2). 57  See ibid art 7. 58  See art 3 of the Law on Prohibition of Harassment at Work.

476 

23 The Concept of ‘Employee’: The Position in the Netherlands GUUS HEERMA VAN VOSS

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

ITLE 10 OF Book 7 (in short: Title 7.10) of the Netherlands’ Civil Code1 regulates the contract of employment (arbeidsovereenkomst). Article 7:610, paragraph 1 provides the definition of a contract of employment: A contract of employment is a contract whereby one part—the employee— undertakes to perform work in the service of the other party—the employer—for remuneration during a given period.2

According to this definition, three components are of significance in determining whether an employment contract exists: (1) performance of work, (2) in the service of the employer, and (3) in exchange for remuneration. In the following, these three elements will be further explained by the relevant case law. Regarding the first element of ‘work’, it has been established that this element does not necessarily mean that the employee works actually all (agreed) working hours. According to the settled case law, even sleep (an employee’s periods of inactivity during which his or her services are not required) can be considered as work.3

1 

Burgerlijk Wetboek. For an English translation of the Netherlands’ Civil Code, see HCS Warendorf, R Thomas and I Curry-Summer, The Civil Code of the Netherlands, 2nd edn (Alphen aan den Rijn, ­Kluwer Law International, 2013). 3  HR 15 Maart 1991, NJ 1991/417 (Jebliouazanni v Stichting Casa Migrantes). 2 

478  Guus Heerma van Voss One specific issue is the position of trainees. The Hesseling v Stichting De Ombudsman case is considered the benchmark judgment of the Supreme Court (Hoge Raad). A student of the Social Academy pursued a traineeship at the Foundation of a Private Ombudsman (Stichting De Ombudsman). After completing his traineeship, the student alleged that he had an employment contract with the foundation, since he had performed work in a relationship of authority in exchange for remuneration. The Ombudsman, however, argued that the claimant had not worked according to the definition of the contract of employment, since the trainee’s activities were aimed at broadening his own knowledge and experience. The Netherlands’ Supreme Court ruled in favour of the Ombudsman and held that in the given case, the traineeship had primarily been aimed at broadening the knowledge and experience of the trainee within a regular education programme, and that there was no contract of employment.4 Interestingly, in the PhD Students v University of Amsterdam case, it was decided that although the work of PhD students, who are working towards completing a PhD thesis at the university, is primarily aimed at obtaining a doctoral/PhD degree, their work was considered ‘work’ under the definition of the contract of employment. The outcome was justified by the fact that the university received a premium from the Ministry of Education for every PhD completed.5 As a general rule, the employee’s duty to perform work cannot be enforced through a fine or detention due to the freedom of labour.6 The employer’s obligation to provide work to the employee is based on the assumption that a good employer is obliged to provide work on the basis of the employment contract. This is not explicitly mentioned in the Netherlands’ Civil Code, but should be one of the employer’s duties under the general requirement of good employership: The employer and the employee shall be obliged to act as a good employer and a good employee.7

In the 1965 Walsweer v Acmesa case, the Dutch Supreme Court refuted the idea that the contract of employment implied that the employee was in principle entitled to be provided the agreed work. This right has to be decided on a case-by-case basis and is dependent on the nature of employment, the 4 

HR 9 October 1982, NJ 1983/230 (Hesseling v Stichting De Ombudsman). 14 April 2006, NJ 2007/447, JAR 2006/119, RAR 2006/74 (Beurspromovendi v UvA). 6  Article 7:659, para 2 Netherlands’ Civil Code, which is inspired by ILO Conventions. 7 ibid, art 7:611. See on this provision GJJ Heerma van Voss, Goed werkgeverschap als bron van vernieuwing van het arbeidsrecht, Reeks Vereniging voor arbeidsrecht no 29, 2nd edn (Deventer, Kluwer, 1999); MAC de Wit, Het goed werkgeverschap als intermediair van normen in het arbeidsrecht, Monografieën Sociaal Recht no 14 (Deventer, Kluwer, 1999); DJB de Wolff, Goedwerknemerschap, Monografieën Sociaal recht no 44 (Deventer, Kluwer, 2007). 5 HR

The Concept of ‘Employee’: The Position in the Netherlands 479 agreed work and the specific circumstances of the concrete case.8 However, the lower courts usually accept the principle of the right of the employee to be provided the agreed work, except in cases where the employer has a valid reason to refuse the provision of work. Valid reasons include lack of work, misconduct of the employee or conflicts at the work site. In later cases, the Supreme Court acknowledged specific circumstances under which the right to the provision of work is justifiable. In the Possemis v Hoogenboom’s Bewakingsdienst case, the employee had concluded an on-call contract as a security guard. The Supreme Court decided that the employer was obliged to provide the employee with work, since the employee had also obliged himself to perform work on every call.9 In such a case, a mutual obligation exists. In Chelbi v Klene, the Supreme Court ruled that the employer was to keep the possibility open for an employee who had been suspended from work to return. The employee has to claim this option within a reasonable time period.10 The second element, ‘remuneration’ (or wage), is not defined in the ­Netherlands’ Civil Code. However, the Netherlands’ Supreme Court has construed it as the agreed payment in return for the work performed.11 The wage component can be established on a factual base and does not need to be explicitly agreed upon. For example, in the Bethesda v Van der Vlies case, the claimant provided care for elderly persons and had worked full-time for about 30 years at a home and nursing institution. In exchange, she received room and board, a small amount of holiday pay and a small Christmas bonus. While the nursing institution considered the work performed to be of a voluntary nature and did not consider the claimant’s room and board to be a wage so as to deny an employment contract, the caregiver claimed that she actually had an employment contract with the nursing institution. The Netherlands’ Supreme Court ruled that the room and board were to be considered a wage, and since the parties had entered into a de facto contract of employment, the nursing institution had to pay the claimant remuneration for the last five years with retrospective effect and in compliance with the collective agreement applicable to staff of nursing institutions.12 The third element ‘in service of’ means that the employee must follow the employer’s instructions. For this reason, this element is usually indicated with the term ‘authority’ in the Netherlands’ literature. This notion is quite close to the concept of ‘subordination’ as used in other countries. They represent two sides of the same coin. The difference is that the term ‘authority’

8 

HR 26 Maart 1965, NJ 1965/163 (Walsweer v Acmesa). HR 25 January 1980, NJ 1980/264 (Possemis v Hoogenboom’s Bewakingsdienst). 10  HR 12 May 1989, NJ 1989/801 (Chelbi/Klene). 11  HR 18 December 1953, NJ 1954/242. 12  HR 12 October 2001, NJ 2001/635, JAR 2001/217 (Bethesda v Van der Vlies). 9 

480  Guus Heerma van Voss denotes the employer’s side of the concept. In the Netherlands’ system, the subordination of the employee is addressed in section 7 of the employment contract on the obligations of the employee. Article 7:660 in this context states: An employee must observe the rules governing the performance of work and those designed to promote order in the undertaking of the employer issued to him, by or on behalf of the employer, whether or not at the same time as issued to other employees, within the limits of generally binding provisions or of a contract.

The fact that the employer has control over the work and gives work instructions today is not always as obvious as it used to be in the past, when traditional factories with unskilled workers were dominant. Nowadays, many employees work autonomously and are not given (that many) work instructions throughout the day. According to the case law, it suffices for the employer to be entitled to give instructions on job content.13 Thus, in principle, it is not necessary for instructions to actually be given by the employer. The criterion has changed from ‘giving instructions’ to ‘being entitled to give instructions’. The exercise of authority is being reduced in some cases from applying to job content as a whole towards being limited mainly to organisational and disciplinary aspects of the job. This reduction in the scope of the employer’s discretion depends on the degree of the worker’s independence in the particular job. In certain highly professional jobs, the employer has less influence than in more traditional blue-collar jobs. This applies, for instance, to jobs involving specific professional standards, such as medical work, legal work and accounting. It also applies to professions in which a certain degree of freedom is inherent, including in the arts, journalism (at times within the limits of an editorial statute) and religious workers. Thus, as confirmed in the Imam case,14 a religious function carried out to a large extent in a discretionary manner can also be regarded as being exercised under a contract of employment. In other words, according to the Netherlands’ Supreme Court, a contract of employment can be considered to have been established whenever the employer has the possibility to decide on certain aspects such as working time and holidays, even though the employee is free to choose how to carry out the religious aspects of his or her function. This element will be discussed more extensively in section IV.A below. Article 7:610 of the Netherlands’ Civil Code additionally requires the employee to work ‘during a given period’. It can be said that the majority of the case law and scholars do not consider this component to be a distinctive feature of employment contracts. Accordingly, it has been argued that the provision does not specify the notion of a ‘given period’ and this ­requirement is 13  14 

HR 28 September 1983, NJ 1984/92. HR 17 June 1994, NJ 1994/757, JAR 1994/152 (Iman).

The Concept of ‘Employee’: The Position in the Netherlands 481 therefore of minor significance in comparison with the element of authority. It is generally accepted that this component is met even when only a few hours of work are agreed in the contract.15 However, in some social security cases dealing with occasional work, this component was used to determine whether an employment relationship could be assumed to exist.16 In the past, a few scholars considered working during a ‘given period’ to be a relevant component, arguing that the presence of ‘authority’ today is often difficult to recognise and the duration of work has therefore assumed more relevance.17 Surprisingly, this reasoning, along with the rise of flexible employment relationships in which the periods of work are unsure, motivated the legislator to keep the element as part of the definition of ‘employment relationships’ in the revised title of the Netherlands’ Civil Code on the contract of employment. The Supreme Court of the Netherlands considers the element of ‘authority’ to be characteristic of the employment contract. The view that the component of ‘authority’ continues to be essential dominates legal regulations as well. It is generally argued that replacing this with other criteria would conceal the crucial importance of the employer’s discretionary power.18 Another requirement, which is not explicitly mentioned in the definition of the employment contract, is that the work has to be carried out personally by the employee (personal performance). The principal source for this requirement is Article 7:659, paragraph 1 of the Netherlands’ Civil Code: An employee must perform the work himself; he may not arrange to be substituted by a third party, except with the consent of the employer.

The requirement of personal performance of work is considered subsidiary to the three basic elements mentioned earlier and is included in the duty of 15  AR Houweling (ed), C Loonstra and WA Zondag, Arbeidsrechtelijke themata, 5th edn (The Hague, Boom juridische uitgevers, 2015) 131; GJJ Heerma van Voss, ‘Arbeidsovereenkomst’ in C Asser (ed), Mr. C. Assers Handleiding tot de beoefening van het Nederlands Burgerlijk Recht, Bijzondere overeenkomsten, 3rd edn, part V (Deventer, Wolters Kluwer, 2015) no 25. 16  CRvB 6 April 1972, RSV 1972/214; CRvB 31 March 1981, RSV 1981/165; CRvB 2 May 1986, RSV 1987/155; CRvB 15 December 1993, RSV 1994/169; CRvB 23 October 1995, AB 1996/78; CRvB 10 July 2003, RSV 2003/255. 17 WF de Gaay Fortman, ‘De onderneming in het arbeidsrecht’, PhD dissertation, Free ­University Amsterdam, 1936; FJHM van der Ven, Over de aard der arbeidsovereenkomst, farewell lecture, University of Tilburg (Alphen aan den Rijn, Samsom, 1972); GHA Schut, ‘Medezeggenschap en het gezag van de werkgever’ (1977) RM Themis 233; WCL van der Grinten, ‘Boek 6 van het nieuwe BW’ (1976) NJB 1197; SCJJ Kortmann, LJM de Leede and HO Thunnissen, ‘Opdracht, arbeidsovereenkomst, aanneming van werk’ in C Asser (ed), Mr. C. Assers Handleiding tot de beoefening van het Nederlands Burgerlijk Recht, Bijzondere overeenkomsten, 7th edn, part V-IIIb (Zwolle, WEJ Tjeenk Willink, 1994) no 14–21. 18  Heerma van Voss (n 15) no 25; Houweling (ed), Loonstra and Zondag (n 15) para 4.4, 160–67. See also T Koopmans, De begrippen werkman, arbeider en werknemer (Alphen aan den Rijn, Samsom, 1962); and PF van der Heijden, ‘De definitie van de arbeidsovereenkomst in art. 610 boek 7 NBW’ in PF van der Heijden (ed), De arbeidsovereenkomst in het NBW, Sociaal- en arbeidsrechtelijke reeks no 26 (Deventer, Kluwer, 1991) 41–55.

482  Guus Heerma van Voss the employee to perform the work.19 The statutory provisions state that the employee can only be replaced by someone else provided that the employer agrees. Performing work personally is crucial, as follows, for instance, from cases where the Netherlands’ Supreme Court ruled that a distributor of newspapers and a deliverer of periodicals respectively were not working on the basis of an employment contract since neither was contractually obliged to personally carry out the work.20 The employment contract must be distinguished from the contract for services (overeenkomst van opdracht), which is defined in Article 7:400, paragraph 1 of the Netherlands’ Civil Code which reads as follows: A contract for services is a contract whereby one party, the provider of services, obliges himself to carry out tasks for another, the client, which lie outside the contract of employment, other than the manufacture of tangible products, the safeguarding of objects, the publication of work, or the delivery or transportation of persons or things.

In principle, the two contracts exclude each other.21 The essential difference between the two is the requirement of employer ‘authority’ (gezag) over the employee in the case of an employment contract (‘in the service of the other party’ in Article 7:610 of the Netherlands’ Civil Code). Article 7:750 of the Netherlands’ Civil Code defines a more specific form of contracts for services for the construction industry—the ‘contract for works’ (overeenkomst tot aanneming van werk). Besides this, specific forms of contracts for services are regulated in Book 7 of the Netherlands’ Civil Code, such as contracts relating to mandate, agency, commercial agency, medical treatment and tour operators (travel contract). Furthermore, contracts of carriage and goods are regulated in Book 8 of the Netherlands’ Civil Code on the Law of Delivery and Means of Transport. In essence, all these types of contracts differ from the contract of employment based on the lack of authority of one party over the other. The statutory law in the Netherlands does not provide for formal requirements on concluding a contract of employment. In practice, especially in small firms and certain branches, oral employment agreements are still being used. This is also the case with respect to marginal employment relationships, for example, part-time jobs for students. However, it should be mentioned that as a consequence of EU law, the employer is obliged to inform the employee in writing about certain aspects of the contract,22 but 19 

Houweling (ed), Loonstra and Zondag (n 15) 129–30; Heerma van Voss (n 15) no 23. 13 December 1957, NJ 1958/35 (Zwarthoofd v Het Parool); HR 21 March 1969, NJ 1969/321. 21  Although it is theoretically conceivable that a person could have a contract of employment combined with an additional contract for services for different hours with the same employer, this is not seen in practice. 22  Article 7:655 of the Netherlands’ Civil Code transposing Council Directive (EEC) 91/533 of 14 October 1991 on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship [1991] OJ L 288. 20  HR

The Concept of ‘Employee’: The Position in the Netherlands 483 this is not a prerequisite for the validity of the contract. In addition, the Netherlands’ Civil Code may require certain provisions to be made in ­writing in order to be valid, for instance, a clause containing a probation period (Article 7:652, paragraph 2) or a competition clause (Article 7: 653, paragraph 1). Notably, even if the parties have not explicitly concluded a contract, the parties’ factual behaviour may lead to the conclusion that a contract of employment has been established. Collective agreements (collectieve arbeidsovereenkomst) may set further requirements for the conclusion of contracts of employment, yet this is not regular practice. Regardless, collective agreements may require certain provisions to be concluded in writing, for instance, in case of the fixed-term of contracts. A contract of employment may be void or voidable when it is contrary to good morals or public policy. Pursuant to Article 3:40 of the Netherlands’ Civil Code: (i)

A juridical act which by its content or necessary implication is contrary to good morals or public policy is null. (ii) A juridical act which violates a mandatory statutory provision is null; ­however, if the provision is solely intended for the protection of one of the parties to a multilateral juridical act, the act may only be annulled; in both cases, this applies to the extent that the provision does not provide otherwise. (iii) Statutory provisions that do not purport to invalidate conflicting juridical acts are not affected by the preceding paragraph.

In principle, under the Netherlands’ Civil Code, an illegal juridical act is void, but when the rule primarily serves to protect one of the parties, it is only voidable by that party or by the court upon request of that party. In labour law, the employee is usually seen as the protected party. Consequently, an illegal juridical act becomes voidable. For example, the Netherlands’ Supreme Court decided that a contract of employment that had been concluded with an immigrant who was not entitled to work in the Netherlands was valid, even though it violated a mandatory provision. The reasoning was that the obligation to apply for a work permit rests upon the employer. An employer is not allowed to provide an illegal immigrant with work and therefore he may end the contract of employment for this reason once he has attended to this. However, according to the applicable case law, the employer must pay wages as long as the work is performed, because the employer bears the risk that the illegal immigrant is granted a work permit.23

23  HR 27 March 1981, NJ 1981/492 (El Araichi v Roemo Total Care); HR 20 December 1985, NJ 1986/713 (Hotel Ibis v Elbouk).

484  Guus Heerma van Voss It is my assumption that in the case of criminal activities, such as ­selling weapons without a permit or trafficking, the contract of employment will be void since the legal provision in place does not aim to protect the employee. Yet in the case of an employment contract with a child entered into in violation of the regulations against child labour, one could argue that the provision aims at protecting the employee and the contract is therefore voidable. In the case of an employee of a coffee shop selling ‘soft drugs’ (which is tolerated by the Dutch authorities despite being illegal according to the ­Netherlands’ Criminal Code), it could be discussed whether such a contract of employment is void or voidable. In all these cases, the validity of the contract can be determined by the court. Nullification usually only affects the future. This means that the employer has to pay wages for work carried out before the nullification of the contract becomes effective.24 Special protection for illegal (foreign) workers is foreseen in the Labour Immigrants Act.25 Article 23, paragraph 2 of the Act stipulates that an employer who has employed an illegal immigrant is presumed to have employed him or her for at least six months against the wage established in Article 2, paragraph j of Directive 2009/52/ EC and for working hours typical for that sector. The above-mentioned provision of Directive 2009/52/EC states that an illegally employed worker must be paid the equivalent of what a legally employed worker would have earned in the same situation. The presumption is rebuttable. An illegally employed worker can also claim wages from a higher-ranking employer in a chain of employers in the event that his or her claim against a lower-ranked employer was unsuccessful. B.  Employment Relationship: Basic Definition A specific notion of ‘employment relationship’ as such does not really exist in the Netherlands’ labour legislation. The Minimum Wage Act uses the term ‘labour relationship’ (dienstbetrekking). The basic definition in the Act refers to the employment contract, but the Act extends to employee-like persons (see further section XI.A below). The same applies to social insurance and tax legislation. It can be said that the Netherlands’ labour legislation is increasingly based on the definition of the employment contract. Nearly all forms of employment against remuneration may fall under this definition, with the result that additional provisions are barely relevant.

24  25 

Heerma van Voss (n 15) no 51. Wet arbeid vreemdelingen, Act of 21 December 1994, Stb 1994.

The Concept of ‘Employee’: The Position in the Netherlands 485 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition There is no separate definition for ‘employee’ in the Netherlands’ Civil Code. However, this definition can be derived from the above-mentioned definition of the contract of employment. An employee is thus a person who undertakes to perform work in the service of the employer in exchange for remuneration during a given period. Other Acts provide more specific definitions, such as: (i)

Article 4 of the Netherlands’ Minimum Wage and Minimum Holiday Allowance Act;26 (ii) Article 1:1 of the Netherlands’ Working Hours Act;27 (iii) Article 1, paragraphs 1 and 2 of the Netherlands’ Health & Safety Act;28 (iv) Article 3 of the Netherlands’ European Works Council Act;29 (v) Article 3 of the Netherlands’ Unemployment Act;30 (vi) Article 3 of the Netherlands’ Sickness Act;31 (vii) Article 8 of the Netherlands’ Disability Act.32 Most of these provisions are largely based on Article 7:610 of the Netherlands’ Civil Code, but differ slightly. For instance, Article 4 of the Netherlands’ Minimum Wage and Minimum Holiday Allowance Act defines ‘employee’ as a natural person who is employed, whereas Article 2 of this Act defines ‘employment’ closely with the definition elaborated in the Civil Code. The above-mentioned social insurance acts include not only employees with an employment contract under civil law, but also civil servants appointed under public law. The Minimum Wage Act as well as the three above-mentioned social insurance acts extend their scope to certain groups. The extension to ‘employeelike’ persons is discussed below in section XI.A. The Working Hours Act defines an employee in relation to the definition of ‘employer’. The definition covers every person who works under the authority of another, as well as persons who are made available to work for another. Article 2:7 of the Working Hours Act opens the possibility to

26  Wet minimumloon en minimumvakantiebijslag, Act of 27 November 1968, Stb 1968, 657. 27  Arbeidstijdenwet, Act of 23 November 1995, Stb 1995, 598. 28  Arbeidsomstandighedenwet, Act of 18 March 1999, Stb 1999, 184. 29  Wet op de Europese ondernemingsraden, Act of 23 January 1997, Stb 1997, 32. 30  Unemployment Act (Werkloosheidswet), Act of 6 November1986, Stb 1986, 566 (WW). 31  Sickness Act (Ziektewet), Act of 5 June 1913, Stb 1913, 204; 1999, 22 (ZW). 32  Work and Income (Capacity for Work) Act (Wet werk en inkomen naar arbeidsvermogen), Act of 10 November 2005, Stb 2005, 572 (Wet WIA).

486  Guus Heerma van Voss include self-employed persons under the scope of the Act. The Health & Safety Act entails comparable definitions. The Netherlands’ Works Council Act does not include a definition of employee, but refers to the term ‘persons working in the enterprise’ (Article 1, paragraph 2).33 B.  Employer: Basic Definition There is no separate definition of ‘employer’ in the Netherlands’ Civil Code. However, as in the case of ‘employee’, this definition can be deduced from the already-discussed definition of ‘contract of employment’. An employer is therefore a person in whose service the employee undertakes to perform work in exchange for remuneration during a given period. Notably, under the Netherlands’ social security law, some provisions provide an elementary definition of the term ‘employer’. For example, according to Article 9 of the Netherlands’ Unemployment Insurance Act and Article 9 of the Netherlands’ Sickness Benefits Act, an employer is the public employer or the natural person or body for whom one or more natural persons work in employment. In the Working Hours Act and the Health & Safety Act, a definition of ‘employer’ is provided and related to the definition of ‘employee’ in these Acts. Labour law does not define ‘groups of employers’. In specific cases, the courts must determine which employer in a group is the contracting party to the employment contract. The law on works councils envisages specific bodies being established in groups of employers to represent employees: the groups and central works councils. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees The definition of ‘employment’ is meant to be useful for every type of employer and employee: it builds on a ‘one-size-fits-all’ principle. Nevertheless, in recent years, there has also been a tendency to differentiate and ­create deviating rules for specific groups of employers and employees. The specific sub-groups of employees in the Netherlands’ labour legislation constitute board members, persons working in private households, civil

33 

Wet op de Ondernemingsraden, Act of 28 January 1971, Stb 1971, 54 (WOR).

The Concept of ‘Employee’: The Position in the Netherlands 487 servants, employees of churches and private schools with a specific denomination, commercial representatives, temporary agency workers and seafarers. Board members (Bestuurders), whose employment relationship falls within the scope of Article 7:610 of the Netherlands’ Civil Code, are employed on the basis of a contract of employment. However, the Code explicitly stipulates that the contract with the member of the board of a corporation whose shares are available on the stock exchange cannot be a contract of employment (Article 2:132, paragraph 3 of the Netherlands’ Civil Code). The purpose of this exception, which was introduced by an amendment of the Members of Parliament to the Act on Governance of Legal Persons,34 is to preclude enormous severance payments for board members who have been discharged. In practice, this objective will not materialise because the current law does not stipulate any limits to such payments. The protection regular employees enjoy, especially with regard to protection in the case of dismissal, does not apply to members of the board according to the Netherlands’ Civil Code. The court cannot order the employer to restore the employment of members of the board.35 This is explained by the fact that shareholders should be able to determine the course of the company in the case of divergent views between shareholders and members of the board. Persons working in private households (huishoudelijk personeel) for less than four days per week are, as a general rule, employed on the basis of a contract of employment. They are exempt from dismissal protection and social security rights in certain provisions. Dismissal is permitted without a preventive check to determine its reasonableness and they are not insured through social insurance. The purpose of these exceptions is to reduce the administrative burden on private households and to promote domestic services. Civil servants (ambtenaren) have a special statute under public law regulated in the Civil Servants Act.36 They are appointed by unilateral decision of the government and therefore have no contract of employment under the Netherlands’ Civil Code. However, Parliament has accepted a proposal to change this status quo.37 According to the new Act, civil servants shall be employed on the basis of contracts of employment under civil law. Additionally, specific provisions in the Civil Servants Act will apply. Only those civil servants working in

34 

Wet inzake toezicht en bestuur van NV’s en BV’s, Stb 2011, 2758. Netherlands’ Civil Code, arts 2:134 and 2:244. 36  Ambtenarenwet. 37 Act on Normalisation of the Legal Position of Civil Servants of 9 March 2017, Stb 2017, 123. 35 

488  Guus Heerma van Voss the military, police and members of the judiciary will keep a completely separate statute under public law. The Home Minister has announced in a letter to Parliament of 20 January 2017 that the entering into force of the new Act will require adjustment of a large amount of legislation. The planning is that this will be completed—and thus the new Act will be introduced—by 1 January 2020. Furthermore, certain lower public authorities, such as local communities and provinces, also occasionally work with contracts of employment. Article 7:615 of the Netherlands’ Civil Code makes a general exception of the applicability of Title 7.10 of the Netherlands’ Civil Code to contracts of employment with public authorities. This implies that public authorities that conclude contracts of employment must determine their own rules for this category of employees. However, they can choose to apply Title 7.10 or parts thereof. Employees of churches are generally supposed to work under a contract of employment. This issue raises some controversies, particularly when internal church regulations that apply to employment relationships conflict with secular law. Thus, certain exceptions are envisaged in relation to dismissal and the equal treatment law to allow the churches to exercise religious freedom, which is guaranteed in the Constitution and in international law. Employees of denominational private schools (bijzonder onderwijs) (such as Catholic, Protestant, Jewish and Islamic, but also Dalton, Montessori, Jenaplan and others) fall under the general rules of contracts of employment. However, certain exceptions in the law on dismissals and in the equal treatment law apply to these employers in order to allow them to exercise the constitutionally guaranteed freedom of education. Section 10 of Title 10 of Book 7 of the Netherlands’ Civil Code contains specific provisions for employees who are commercial representatives (handelsvertegenwoordiger). Article 7:687 of the Netherlands’ Civil Code reads as follows: A contract for commercial representation is a contract of employment under which one party—the commercial representative—is contracted by another party—the principal—in exchange for remuneration consisting wholly or partly of commissions, to act as an intermediary in the conclusion of contracts and to possibly conclude them in the name of the principal.

This means that there is an employment relationship between the commercial representative and the principal, but some provisions that usually concern agents are applied to this type of contract in addition to the rules for contracts of employments. This concerns, for instance, some rules with regard to the calculation and payment of commission. Section 11 of Title 10 of Book 7 of the Netherlands’ Civil Code contains specific provisions on temporary agency workers (uitzendkrachten). Their contract with the temporary work agency (uitzendbureau) is called

The Concept of ‘Employee’: The Position in the Netherlands 489 a ­temporary agency contract (uitzendovereenkomst). Article 7:690 of the Netherlands’ Civil code defines it as: [A] contract of employment within the scope of a professional or business establishment of the employer whereby the employee is placed by the employer at the disposal of a third party to perform work under the supervision and direction of the latter by virtue of a contract for services concluded by the latter with the employer.

So-called ‘payroll companies’ (payrollbedrijven) are a recent phenomenon in the Netherlands and, like temporary work agencies, exercise the role of employer, although the employee does not directly work for the payroll company, but for a hiring company. The difference between such companies and temporary work agencies is that the payroll employer does not play an intermediary role on the labour market. The payroll company does not search for employees, but only acts as their formal employer. The legal status of such companies raises some problems. The Supreme Court decided that payroll contracts can be considered temporary agency contracts since they are covered by the definition of Article 7:690 of the Netherlands’ Civil Code as quoted above. It argued that in the event of the use of this type of contract contrary to the purpose of this Article, the courts can remedy this.38 In recent legislation on dismissals, the position of payroll employees ­(payrollwerknemers) was protected. In Article 1, paragraph f of the Dismissal Regulation,39 a payroll employer (payrollwerkgever) is defined as: [A]n employer who on the basis of a contract with a third party, which is not established within the framework of providing services for matching demand with supply in the labour market, places an employee at the disposal of and under the supervision and guidance of that third party to perform work, whereby the employer who only places the employee with the consent of the third party is entitled to place the employee at the disposal of another party.

The payroll employee is defined under paragraph g in the same Article as ‘the employee intended under f’. Section 12 of Title 10 of Book 7 of the Netherlands’ Civil Code covers the employment contracts of seafarers (zee-arbeidsovereenkomst). The employment contract of seafarers is defined in Article 7:694, paragraph 1 as: [T]he contract of employment, including temporary agency contracts, whereby the seafarer undertakes to perform work on a sea vessel.

The provisions in this section explicitly distinguish contracts of employment for work on sea vessels partly because such work is performed in different countries. The provisions are mainly based on the Maritime Labour 38 

HR 4 November 2016, JAR 2016/286 (C4C/StiPP). of the Minister of Social Affairs and Employment of 23 April 2015 to enact regulations on dismissals and the transition payment (Dismissal Regulation—Ontslagregeling), Official Gazette (Staatscourant) 11 May 2015, No 12685. 39  Regulation

490  Guus Heerma van Voss ­ onvention 2006 of the International Labour Organization (ILO) and C partly on customary practices in the sector. As a general rule, the contract of seafarers has to be agreed in writing.40 Violations of this provision do not invalidate the contract, but it may be voidable. In section 12A of Title 10 of Book 7 of the Netherlands’ Civil code, s­ pecific rules are established for contracts of employment for sea fishing. This ­section stipulates specific rules for this group of employees, such as their rights in the event that they are entitled to part of the catch. It is expected that the implementation of ILO Convention 188 on Labour in the Fishing Industry will lead to further legislation on other groups of fishermen. B.  The Establishment of a Specific Category of ‘Workers’ The category of ‘workers’ does not exist in the Netherlands. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The third component of the definition of contract of employment, namely authority, often gives room for discussion. As mentioned above, according to the case law in the Netherlands, the principle of authority does not ­necessarily imply that work instructions should be given on a regular basis. It suffices for the employer to be entitled to give work instructions. The level of education of employees has been rising, and the nature of work has generally changed to the extent that it relies more often on ­knowledge, new technologies and communication than on actual material production. More qualified/independently working employees are therefore being sought. As a result, it has become more common for the employer to not give instructions related to the content of the work (the employer may not be able to or may not even be allowed to do so). This, for instance, is the case in hospitals, where the board has no medical knowledge, or at a newspaper, where journalists’ freedom of the press is guaranteed by an editorial statute. In any case, however, the employer is still allowed to give instructions on disciplinary aspects and on working conditions (working hours, administrative requirements, holidays, disciplinary measures and dismissal), which suffices to constitute the required authority.

40 

Netherlands’ Civil Code, art 7:697, para 1.

The Concept of ‘Employee’: The Position in the Netherlands 491 Aside from the competence to give work instructions, the concept of authority also includes the exercise of control over the work and the competence to integrate the employees’ various activities into the company. B. Indicators As simply giving orders is no longer decisive, it can be difficult to distinguish a contract of employment from a contract of services. To this end, the case law in the Netherlands has made use of several criteria to identify employment relationships. Accordingly, the courts assess the employer’s authority the position of the employee within the organisation and who bears the risk of the work. These are all relevant criteria necessary to determine whether the given individual is employed by another person. These criteria are weighed by the courts. The individual criteria are not decisive in themselves. Notably, the decision whether the criterion ‘authority’ is met is made on the basis of a ‘holistic approach’41 in which all relevant circumstances are weighed in connection with each other. Indications for self-employment are as follows:42 (i)

The worker has several customers, not just one contract partner who provides work.43 The worker meets the formal requirements related to the contract of services. For example, a self-employed person must present invoices which are subject to VAT and should be registered with the (regional) Chamber of Commerce.44 (ii) Freedom of the worker to determine his or her work plan. (iii) Remuneration is related to concrete services. Accordingly, if invoices are issued for specific services, a contract of services is indicated. Conversely, if the same amount is paid to the worker every month, it points to a contract of employment. (iv) Remuneration directly paid by the clients to the worker. (v) The worker bears entrepreneurial risks. In the event that the worker is only paid once the work is completed and in the event that the p ­ ayment is related to the profits made by him or her, self-employment is implied. 41  The term used by Advocate General Huydecoper in his conclusion before HR 14 April 2006, NJ 2007/447, JAR 2006/119, RAR 2006/74 (Beurspromovendi v Universiteit van Amsterdam). 42 The list of indications is mainly based on the commentary on art 7:610 BW by GJJ Heerma van Voss and FG Laagland, ‘Commentaar op artikel 610 Boek 7 BW’ in LG Verburg et al (eds), Arbeidsovereenkomst (Deventer, Kluwer (online)) para 1.2. 43  CRvB 17 July 2003, USZ 2003/277 accepted self-employment, though there was eventually only one customer in the case of start-ups. 44  In HR 13 July 2007, NJ 2007/449, JAR 2007/231, RAR 2007/123 (Thuiszorg Rotterdam v Stichting Pensioenfonds PGGM), the non-existence of bills and VAT payments contributed to the conclusion that the person was an employee.

492  Guus Heerma van Voss (vi)

The worker supplies the raw and ancillary materials as well as the tools himself or herself. (vii) Payment is not continued during holidays, sickness or days off. (viii) No other work is performed aside from the agreed work. (ix) Incidental character of the work. It is not essential for the work to be carried out on the premises of the employer. Home working cannot only be carried out within the scope of self-employment, but also under the authority of an employer, depending on the circumstances.45 C.  The Relevance of ‘Economic Dependence’ Economic dependence may be a factor in decision whether a contract of employment exists or whether the person is working in a self-employed capacity. This is illustrated in the Groen v Schoevers case. In this case, Groen had his own practice as a tax consultant. In addition, he gave lectures for a couple of hours per week at the Schoevers’ school for secretaries. Groen stated that he did not want to have an employment relationship with the school and that he wanted to be paid per hour. However, when Schoevers terminated the contract with Groen, he claimed that the contract between both should be qualified as a contract of employment. The Supreme Court of the Netherlands addressed in this case the question whether the parties had intended to enter into a contract of employment and how they executed this contract in practice. In answering this question, the position of the parties in society was taken into consideration. That led to the conclusion that a contract of service was entered into in this case.46 In fact, the Supreme Court, by referring to ‘the position of the parties in society’ (de maatschappelijke positie van partijen), probably means the economic position and the level of education of the parties. This implies that the courts can decide on a case-by-case basis whether the employee is the weaker party who needs protection against the employer or not. This can be understood against the background that Groen, being a tax expert, had initially preferred to work as a self-employed person, but later changed his attitude towards concluding an employment contract once this type of relationship became more attractive to him. Apparently, the Supreme Court did not reward these calculating tactics.

45  46 

HR 17 November 1978, NJ 1979/140 (IVA v Queijssen). HR 14 November 1997, NJ 1998/149, JAR 1997/263 (Groen v Schoevers).

The Concept of ‘Employee’: The Position in the Netherlands 493 V.  THE PRINCIPLE OF PRIMACY OF FACTS

In the Netherlands, the principle of the ‘primacy of facts’ is recognised in the legal doctrine, but is not always a conclusive factor. The legal nature of the contract will be defined by both the intention and practices of the parties. The principle is named differently in the Netherlands. At times, the phrase ‘the veil is being pierced’ (doorprikken van de constructie) is used, while at other times the phrase ‘essence goes before appearance’ (wezen gaat voor schijn) is used.47 The Agfa v Schoolderman case demonstrates the principle in practice. In this case, the Supreme Court explicitly recognised the longstanding tradition in labour law of recognising practice as an important criterion which shall be taken into account when determining the legal nature of a contract. Hendrika Schoolderman worked for years for the Agfa company on the basis of various types of contracts, including fixed-term, zero-hours and employment agency work. After 10 years, she asked to be remunerated on an equal footing with her colleagues who were performing the same job, but were employed on a permanent basis. The Netherlands’ Supreme Court considered that the practice of Agfa of using temporary employees was in itself not unlawful, although the payment was not equivalent to the payment permanent employees received. However, in the view of the Court, the original character of the relationship had changed. This means that an employment relationship had practically been established between Schoolderman and Agfa as regards the relevant aspects, and could not be distinguished from an employment relationship of comparable permanent employees of Agfa. The Supreme Court considered that the initially agreed labour conditions were not decisive, but what was also of significance was the way in which the parties implemented the contract of employment in practice and thus gave it another content. According to the requirement to act as a good employer, Agfa was obliged to apply the labour conditions in terms of the pay of the permanent staff to Schoolderman. The judge was obliged to apply48 the generally accepted principle of law that the same work under the same circumstances should be paid the same, unless there is an objective justification for a difference in pay.49 In the already-discussed Groen v Schoevers case, the parties had a certain degree of freedom to choose a contract for services, but Groen was in a much better economic position and able to make a truly free choice. It seems 47 GJJ Heerma van Voss, ‘De ontsluiering van het sociaal recht’ in CJ Loonstra and AR Houweling (eds), Het sociaal recht uitgedaagd, Een bundel arbeidsrechtelijke oraties 1997–2013 (The Hague, Boom juiridische uitgevers, 2014) 34–54. 48  Article 3:12 of the Netherlands’ Civil Code states: ‘In determining what reasonableness and fairness require, generally accepted principles of law, current juridical views in the ­Netherlands and the societal and private interests involved in the case must be taken into account.’ 49  HR 8 April 1994, NJ 1994/704, JAR 1994/94 (Agfa v Schoolderman).

494  Guus Heerma van Voss that in the Agfa v Schoolderman case, the primacy of facts was decisive because of the employee’s position of economic dependence. Another situation in which a court may allow the primacy of facts is when the parties’ intention was to circumvent social security obligations. This issue was addressed in Thuiszorg Rotterdam v Stichting Pensioenfonds PGGM. In this case, the Pension Fund PGGM requested the employer Thuiszorg to pay pension contributions for its director. Thuiszorg, however, claimed that the director was working on the basis of a management contract. The Netherlands’ Supreme Court ruled that in order to determine whether a contract of employment existed between the two parties, it was not only of relevance what the parties had in mind when they concluded the contract, but also the implementation of the employment contract. In the given case, the director had to perform the work personally and his remuneration by Thuiszorg could be considered payment in return for the work performed. The Supreme Court consequently concluded that the director was employed on the basis of an employment contract within the meaning of Article 7:610 of the Netherlands’ Civil Code.50 VI.  QUALIFICATION IN FULL

In the Netherlands, labour law does not recognise the concept of ‘qualification in full’. However, the opinion that a contract of employment is not ‘divisible’ is widespread. Accordingly, it is not possible, for instance, for the employer to dismiss an employee partly, ie, for a specific number of hours, or to unilaterally reduce an employee’s wage. Several court cases have been decided in this respect over the past few decades, though the possibility of a partial dismissal has been defended in the literature.51 The principle that a partial dismissal is not possible is laid down in Article 4 of the Dismissal Regulation of 2015,52 which reads as follows: No reasonable grounds exist for giving notice of termination of the contract of employment for economic reasons in case the number of employees selected for dismissal is higher than the number of posts to be terminated, unless this is unavoidable and the employer has offered the employees whose working place is partly terminated, in writing, to continue the contract of employment under the same conditions for the remaining part of the agreed working hours.

50  HR 13 July 2007, NJ 2007/449, JAR 2007/231, RAR 2007/123 (Thuiszorg Rotterdam v Stichting Pensioenfonds PGGM). 51 CJ Loonstra, ‘Partiële opzegging en partiële ontbinding van de arbeidsovereenkomst’ (1995) NJB 204 ff; RLJ van der Meer, ‘Partiële ontbinding arbeidsovereenkomst’ (1995) ArbeidsRecht 6; G van Amstel, ‘Partiële ontbinding van de arbeidsovereenkomst’ (1995) ArbeidsRecht 54. 52  Ontslagregeling, Regulation of the Minister of Social Affairs and Employment of 23 April 2015, Stcrt 2015, 12685.

The Concept of ‘Employee’: The Position in the Netherlands 495 This Article in principle prohibits partial terminations of the employment contract, but on the other hand, it provides for an exception to the principle when a partial dismissal is unavoidable. In the Netherlands, there have been discussions on the contractual ­status of work that is performed within the context of the family. Between 1907 and 1997, the Civil Code explicitly declared an employment contract between spouses null and void. At the time, it was principally considered contradictory to spouses’ legal equality. However, this Article was abolished in 1997 because there was a need for this type of employment contracts and there were plenty of ways to circumvent the prohibition. It was recognised that spouses can be equal in their marital relationship but still exercise authority over each other in an employment relationship. Also, children could work for their parents on the basis of an employment contract. However, in some cases, the family character of such a relationship prevails. This was the conclusion in a case referring to the custom in agriculture that children work on their parents’ farm without concluding a contract.53 The Civil Code does not preclude the parties to an employment contract to also conclude another type of contract. This is established in the principle of freedom of contract. Employment contracts are occasionally combined with other contracts regulated in the Civil Code, such as contracts for renting a house of the ­company.54 In the event that the housing is an essential element of the employment contract (eg, in the case of a gatehouse occupied by the porter of an estate), no rental contract is assumed, but only an employment contract which includes the obligation to live in the given house. This implies that once the job terminates, the house must be abandoned as well.55 The legal doctrine has frequently addressed the issue of what happens when two types of contracts are combined and the legal rules that deal with these two types of contracts conflict with one another. This is explicitly addressed in Article 7:610, paragraph 2 of the Netherlands’ Civil Code, which reads as follows: If a contract fulfils both the definition of paragraph 1 and that of another special type of contract regulated by law, the provisions of this Title and the provisions governing the other type of contract apply in conjunction. In the event of a conflict, the provisions of this Title apply.

This paragraph first applies the rule of ‘cumulation’: the rules on both contracts are equally applicable. In the case of conflict between the two rules,

53 

HR 27 February 1952, NJ 1953/362. Heerma van Voss (n 15) no 46. 55  HR 17 March 1961, NJ 1961/237; HR 19 December 1975, NJ 1976/240; HR 16 April 1982, NJ 1982/88; HR 19 March 1976, AA 1976, 399. 54 

496  Guus Heerma van Voss the paragraph gives ‘priority’ to employment law. However, the question is whether this actually is often the case. If a company house is rented by the employee, his or her dismissal does not preclude him or her from continuing to rent the house. The protection of renters envisaged in rent law can also be applied. While continuing to live in the company’s house despite ending his or her job, the employee’s protection as a renter can be applied without conflicting with employment law. In this respect, it makes no difference whether the employee was dismissed or resigned.56 He or she is only protected if he or she acts in good faith.57 Frequently used combinations of contracts are apprenticeship contracts annexed to employment contracts. In that case, it is a combination of parttime training on the job and part-time work as an employee. The relationship between an apprentice and the respective company is not regulated by law. Often, the trainee’s school ensures that solid contracts between all parties are concluded. In case the situation is unclear, the court may have to determine whether a (partial) employment relationship or only an internship exists. The Netherlands’ Supreme Court is reluctant to accept the existence of an employment contract if it is not explicitly agreed in advance.58 VII.  LIMITS TO THE FREEDOM OF CONTRACT

The principle that the parties cannot alter the legal nature of their contract/ legal relationship is controversial in the Netherlands. As already mentioned, according to the case law of the Netherlands’ Supreme Court, the question whether a contract of employment has been concluded must be decided on the basis of the parties’ intention, but also on the way it is implemented in practice.59 Whether the parties can alter the legal nature of their relationship is decided on a case-by-case basis and it is difficult to formulate general rules on this. The problem was illustrated in the Van Houdts v BBO case. The bus driver, Van Houdts, worked until 1995 for the bus company BBO. In that year, he and three other bus drivers concluded an agreement for the establishment of a commercial partnership that was officially registered, and BBO became their most important client. The commercial partnership ended in 1997 since not all the required licences were obtained. Starting from that year, BBO employed the four bus drivers again. Van Houdts, having argued that he had factually continued his employment contract between 1995 and 56 HR 8 January 1965, NJ 1966/138 (Neleman/Ten Hagen); HR 3 December 1965, NJ 1996/195. 57  HR 8 March 1968, NJ 1968/142. 58  HR 28 June 1996, JAR 1996/153 (Verhoeff/Van Zuijlen). 59  HR 8 April 1994, NJ 1994/704, JAR 1994/94 (Agfa v Schoolderman) and HR 14 November 1997, NJ 1998/149, JAR 1997/263 (Groen v Schoevers).

The Concept of ‘Employee’: The Position in the Netherlands 497 1997, claimed payment of his due remuneration. Interestingly, the Supreme Court of the Netherlands upheld his claim on the basis of the primacy of facts, even though the diverging legal situation had been formally established and clearly documented.60 The rule that parties are free to enter into a Contract of Employment has not been adopted in the Netherlands. The primacy of facts is also applied the other way round. A good example of this is the Van der Male v Den Hoedt case, where a disguised contract of employment was not recognised. The parties constituted a married couple who eventually divorced. Probably for fiscal reasons, they decided that the marital settlement agreement would assume the form of an employment contract. Accordingly, the former wife became the employee and the former husband’s limited company became the employer. The former wife was paid a ‘wage’, but did not perform any work in exchange. When the former wife found a new partner and moved in with him, her former husband stopped paying her ‘wages’. According to the Netherlands’ family law, moving in with a new partner is a ground to cease paying alimony ex lege. The former wife nonetheless requested the continuation of ‘wage’ payments because the contract of employment had not formally been terminated. She also claimed statutory compensation for delayed payments of her wage. The ­Netherlands’ Supreme Court decided that the essential elements of a contract of employment, namely of ‘work’ and ‘in service of’, were not fulfilled, since it was apparent that the former wife (‘employee’) was not obliged to perform work from the conclusion of the contract. Therefore, it was ruled that no contract of employment existed, but rather a contract sui generis. Nevertheless, the former husband was ordered to continue paying her wages, because he had never issued a proper notice of termination of the contract. The statutory compensation associated with contracts of employment was, however, denied.61 The question whether an employee states can be wired, is a rather controversial issue in the Netherlands.62 The definition of the employment contract is considered a provision of public order and can therefore not be set aside by a contract.63 As already mentioned, the case law qualifies a contract as a contract of employment on the basis of the parties’ intention at the commencement of the contract as well as how it is implemented thereafter. In certain cases, such as in Groen v Schoevers discussed above, the Supreme Court accepted that a person may deliberately choose a contract of services over a contract of employment. One could argue that this can only be an option when

60 

HR 15 December 2006, NJ 2007/448, JAR 2007/19, RAR 2007/26 (Van Houdts v BBO). HR 10 October 2003, NJ 2007/446, JAR 2003/263 (Van der Male v Den Hoedt). 62  For a review of this discussion, see Houweling (ed), Loonstra and Zondag (n 15) 147–50. 63  See a note of the Netherlands’ Ministers of Social Affairs and Justice of 23 June 1997 on ‘Developments in Employment Contract Law’: Ontwikkelingen in het arbeidsovereenkomstenrecht, Kamerstukken II 1996–77, 25 426, No 1, 23. 61 

498  Guus Heerma van Voss the situation is unclear and both definitions could be applicable. The parties should then make a choice. However, one could also argue that by accepting this reasoning, the Supreme Court leaves the choice between a contract of employment and a contract for services to the parties. The legal doctrine on this issue in the Netherlands is ambiguous. It seems that the Supreme Court only leaves this option open in the event that the employee’s societal position indicates that it may be assumed that he or she has freely taken the decision. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Collective agreements cannot set aside the statutory definition of the contract of employment. Although the legislation does not explicitly stipulate that this definition is mandatory, it is assumed to be a provision of public order.64 Yet it is possible to distinguish certain groups of employees in a collective agreement, for instance, weekend workers in the catering branch,65 whose entitlements differ from those of regular employees. This in principle concerns rights granted within the collective agreement itself. In some cases, statutory law allows collective agreements to deviate from mandatory law for certain factors. This, for instance, is the case with respect to the number of fixed-term agreements permitted.66 In addition, collective agreements in some companies envisage dispute resolution mechanisms, like arbitration procedures with regard to the interpretation of the contract. In such cases, an arbitration board can play a role in interpreting the definition of the contract of employment. B.  Custom and Practice Custom and practice play no specific role in the Netherlands with regard to the contract of employment. The most important reason seems to be that the contract of employment is already extensively regulated by legislation and the established case law.

64 ibid. 65 

HR 28 June 2002, NJ 2003/111, JAR 2002/168 (Buijsman/Akersloot). Netherlands’ Civil Code, art 7:668a. In the Netherlands, this method is indicated with the notion ‘three-quarter mandatory law’ (driekwart dwingend recht). 66 

The Concept of ‘Employee’: The Position in the Netherlands 499 IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions In the Netherlands, legal presumptions on the status of the employment relationship have existed since 1999. Since then, two provisions have been introduced, namely Articles 7:610a and 7:610b of the Netherlands’ Civil Code, which aim to ensure that both parties share transparent and fair information with each other at the beginning of their contractual relationship. Article 7:610a of the Netherlands’ Civil Code provides that: A person who, for the benefit of another person, performs work for remuneration for three consecutive months, weekly or for not less than twenty hours per month, is presumed to perform such work pursuant to a contract of employment.

This Article is applicable either when the type of contract is not explicitly agreed upon or when the type of contract agreed upon is not in conformity with practice. Accordingly, if a person has worked for more than three months—with a minimum number of weeks or hours—in exchange for remuneration, he or she can claim that this work has been carried out on the basis of a contract of employment. However, this legal presumption can be rebutted, provided that the person who provides the ‘employee’ with work can, first and foremost, prove that it was not the parties’ intention to conclude a contract of employment. In addition, the ‘employer’ must prove that the parties have not actually implemented the contract in such a way that would imply that it is a contract of employment. In any case, the ‘employee’, can rebut those arguments. The reason why the legislator introduced this provision is that the legal status of the relationship in many so-called ‘flexible employment relationships’ (eg, on-call contracts) is rather vague. Thus, the provision provides the worker with some degree of protection in the event that the employer tries to avoid concluding a contract of employment, although practice indicates the existence of a contract of employment. For instance, when a painter is hired to paint the walls of a factory, it is usually assumed that the work is being carried out under a contract of services. But if the painter continues to work for the same principal for a longer period of time, it is up to the latter to provide evidence that no contract of employment exists. Article 7:610b of the Netherlands’ Civil Code provides: Where a contract of employment has lasted for at least three months, the contracted work in any month is presumed to amount to the average working period per month over the three preceding months.

The purpose of this second legal presumption is to ensure that the employer—in the event that the existence of a contract of employment is

500  Guus Heerma van Voss assumed—­cannot claim that a lower number of working hours was agreed than actually worked. Consequently, after three months of working a higher number of working hours, the employee can claim that this is the agreed number of working hours. The employer can also rebut this presumption. For instance, he or she could argue that there was a temporary increase in work. Still, the employer must provide evidence for this. B.  The Burden of Proof The principal rule on the division of the burden of proof under the ­Netherlands’ Civil Code is as follows: The party relying on legal consequences of its alleged facts or rights carries the burden of proof of those facts or rights, unless a different burden of proof arises from a special rule or from the requirements of reasonableness and fairness.67

From this rule, it follows that it is basically up to the alleged employee to prove the existence of an employment contract in the event that this is denied by the pretended employer. In the case of a written and signed contract of employment, the issue can quickly be resolved. In the absence of such a written contract, other means of evidence could include pay slips, bank statements of paid wages, statements by colleagues etc. The problem mostly arises in cases of flexible, irregular work. To this end, the law foresees legal presumption, as discussed above in section IX.A. X.  SPECIFIC PROCEDURES

The most important government bodies that may have to determine whether an employment contract exists are the Tax Office, the social security authorities and the Immigration Office. Although the legal basis for such a decision is of an administrative nature, the civil law position will also be taken into consideration. The decisions on these matters may be subject to the judgment of the administrative courts. The approach of these courts does not differ significantly from that of the civil courts. However, with a view to the prevention of abuse of social welfare provisions, they may slightly differ for that reason. For instance, they may take a more active approach to checking whether the parties’ activities are in line with the information they have provided. One of the objectives of fiscal and social security provisions is to determine who falls within the scope of specific provisions related to the status of employee. To avoid uncertainty in this respect, in May 2016 a special 67 

Netherlands’ Code of Civil Procedure, art 150; Wetboek van Burgerlijke Rechtsvordering.

The Concept of ‘Employee’: The Position in the Netherlands 501 ­ rovision was introduced in tax law for persons who, for fiscal purposes, p seek to be recognised as self-employed persons. This was introduced by the Act on Deregulation Judging Labour Relationships.68 The provision contains the principle that the Tax Administration Service will consider a labour relationship as a contract for services when it is based on a model contract for services, designed by the social partners in the specific branch. However, during 2016, the Act caused great confusion for selfemployed persons, who feared that they could be taxed as employees. On the basis of an evaluation report prepared by a committee under the presidency of the Leiden Labour Law Professor Gerrard Boot, the government decided in November 2016 to postpone the implementation of the Act until at least 2018 and during this period not to enforce this Act with repressive means.69 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons The instrument to extend the definition of employee to ‘employee-like’ persons is used in the Netherlands’ labour law to a certain extent. In this context, two forms of ‘employee-like’ persons can be distinguished. First, the application of labour law is in some cases extended by specific provisions to contracts other than contracts of employment. For instance, Article 7:655, paragraph 5 of the Netherlands’ Civil Code on the duty of the employer to provide information to the employee (implementing EU Directive 91/533, which covers employment contracts as well as employment relationships) extends the application of the provision to other specific relationships: Paragraphs 1 to 5 apply, mutatis mutandis, to contracts that regulate the conditions of one of several contracts of employment the parties will enter into if work is performed on demand as well as to contracts entered into other than a contract of employment, whether or not followed by similar contracts under which one party, being a natural person, undertakes to perform work for the other party for remuneration, unless this contract is entered into in the name of a profession or business.

The second concept of ‘employee-like’ persons is used under the social insurance and tax legislation. Accordingly, certain types of work fall within 68 

Act of 3 February 2016, Stb 2016, 45 (Wet DBA). to Parliament of the Deputy Minister of Finance, Mr Wiebes, of 18 November 2016, ‘Tweede Voortgangsrapportage Wet DBA’. Annexed is the Evaluation Report on the Act of the evaluation committee presided by the Labour Law Professor Gerrard Boot (Leiden University): Eindrapport Commissie (model)overeenkomsten, Amsterdam, November 2016. 69 Letter

502  Guus Heerma van Voss the scope of this legislation, even if they might not fall under a contract of employment per se. They are referred to as ‘fictitious employment’ (fictieve dienstbetrekking). The Netherlands’ Acts on Unemployment,70 Sickness71 and Disability Benefits72 state that a government decree can provide that small building contractors, certain intermediaries, home workers, musicians, artists, athletes and others who personally work for remuneration are deemed to work in employment (Article 5) under certain conditions. The related ‘Decree to assign cases in which employment is considered a labour relationship’73 provides more details. Categories of workers that fall within the scope of this Decree are covered by social insurance legislation for employees. On this basis, authorities can more easily claim social security contributions from employers in the case of doubt over the existence of a contract of employment with the worker. For the workers involved, it forms the basis of a claim if they become unemployed, sick or disabled. For instance, in the case of artists, including them prevents discussions with theatres, at which they may only perform occasionally, about the need to provide them with social security protection. The same principle is applied in Articles 3 and 4 of the Wage Tax Act of 1964.74 The extension partly covers the same groups as those covered in social insurance legislation. This is partly because the Tax Office collects both income tax and social security contributions from employees. Furthermore, it is an effective way to collect taxes from every worker, and furthermore serves to prevent employers from defining contracts as contracts for services instead of contracts of employment to circumvent the duty to withhold taxes from employee wages. Article 3 of the Minimum Wage and Holiday Allowance Act also offers the possibility of extension by the Decree to ‘employee-like’ persons. This extension applies to those who work for remuneration on the basis of a contract for at most two others, unless this contract is carried out within the scope of a profession or business. The work must be performed personally or exclusively with the help of the spouse or of family members who live in the same residence as the contracting party. In addition, the employment relationship should last at least three months and the work should last at least five hours per week.75 The extension primarily targeted home workers

70 

Unemployment Act (Werkloosheidswet), Act of 6 November1986, Stb 1986, 566 (WW). Sickness Act (Ziektewet), Act of 5 June 1913, Stb 1913, 204; 1999, 22 (ZW). 72  Work and Income (Capacity for Work) Act (Wet werk en inkomen naar arbeidsvermogen), Act of 10 November 2005, Stb 2005, 572 (WIA). 73  Besluit aanwijzing gevallen waarin arbeidsverhouding als dienstbetrekking wordt beschouwd, Decree of 24 December 1986, Stb 1986, 665 (usually called ‘Rariteitenbesluit’ in the Netherlands). 74  Wet op de Loonbelasting 1964. 75  Decree of 2 September 1996, Stb 1996, 481. 71 

The Concept of ‘Employee’: The Position in the Netherlands 503 and other flexible employment relationships, but since they often already fall under an employment contract in accordance with the Civil Code, the Decree does not seem to have been very influential. B.  Equality and Anti-discrimination Law The Act on Equal Treatment of Men and Women76 states that the rules for equal treatment of men and women in employment is explicitly applicable to persons who work under the authority of a natural person, a legal person or competent authority (Article 1c), besides employees to whom civil law applies and civil servants. The reason for this is that the basic rules on non-discrimination of men and women in employment are regulated in the Netherlands’ Civil Code under the title contract of employment. Other legislation on equal treatment (ie, the General Act on Equal ­Treatment,77 the Act on Equal Treatment on the Grounds of Disability or Chronic Disease78 and the Act on Equal Treatment on the Ground of Age)79 does not provide for such an extension of the scope of coverage, because these Acts already take a far-reaching approach. They encompass all types of work and are not restricted to contracts of employment.

76  Wet gelijke behandeling van mannen en vrouwen, Act of 1 March 1980, Stb 1980, 86; repaired by Act of 27 April 1989, Stb 1989 168 (Reparatiewet gelijke behandeling van mannen en vrouwen). This Act transposed Council Directive (EEC) 76/207 of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, [1976] OJ L 039, and was actually replaced by Directive (EC) 2006/54 of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast) [2006] OJ L 204. 77  Algemene Wet Gelijke Behandeling, Act of 2 March 1994, Stb 1994, 230. This Act served to transpose Council Directive (EC) 2000/78 of 27 November 2000 establishing a general framework for equal treatment in employment and occupation [2000] OJ L 30 and Council Directive (EC) 2000/43 of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin [2000] OJ L 180. 78  Wet gelijke behandeling op grond van handicap of chronische ziekte, Act of 3 April 2003, Stb 2003, 206. This Act partly implemented Directive (EC) 2000/78. 79  Wet gelijke behandeling op grond van leeftijd bij de arbeid, Act of 17 December 2003, Stb 2004, 30. This Act partly implemented Directive (EC) 2000/78.

504 

24 The Concept of ‘Employee’: The Position in Norway HELGA AUNE

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

I

N NORWAY, NO statutory definition of the term ‘contract of employment’ (Arbeidsavtale/Arbeidskontrakt) exists. There is, however, a legal requirement that all employment relationships shall be subject to a written contract of employment.1 The contract of employment shall—as a minimum—cover factors that are of major significance for the employment relationship, including: (i)

(ii) (iii) (iv) (v) (vi) (vii)

the place of work—if there is no fixed or primary place of work, the contract of employment shall provide information to the effect that the employee is employed at various locations and shall state the registered place of business or, where appropriate, the employer’s home address; a description of the work or the employee’s title, post or category of work; the date of commencement of the employment; if the employment is of a temporary nature, its expected duration and the basis for the appointment; where appropriate, provisions relating to a trial period of employment; the employee’s right to holiday and holiday pay, and the provisions on the fixing of dates for holidays; the periods of notice applicable to the employee and the employer;

1  See Working Environment Act (Arbeidsmiljøloven) of 17 June 2005 no 62 (I 2005 hefte 8) s 14-5 (1).

506  Helga Aune (viii) the pay applicable or agreed upon the commencement of employment, any supplements and other remuneration not included in the pay, for example, pension payments and allowances for meals or accommodation, method of payment and payment intervals for ­salary payments; (ix) the duration and disposition of the agreed daily and weekly working hours; (x) length of breaks; (xi) agreement concerning any special working hour arrangements; (xii) information on any collective pay agreements regulating the employment relationship—if an agreement has been concluded by the ­parties outside the undertaking, the contract of employment shall state the identities of the parties to the collective pay agreement.2 In employment relationships with a total duration of more than one month, a written contract of employment shall be entered into as early as possible and, at the latest, one month following the commencement of the employment relationship.3 In employment relationships of a duration shorter than one month or in connection with the hiring-out of labour, a written contract of employment shall be entered into immediately.4 Changes in the employment relationship shall be included in the contract of employment as early as possible, but no later than one month after the entry into force of the given change. Nevertheless, this shall not apply if the changes in the employment relationship are attributable to amendments to acts, regulations or collective pay agreements.5 The employer is the party obligated to draft a written contract of employment in accordance with the requirements of the law.6 Any proprietor of an undertaking, employer or person managing an undertaking in the employer’s stead who wilfully or negligently breaches the provisions or orders contained in or issued pursuant to the Working Environment Act (Arbeidsmiljøloven), including the obligation to arrange for a written employment contract, shall be liable to a fine, imprisonment for up to one year or both.7 As a main rule, the Working Environment Act may not be departed from by agreement to the detriment of the employee, unless this is expressly provided for in the relevant regulations.8 Thus, provisions in a written employment contract may be deemed void if the provision departs from the regulations in the Working Environment Act and are to the detriment

2 

See ibid s 14-6 (1). See ibid s 14-5 (2). 4  See ibid s 14-5 (3). 5  See ibid s 14-8. 6  See ibid s 14-5 (1). 7  See ibid s 19-1 (1); cf s 19-1 (4). 8  See ibid s 1-8. 3 

The Concept of ‘Employee’: The Position in Norway 507 of the employee. Further, the provisions in a written employment contract can be deemed void if they are contrary to other laws or are in conflict with decency (Ærbarhet).9 Provisions in an employment contract may also be deemed void/amended if they are deemed to be unreasonable (Urimelig) or in conflict with good business practices (God forretningsskikk).10 The same applies if a clause is in conflict with a collective agreement (Tariffavtale) that is applicable to the employment relationship. In most cases, violations may lead to only the relevant parts of the employment contract being void. As a main rule, the employment relationship continues to exist while the nullity of the employment contract is restricted to the part of the contract that is contrary to law, decency or good business practice. B.  Employment Relationship: Basic Definition The term ‘employment relationship’ (Arbeidsforhold) as such is not defined in the legislation. The term is implicitly inferred from the definitions of ‘employee’ (Arbeidstaker) and ‘employer’ (Arbeidsgiver), as are all matters regarding the relationship between the two parties. As mentioned above, a written contract of employment should be entered into for all employment relationships. An employment relationship may, however, be established without a written contract. For example, some employers are reluctant to provide a written contract of employment to their employees because of the strict regulations regarding the termination of employment relationships in Norway.11 Even if the employer has not fulfilled its obligation to provide a written employment contract, the employment relationship may still be considered as having been established by oral agreement and, eg, by the employee performing work for the employer. One of the results of the establishment of an employment relationship is that it will be covered by the Norwegian employment law regime despite the lack of a written contract.12 In some instances, the question whether a relationship between two or more parties should be considered an ‘employment relationship’ or a 9  See King Christian V’s Law of 15 April 1687 (Kong Christian / den femtis lov av 15 april 1687) s 5-1-2. 10  See Norway’s Contract Act of 31 May 1918 no 4 (ISBN 82-504-1034-3) (Avtaleloven) s 36. In a case before the Norwegian High Court—Rt-2006-420, the High Court examined whether a clause in an employment contract, which bound the employee to the company for five years, should be deemed void based on Norway’s Contract Act of 1918, s 36. The court found that the clause was not void, but commented that the clause was near the limit of acceptable practice in this type of employment relationship. 11  See Working Environment Act (Arbeidsmiljøloven) c 15 and c 17. 12  eg, the Working Environment Act (Arbeidsmiljøloven), the Act Relation to Vacation of 29 April 1988 no 4 (ISBN 82-504-1497-7) (Ferieloven) etc.

508  Helga Aune ­ rovision of services from an independent contractor or ‘freelancer’ may p arise. According to the case law, a mayor is not considered an ‘employee’ and, as such, no employment relationship exists between the mayor and the municipality.13 On the other hand, a person who worked in a family home to care for a severely disabled family member on assignment from the municipality was considered to be an employee. Thus, an ‘employment relationship’ was considered to exist between the person and the municipality.14 The owners of enterprises, as a general rule, are not considered to be in an employment relationship with the company. Hence, they are not covered by the definition of ‘employee’ as they do not perform work in the service of another.15 Conversely, if an owner also performs work in the business other than work related to ownership, eg, participation in general meetings, the owner will be considered an employee of the business.16 Work performed on the basis of a family relationship or equivalent17 is in principle not considered an employment relationship. This may be justified by the fact that family relationships are based on shared fundamental common interests related to the home and children, and the consequent formal and traditional maintenance obligation. This would, for instance, be the case where family members, especially the father, mother or child, perform habitual chores at home, such as housework, cleaning, childcare or where either spouse cares for the other. Pursuant to the Social Services Act,18 wages may be rendered to persons who have especially burdensome care work. Persons performing temporary agency work are considered to be e­ mployees and the temporary work agency (Bemanningsforetak/Vikarbyrå) is deemed to be the employer of such persons. Thus, an employment ­relationship exists between the employee and the temporary work agency, and the regulations in the Working Environment Act apply to the relationship.19 In case of a ‘transfer of undertaking’ (Virksomhetsoverdragelse), the transfer will be covered by the regulations in the Working Environment

13 See HR-2016-589-A. Further, see section IV.B below on the indicators assessed when determining whether a person should be considered an ‘employee’. 14 See Rt-2013-354 and Rt-2013-342. Rt-2013-342 was a case of a similar nature to Rt-2013-354 and the court arrived at the same conclusion, namely that the person in question was an employee and that an employment relationship existed between the individual and the municipality. 15  See the Working Environment Act (Arbeidsmiljøloven) s 1-8 (1). 16  Rt 1929 s 640, Rt 1957 s 1047, Rt 1952 s 658, Rt 1952 s 967 and Rt-1966-648. 17  Rt 2013 s 342. 18  L13.12.1991 no 81 para 4-2. 19 See, eg, the Working Environment Act (Arbeidsmiljøloven) s 14-12a relating to equal treatment regarding pay and working conditions in connection with the hiring-out of workers by temporary work agencies, s 14-12; cf 14-13 and 14-9 relating to the conditions which must be met in order to be able to hire employees from temporary work agencies, s 14-14 regarding the consequences of unlawful hiring of employees, s 14-12b regarding the obligation to provide information and the right of access to information when hiring workers from temporary work agencies, s 14-12c regarding joint and several liability for user undertakings etc.

The Concept of ‘Employee’: The Position in Norway 509 Act.20 One of the conditions that must be met for a transfer to be considered a ‘transfer of undertaking’ is that the undertaking or part thereof is transferred to another employer.21 One of the implications this has is that the regulations on ‘transfers of undertakings’ do not apply if only the shares of a company are transferred to a new owner. The company that had the shares will still be regarded as the employer of the employees and hence no transfer to a new ‘employer’ will have occurred.

II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition An employee is defined as ‘anyone who performs work in the service of another’.22 The statutory definition is supplemented by further criteria stated in the preparatory works23 of the Working Environment Act and developed through the case law.24 The overall evaluation process is based on a list of criteria25 and establishes whether a traditional employment relationship exists between the ‘employee’ and the ‘employer’, or with a self-employed person/independent contractor/freelancer providing services to a customer. The Vacation Act (Ferieloven)26 provides the same definition of ‘employee’ as the Working Environment Act. The Civil Servants Act (Tjenestemannsloven)27 defines an employee as a person employed in public service (I statens tjeneste). According to the Labour Disputes Act (Arbeidstvistloven),28 an employee is defined as anyone performing work in another’s service and the p ­ erson is not covered by the Labour Disputes Act for the Public Sector (Lov om offentlige tjenestetvister).29 The latter applies to all persons employed in the public sector. The National Insurance Act (Lov om folketrygd—

20  See the Working Environment Act s 16, which implements the regulations of Directive 2001/23/EC and regulates the rights of employees in the event of a transfer of ownership of the undertaking. 21  See the Working Environment Act (Arbeidsmiljøloven) s 16-1. 22  ibid s 1-8 (1). 23  Ot.prp.nr 49 (2004–2005) s 6.1.1. 24  See HR-2016-589-A, Rt-2013-998, Rt-2013-342, Rt-2013-354 and Rt-1984-1044. 25 See section IV.B below for a list of criteria which are taken into consideration in the overall evaluation. 26 See the Civil Servants Act of 4 March 1983 no 3 (ISBN 82 504 1404 7) (Tjenestemannsloven) s 1. 27  L04.03.1983 No 3 s 1 (1). 28  L27.01.2012 No 9 s 1 (1). 29  L18.07.1958 No 2.

510  Helga Aune Folketrygdloven)30 defines an employee as anyone who works in another’s service in exchange for salary or other remuneration.31 From a general point of view, one can therefore argue that there is a ­universal notion of the definition of ‘employee’ in Norwegian law. If a person is defined as an employee, he or she will be covered by the National Insurance Act (Folketrygdloven) and will be entitled to sick leave benefits and pension benefits based on certain conditions. A self-employed person must buy insurance coverage for invalidity as well as pension insurance. One-man companies are a legal form of company organisation.32 B.  Employer: Basic Definition ‘Employer’ (Arbeidsgiver) is defined as anyone who has engaged an employee to perform work in his or her service.33 The definition of ‘employer’ is based on a functional concept in Norway.34 If there is uncertainty in terms of who should be considered the ‘employer’ of an ‘employee’, a comprehensive evaluation is carried out to determine who has performed the ‘employer functions’ (Arbeidsgiverfunksjoner), eg, who instructed the employee or controlled the employee’s work. Thus, a company that has performed employer functions can be considered the employer of the employee, even if the original employment contract is entered into with another employer or where the employment relationship otherwise started with another company as the employer.35 Further, more than one company/ person can be considered the employer of the same employee, provided that both companies have performed employer functions.36

30 

L 28.02.1997 No 19 s 1-8. Rt 1985 s 957. 32  See the Company Act of 21 June 1985 no 83 (ISBN 82-504-1440-3) (Selskapsloven) s 1-2. 33  Working Environment Act (Arbeidsmiljøloven) s 1-8 (2). 34  See Ot.prp. nr 49 (2004–2005) p 76 and Rt-2012-983). 35  See Rt-2012-983, where the company which had originally employed the employees, following a series of alterations, did not perform employer functions related to the employees. The High Court stated that the entity which had performed the employer functions should be considered the actual employer of the employees, even if the employment contract was formally entered into with another company. 36  See Rt-1989-231 and Rt-1990-1126. In Rt-1990-1126, both the mother company and a daughter company in the same corporation were considered to be the employers of the employee, since both the companies had performed employer functions. Another area of concern is the off-shoring of jobs. This opens new aspects of employment law, as it eventually makes the loss of tax-income at the national level to public institutions visible. The consequences of a global employment market are visible at the national level at local costs. The third challenge is the question of who is the true employer. Is it the daughter company, which is the holder of all employer-responsibilities, or are these tasks actually carried out by the mother company? This was the underlying reason for the Norwegian airline company’s strike in 2015. 31 

The Concept of ‘Employee’: The Position in Norway 511 The term ‘employer’ can also be relative depending on the given situation. One example is the question which entity should be considered the employer might be answered differently if the question is ‘who is the employer in terms of the party responsible for paying the salary/vacation pay/tax/social security’ and ‘who is the employer in terms of the party responsible for ensuring the safety of the employee’. In the first instance, the employer will, as a main rule, be regarded as the entity that has entered into the written employment agreement with the employee. In the latter situation, the responsible party will often be the entity/person who has had a real opportunity to instruct and control the employee.37 The provisions of the Working Environment Act relating to the employer shall apply accordingly to a person managing the undertaking in the employer’s stead.38 The responsibilities mainly relate to the working environment of employees.39 Furthermore, the Labour Disputes Act has the same definition of ‘employer’ as the Working Environment Act.40 The Ship Labour Act (Skipsarbeidsloven)41 provides the following definition: ‘employer’ means anyone who has engaged an employee to perform work on board ships. Other types of workers, for example, trade agents, are regarded as selfemployed persons and not employees. A trade agent is defined in the Act Relating to Trade Agents and Commercial Travellers (Agenturloven) as: [T]he person who in commercial activities by arrangement with another (the principal) has undertaken, independently and over time, to work for the sale or purchase of goods for the principal’s account by obtaining orders for the principal or by concluding agreements in the principal’s name.42

Tax law, employment law and social security law do not have a common definition of employee status. In order to define the appropriate application, an assessment of the various key elements of the relationship between the parties must be carried out. Generally, in tax law, the formal employer will often be decisive, as the main purpose is taxation.

This concerns in particular the power of the parties in collective bargaining, ie, whether the trade unions are left to bargain with the daughter company, which holds no decisive powers. The issue of who is the true employer bears consequences for other topics as well, for example, preferential rights to other positions in the company (structure) or not. 37 

See Rt-1985-941. See the Working Environment Act (Arbeidsmiljøloven) s 1-8 (2). 39  See Rt-1982-878, where a site manager in a contracting firm was fined for making an aid worker work continuous shift work, despite the fact that the employee was below 18 years of age, and Rt-1983-196, where a site manager was fined for not securing the workplace, and an employee was injured due to the lack of safety measures. 40  cf s 1-8 (2). 41  L21.06.2013 No 102 s 2-1. 42  See the Act Relating to Trade Agents and Commercial Travellers of 19 June 1992 no 56 (LNr.12) (Agenturloven) s 1. 38 

512  Helga Aune III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Norwegian labour legislation contains some regulations on sub-types of employees. For example, the chief executive officer of the undertaking of a company is defined as an employee according to the Woking Environment Act and hence is subject to the same working conditions as any other employee under the Woking Environment Act and the contract of employment. ­However, it is possible to agree that the chief executive officer of the undertaking ­(Virksomhetens øverste leder) should be hired on a temporary basis43 and that the chief executive officer of an undertaking can relinquish his or her protection against dismissal in exchange for compensation.44 It is possible to agree that disputes in connection with the termination of the employment relationship shall be settled by means of arbitration45 and that the chief executive officer of an undertaking should not be compromised by the regulations relating to non-competition, non-recruitment and customer clauses.46 Furthermore, it is possible to agree that employees in a ‘leading position’ (Ledende stilling) as well as employees in a ‘particularly independent position’ (Særlig uavhengig stilling) should not be compromised by the working hour regulations.47 The same provisions of the Working Environment Act for ordinary employees cover the chief executive officer of the undertaking. A w ­ ritten agreement may be entered into stating that the chief executive officer is appointed for a fixed term.48 Furthermore, exceptions can be made with regard to the regulations in the Working Environment Act relating to w ­ orking hours and overtime payment for employees in senior posts or ­particularly independent posts.49 Further, other regulations and acts may apply in addition to the Working Environment Act. For instance, the category of job holders, who perform work in the employee’s or the employer’s home,50 are covered by the regulations in the Working Environment Act, and additional/deviating provisions 43 

See the Working Environment Act (Arbeidsmiljøloven) s 14-10. See ibid s 15-16 (2). 45  See ibid s 15-16 (1). 46  See ibid s 14 A-5. 47  See ibid s 10-12 (1) and s 10-12 (2). 48  See ibid s 14-10 (1). 49  See ibid s 10-12 (1) and (2). 50  See ibid s 1-5; see also regulations related to work performed in the employee’s home (Forskrift om arbeid som utføres i arbeidstakers hjem—FOR of 5 July 2002 no 715 (I 2002 hefte 8)) and the regulations relating to housework, care and supervision in the private home or household of the employer (Forskrift om husarbeid, tilsyn og pleie i privat arbeidstgivers hjem eller hushold)—FOR of 5 July 2002 no 716 (I 2002 hefte 8). 44 

The Concept of ‘Employee’: The Position in Norway 513 are made in Special Regulations,51 stipulating, for example, what additional information may need to be included in the employment contract as well as regulations on the working environment and working hours if the work is performed at the employer’s home. Special legislation applies to supplement the provisions of the Working Environment Act for work performed at sea and in the petroleum sector.52 Special regulations apply regarding holidays and holiday pay for fishermen.53 Furthermore, employees performing work on ships are covered by the Ship Labour Act (Skipsarbeidsloven)54 and the Ship Safety and Security Act (Skipssikkerhetsloven).55 Nonetheless, none of the aforementioned legislation defines the term ‘employee’ or ‘employer’ specifically, so the term is based on the same legal evaluation of the relevant factors stated in the Working Environment Act. Deviations can be made on the work performed and may not be based on the definition of ‘employee’ as such. However, the Working Environment Act does contain a list of persons who specifically should not be regarded as employees in relation to the Act’s provisions on health, environment and safety when performing work in undertakings that are subject to the Act. These are students at educational or research institutions, national servicemen, persons performing civilian national services and civil defence servicemen, inmates in correctional facilities, patients in health institutions, rehabilitation institutions and the like, persons who for training purposes or in connection with work-oriented measures are placed in undertakings without being employees, and persons who without being employees participate in labour market schemes.56 There are a few sub-groups or legal distinctions of employees. The Working Environment Act mentions persons managing the undertaking in the employer’s stead.57 Apprentices in vocational trades will to some extent be regulated by collective agreements. There are no specific legal provisions or terms for special categories of employees/workers such as blue-collar or white-collar workers in the ­general employment acts. However, some information may be added; freelancers are not considered to be employees, but are defined as self-employed workers.

51 

See the Working Environment Act (Arbeidsmiljøloven) s 1-5. See regulations relating to health, safety and the environment in petroleum activities and at certain onshore facilities of 12 February 2010 no 158 (I-2010 hefte 2) (Rammeforskriften). 53  The Act on Vacation for Fishermen of 16 June 1972 no 43 (Lov om ferie for fiskere). 54  The Ship Labour Act (Skipsarbeiderloven) of 21 June 2013 no 102 (I 2013 hefte 9) (Lov om stillingsvern mv. for arbeidstakere på skip). 55  The Ship Safety and Security Act of 16 February 2007 no 9 (I 2007 hefte 2) (Lov om skipssikkerhet-Skipssikkerhetsloven). 56  See the Working Environment Act (Arbeidsmiljøloven) s 1-6. 57  See ibid s 1-8 (2). 52 

514  Helga Aune The Working Environment Act covers all sectors, including the entertainment industry, media and sport, since they are not positively exempt from the Act. However, these sectors have the right to offer temporary appointments/ fixed-term contracts if certain conditions are fulfilled.58 The main reason for allowing temporary employment is because it is warranted by the nature of the work and the work differs from the work normally performed in the undertaking.59 Athletes, trainers/coaches, referees and other leaders within organised sports are specifically mentioned and can be offered temporary employment.60 National unions may enter into collective pay agreements with an employer or an employers’ association on the right to make temporary appointments within a specific group of workers employed to perform artistic work, research work or work in connection with sport.61 The employer may, under the same conditions, enter into a temporary contract of employment with other employees to perform corresponding work if the collective pay agreement is binding for a majority of employees within a specified group of employees in the undertaking.62 Furthermore, in businesses that employ both organised and unorganised workers, it may be difficult to apply different sets of rules with respect to temporary employment. If the majority of the workers are bound by a collective agreement, the employer could make the agreement valid in relation to those who are not bound by collective agreements, given that they are employed to perform the same duties as employees who are bound by the collective agreement. What should be regarded as the same type of work and who should be considered to fall under the category of workers covered by the collective agreement shall be determined in an assessment of the agreement and each employee’s duties.63 Parliamentary commissioners who are elected or appointed to their ­position are only covered by some of the provisions in the Civil Servants Act.64 This includes Members of Parliament, council members, mayors, public trustees and guardians. Work performed under a statutory duty is accordingly in principle only covered by labour legislation to a limited degree. A person employed in public service is covered by the Civil Servants Act. The Working Environment Act also includes the category of ‘posted employees’ (Utsendt arbeidstaker). A posted employee is an employee who,

58 

See ibid s 14-9. See ibid s 14-9 (1) a). 60  See ibid s 14-9 (1) e). 61  See ibid s 14-9 (3). 62  See the Working Environment Act (Arbeidsmiljøloven) s 14-9 (3). 63  Ot.prp.nr 49 (1995–96) p.14, Ot.prp.nr 49 (2004–05) 218 and 333. 64  See the Civil Servants Act (Tjenestemannsloven) s 1. 59 

The Concept of ‘Employee’: The Position in Norway 515 for a limited period, works in a country other than that with which the employment contract is normally associated.65 An au pair is not defined as an ‘employee’ in Norway, but as a f­oreigner who comes to Norway to improve his or her language skills and any ­technical knowledge, as well as his or her general education.66 In order to obtain a residence permit as an au pair, the condition must that the purpose of the stay is cultural.67 As a main rule, an au pair should be between 18 and 30 years of age. According to the immigration authority’s standard contract, an au pair is entitled to participate in educational and recreational activities, should have 25 days of leave per year, should be treated as a family member and should have the opportunity to actively participate in the family’s life. The au pair shall not be considered a domestic helper, but as part of the household. He or she can carry out light domestic work, mind and look after children, care for pets etc. An au pair’s working hours may normally not exceed five hours per day. He or she cannot work more than 30 hours per week, not even for extra pay. He or she cannot perform tasks that are not related to the host family’s home. Work for other employers or individuals (paid or unpaid) is illegal. Illegal work and exploitation of an au pair may lead to imprisonment or fines on the host family in addition to the au pair’s permit being revoked The au pair is entitled to a fixed monthly allowance from the host family, in addition to free board and lodging. In a labour law context, no employment relationship exists and the au pair is not regarded as an employee. Thus, the Working Environment Act does not cover au pairs. The au pair system has been criticised as a malfunctioned and outdated system for providing cheap domestic aid to households.68 A ‘freelancer’69 is defined as anyone who performs work or assignments for pay or other remuneration, but without being self-employed’. Thus, freelancers are regarded as a group between employees and self-employed persons. Examples of freelancers are journalists and performing artists. B.  The Establishment of a Specific Category of ‘Workers’ The category of ‘workers’ does not exist in Norway.

65 

See the Working Environment Act (Arbeidsmiljøloven) s 1-7. See Prop 154 L (2012–13) 21. 67  Cf the Immigration Regulations of 15 October 2009 no 1286 (I 2009 hefte 11) (Forskrift om utlendingers adgang til riket og deres opphold her-Utlendingsforskriften) s 6-25. 68 See, eg, Aune and Løvdal ‘Au pair ordningens rettslige konstruksjon—sårbarhet i et arbeids- og strafferettslig perspektiv’/‘The au pair schemes legal construction—vulnerability in an employment and criminal legal perspective’, chapter 9 in Hellum and Koehler Olsen, Like rettigheter, ulike liv (Gyldendal Forlag 2014). 69 The National Insurance Act of 28 February 1997 no 19 (Avd I 1997 Nr 5) (Lov om folketrygd-Folketrygdloven) s 1-9. 66 

516  Helga Aune IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration As a starting point, the fundamental difference between employment and the performance of services as a freelancer or independent contractor must be taken into account. On this basis, the different elements can be classified into the following main categories: factors associated with risk sharing, instructional and management rights; factors associated with personal work; and factors related to equipment and assets. In borderline cases where there is uncertainty about whether a person should be considered an ‘employee’, and thus whether an employment relationship exists, or whether the person providing the services should be regarded as an independent contractor/freelancer, the courts will carry out a ‘discretionary overall assessment’ (Skjønnsmessig helhetsvurdering) based on the relationship between the parties as a whole, keeping in mind the factors covered in section IV.B below.70 There is no single criterion among the many criteria that must be met in order for the relationship to be considered one of employment. Instead, the various criteria are evaluated with regard to the existence of an employment relationship. To exemplify this, the courts found that a person who had concluded a contract with the child welfare authorities should be considered an independent contractor. In this particular case, one of the decisive factors for not regarding the relationship as one of employment was that the objective of the assignment was to provide a home where the foster child could, to the furthest extent possible, feel like a family member.71 In another case, where the person on assignment from the municipality worked in the home of a family to care for their multi-disabled son, the person was considered an employee.72 In independently commissioned relationships, the contractor must bear the risk of the result. The opposite is the case in an employment relationship where the employer carries the risk for the result of the work performed by the employee, and the employee must put his or her labour at the employer’s disposal at the agreed time and place. The employer’s instructional and management rights are far-reaching. Subordination and the duty of obedience and commitment to follow working hours, instructions for proper

70 See Rt-2013-998, Rt-2013-342, Rt-2013-354, Rt-2007-1458, Rt-1984-1044, Ot.prp. nr 49 (2004–2005) s 6.1.1-6.1.4 and the legal commentary to the Working Environment Act (Arbeidsmiljøloven) in Arbeidsrett.no, 63–65. 71  See Rt-2013-342. 72  See Rt-2013-354.

The Concept of ‘Employee’: The Position in Norway 517 work procedures, control etc are all consequences of the risk borne by the employer.73 Whether the work is organised in such a way that the party performing the work is subject to the instruction and ‘management prerogative’ (Styringsrett) of the person/entity the work is being performed for carries substantial weight. Emphasis on this factor should have particular importance and points to the existence of an employment relationship under which instructional and managerial powers are far-reaching. It is a main characteristic of an employment relationship that the employee’s personal labour is subject to the employer’s instruction and management rights, and tools and the equipment or assets in general are provided by the employer.74 This principle also applies where the employee covers minor costs for equipment or assets where this does not substantially change the general risk and cost allocation in employment.75 Conversely, where the involved person also pays for and maintains the equipment and assets in general is of considerable economic significance, the person will often be regarded as a freelancer/ independent contractor.76 In weighing up the main factors, an assessment of the personal obligation to work must be considered the most important one. A personal obligation to provide labour and no possibility to arrange for a stand-in clearly indicates the existence of an employment relationship.77 B. Indicators Some of these indicators (factors in an overall evaluation) are as follows:78 (i)

Whether or not the work is to be carried out personally or if ­additional help may be used. —— If the person cannot fulfil his or her obligation by using a third party, for example, it is indicative of an employment relationship.

73 See the legal commentary to the Working Environment Act (Arbeidsmiljøloven) in Arbeidsrett.no, 63–64. 74 See Rt-2007-1458 and the legal commentary to the Working Environment Act (Arbeidsmiljøloven) in Arbeidsrett.no, 63–64. 75 See Rt-2007-1458 and the legal commentary to the Working Environment Act (Arbeidsmiljøloven) in Arbeidsrett.no, 64. 76  See Rt-2013-342. 77 See the legal commentary to the Working Environment Act (Arbeidsmiljøloven) in Arbeidsrett.no, 63–64. 78 See Rt-2013-998, Rt-2013-342, Rt-2013-354, Rt-2007-1458, Rt-1984-1044, Ot.prp. nr 49 (2004–2005) s 6.1.1-6.1.4 and the legal commentary to the Working Environment Act (Arbeidsmiljøloven) in Arbeidsrett.no, 63.

518  Helga Aune (ii)

Whether or not the work is to be performed under another’s instruction and control. —— If the person can freely decide how to perform the contract and is expected to deliver a result within a given period, this indicates that the person is an independent contractor/freelancer. (iii) Who provides and pays for the tools and material to be used and who covers the maintenance costs? —— If the person provides the tools/materials to carry out a task, it may be indicative of an independent contractor/freelancer. (iv) Who carries the risk for the result of the work? —— If the person ordering the work to be completed carries the risks for the result of the work, this indicates an employment relationship. (v) How is remuneration for the work being paid? —— Payment per hour indicates the existence of an employment relationship. Payment as a lump sum to perform a specific task may indicate freelance/independent work. (vi) What duration does the work relationship have and can the work relationship be terminated through a notice of termination? —— Long duration/stable character of the relationship and if the relationship must be terminated with a notice period indicates the existence of an employment relationship. (vii) Is the work being carried out simultaneously with other service providers, ie, are other contractors or self-employed persons performing their work? —— If the work is performed simultaneously, ie, if another independent contractor is performing their work, this indicates a freelancing/independent contractor relationship. (viii) Where is the work being carried out? —— If, eg, the work is performed at the premises of the party ­ordering the services, this may be indicative of an employment relationship. (ix) What are the working times? —— Fixed working hours indicate an employment relationship. (x) Has the self-employed person paid taxes, VAT and registered as a self-employed person? —— This may indicate that it is a self-employed person. C.  The Relevance of ‘Economic Dependence’ Economic dependence is one of several factors in an overall evaluation of factors to determine the character of the contract relationship (independent

The Concept of ‘Employee’: The Position in Norway 519 contractor or employed). As such, economic dependence is neither required nor in itself sufficient to determine the status of the relationship. V.  THE PRINCIPLE OF PRIMACY OF FACTS

Norwegian employment legislation follows the principle of ‘primacy of facts’ where the substance of the relationship determines the legal nature of the contract.79 The existence of an employment relationship is defined by the courts based on an overall assessment of a variety of factors. In accordance with the principle of ‘primacy of facts’, the factual reality and not the formality in arrangements will be decisive when determining the nature of an employment contract. To determine whether an employment relationship in fact exists between the two parties or whether a self-employed person has concluded a contract with a business partner, an overall evaluation of the reality of matters is necessary. Important questions in this evaluation, which are in line with the criteria listed section IV above, are as follows: who bears the risk of the result of the work being performed? Who owns the equipment? Where is the work being performed? How many clients does the self-employed worker have? What are the formal arrangements with the tax authorities, insurance etc?80 It is reported that in practice, many migrant workers are forced to organise themselves as independent workers and that the tax authorities might accept them as such. However, the question could, for example, arise in a case where a person demands to be regarded as an employee or files a claim asking for compensation due to invalidity following an accident at the workplace. The courts will in these instances question the existence of the employment relationship and the nature of this relationship will be decisive. VI.  QUALIFICATION IN FULL

Norwegian employment law does not acknowledge hybrids of employment contracts. It is either an employment contract or it is not. The existence of an employment contract does not prohibit additional contracts of another character being entered into. An employee of a company may, for example, also enter into a ‘shareholder agreement’ (Aksjonæravtale) with other shareholders of the same 79  Rt 2013, 998, Rt 2013, 354, Rt 2013, 342, Rt 2007, 1458 and Ot.prp. nr 49. (2004–2005) s 6.1.4. 80 ibid.

520  Helga Aune company. This is the case if the employee owns shares in the company that is regarded as the employer. Further, the employee may also enter into other standalone agreements with the employer, eg, bonus agreements or agreements on compensation/coverage of costs, where these agreements may not be regarded as part of the employment contract. Such contracts may be terminated without terminating the employment relationship itself. Depending on their structure and wording, these contracts may possibly be unilaterally terminated/amended on the part of the employer by virtue of the ‘employer’s managerial prerogative’ (Arbeidsgivers styringsrett). Apart from the contractual relationship between the employer and the employee, the employment relationship is also subject to non-contractual legal relationships. For instance, the employer/employee may be liable under tort law in the event of wilful or negligent damage being caused to the other party.81 The parties are also subject to norms regarding ‘good business practice’ (God forretningsskikk), which may affect the employment relationship.82 VII.  LIMITS TO THE FREEDOM OF CONTRACT

The terms ‘employee’ and ‘employer’ are legal terms and may not be contractually modified by the parties to the contract. If a person, based on an objective legal assessment, qualifies as an ‘employee’, the parties are not allowed to set this qualification aside by insisting that their contract is not a contract of employment.83 The High Court has made it clear that the ‘social protection of employees afforded by mandatory employment law provisions cannot be circumvented by the parties designating an existing employment contract differently and thereby disposing of any legal consequences that are linked to the existence of an employment relationship, such as consequences relating to tax and social contributions’. If the parties did not choose what, in light of the facts, would be the ‘right’ legal form for their contractual relationship, they are held to the ‘right’ legal form based on the objective ­circumstances, irrespective of their own label of the contractual relationship. However, in the opposite case (when the parties choose to label the relationship as an ‘employment relationship’ though the party performing the services based on an objective assessment is a ‘freelancer/independent

81  See the Norwegian Law on Tort of 13 June 1969 no 26 (ISBN 82-504-1198-6) (Lov om skadeserstatning-Skadeserstatningsloven) c 2, cf c 5 and the court issued general principles regarding torts (Alminnelige erstatningsrettslige prinsipper). See also Rt-2015-475. 82  See the Market Practices Act of 9 January 2009 no 2 (I 2009 hefte 1) (Lov om kontroll med markedsføring og avtalevilkår mv.-Markedsføringsloven) ss 25, 28 and 29. 83 See the Working Environment Act (Arbeidsmiljøloven) s 1-9; and Rt-2013-354 and Rt-1984-1044.

The Concept of ‘Employee’: The Position in Norway 521 c­ ontractor’), the designation of the contract by the parties usually prevails. This legal situation must be seen in the light of the regulations in the ­Working Environment Act84 and other related regulations, such as the National Insurance Act, the Tax Act (Skatteloven) and the Tax Payment Act (Skattebetalingsloven). In this respect, weight is given to the fact that the person in question is guaranteed better protection under the Working Environment Act and the tax authorities do not lose taxable income. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Social dialogue mechanisms and collective bargaining play a role in defining employment relationships in terms of providing the conditions and terms of the relationship. However, the parties may not through collective agreements depart from the definitions of an employee or an employer as defined in the Working Environment Act.85 If a collective agreement deviates from the definitions provided in the Working Environment Act and further defined in the case law, this part of the collective agreement would be deemed invalid.86 B.  Custom and Practice Deviations based on custom or practice are not acknowledged in Norway. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions Presumptions for employment contracts do not exist under Norwegian law. It is the actual existence of the relationship that is decisive, where the ­various indicators mentioned in section IV above will be subject to an ­overall evaluation.

84  See the Working Environment Act (Arbeidsmiljøloven) s 1-9, whereas the Act as a main rule may not be deviated from to the detriment of the employee. 85  See ibid s 1-8. 86  See ibid s 1-8, cf s 1-9.

522  Helga Aune B.  The Burden of Proof There is no rule in the Working Environment Act on the shared burden of proof, as is the case in all the anti-discrimination legislation. However, since the Working Environment Act and the related employment regulation are designed to provide protection to employees, the courts may be inclined to tip the result in favour of the employee in borderline cases. This will be the case if the ‘employer’ is considered the stronger party in the contractual relationship and is at fault in terms of not providing clear terms in relation to the definition of the relationship. However, depending on who or which authority is questioning the nature of the contract, the answer might vary. If, for instance, the tax authorities claim that a relationship between two parties should be regarded as an employment relationship and not as a relationship between an independent contractor and a person/entity ordering services from the independent contractor, the tax authorities will, as a general rule, bear the burden of proof.87 There is not an easing or shifting of the burden of proof with regard to ascertaining an employment relationship. The starting point will be an evaluation of the evidence provided. However, one may argue that a certain easing of the burden of proof exists in reality, as it is expected that the employer will provide evidence to which an employer naturally has access. X.  SPECIFIC PROCEDURES

There are no specific procedures to determine whether a relationship is based on an employment contract or not. If it is still being contested after an initial round of negotiations, the issue may be brought before the courts. The Labour Inspection Authority through its regional offices offers guidance in employment issues to individuals as well as to employers. In practice, it will often settle disputes by simply informing the parties about the legislation and especially in cases where it issues orders and decisions as to how a matter is to be resolved. The labour inspectorates routinely demand insight into the employment contracts at worksites where they perform inspections. The inspectorate may also issue orders and set time limits for their effectuation in relation to requirements regarding a written contract of employment according to section 14-5 (1) and section 18-6 (1). The enforcement of legislation at the national level is ensured by the civil courts. The courts may offer mediation with a judge as a mediator

87 See the Tax Assessment Act of 13 June 1980 no 24 (ISBN 82-504-1410-1) (Lov om ligningsforvaltning-Ligningsloven) s 8-1.

The Concept of ‘Employee’: The Position in Norway 523 ­(Rettsmekling). Cases involving disputes on the notice of termination, ­suspension and dismissals are prioritised and may be treated expediently.88 In certain cases, it is possible to ask the tax authorities for an ‘advanced ruling’ (Bindende forhåndsuttalelse) regarding how the tax authorities will label a set-up for tax purposes.89 These advanced rulings are binding for the tax authorities based on the facts given to them in the request.90 As such, there is a possibility of obtaining an advanced ruling on whether or not the tax authorities will label an arrangement as an employment relationship or as a relationship between an independent contractor and a person/ entity ordering services from the independent contractor for tax and duty purposes.

XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons Norwegian law does not operate with categories of ‘employee-like’ persons or quasi-salaried workers. B.  Equality and Anti-discrimination Law Equality and anti-discrimination laws apply to all employment relationships.91 Chapter 13 of the Working Environment Act states that discrimination is prohibited; in addition, it refers to all the specific discrimination Acts. ­Illegal differential treatment may result in non-pecuniary as well as e­conomic compensation. Direct and indirect discrimination based on political views, membership of a trade union or age is prohibited in Norway.92 Harassment and instructions to discriminate persons for the reasons referred to above are regarded as discrimination.93

88 

See the Working Environment Act (Arbeidsmiljøloven) s 17-1 (4). See the Regulations on Advanced Rulings in matters relating to Tax and Duties of 14 June 2005 no 550 (I 2005 hefte 8) (Forskrift om bindende fårhåndsuttalelser i skatte- og avgiftssaker) ss 1 and 3. 90  See ibid s 13. 91  See the Working Environment Act (Arbeidsmiljøloven) c 13. 92  See ibid s 13-1 (1). See the High Court judgments on age discrimination HR-2016-296-A, HR-2015-912-U and HR-2012-325-A. 93  See the Working Environment Act (Arbeidsmiljøloven) s 13-1 (2). 89 

524  Helga Aune Discrimination based on gender is governed by the Gender Equality Act (Likestillingsloven), which prohibits such discrimination.94 Discrimination based on pregnancy and leave in connection with birth or adoption is regarded as discrimination based on gender.95 Discrimination based on ethnic origin, religion and ethnical and cultural orientation is prohibited by the rules in the Ethnicity Anti-discrimination Act (Diskrimineringsloven om etnisitet).96 Discrimination based on disability is governed by the Anti-discrimination and Accessibility Act (Diskriminerings- og tilgjengelighetsloven),97 which prohibits discrimination based on impaired functioning/disability (Nedsatt funksjonsevne).98 Discrimination based on sexual orientation, gender identity and gender expression is governed by the Sexual Orientation Anti-discrimination Act (Diskrimineringsloven om seksuell orienteering),99 according to which, discrimination based on sexual orientation, gender identity (Kjønnsidentitet) or gender expression (Kjønnsuttrykk)100 is prohibited.101 The prohibition against discrimination applies to all aspects of employment, including: the advertising of vacant positions, appointment, relocation and promotion, training and other forms of competence development, pay and working conditions, and termination of employment. The prohibition also applies correspondingly to the employer’s selection and treatment of one-man enterprises and workers hired from temporary-work agencies or other companies.102 The anti-discrimination legislation also applies to temporary employees and employees working part-time.103 There are no other specific regulations relating to anti-discrimination for atypical work, but atypical work may be a form of discrimination, which is prohibited.104 94  See ibid s 13-1 (4). See the High Court case 2014-831-A. See the Gender Equality Act of 21 June 2013 no 59 (I 2013 hefte 9) (Lov om likestilling mellom kjønnene-Likestillingsloven) s 5. See the following report on the extent of pregnancy discrimination: www.ldo.no/ nyheiter-og-fag/nyheiter/nyheiter-2015/gravide-diskrimineres/sammendrag-av-undersokelsen. 95  See the Gender Equality Act (Likestillingsloven) s 5. 96  See the Working Environment Act (Arbeidsmiljøloven) s 13-1 (5). See the Ethnicity and Anti-discrimination Act of 21 June 2013 no 60 (I 2013 hefte 9) (Lov om forbud mot diskriminering på grunn av etnisitet, religion mv. -Diskrimineringsloven om etnisitet) s 6. 97  See the Working Environment Act (Arbeidsmiljøloven) s 13-1 (6). 98  See the Anti-discrimination and Accessibility Act of 21 June 2013 no 61(I 2013 hefte 9) (Lov om forbud mot diskriminering på grunn av nedsatt funksjonsevne-Diskrimineringsog tilgjengelighetsloven) s 5. 99  See the Working Environment Act (Arbeidsmiljøloven) s 13-1 (7). 100 ‘Gender expression’ refers to how gender identity is consciously or unconsciously expressed or perceived by others. 101 See the Sexual Orientation Anti-discrimination Act of 21 June 2013 no 58 (I 2013 hefte 9) (Lov om forbud mot diskriminering på grunn av seksuell orientering, kjønnsidentitet og kjønnsuttrykk-Diskrimineringsloven om seksuell orientering) s 5. 102  See the Working Environment Act (Arbeidsmiljøloven) s 13-2. 103  See ibid s 13-1 (3). 104  See ibid s 13-1 (1).

25 The Concept of ‘Employee’: The Position in Poland LESZEK MITRUS

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

U

NDER POLISH LAW, the definition of an employment relationship, as well as the content and form of an employment contract, are subject to statutory law. Article 22 § 1 of the Polish Labour Code of 26 June 1974 (hereinafter LC)1 stipulates: By establishing an employment relationship, an employee undertakes to carry out specific work for the benefit and under the guidance of an employer, and an employer undertakes to employ an employee in return for remuneration.

In addition, Article 2 LC stipulates that an employee (pracownik) is a person who is employed on the basis of an appointment, an election, a nomination or a cooperative employment contract. Thus, an employment relationship can be established on the basis of an employment contract and other above-mentioned acts. The concept of an ‘employment relationship’ (stosunek pracy) is broader than the concept of ‘employment contract’ (umowa o pracę).2 However, it is commonly accepted that Article 22 § 1 LC

1 Compiled text: Journal of Laws 2016, item 1666 with further amendments. For the English text, see The Labour Code. Kodeks pracy. Bilingual Edition, translation by A Jamroży, 2nd edn (Warsaw, CH Beck, 2014) 2 f. The Labour Code took effect on 1 January 1975 and has been subject to over 100 amendments. For changes concerning regulations on the employment contract in Poland, see E Kovacs, N Lyutov and L Mitrus, ‘Labor Law in Transition: From a Centrally Planned to Free Market Economy in Central and Eastern Europe’ in MW Finkin and G Mundlak (eds), Comparative Labor Law (Cheltenham, Edward Elgar, 2015) 415 f. 2  See below, section I.B.

526  Leszek Mitrus does not entail an exhaustive definition. Further elements of the employment relationship have been elaborated by judicial decisions and legal literature.3 The notion of employment contract is subject to a comprehensive set of judicial decisions. For example, the Supreme Court ruled that the constitutive features of an employment contract are: voluntary character, personal work performance on a continuous basis, subordination and work performance for the benefit of the employer who carries the risk related to employment as well as to remuneration.4 An employee performs work under subordination, ie, an employee is obliged to follow instructions on his or her work performance. This factor is of major importance for determining the existence of an employment contract.5 Although not expressly mentioned in the LC, it is commonly accepted that an employee is obliged to perform his or her duties in person. It is therefore impossible to introduce a clause allowing substitution under an employment contract.6 An employment contract thus covers a ‘personalised’ relationship. An employment contract is a payable contract, ie, an employee always performs his or her duties in return for remuneration. Work is performed with a long-term perspective on a continuous basis, that is, an employment contract usually does not refer to a one-time ­activity.7 An employment contract implies a contract of due diligence, ie, an employee undertakes to perform his or her duties conscientiously and carefully, but is not responsible for the final result. An employment contract implies a mutuality of obligations. However, the parties’ obligations are not always equivalent, eg, an employer is always responsible for safety at work; even where an employee does not properly carry out his or her duties, the employer may also be obliged to pay remuneration for a period of justified absence from work.8 The major feature of an employment contract is the risk that lies on the employer’s side. In other words, any negative consequences that may arise from the employment contract constitute a risk on the part of the employer.

3  See, eg, B Wagner, ‘Stosunek pracy i jego treść’ in M Matey-Tyrowicz and T Zieliński (eds), Prawo pracy RP w obliczu przemian (Warsaw, CH Beck, 2006) 145 f; P Prusinowski, Umowne podstawy zatrudnienia (Warsaw, Wolters Kluwer, 2012) 45 f; Z Hajn, in Z Hajn and L Mitrus, Labour Law in Poland (Alphen aan den Rijn, Wolters Kluwer, 2016) 79 f. 4  Judgment of 23 October 2006, I PK 110/06. 5  See section IV.A below. 6  Judgment of 28 October 1998, I PKN 416/98, OSNP 1999, No 24, item 775. Moreover, an employment contract automatically expires upon the death of the employee (Art 631 para 1 LC). 7  Judgment of 14 December 1999, I PKN 451/99, OSNP 2001, No 10, item 337. 8  In the recent literature, it has been submitted that within the framework of unreciprocated duties, employers must carry out social tasks arising out of public law. See A Sobczyk, Prawo pracy w świetle Konstytucji RP. Tom I. Teoria publicznego i prywatnego prawa pracy (Warsaw, CH Beck, 2013) 135 f.

The Concept of ‘Employee’: The Position in Poland 527 In this context, we can distinguish between a ‘technical risk’, ie, an employer is obliged to pay remuneration for periods in which no work was performed due to technical reasons, for example, as a result of work stoppage. The employer assumes a ‘personal risk’, ie, the employer is responsible for the employee’s actions. For example, where an employee causes damage to a third party while performing his or her duties, only the employer is obliged to compensate the damage. Under an ‘economic risk’, in turn, even in the case of economic difficulties or losses, an employer is obliged to pay employee remuneration and other work-related benefits. Finally, ‘social risk’ implies that an employer is obliged to provide remuneration even where an employee does not perform work, eg, in case of sickness or absence from work due to the employee’s personal situation.9 Article 29 § 1 LC specifies the content of an employment contract. An employment contract should specify the parties to the contract, the type of contract and the date of its conclusion, as well as the conditions of work and remuneration. The contract should, in particular, specify the type of work, the place of its performance, the remuneration corresponding to the given type of work and its components, the duration of working time and the date of commencement of work. In addition, the parties are free to determine other elements of the contract that they regard as substantial, such as additional employee benefits, additional annual leave or competition clauses. In principle, the parties are free to determine the type of employment contract, ie, a contract for probation, a contract for a fixed-term or an open-ended contract. Labour law provides irreducible minimum employee rights. The provisions of the employment contract and other instruments on the basis of which an employment relationship is established cannot be less favourable to the employee than the provisions of labour law.10 The provisions of employment contracts and other acts mentioned above which are less favourable to the employee than the provisions stipulated in labour law shall be null and void; instead, the appropriate provisions of labour law shall apply.11 Thus, parties to an employment contract can improve the employee’s situation by extending his or her rights. At the same time, it is inadmissible to reduce the level of employee rights. Where the parties introduce contractual stipulations that are less favourable than the provisions of labour law, the invalidity of these specific stipulations only will be implied rather than the entire contract.12 In addition, an employment contract cannot violate the principle

9 

See also Ł Pisarczyk, Ryzyko pracodawcy (Warsaw, Wolters Kluwer Business, 2008) 27 f. LC, art 18, para 1. 11  ibid, art 18, para 2. 12  L Mitrus, ‘The Relationship between Statutory Law, Collective Agreement and Employment Contract: The Case of Poland’ in György Kiss (ed), Recent Developments in Labour Law (Budapest, Akadémiai Kiadó, 2013) 63 f. 10 

528  Leszek Mitrus of equal treatment. Provisions of employment contracts and other acts on the basis of which an employment relationship is established and which violate the principle of equal treatment in employment are null and void. The relevant provisions of labour law shall apply instead. When there are no such provisions, the relevant provisions of a non-discriminatory character shall apply instead.13 Each employment contract shall be made in writing.14 If the contract is not concluded in writing, then the employer is obliged to provide the employee with a written statement of the stipulations of the contract, as well as its type and conditions. However, an oral employment contract remains valid—eg, an employee can claim remuneration for work performed. At the same time, an employer or anyone acting in his or her name, who does not confirm the employment contract concluded in writing with the employee, is liable to a fine.15 Thus, an oral contract of employment remains in force, but the lack of a written form constitutes an offence against the employee’s rights and is subject to penal sanctions. The LC does not cover all issues related to an employment contract. The provisions of the Civil Code apply to an employment relationship in cases not regulated by the provisions of labour law, provided that they do not contravene the principles of labour law.16 The LC regulates the means to conclude an employment contract. Recourse should be taken to the Civil Code. An employment contract can be concluded by accepting an offer (which is the most common case), through negotiation or per facta concludentia. The latter option refers to the parties’ conduct indicating the will to conclude an employment contract, eg, continuing to work after the probation period has ended or to take up work in a particular post.17 Under Polish labour law, an employment contract is not automatically void. There is no concept of ‘rescission’ of an employment contract. In certain cases, an employment contract can be terminated by an employer, with or without notice, depending upon the situation. For example, where a contract violates statutory provisions (eg, if a contract was concluded

13 LC, art 18, para 3. See also Z Góral, ‘Zasada uprzywilejowania pracownika’ in KW Baran (ed), Zarys systemu prawa pracy. Tom I. Część ogólna prawa pracy (Warsaw, Wolters Kluwer, 2010) 663 f. 14  LC, art 29, para 2. 15  ibid, art 281, point 2. 16  ibid, art 300. The LC contains Chapter IIa (arts 10–183a) ‘Basic principles of labour law’, which refers, inter alia, to the right to work, respect for the employee’s personal rights, a ban on discrimination, the right to fair remuneration, the right to rest, and the employer’s duty to ensure healthy and safe working conditions. In addition, principles have been elaborated in doctrine and the case law, eg, protection against dismissal or limited financial liability of employees. See also Z Góral, O kodeksowym katalogu zasad indywidualnego prawa pracy, (Warsaw, Wolters Kluwer, 2011) 64 f. 17  Judgment of the Supreme Court of 31 August 1977, I PRN 112/77, Lex No 14418.

The Concept of ‘Employee’: The Position in Poland 529 with a minor below the legal working age or a contract with a female to carry out work she is prohibited from performing), it is not automatically invalid.18 Instead, it must first be terminated with notice. The employer is obliged to pay remuneration for the notice period and can be subject to a fine for breaching employee rights. Where a contract was concluded on false pretences (eg, a candidate submitted false documents relating to his or her qualifications), it can be terminated by the employer with immediate effect.19 B.  Employment Relationship: Basic Definition Apart from an employment contract (see the previous section), several noncontractual grounds for establishing an employment relationship exist. Article 2 LC provides that an employee is a person who is employed on the basis of an employment contract (umowa o pracę), an appointment (powołanie), a nomination (mianowanie), an election (wybór) or a cooperative employment contract (spółdzielcza umowa o pracę). Two major categories can be differentiated: an employment contract and sources other than employment contracts that may constitute an employment relationship. Employment relationships in the public sector are usually based on an appointment, a nomination or an election. It should be emphasised that employment relationships concluded on a legal basis other than an employment contract are only permissible in cases specified in labour law. An employment relationship can be established on the basis of an appointment in the cases specified in separate provisions.20 Such situations refer, for example, to executive managers of state-owned enterprises and his or her deputy. Certain posts in local government offices can be contracted by appointment, eg, deputies of mayors. Appointed employees can be recalled from their post at any time, with immediate effect or as of a certain date by the body that appointed them. An employment relationship can be established on the basis of an election if the duty to perform work as an employee results from such an election,21 eg, mayors of cities. The internal regulations of social or political organisations can request an election to take place for the establishment of an employment relationship. An employment relationship based on an election terminates upon the expiry of the term in office.22 18  Judgment of the Supreme Court of 26 January 1982, V PZP 8/81, OSNCP 1982, No 7, item 94. 19 A Sobczyk, Rozwiązanie umowy o pracę bez wypowiedzenia (Gdańsk, ODDK, 2010) 15 f. 20  LC, arts 68–72. 21  ibid, arts 73–75. 22 See also A Giedrewicz-Niewińska, Wybór jako podstawa nawiązania stosunku pracy w samorządzie terytorialnym (Warsaw, Wolters Kluwer, 2008) 56 f.

530  Leszek Mitrus Under Article 76 LC, an employment relationship is established on the basis of a nomination in the cases specified in separate provisions. Nominations are regulated by specific statutes on employment in the public sector. The provisions of the LC apply to the extent that certain labour law-related areas are not regulated by those specific provisions.23 Nominations constitute a legal basis for the establishment of employment relationships in public administrations, the educational system, high schools and the judiciary. Public entities can act as employers vis-a-vis the nominated employees, eg, civil servants, judges, public prosecutors and teachers. Statutory provisions introduce different regulations with regard to specific categories of nominated employees. However, some common features emerge. To be employed on the basis of nomination, certain recruitment criteria may apply (eg, Polish nationality, ethical behaviour and minimum age). As a general rule, nominated employees are subordinated to their superiors to a larger extent in comparison to employees who have concluded an employment contract. Moreover, special duties may be imposed on them (eg, a statutory ban on conducting an additional activity). Employees employed on the basis of nomination are subject to disciplinary liability. Protection against dismissal is stronger than in the case of an employment contract. A nominated employee can only be dismissed in cases expressly provided in the relevant statute.24 Nomination is also used in law enforcement agencies, eg, the police, the Internal Security Agency and the Central Anti-Corruption Office. Persons who serve in such institutions are not employees, but rather ‘functionaries’, as their level of subordination is much higher. Their employment relationship is governed by administrative law.25 Article 77 LC provides that an employment relationship shall be considered as having been established between a labour cooperative and a member on the basis of a cooperative employment contract. Such an employment relationship is governed by the Law of 16 September 1982 on Co-operatives.26 Labour cooperative membership is a prerequisite for signing a cooperative employment contract. This type of contract is rarely used in practice. Establishing an employment relationship as well as determining the conditions of work and remuneration regardless of the legal basis of the employment relationship requires a unanimous statement of intent by both the

23 

LC, art 5. Stelina, Charakter prawny stosunku pracy z mianowania (Gdańsk, Fundacja Rozwoju UG, 2005) 17 f. 25 T Kuczyński, E Mazurczak-Jasińska and J Stelina, ‘Tom 11. Stosunek służbowy’ in R Hauser, Z Niewiadomski and A Wróbel (eds), System prawa administracyjnego (Warsaw, CH Beck, 2011) 3 f. 26  Compiled text: Journal of Laws 2016, item 21, with further amendments. 24  J

The Concept of ‘Employee’: The Position in Poland 531 employer and the employee.27 In other words, a consensus of both parties is required to create such types of employment relationships. With regard to appointment and nomination, which are in fact unilateral administrative decisions, an employee can express his or her intention by accepting the decision and taking up the duties at the given post. There are few exceptions to the above-mentioned Article 11 LC. Where an undertaking or part thereof is transferred to another employer, that new employer becomes ex lege a party to an existing employment contract. With regard to appointments, an election, nomination or cooperative employment contract, the new employer should at least propose new employment conditions.28 There are also exceptional situations where a particular person enjoys an enforceable claim to be employed. An employer may terminate an employment contract without notice in the event of a long period of incapacity for work due to illness through no fault of the employee (in principle, 182 days). However, an employer is obliged—to the extent possible—to re-employ an employee who reports to work immediately after the reasons for his or her incapacity ceases to exist within six months of the termination of his or her employment contract.29 A contract of employment expires after an employee is absent from work due to temporary detention (ie, awaiting trial), unless an employer terminated the contract previously without notice through the employee’s fault. An employer is obliged to re-employ the employee if the criminal proceedings are discontinued or when the employee has been acquitted, provided that the employee reports his or her return to work within seven days from the date when the court’s decision becomes valid. This rule does not apply if the criminal proceeding is barred by limitation or discontinued due to an amnesty, or in the case of conditional discontinuation.30 Moreover, where an employee has been dismissed within the framework of a collective dismissal and if employees are being hired in the same occupational category, an employer should employ an employee who applies to re-­establish the employment contract within a year of the date of the termination of the employment relationship. An employer is obliged to re-employ such an employee within 15 months from the date of terminating the previous employment relationship.31

27 

LC, art 11. art 23, para 1 See also judgment of the Supreme Court, 1 February 2001, I PKN 508/99, OSNP 2001, No 12, item 412. 29  LC, art 53. See also judgment of 10 September 1976, I PZP 48/76, OSNP 1977, No 4, item 65. 30  ibid, art 66. 31  Article 9 of the Law of 13 March 2003 on Specific Rules on Terminating an Employment Relationship due to Reasons Not Related to the Employee. Compiled text: Journal of Laws 2016, item 1474 (so-called ‘Law on collective dismissals’). 28 ibid,

532  Leszek Mitrus II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition In Polish, there is no linguistic distinction comparable to the English differentiation between ‘employee’ and ‘worker’. Both notions, which are used in instruments of international or European law, are translated into Polish as ‘pracownik’. The scope of this expression in such international or E ­ uropean legal acts should be determined in each individual situation, depending upon the context. However, there is no doubt that the notion ‘pracownik’, as used in the LC and other statutory labour law provisions, reflects the meaning of the term ‘employee’.32 Article 2 LC introduces the legal definition of ‘employee’, namely a person who is employed on the basis of an employment contract, an appointment, a nomination, an election or a cooperative employment contract (see the previous section). In other words, an employee is a person who is party to an employment relationship within the meaning of Article 22 § 1 LC. This notion has universal scope, since it applies both to employment law and collective labour law. The LC expressly introduces two prerequisites for being deemed an employee. The first is the minimum statutory age— according to Article 22 § 2 LC, anyone who is over 18 years of age may be an employee.33 Under the provision of section 9 LC (ie, Articles 190–206), a person under the age of 18 years can be hired as an employee.34 The second is that limited legal capacity is required.35 According to Article 22 § 3 LC, a person with a limited legal capacity may establish an ­employment relationship and perform activities under the law relating to this relationship without consent of his or her statutory representative. However, if an employment relationship is contrary to the interests of that person, a legal representative may terminate the employment relationship with prior ­judicial permission. The Law of 13 October 1998 on the social security system36 ­introduces an independent definition of ‘employee’. An employee is a person who is party to an employment relationship.37 In addition, a person who c­ oncluded a separate civil law contract with his or her employer is considered an 32 There might be a discrepancy between the Constitution and the LC on defining the ­personal scope of protection related to work. 33  Judgment of the Supreme Court of 22 November 1979, III PZ 7/79, OSN 1980, No 4, item 83. 34  These regulations refer to the employment of minors. See section III.A below. 35  Article 11 of the Civil Code provides that the full capacity for legal acts is acquired at the time that individuals become adults. In addition, under art 15 of the Civil Code, minors who have attained 13 years of age and persons who are partially legally incapacitated have limited capacity for legal acts. 36  Compiled text: Journal of Laws 2016, item 163 with further amendments. 37  Article 8, point 1.

The Concept of ‘Employee’: The Position in Poland 533 employee,38 eg, as regards the duty to pay contributions. In addition, the Social Security Institution is entitled to examine the nature of the relationship. If a bogus contract was concluded (eg, no work was actually performed), the existence of the employment contract will be questioned and any social benefits connected to employee status may be denied.39 The Law of 26 July 1991 on income tax of natural persons40 introduces another definition for employee. An employee is a person who is party to a public service relationship (which covers nominated employees and functionaries) or an employment relationship, or is a home worker.41 Therefore, the definitions of ‘employee’ under social security law and taxation law are broader in comparison to that under labour law. B.  Employer: Basic Definition Article 3 LC defines an ‘employer’ as an organisational unit, even if it has no legal personality, or any natural person, provided that it employs employees. Thus, under Polish law, the basic prerequisite for being defined an employer is to ‘employ employees’. In a broader sense, this requirement relates to the competence to take action with reference to the employment relationship, eg, to hire a candidate, to promote an employee to a higher post or to terminate an employment contract. Any natural person, institution, entity, organisation etc can become an employer if it employs employees under its own name and capacity.42 This principle fully applies to groups consisting of a parent company and its subsidiaries. Such a group cannot be a priori considered an employer. In order to establish whether the parent company or a subsidiary is the employer in a given case, it is necessary to determine which entity is entitled to act in the field of labour law (eg, to conclude an employment contract). Article 24 of the Constitution of the Republic of Poland of 2 April 199743 expressly provides that work shall be protected by the Republic of Poland. The State shall exercise supervision over the conditions of work. Moreover, several constitutional provisions relate to social rights, ie, the freedom of association in trade unions and employers’ organisations (Article 59 item 1), 38 Article 8, point 2a of the Law. See also I Jędrasik-Jankowska, Konstrukcje prawne ubezpieczenia społecznego, 5th edn (Warsaw, Wolters Kluwer, 2013) 57 f. 39  See, eg, judgment of the Supreme Court of 21 November 2011, II UK 69/11; judgment of the Supreme Court of 12 July 2012, II UK 14/12; judgment of the Supreme Court of 22 June 2015, I UK 367/14, Lex No 1771586. 40  Compiled text: Journal of Laws 2016, item 2032 with further amendments. 41  Article 12, point 4 of the Law. See also section XI.A below. 42  Judgment of the Supreme Court of 13 March 2012, II PK 170/11, Lex No 1211150. 43  Journal of Laws 1997, No 78, item 483 with further amendments. See The Constitution of the Republic of Poland (Warsaw, Sejm Publishing Office, 1997). English translation of the Constitution is also available at www.sejm.gov.pl/prawo/konst/angielski/kon1.htm.

534  Leszek Mitrus the freedom to choose and pursue an occupation and to choose the place of work (Article 65 item 1), the right to safe and hygienic conditions at work (Article 66 point 1) and the right to statutorily specified days of leave and annual paid holidays, as well as the maximum permissible hours of work (Article 66 point 2). In the legal literature, it has been rightly submitted that the constitutional protection of work cannot be limited to the employment relationship only.44 Thus, not only employees within the meaning of the Labour Code should enjoy statutory protection, though the extent of rights of employees and other categories of persons who perform work may differ.45 In a recent ruling, the Constitutional Tribunal46 declared the provisions of the Law of 23 May 1991 on trade unions47 that confine the right to unionise to employees within the meaning of Article 2 LC (with some minor ­exceptions). The Tribunal ruled on the incompatibility of the above Law with the Constitution of Poland and ILO Convention No 87 on Freedom to Association and Protection of the Right to Organize. The Tribunal emphasised that the notion ‘pracownik’ (see point 2.1 above) has an independent and autonomous constitutional scope. The Constitution protects persons who carry out paid work, remain in a legal relationship with a subject who is a beneficiary of work, and have common interests that can be collectively defended. The legal form of the performance of work should not determine the personal scope of the right to establish trade unions. Thus, it seems that constitutional protection refers to ‘workers’, ie all categories of persons who carry out paid work. As a consequence of the ruling, civil law contractors and self-employed persons shall enjoy the right to set up trade unions alongside employees.48 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Polish law introduces a universal definition of ‘employee’ with the same meaning in all parts of its labour law (see above, section II.A). No ­general distinction is made between blue-collar and white-collar employees.

44  See, eg A Sobczyk, Prawo pracy w świetle Konstytucji RP. Tom I. Teoria publicznego i prywatnego prawa pracy (Warsaw, CH Beck, 2013) p 46 f. 45  See also s 11.1 below. 46  Judgment of 2nd June 2015, K 1/13, 80/6/A/2015. See also Z Hajn, ‘The Right of Association in Trade Unions – the Right of Employees, or the Right of Working People?’ in J Stelina, Ł Pisarczyk (eds) Studia Iuridica vol 60 Collective Labour Law (Warszawa 2015) p 107 f. 47  Compiled text, Journal of Laws 2015, item 1881. 48  The Law on Trade Unions should be amended, although the extent of modification is not yet clear.

The Concept of ‘Employee’: The Position in Poland 535 At the same time, a differentiation is made regarding the status of various ­categories of employees employed on the basis of agreements other than employment contracts (see above, section I.B). There is no special category of family employees. There are no special labour law provisions for athletes or artists. They can carry out work on the basis of an employment contract or a civil law contract. Moreover, it must be emphasised that in relation to health and safety at work, an employer is responsible not only towards employees, but also towards persons who perform work on a basis of an agreement other than an employment relationship, as well as those who conduct business activities on their own account, in a work establishment or other place designated by the employer.49 Minors constitute a particular category of employees. According to the LC, a minor (pracownik młodociany) is a person who has reached the age of 16, but is not yet 18 years old. It is prohibited to employ a person who has not yet reached the age of 16.50 A minor can only be employed for the purpose of vocational training or to perform light work.51 Minors are required to supplement any work they perform with schooling until they reach the age of 18. They enjoy special rights with regard to health and safety protection. Teleworkers52 and temporary agency workers53 constitute separate categories of employees with specific rights and duties connected to the method of work performance. Their legal status is based on the Framework Agreement on Telework54 and Directive 2008/104 of 19 November 2008 on Temporary Agency Work,55 respectively. In addition, seafarers also constitute a separate category. They are covered by the Law of 5 August 2015 on Work at Sea.56 Managerial employees do not constitute a separate legal group with a comprehensive set of rights, but several LC provisions have been expressly

49 

LC, art 304. ibid, art 190. Please note that according to the Law of 19 March 2009 on the amendment of the Law on Education System and several other statutes (Journal of Laws 2009, No 56, item 458), from 1 September 2018 the minimum age for legal employment will be 15 years. This change is connected to a comprehensive reform of the primary education system. 51  Light work may not endanger the life, health or psychological development of minors, and may not impede their school duties. A list of light work duties should be set out by the employer with prior permission from an occupational doctor. This list must be confirmed by the labour inspector (art 200, paras 2 and 3 LC). 52 LC, art 675–6717. See also A Sobczyk, Telepraca w prawie polskim (Warsaw, Wolters Kluwer, 2009) 24 ff. 53  The Law of 9 July 2003 on the employment of temporary agency workers, Journal of Laws 2016, No 360, item 1608 with further amendments. For the English text, see A Collection of Labour Law Acts and Ordinances. Prawo pracy—zbiór ustaw i rozporządzeń, ­translated by N Faulkner, B Glogier-Osińska and J Sikora (Warsaw, CH Beck, 2013) 87 ff. 54  Available at www.etuc.org. 55  Directive (EC) 2008/104 of the Euopean Parliament and of the Council of 19 November 2008 on Temporary Agency Work [2008] OJ L 327/9. 56  Journal of Laws 2015, item 1569. 50 

536  Leszek Mitrus modified in respect to them. For the purposes of working time, Article 128 § 2 point 2 LC introduces the notion of an ‘employee managing the establishment on behalf of the employer’. This provision applies to employees who manage the establishment, deputy managers, employees who are members of a collective body and manage the establishment, as well as chief accountants. In principle, they are obliged to perform overtime work when necessary, without the right to additional compensation.57 Moreover, a plant collective agreement cannot determine the remuneration of such persons.58 They cannot be members of a conciliation commission at the undertaking.59 B.  The Establishment of a Specific Category of ‘Workers’ There is no general category of ‘workers’. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration Employee subordination is an essential factor of an employment relationship. Article 22 § 1 LC expressly provides that an employee performs work of a specified type: [F]or the benefit of an employer and under his supervision, in a place and time specified by the employer.

As emphasised above,60 an employee is obliged to carry out work in person. The provision of work instructions by the employer constitutes a major element defining an employment relationship. Thus, an employee is obliged to follow the employer’s work instructions. He or she is not free to decide on the mode of work performance. This feature is a structural characteristic of an employment relationship.61 Employment is often described as ‘organisational subordination’, since employees are integrated into the structure of an establishment and are obliged to carry out work within the organisational framework of an undertaking, its hierarchy etc. ­However, the scope of subordination within the framework of an employment 57 

LC, art 151. ibid, art 241, para 2. 59  ibid, art 246. 60  See section I.A above. 61 Judgment of the Supreme Court, 25 November 2005, I UK 68/05; judgment of the Supreme Court of 22 April 2015, II PK 153/14, Lex No 1712814. 58 

The Concept of ‘Employee’: The Position in Poland 537 contract can vary, depending upon the type of work. For example, employee subordination is relatively weak in the case of telework, where activities are performed outside the employer’s premises. Moreover, employees who occupy managerial posts can be expected to take the initiative with regard to work performance. This situation is not affected by the existence of an employment relationship, since such employees are bound by the rules on the organisation and functioning of the undertaking.62 Based on the case law of the Supreme Court, the concept of ‘autonomous subordination’ has been introduced.63 This refers to situations in which an employer determines the duration of working time and the tasks to be completed, but does not directly interfere in the employees’ mode of work performance. In other words, the employee is required to achieve the results requested by the employer, but has a relatively broad scope of discretion with regard to the method of performing the work. In practice, this concept relates to employees with high skills or autonomy. B. Indicators In practice, not all criteria (see section I.A above) must be met in order to classify an employment relationship as a valid one. In the view of the Supreme Court, the legal nature of a contract cannot be determined on the basis of a single factor, but on a comprehensive assessment of the factual situation.64 Where the features of an employment relationship do not prevail, the description of the contract and the mode of work performance are decisive.65 On the other hand, when the features that are characteristic of an employment relationship in accordance with Article 22 § 1 LC prevail, it will be deemed that an employment relationship has been established, regardless of the description of the contract by the parties and their initial will.66 Should the features of an employment contract and civil law contract be equal, then the will of the parties prevails.67 As a general rule, a lack of duty to perform the work in person is an indicator that the agreement is not an employment contract.68 In practice, the mode of work performance is of major importance, regardless of the label of the contract. Another major

62 

Judgment of the Supreme Court of 11 October 2007, III UK 70/07. Judgment of the Supreme Court 17 September 1999, case I PKN 277/99; judgment of the Supreme Court of 11 October 2007, case UK 70/07. 64  Judgment of the Supreme Court of 7 October 2009, case III PK 38/09. 65  Judgment of the Supreme Court of 2 September 1998, I PKN 293/98. 66  Judgment of the Supreme Court of 18 January 2012, case II PK 239/11. 67  Judgment of the Supreme Court of 18 June 1998, case I PKN 191/98. 68  Judgment of the Supreme Court of 28 October 1998, case I PKN 642/98. 63 

538  Leszek Mitrus factor is for the work to be carried out on a continuous basis (civil law contracts often cover one-time or short-term activities).69 C.  The Relevance of ‘Economic Dependence’ There is no particular category of economically dependent workers. Economic dependence cannot be the sole criterion to determine whether an employment relationship exists. V.  THE PRINCIPLE OF PRIMACY OF FACTS

Article 22 § 1 LC provides that an employment relationship based on the terms specified in this provision70 shall be considered a valid employment relationship, regardless of the label of the contract concluded by the parties. According to Article 22 § 1 LC, it is not permissible to replace an employment contract with a civil law contract where the terms upon which the work to be provided are based on the provisions specified in § 1. Thus, the ‘primacy of facts’ principle is expressly recognised in the LC. Where a legal relationship has the features of an employment contract, the description of the contract by the parties is irrelevant.71 The content of the contract and the mode of work performance are decisive for establishing the legal nature of the contract.72 However, Article 22 § 1 LC does not establish the presumption that an employment contract has been concluded.73 It is up to the court to determine whether an employment contract has been entered into, even where the parties, in good faith, concluded a civil law contract, but the content of the contract and the mode of its performance are characteristic of an employment contract.74 VI.  QUALIFICATION IN FULL

Under Polish law, there are no mixed contracts, ie, contracts with features combining an employment contract and a civil law contract. The contract must belong to a specific category with all the consequences that arise

69 Judgment of the Supreme Court of 14 December 1999, I PKN 451/99, OSNP 2001, No 10, item 337. 70  See section I.A above. 71  Judgment of the Supreme Court of 7 April 1999, case I PKN 642/98. 72  Judgment of the Supreme Court of 24 June 2015, II PK 189/14, Lex No 1764808. 73  Judgment of the Supreme Court of 29 June 2010, case I PK 44/10. 74  Judgment of the Supreme Court of 3 June 2008, case I UK 282/07.

The Concept of ‘Employee’: The Position in Poland 539 from concluding such a contract.75 However, there is the possibility for the parties to an employment relationship to conclude an additional contract. For example, the parties can agree on a competition clause during the employment relationship76 or following its expiry.77 In addition, the parties to an employment relationship are free to conclude a civil law contract among each other. Yet, this may lead to abuse of labour law provisions, eg, with regard to overtime work. In principle, a civil law contract concluded between an employer and an employee should refer to another type of work than that covered in the existing employment contract.78 In addition, if damage is caused by the employee to a third party while performing his or her duties, the employer is obliged to compensate for the damage. An employee bears liability towards the employer for compensation connected to damage incurred by a third party.79 VII.  LIMITS TO THE FREEDOM OF CONTRACT

As already mentioned,80 the existence of an employment contract must be determined on the basis of objective criteria. The concept of ‘employee’ is mandatory and parties to a contract cannot alter the concept through contractual stipulations. In other words, an employee’s rights cannot be waived based on the will of the parties. As regards appointments, elections, nominations or cooperative employment contracts, it is worth mentioning that these can only be concluded in cases specified in the labour law provisions.81 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Polish labour law consists primarily of statutory law; collective agreements play a secondary role. Only the legislator may determine or modify the criteria that designate an employee relationship and employee status. There is no room for social partners to modify the statutory notion of ‘employee’. 75 

Judgment of the Supreme Court of 18 November 2003, I PK 580/02. LC, art 101. 77 ibid. 78 In such a case, a civil law contractor is considered an employee for social security purposes (see section II.A above). 79  LC, art 120. 80  See section V above. 81  See section I.B above. 76 

540  Leszek Mitrus B.  Custom and Practice Custom and practice are irrelevant in determining the existence of an employment relationship. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

The Supreme Court expressly ruled that Article 22 § 1 LC does not introduce a presumption of the existence of an employment contract.82 The burden of proof lies entirely with the individual who seeks to prove the existence of an employment relationship. In practice, this applies to civil law contractors who are of the opinion that they have concluded a disguised employment contract. There is no legal presumption of the existence of an employment contract in the field of social security law either. X.  SPECIFIC PROCEDURES

In Poland, the labour courts constitute separate organisational judiciary units and are integrated into the judiciary system. The Code of Civil Procedure (hereinafter CCP)83 of 17 November 1964 introduces a separate procedure for labour disputes. Therefore, the general rules for civil procedures with some modifications apply to labour disputes. Article 476 § 1 CCP covers determinations of the existence of an employment relationship. This provision covers situations in which a civil law contractor seeks to prove that his or her civil law contract is in fact a disguised employment contract. In addition, a labour inspector can evaluate whether a civil law contract has been concluded where an employment contract should have been made and, consequently, whether the employer has breached employee rights.84 The Social Security Institution can also examine whether a bogus employment relationship was concluded and whether the given employee may in fact qualify for social security benefits.85

82 

Judgment of 29 June 2010, case I PK 44/10. Compiled text: Journal of Laws 2016, item 1822 with further amendments. 84  LC, art 281, point 1. 85  See section II.A above. 83 

The Concept of ‘Employee’: The Position in Poland 541 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons In Poland, there is no general category of employee-like persons. In principle, civil law contractors do not enjoy employee rights. An exception to this rule is home-based workers in the cottage industry (praca nakładcza). In principle, this involves simple manual work performed at home. Home-based work is performed on the basis of a civil law contract. According to Article 303 LC, the government shall regulate the scope of application of the provisions of labour law to persons engaged in home working.86 Some labour law provisions apply to home workers, such as termination of the contract, remuneration for work, paid leave and responsibility for damage caused while performing work. There is currently a debate in Poland as to whether certain employee rights should be extended to civil law contractors. De lege lata there is a strict distinction between an employment contract and a civil law contract for the provision of services (umowa zlecenia). Employees enjoy full protection under labour law and social security law. By contrast, civil law contractors (zleceniobiorca) are not covered by labour law at all. For example, they are not entitled to overtime remuneration, paid holiday or protection against dismissal. In addition, civil law contracts provide much more limited social security protection than employment contracts.87 Thus, Poland’s labour market is highly segmented. Such differentiation has attracted a lot of criticism. The draft of the new LC88 explicitly provides that certain employee rights should be provided to persons who carry out work on the basis of an agreement other than an employment contract, in person, continuously, in return for remuneration that amounts to at least half of the minimum statutory wage.89 Since 1 January 2017, several categories of civil law ­contractors enjoy the statutory minimum wage.

86 Regulation of 31 December 1975, Journal of Laws 1976, No 3 item 19 with further amendments. 87  I Florczak and B Muszyńska, ‘Selected Differences between Civil Law and ­Employment Law Contracts Related to Work on the Grounds of the Polish legislation’ in I Florczak and Z Góral (eds), Developments in Labour Law from a Comparative Perspective (Łódź, Wydawnictwo Uniwersytetu Lodzkiego, 2015) 43 f. 88  Kodeks pracy. Zbiorowy kodeks pracy. Projekty opracowane przez Komisję Kodyfikacyjną Prawa Pracy (Katowice, Wydawnictwo Uniwersytetu Ekonomicznego w Katowicach, 2010). 89  See generally AM Świątkowski, ‘The Protection of Working Relationships in Poland’ in F Pennings and C Bosse (eds), The Protection of Working Relationships: A Comparative Study (New York, Wolters Kluwer Law & Business, 2011) 115 f.

542  Leszek Mitrus B.  Equality and Anti-discrimination Law Article 11 § 2 LC provides that employees have equal rights in terms of the performance of the same duties. This principle applies in particular to the equal treatment of men and women in employment. According to Article 11 § 3 LC, any discrimination in employment, whether direct or indirect, in particular in respect of gender, age, disability, race, religion, nationality, political views, trade union membership, ethnic origin, creed, sexual orientation or in respect of the conditions of employment for a definite or an indefinite period or full-time or part-time work is prohibited. Further provisions are subject to Chapter IIa of the LC (‘Equal treatment in employment’).90 The scope of anti-discrimination provisions is broad. They cover the establishment and termination of employment relationships, the conditions of employment, promotion conditions and access to training to improve professional skills and qualifications. The principle of equal treatment in Poland reaches beyond employment. The Law of 3 December 2010 on implementing provisions of the European Union on equal treatment91 should be mentioned here. The Law determines the scope of application and methods of preventing violations of the principle of equal treatment based on sex, race, ethnic origin, nationality, religion, belief, disability, age or sexual orientation. It applies, inter alia, to taking up vocational training and re-training, taking up self-employment or other occupational activities, in particular within the framework of an employment contract or a civil law contract.

90 

Article 183a—183e. Journal of Laws 2010, No 254, item 1700. The Law implements Directives Nos 86/613, 2000/43, 2000/78, 2004/13 and 2006/54. 91 

26 The Concept of ‘Employee’: The Position in Portugal JOSÉ JOÃO ABRANTES AND RITA CANAS DA SILVA

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract The Portuguese Labour Code (hereinafter PLC)1 defines an employment contract as an agreement: [I]n which a natural person undertakes, in exchange for remuneration, to provide its activity to another or others, within an organisation and under their authority.2

The reference to ‘another or others’ takes into account that the employment contract might be concluded between the employee and a plurality of employers.3 As a rule, the employment contract does not need to take a specific form, unless expressly stipulated.4 Hence, in practice, it may be based on an oral

1 Approved by Law No 7/2009 of 12 February and amended by Law No 105/2009 of 14 September, 53/2011 of 14 October, 23/2012 of 25 June, 47/2012 of 29 August, 69/2013 of 30 August, 27/2014 of 8 May, 55/2014 of 25 August, 28/2015 of 4 April and 120/2015 of 1 September. See also Rectification No 38/2012 of 10 July. 2  PLC, art 11. See also art 1152 of the Portuguese Civil Code, which defines an employment contract as an agreement in which a natural person undertakes, in exchange for remuneration, to provide its manual or intellectual activity to another under their authority and direction. The PLC no longer distinguishes between manual or intellectual work. 3 PLC, art 101. See C Carvalho, ‘Contrato de trabalho e pluralidade de empregadores’ (2005) 26(XII) Questões Laborais 209–39. In the case law, see Supreme Court Decision No 163/09.0TTMTS.P1.S1 of 29 February 2012, available at www.dgsi.pt (Portuguese version). 4  The contract of employment may also be concluded through standard contractual terms (‘cláusulas contratuais gerais’); see arts 104 and 105 of the PLC. The PLC also foresees the possibility of concluding in writing a promised employment agreement (art 103). Concerning the duty of information, to be provided in writing, see arts 106 ff of the PLC.

544  José João Abrantes and Rita Canas da Silva agreement and the contract’s employment nature may arise from its performance/execution, provided that the work is performed under legal subordination. Nevertheless, the written form and additional formal requirements apply in specific cases, where the employment contract is entered into under special circumstances, requiring the applicability of a particular set of rules—as is, inter alia, the case in agreements concluded with a plurality of employers,5 fixed (or unfixed) term employment contracts,6 part-time employment contracts,7 contracts for intermittent employment (contrato de trabalho intermitente),8 temporary special arrangements (comissão de serviço),9 telework10 and temporary agency work contracts.11 In such cases, special provisions only apply if the contract is entered into in writing, but non-compliance with formal requirements does not affect the existence of an employment contract; as a rule, the agreement remains valid without the accessory clauses for full-time work of indefinite duration. Hence, for example, if the fixed term is void (due to lack of grounds), the employment contract remains valid, but it is entered into for an indefinite duration.

5 

ibid art 101. arts 139–49. Term employment contracts may be entered into to satisfy the transitional needs of enterprises, but only for the required period to comply with those needs. According to the PLC, ‘term employment contracts’ may be entered into: (i) for a ‘fixed term’ (‘termo certo’), ie, when determined by a specific date; or (ii) for an ‘unfixed term’ (‘termo incerto’), which expires upon the completion of a specific task or the occurrence of a specific event. Considering that term employment contracts are deemed to be an exception to the principle of stability of employment, they may only be entered into under specific grounds explicitly provided by the law. These grounds usually relate to situations that are transitional and/or unpredictable (such as the replacement of a sick employee or a sudden increase in work). 7  ibid arts 150–56. 8  ibid arts 157–60. Before 2009, intermittent contracts were only foreseen for artistic activities according to the special legal regime set forth in Law No 4/2008 of 7 February. Pursuant to the PLC, a contract for intermittent employment is foreseen for enterprises with variations in activity throughout the year (eg, seasonal activities), carrying out an activity with cyclical reductions or interruptions. The intermittent contract shall be entered into for an indefinite period (thus, term or temporary contracts are not admissible) and periods of activity are intercalated with periods of inactivity. During the period of inactivity, the employee is entitled to compensation equal to 20 per cent of his or her base remuneration, unless a different amount is foreseen in collective regulation instruments. Nevertheless, the period of activity shall not be shorter than six months annually, four of which must be consecutive. 9  ibid arts 161–64. An employment contract as a ‘temporary special arrangement’ may be applied to management or equivalent functions, directors or leadership positions that directly report to management, general directors or equivalent functions and positions of secretariat of those posts and, where foreseen in collective bargaining agreements, to employees who perform functions that require a special bond of trust with regard to these management or leadership positions. 10 ibid arts 165–71. Telework (‘teletrabalho’) is work performed under legal subordination, usually outside the employer’s premises and by means of information and communication technologies. 11  ibid arts 172–92. For this purpose, ‘agency employment contract’ is a term contract or contract of indefinite duration entered into between an employment agency and an employee, whereby the latter provides its activity, upon remuneration, to different enterprises (‘users’), the employment relationship thus remaining with the employment agency. 6  ibid

The Concept of ‘Employee’: The Position in Portugal 545 As regards the invalidity of the employment contract (eg, lack of professional title or failure to comply with the required minimum age to enter into an employment contract), the following rules apply: (i)

partial voidness does not affect the validity of the entire contract, unless it can be proven that the agreement would not have been concluded without the component that is void;12 (ii) a void or voidable employment contract is deemed to be effective with regard to the past13 (a de facto employment relationship is established), as an exception to the general provisions of the Civil Code, according to which a void contract is retroactively ineffective);14 (iii) pursuant to Article 125 of the PLC, if the cause of invalidity ceases to exist, the employment contract is considered to have been effective since the beginning of its performance.

B.  Employment Relationship: Basic Definition No statutory definition of ‘employment relationship’ exists in Portugal. However, as a general rule, an employment relationship is based on a contract of employment.15 In addition, an employment relationship may also arise in situations considered to be exceptions to regular contractual negotiations. This is the case, for example, in a transfer of undertaking, whereby: [I]n the event of a transfer, by any means or form, of ownership of an enterprise or undertaking or part of an enterprise or undertaking, which represents an economic unit, the acquirer assumes the legal position of the employer in the existent employment contracts.16

Similarly, if the employment contract entered into between an employee and a temporary work agency is void (eg, due to lack of required justifications), an employment relationship may be deemed to exist between the employee and the user undertaking—Article 180 No 2 and 3 of PLC expressly foresees such a legal effect.17 12 

ibid art 121, N. 1. ibid art 122, N. 1. 14  Civil Code, art 289. 15  See also P Ramalho and M do Rosário, Da autonomia dogmática do Direito do trabalho (Coimbra, Almedina, 2001) 117, 126, 239 ff and 465 ff. 16  See art 285 of the PLC. The PLC transposed Council Directive (EC) 2001/23 of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employee rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses [2001] OJ L 82. 17  Apart from the above-mentioned situation of invalidity of the employment contract, there are other circumstances under which an employment relationship may arise from de facto arrangements, for example, when the employee under an unfixed-term contract remains in the service of the employer for a period of 15 days after the expiry of the contract. In such a 13 

546  José João Abrantes and Rita Canas da Silva II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition The PLC does not provide definitions of ‘employee’ or ‘employer’. However, such notions are inferred from the statutory definition of the employment contract enshrined in Article 11.18 Accordingly, the employee is the natural person (legal persons are by implication excluded) who provides his or her activity, in exchange for remuneration, to the employer(s) (natural or legal person(s)).19 Nevertheless, legal subordination (subordinação juridica)20 remains the main criterion distinguishing employment contracts from other similar contracts (namely, contracts for services—contrato de prestação de serviços).21 In fact, all forms of employment regulated in the PLC—term employment, part-time work, telework, temporary special arrangement, temporary agency work, contract for intermittent employment etc—require the work to be performed under legal subordination; work performed independently (service providers/self-employed persons) is excluded.22 B.  Employer: Basic Definition The notion of ‘employer’ is not defined by law, but its definition derives from the legal concept of an employment contract enshrined in the PLC.23

situation, the unfixed-term employment contract is converted into a permanent agreement, but only after that minimum period of performance—for such a period, the employment relationship has a de facto (not contractual) basis (art 147, No 2, c) of the PLC). An identical situation is foreseen in art 178, No 4 of the PLC on temporary agency work. 18  The term ‘employee’ is uniform across different strands of law. In Portugal, the existing case law refers mainly to the qualification of the contract as an employment contract or a services agreement. 19  Nevertheless, the PLC provides for definitions of specific types of employees, to which a special set of rules applies, such as ‘pregnant, puerperal or nursing employee’ (art 36, No 1), ‘minor employee’ (art 68) or ‘student employee’ (art 89). 20  See section IV.A below. 21  Foreseen in art 1154 of the Civil Code. 22  Nevertheless, art 4, No 2 of Law No 7/2009 of 12 February states that such workers must apply for insurance which guarantees the payment of benefits in the event of work accidents or occupational illness. In addition, the PLC is also not applicable to apprentices, as they, in principle, do not qualify as employees; instead of an employment contract, a trainee or apprenticeship contract is concluded in accordance with the legal framework set forth in Decree Law No 66/2011 of 1 June. Although excluded from the scope of the PLC, art 4, No 1, a) of Law No 7/2009 of 12 February extends the regulations on work accidents and occupational illnesses set forth in arts 283 and 284 of the PLC to apprentices, trainees and other individuals who are participating in professional training. In the case law, see Lisbon Court of Appeal ruling No 1598/2005-4 of 2 June 2005, available at www.dgsi.pt/jtrl.nsf/0/d77f01710fee5dc08025708a 0035d79e?OpenDocument (Portuguese version). 23  PLC, art 11.

The Concept of ‘Employee’: The Position in Portugal 547 The employer is the natural or legal person within the organisation to whom the employee provides its activity in exchange for remuneration. The employer has the disciplinary authority and the power to determine and supervise the employee’s activity to ensure compliance with the contract.24 Pursuant to Article 11 of the PLC, an employment contract may be concluded with a plurality of employers if the employers belong to a group of enterprises or merge into a common organisational structure. In such a scenario, one of the employers shall be appointed to represent the others with regard to the performance of the contract; nonetheless, the employers remain jointly liable for the duties arising from the agreement.25 Furthermore, should the employer be an enterprise, the PLC defines26 what shall be considered, for the purposes of the Code, a ‘micro’,27 ‘small’,28 ‘medium’29 and ‘large’ enterprise.30 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees The PLC does not envisage a different set of rules depending on the employee’s functions. Nevertheless, if agreed between the parties, a ‘temporary special arrangement’ (comissão de serviço) may be applicable to some categories of employees. The latter, pursuant to Article 161 of the PLC, may be applied to management or equivalent functions, directors or leadership positions that directly report to management, general directors or equivalent functions and positions of secretariat of those posts.31 This special regime is based on a special bond of trust between the parties; therefore, if such trust is breached, the ‘temporary services commission’ may be terminated following an easier and quicker process than the one provided by the general rules of dismissal and termination of employment contracts.32 Accordingly, 24  Articles 97 and 98 of the PLC provide for the management, supervision and disciplinary powers of the employer. Concerning the definitions of ‘employment contract’, ‘employee’ and ‘employer’, see A Monteiro Fernandes, Direito do trabalho, 17th edn (Coimbra, Almedina, 2014) 113 ff, 177 ff, 227 ff. 25 On this topic, see Lisbon Court of Appeal ruling of 11 March 2015, Proc No 559/12.0TTLSB.L1-4. 26  In art 100, No 1 of the PLC. 27  Employing fewer than 10 employees. 28  Employing from 10 to fewer than 50 employees. 29  Employing from 50 to fewer than 250 employees. 30  Employing 250 or more employees. 31 And, where collective bargaining agreements foresee it, to employees who perform functions that require a special bond of trust with regard to these management or leadership positions. 32  See Lisbon Court of Appeal ruling of 7 March 2012, No 171/11.0TTPDL.L1-4, available at www.dgsi.pt/jtrl1.nsf/0/29dc563b2d7e68a1802579bf00412c53?OpenDocument (Portuguese version). In this ruling, the Lisbon Court of Appeal analysed whether this special regime could be agreed for a fixed term.

548  José João Abrantes and Rita Canas da Silva either party may terminate the agreement in writing giving prior notice of at least 30 or 60 days, depending on the duration of the contract. In addition, where termination is initiated by the employer, payment of compensation is due to the employee.33 Notably, apart from the general legal regime provided in the PLC, special regimes may be adapted to certain sectors and activities. Pursuant to Article 9 of the PLC: [T]he general rules of the Code may be applied to employment contracts under a special regime if consistent with the specificity of these contracts.

These special regimes cover the specificities of several activities (eg, housekeepers,34 artists35 or professional athletes),36 which do not always match with the general rules laid down in the PLC for the majority of employees.37 B.  The Establishment of a Specific Category of ‘Workers’ ‘Economically dependent workers’ as described below are not qualified as ‘employees’, since their activity is performed without legal subordination, but may be qualified broadly as ‘workers’.38 See sections IV.C and XI.A below. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration As already mentioned, legal subordination remains the main criteria for distinguishing between employment contracts and other similar contracts (namely, contracts for services). Consequently, if legal subordination is

33 

PLC, arts 161–64. Law No 235/1992 of 24 October is applicable when a person undertakes, in exchange for remuneration, to provide to another person, under its direction and authority, activities connected with the special needs of a family unit or its equivalent and of its members, such as the preparation of meals, laundry, housework, and the supervision and care of children, elderly and sick persons. This Act was amended by Decree Law No 88/1996 of 3 July and by Law No 114/1999 of 3 August. See also Rectification No 174/1992 of 31 October. 35 Law No 4/2008 of 7 February, modified by Law No 105/2009 of 14 September and 28/2011 of 16 June. 36  Law No 28/98 of 26 June, modified by the Law of 3 August and Law No 74/2013 of 6 September. 37  For civil servants, see Law No 35/2014 of 20 June, which approved the legal framework for employment in civil services (‘Lei Geral do Trabalho em Funções Públicas’). 38 However, please note that beyond the definition of ‘employee’, there is not a relevant ‘worker’ concept. 34 Decree

The Concept of ‘Employee’: The Position in Portugal 549 ascertained, an employment contract is deemed to exist without the need to conduct further assessments. Nevertheless, given the complexity of facts, it is often difficult to determine whether or not this element occurs in practice (see section IV.B below). Notably, there are certain professions that are traditionally regarded as being independently performed, ie, without legal subordination (eg, lawyers, medical practitioners and architects). Still, under Portuguese law, legal subordination does not have to be effectuated. A mere potential suffices and is consistent with the technical autonomy of employees.39 Therefore, a significant number of professionals undertake these functions with legal subordination in the performance of an employment contract. Hence, the same professional groups, depending on the characteristics of each case, may be included within different legal frameworks—the general provisions of a contract for services (namely, the Civil Code) or the Labour Law.40 For instance, in the Supreme Court’s ruling of 4 February 2015,41 the question whether a dental practitioner (A) had entered into an employment contract or a contract for services with the beneficiary of the activity (a dental clinic—B) was evaluated. A proved that he performed his functions exclusively for B and was economically dependent on B. Legal subordination derived from multiple factors: B published regulations instructing practitioners (including A) on the performance of their activity, organisational and supervisional procedures were implemented, and A was entitled to annual leave. In accordance with the ‘facts index’ system and balancing these components, the Court ruled that the contractual relationship existing between the parties should be properly qualified as an employment contract, thus excluding the qualification as a contract for services. The effect of such qualification is that labour, tax and social security regulations apply. B. Indicators Portuguese courts apply the ‘facts index’ system (método indiciário) to determine whether legal subordination exists, relying on a complex number of indicators. Under this approach, different elements are taken into consideration, eg, whether the workplace and work time is determined by 39 

PLC, art 116. the Portuguese Supreme Court of Justice ruled on 16 November 2005 that a medical practitioner had concluded an employment contract (Proc No 05S2138), whereas in the decisions of 9 November 2005 (Proc No 05S2334) of 21 September 2005 (Proc No 05S1702) and of 18 January 2006 (Proc. No 05S3487), the same Court decided that no legal subordination existed between the performers (also medical practitioners) and the beneficiaries, and therefore qualified the contracts as contracts for services. The different rulings are not inconsistent or contradictory; they reflect how legal subordination may exist or not, depending on the balance of several indicators that may legitimately justify a different qualification in each case. 41  Proc No 437/11.0TTOAZ.P1.S1. 40  eg,

550  José João Abrantes and Rita Canas da Silva the beneficiary of the activity, whether a fixed timetable must be complied with, whether the services are provided under the orders and instructions of the beneficiary of the activity, whether the activity is performed within the beneficiary organisation’s activity, which party is the owner of the work equipment, the regularity of payments, payment of Christmas and holiday allowances, the applicable tax and social security regime, whether the activity is carried out personally or whether it can be provided by third parties, whether the work is performed with exclusivity and who bears the activity’s risk.42 Pursuant to such an evaluation, each component is only approximate and does not automatically provide an accurate and definitive qualification. Thus, in principle, by balancing the relevance of the components, it is possible to arrive at a conclusion regarding the contract’s legal qualification.43 Interestingly, the legal literature usually distinguishes between internal and external components. Amongst the internal components, it is important to determine how the workplace is established. In practice, performance of the activity at the employer’s premises or in a place selected by the employer is considered to be an indicator of an employment contract. Still, there are contracts where the specification of the place of work largely depends on the specificity of the activity (eg, a photographer or a journalist); hence, it cannot be excluded that a contract for services has been concluded.44 A fixed timetable also suggests that an employment contract exists. Nevertheless, the specification of start and finish times of work may have other justifications, eg, if the work has to be performed outside the periods of operation of the enterprise or during the rest periods of other employees (eg, cleaning or maintenance services). It is also relevant to determine which party is the owner of the work equipment; although ownership of equipment by the beneficiary of the activity suggests the conclusion of an employment contract, service providers occasionally also make use of the equipment of third parties.45 Attention should also be paid to remuneration: piece rate remuneration is inherent to contracts for services, while a fixed or periodic remuneration— with reference to the availability of the performer—indicates an employment contract.46 This relates to an additional relevant criterion, namely, who bears the activity’s risk. Under an employment contract, even if the result is not

42 

See P Romano Martinez, Direito do trabalho, 7th edn (Coimbra, Almedina, 2015) 324. ibid 325 ff. 44  See Portuguese Supreme Court ruling of 8 October 2008, Proc No 08S1328, available at www.dgsi.pt/jstj.nsf/954f0ce6ad9dd8b980256b5f003fa814/346a9631de25f05c802574e1003 6151f?OpenDocument (Portuguese version). 45  See Supreme Court ruling of 31 January 2012, Proc No 121/04.0TTSNT.L1.S1, available at www.dgsi.pt/jstj.nsf/954f0ce6ad9dd8b980256b5f003fa814/ccbf2ac7a9202b5a802579990 0386737?OpenDocument (Portuguese version). 46  Romano Martinez (n 42) 326. 43 

The Concept of ‘Employee’: The Position in Portugal 551 achieved, the employee is entitled to remuneration (the employer bears the employment risk); in turn, in a contract for services, if the provider does not present the final result, he or she is not entitled to remuneration (the service provider bears the contractual risk). There are, however, several exceptions to this rule: often, employees are partially remunerated in accordance with performance (eg, commissions or productivity awards).47 If Christmas and holiday allowances are paid, if annual leave is granted or if the employee is a union member, an employment contract will be deemed to have been concluded. However, on the other hand, the lack of payment of Christmas or holiday allowances as well as the incorrect registration as a self-employed beneficiary in tax and social security regimes (external elements) are only subsidiary components, since they may reflect a breach of contract. It is also relevant to verify whether the services shall only be performed by the service provider or whether he or she may appoint third parties to perform work in order to comply with the contract. In principle, the first scenario suggests an employment contract and the second a contract for services, since the performance of work by the employee is usually irreplaceable. It is also relevant to determine whether the work is performed exclusively or rather simultaneously for several beneficiaries. It should be noted that Portuguese law, as long as it does not conflict with loyalty, confidentiality and non-competition obligations, does not preclude an employee from concluding employment contracts with different employers (eg, employee A may perform part-time work for employer B in the mornings and part-time work for employer C in the afternoons). C.  The Relevance of ‘Economic Dependence’ With regard to economically dependent workers, Article 10 of the PLC states that: [T]he legal rules regarding personality rights, equality and non-discrimination, occupational safety and health, shall apply to situations in which professional activity is performed by a person for another without legal subordination, where the provider should be considered economically dependent from the activity’s beneficiary.

47 Regarding the payment of comissions, see A Monteiro Fernandes, ‘A comissão como elemento da retribuição’ (1984) Temas Laborais 78 f. On productivity awards, see Supreme Court ruling of 29 April 2010, Proc No 4092/05.8TBAVR.C1.S1, available at www.dgsi.pt/ jstj.nsf/954f0ce6ad9dd8b980256b5f003fa814/6400c98da448c798802577290057ac8b?Open Document (Portuguese version).

552  José João Abrantes and Rita Canas da Silva Moreover, Law No 101/2009 of 8 September 2009 provides the legal framework for home working (trabalho no domicílio) within which the: [A]ctivity is performed without legal subordination, at the worker’s residence or establishment, and to contracts in which the worker buys raw materials and provides the final product to the seller for a certain price, considering that in both cases the worker is economically dependent on the beneficiary.48

Amongst others, special rules apply to privacy and rest periods (Article 4), safety and health (Article 5), professional training (Article 6), remuneration (Article 7), right to annual allowance (Article 8) and suspension, reduction or termination of the contract (Articles 9–11). In addition, the worker and the beneficiary of the activity are subjected, as the beneficiary and contributor, respectively, to the general social security regime of dependent employees set forth in special legislation (Article 15). V.  THE PRINCIPLE OF PRIMACY OF FACTS

The principle of ‘primacy of facts’ is applied in Portuguese labour law. Consequently, even if the parties expressly qualify the contract as a contract for services, if the substance of the relationship rests upon the main components of an employment contract, it shall be qualified as such.49 This mechanism is granted to protect the employee against false labelling of the contract and has been recognised in court decisions.50 VI.  QUALIFICATION IN FULL

As a general rule, an agreement between parties can be either an employment contract or a different type of agreement (eg, a service agreement), ie, a person may perform a professional activity on the basis of an employment or a contract for services, but not on the basis of both simultaneously. ­However, this does not preclude the possibility of combining different agreements; this is the case, for example, where the employee is also a tenant and the employer is a landlord in a housing lease. Nevertheless, attention should be paid to the fact that the employee’s accommodation is frequently q ­ ualified as part of his or her remuneration (ie, remuneration in kind) and, in such cases,

48 Article 1 No 1; this legal framework also applies to workers who perform the activity in their residence with the assistance of a family member or when for health and safety reasons of the worker or his or her family, the activity must be performed outside their residence or ­establishment, providing that it is not performed in an undertaking of the beneficiary (art 1, No 3). 49  Namely, by courts of law or labour inspectors. 50  See, eg, Supreme Court ruling of 26 November 2008, Proc No 08S2308.

The Concept of ‘Employee’: The Position in Portugal 553 providing the employee with accommodation is still part of the employer’s duties. VII.  LIMITS TO THE FREEDOM OF CONTRACT

The legal concept of an employment contract (Article 11 of the PLC) is mandatory and cannot be disposed of by the parties. In other words, if a person qualifies as an employee on the basis of an objective assessment,51 the parties are not entitled to set this qualification aside by labelling their contract as a services agreement. However, in the opposite situation, such qualification prevails according to the case law should the parties expressly designate the agreement as an employment contract.52 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Defining employment relationships has not been a relevant issue for social dialogue and collective bargaining. The legal notion of employment contract delimits the scope of Portuguese labour law and trade unions’ action. A trade union is defined in the PLC as a ‘permanent association of employees, for the defence and promotion of its socio-professional interests’53 and the notion of ‘employee’, for this purpose, is limited to the one described above in section II.A above. B.  Custom and Practice Deviations on the basis of custom and practice are not acknowledged. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

According to the general principles of the burden of proof, the employee would have to prove the existence of an employment contract;54 however, 51 

Namely by the labour courts. See Supreme Court ruling of 12 February 2009, Proc No 08S2583, available at www.dgsi. pt/jstj.nsf/954f0ce6ad9dd8b980256b5f003fa814/519abc974fed4dff802575710039ad84? OpenDocument (Portuguese version). 53  PLC, art 442, No 1, a). 54  Pursuant to art 342, No 1 of the Civil Code. 52 

554  José João Abrantes and Rita Canas da Silva a legal presumption upon the conclusion of an employment agreement is foreseen in Article 12 of the PLC: The existence of an employment contract is presumed when, in the relationship between the person who provides an activity and the other (or others) who benefit from it, some of the following elements can be verified.

Only two elements seem to suffice: a) the activity is carried out in a place that belongs to the beneficiary of the activity or in a place determined by him; b) the equipment and working tools belong to the beneficiary of the activity; c) the person who provides the activity complies with a specific start and end time, as determined by the beneficiary; d) an amount is paid to the provider within a certain period in return for the activity performed; e) the provider performs management or leadership functions in the enterprise.

Nevertheless, this legal presumption may be rebutted by evidence of the contrary.55 Thus, even if all the elements stated in Article 12 of the PLC are established/verified, the employer may rebut the presumption, proving that the relationship should not be considered an employment contract. X.  SPECIFIC PROCEDURES

As in other countries, bogus self-employment in Portugal requires close monitoring, since it is a form of fraud. The relevance of the problem is reflected in the high number of legal disputes on the qualification of contracts (as civil law or employment contracts).56 Article 12 No 2 of the PLC states that it is: a very serious misdemeanour to perform an activity with the formal appearance of a services agreement, but according to the typical conditions of an employment contract in a way that might cause damage to the employee or to the State.57

More recently, Law No 63/2013 of 27 August introduced a special judicial procedure, thus amending the Labour Procedure Code, to assess the qualification of contracts (as service agreements or employment contracts). It also

55 ibid.

56  See, eg, Supreme Court decisions of 31 January 2012, Proc No 121/04.0TTSNT.L1.S1 and of 21 May 2014, Proc No 517/10.9TTLSB.L1.S1. 57  See also arts 132 ff and especially art 140 of the Social Security Code, which imposes a mandatory regime with regard to service providers who perform 80 per cent of their activity per calendar year for the same beneficiary (Code approved by Law No 110/2009 of 16 September, amended by Law No 119/2009 of 30 December by Decree Law No 140-B/2010 of 30 December and by Law Nos 55-A/2010 of 31 December, 64-B/2011 of 30 December, 20/2012 of 14 May, 66-B/2012 of 31 December, 83-C/2013 of 31 December and Law No 82-B/2014 of 31 December (‘Código dos Regimes Contributivos do Sistema Previdencial de Segurança Social’).

The Concept of ‘Employee’: The Position in Portugal 555 reinforced the competences of the Authority for Labour Conditions (Autoridade para as Condições do Trabalho)58 in monitoring fraud and expediting such cases in court, when suspicion of bogus self-employment is verified and not corrected within the deadline set forth by law. Since this judicial procedure is carried out ex officio despite the employee’s inactivity, it is questionable whether the new regime has introduced a system that pursues a mandatory public interest (against fraud and bogus self-employment) or whether the free will of the parties prevails and the employee shall remain empowered to withdraw the proceedings—eg, by entering into an agreement with the employer or by legitimately arguing no interest in (re)qualifying the contract as an employment contract. In this regard, the courts have not issued unanimous and clear responses. For instance, in the decision of 24 September 2014, the Lisbon Court of Appeal ruled that the new judicial procedure had the goal of protecting the employee and not any public interest related to a general requalification of contracts;59 however, an opposing interpretation was provided by the Lisbon Court of Appeal a few days later in a decision of 8 October 2014,60 where the Court ruled that the employee was not entitled to withdraw the judicial procedure, since the Public Prosecutor is empowered to proceed with the action even against the employee’s will, given the public interest inherent to this procedure. On 17 December 2014, the Lisbon Court of Appeal, having underlined these conflicting understandings,61 decided that even if the employee and the employer agreed on the termination of the employment contract (after the judicial procedure had been initiated), the Public Prosecutor was empowered to proceed with the judicial action, given the public interest inherent to this special procedure and the duty to comply with past obligations (namely, social security and tax duties). Yet, a different construction of the Law was issued by the Lisbon Court of Appeal in its ruling of 3 December,62 where it stated that the Public Prosecutor was not empowered—due to lack of interest—to proceed with judicial action in a similar case. Given the strikingly divergent rulings, close attention should be paid to upcoming developments on this issue.

58  www.act.gov.pt/(pt-PT)/Paginas/default.aspx (website in Portuguese). For further details on the composition of the Authority for Labour Conditions, see Decree Law No 167-C/2013 of 31 December. 59  Proc No 4628/13.0TTLSB.L1-4. 60  Proc No 1330/14.0TTLSB.L1-4. 61  Proc No 1332/14.6TTLSB.L1-4. 62  Proc No 233/14.2TTCSC.L1-4.

556  José João Abrantes and Rita Canas da Silva XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons See section IV.C above. B.  Equality and Anti-discrimination Law General rules on equality and anti-discrimination63 are applicable to all employees and pursuant to Article 10 of the PLC are extended to economically dependent workers.

63 

PLC, arts 23 ff.

27 The Concept of ‘Employee’: The Position in Romania RALUCA DIMITRIU

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract According to Article 10 of the Romanian Labour Code: [T]he contract of employment is the contract according to which a natural ­person, referred to as an employee, performs work for and under the direction of an employer, a natural or a juridical person, in exchange for remuneration referred to as salary.1

The contract of employment (contractul de muncă) is defined by legal doctrine as an agreement concluded in writing between the employee (salariatul), who pledges to perform, with continuity, certain work for and under the direction of the other party—the employer (angajatorul)— a natural or juridical person, who pledges to provide for decent working conditions and to pay the agreed remuneration.2 By contrast, the Fiscal Code3 does not use the concept of ‘employment contract’, but that of ‘dependent activity’ (activitate dependentă), defined in Article 7(1), point 1 as any activity carried out by a natural person in an employment relationship generating income. The concept of ‘employment relationship’ (relaţie de angajare) is not defined in the law; it is inferred by exclusion as the Fiscal Code indicates the defining criteria for an independent relationship.4 1  Labour Code—Law No 53/2003, republished in the Official Gazette of Romania No 345 of 18 May 2011. 2 IT Ștefănescu, Dicționar de drept al muncii (Bucharest, Universul Juridic, 2014) 127. 3 Law No 277/2015 on the Fiscal Code, published in the Official Gazette of Romania No 688 of 10 September 2015 4  See below, section IV.B.

558  Raluca Dimitriu The individual employment contract used to traditionally be considered to be of a consensual nature, meaning that it produced effects without being concluded in writing. In 2011, however, the Labour Code was amended and introduced the requirement of employment contracts to be concluded in writing as a condition of validity.5 It is now mandatory to conclude all types of contracts (open ended, fixed-term, part-time, temporary agency work, home work, apprenticeship etc) in writing. Although the legislator’s intention was legitimate, namely to reduce undeclared work,6 this change, which left all oral contracts void of legal effect, caused practical and theoretical difficulties. In fact, the amendment of the Labour Code, ie, that oral contracts are null and void, was already called for in the Memorandum of ILO Technical Comments on the Draft Labour Code and the Draft Law on Social Dialogue of Romania in January 2011.7 However, according to Article 57(3) of the Labour Code, voidness (absolute nullity) of the employment contract may be covered by the subsequent fulfilment of the conditions imposed by the law.8 Moreover, according to Article 57(2), the voidness shall only take effect in the future.9 Consequently, the voidness of the contract produces effects at the time it is determined (ex nunc), and not for the time that has already past (ex tunc). Hence, although an oral contract is null and void, a subsequent contract concluded

5  Article 16(1) of the Labour Code states: ‘The individual employment contract shall be concluded on the basis of the parties’ consent, in writing, in the Romanian language. The requirement to conclude individual employment contracts in writing lies with the employer. A written contract is mandatory if the contract is to be deemed valid.’ The employment contract shall be concluded in the Romanian language, but the job applicant has the right to be informed about all components of his or her future contract in his or her language (art 17 of the Labour Code). The employer’s obligation to inform is considered to have been fulfilled if this has been completed in a language the applicant is able to understand. 6  As stipulated by the Constitutional Court, ‘the written form of the employment contract, which is required by law, is justified by the need to fight practices by employers who take advantage of the fact that the written form of the employment agreement was simply an instrumentum probationis, and evade taxes’ (Decision 383/2011, published in the Official Gazette of Romania No 281 of 21 April 2011). 7 www.araco.org/infutile/infirmatiiue/2011/OIM_IANUARIE2011/Technical%20Memorandum%20Romania%20on%20Draft%20Labour%20Code%20and%20Draft%20 Law%20on%20Social%20.pdf, 3, point 10: ‘While the pursued objective of deleting that rebuttable presumption is unknown, its potential effect on jeopardising legal security and predictability for both parties to an oral contract of employment can easily be anticipated.’ 8 Notwithstanding the general rule of civil law, according to which absolute nullity can never be covered. 9  The rule of non-retroactiveness of the nullity of the employment contract derogates from the rule of the new Civil Code stipulated in Art 1254(3): ‘In case the contract is revoked, each party shall return to the other party, in kind or equivalent, the duties performed … even if these were performed successively or continuously.’ This rule is new in Romania’s system of law; under the former Civil Code, the invalidity of successive contracts did not produce effects retroactively. The new Civil Code entered into force in 2011: Law No 287/2009 on the Civil Code, published in the Official Gazette of Romania No 505 of 15 July 2011.

The Concept of ‘Employee’: The Position in Romania 559 in writing covers the voidness of the oral contract, which will thus be considered valid retroactively.10 Prior to the commencement of the activity, the individual employment contract must be registered in the General Employee Registry, which is reported to the relevant Labour Inspectorate.11 The employer is required to give the employee a copy of the individual employment contract prior to the commencement of work. Non-compliance with these regulations establishes employer liability (but not the nullity of the contract). The voidness (absolute nullity) of the employment contract may be equally determined on any of the applicable grounds for nullity of the contract in general, as well as by the specific clauses of the special categories of contracts.12 Grounds for voidness include: failure to comply with the minimum age requirement for the employee,13 conclusion of the contract to perform illicit or immoral work or activity,14 absence of medical examination,15 absence of notifications16 or of required licences to practice the profession,17 lack of consent18 etc. The employment contract is void on the grounds provided for in civil law, but not explicitly stated in the Labour Code, such as vices of consent. The contract of employment can also be declared partially void, the objective being to preserve the contract whenever possible.19 In the event that the contract is declared partially void, the nullified clauses are replaced de jure with the applicable legal provisions. Indeed, according to Article 57(4) of the Labour Code: [I]f a contractual clause is nullified on account of the establishment of lesser rights for employees than those established by law or by applicable collective labour

10  S Beligrădeanu, ‘Principalele aspecte teoretice şi practice rezultate din cuprinsul legii nr. 40/2011 pentru modificarea şi completarea Legii nr. 53/2003—Codul muncii, II’ (2011) 7 Dreptul 30. 11  Labour Code, art 16(2). 12  ibid art 57 stipulates: ‘Failure to comply with any of the requirements of the law for the valid conclusion of the employment contract may cause its nullity.’ In matters of nullity, the Labour Code is supplemented by the Civil Code. 13  ibid art 13(3). 14  ibid art 15. 15  ibid art 27(2). 16 For instance, the notification of police when employing security personnel, according to Law No 333/2003 on the protection of objectives, goods, valuables and the protection of persons, published in the Official Gazette of Romania, No 189 of 18 March 2014. 17  For instance, the work permit necessary for the employment of third-country nationals, according to Government Ordinance No 25/2014 on the employment and posting of foreign citizens on the territory of Romania, and on the amendment and supplements of regulations on the regime of foreign citizens in Romania, published in the Official Gazette of Romania, No 640 of 30 August 2014. 18 Article 1204 of the Civil Code, which stipulates that consent must be competent, voluntary and informed, is also applicable in the case of the employment contract. 19 See generally M Nicolae, ‘Nulitatea parţială şi clauzele considerate nescrise în lumina noului Cod civil. Aspecte de drept material şi drept tranzitoriu’ (2012) 11 Dreptul 11.

560  Raluca Dimitriu agreements, it shall be replaced de jure by provisions of the law or applicable collective labour agreements, the employee being entitled to compensation

Once nullity is established,20 the contract ceases to exist according to Article 56, letter (d) of the Labour Code. In the event that the employment contract is declared void, the employee shall have the right to the applicable remuneration for his or her job duties for the work already performed.21 Relating remuneration to the fulfilment of job duties requires that the person who performed the work shall be paid as though the contract was valid, except in a situation in which the employer can prove that the work was not performed in accordance with the contract and that the job duties could therefore not have been fulfilled.22 B.  Employment Relationship: Basic Definition There is no statutory definition of ‘employment relationship’, but it is generally acknowledged that it is broader than the contract of employment.23 The notion of ‘employment relationship’ (raport de muncă) includes not only contracts of employment but also administrative employment relationships within the public service domain. Civil servants perform their duties based on such legal relationships, without a contract and regulated not by the Labour Code, but by a special law, Law No 188/1999.24 Individuals who do not have the status of employee but carry out activities based on a civil contract (contract for services) are not considered to be parties to a contract of employment. Romanian law does not cover the concept of quasi-employees or employee-like persons. Working individuals are either employees or self-employed persons (persoane fizice autorizate). The contractual basis of a self-employed person’s activity is a civil contract for services under the provisions of the Civil Code. Independent work performed by freelancers (liberi profesionişti) or by self-employed persons (persoane fizice autorizate) lies outside the scope of employment relationships. A special category of persons acting within an employment relationship without being employees as such are casual workers (zilieri). After some 20  Nullity may either be established by the parties or, if they cannot agree, by the court. In terms of legal consequences, there is no difference. 21  Labour Code, art 57(5). 22  See generally R Dimitriu, ‘Reflecții privind nulitatea contractului individual de muncă’ (2013) 4 Dreptul 163. 23 The doctrine on employment relationships includes legal relationships arising from employment contracts, civil law relationships of public servants, dignitaries and judges: see, eg, IT Ștefănescu, Tratat teoretic și practic de drept al muncii, 3rd edn (Bucharest, Universul Juridic, 2014) 21–32; A Țiclea, Tratat de dreptul muncii, 8th edn (Bucharest, Universul Juridic, 2014) 23–33. 24  Published in the Official Gazette of Romania No 365 of 29 May 2007.

The Concept of ‘Employee’: The Position in Romania 561 wavering, the law-maker opted to qualify the legal relationship from the day that workers commence with the performance of their activity as an employment relationship.25 Other categories of persons engaged in atypical employment relationships (apprentices, temporary agency workers etc) are considered employees. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition In the Labour Code, the definition of the term ‘employee’ relates to the contract of employment.26 The Social Dialogue Law27 provides an explicit definition of the term ‘employed person’, namely a person who is paid a salary (angajat) and which may include public servants.28 In public institutions, where the majority of employed persons consist of public servants, those who work on the basis of a contract of employment and thus are not registered as public servants are identified in the legislation as ‘contractual personnel’. A more inclusive notion of ‘worker’ is used in Law No 319/2006 on Health and Safety in the Workplace, which defines ‘workers’ as persons hired by an employer, which also include students who engage in internships, as well as apprentices and other persons who perform work activities, with the exception of those involved in domestic activities. In general: (i) (ii)

in labour legislation, it is exclusively the employee who concludes an employment contract;29 in administrative legislation, the concept of ‘contractual personnel’ is used to outline the fact that the grounds for performing work is not an act of administrative authority, but a negotiated one;30

25 Law No 52/2011 on activities occasionally performed by casual workers, republished in the Official Gazette of Romania No 947 of 22 December 2015. See IT Ştefănescu, ‘Contractul individual de muncă al zilierilor’ (2014) 4 Revista română de dreptul muncii 15; O Ținca,’ Considerații referitoare la contractul de muncă si raportul de muncă in dreptul Uniunii Europene’ (2013) 10 Dreptul 115. 26  See art 10, cited above (‘the contract of employment is the contract according to which a natural person, referred to as employee …’). 27  Law No 62/2011, published in the Official Gazette of Romania No 625 of 31 August 2011. 28  Article 1 g: ‘An employed person is the natural person, party to an individual employment contract or to an employment relationship, who performs work for and under the authority of an employer and enjoys the rights stipulated by the law and the applicable collective labour agreements.’ 29  Ștefănescu (n 23). 30  eg, Framework Law No 284/2010 on uniform pay of staff who receive payment from public funds, published in the Official Gazette No 877 of 28 December 2010, distinguishes

562  Raluca Dimitriu (iii) in tax legislation, the defining element of the concept of ‘employee’ is economic dependence—the legislator speaks of persons who perform an activity in a subordinated relationship, without expressly referring to the contract concluded by them; (iv) in legislation on health and safety at work and the prohibition of discrimination, the term ‘worker’ (lucrător) is used to cover—to the widest extent possible—all persons who perform work, regardless of its grounds.31

B.  Employer: Basic Definition According to Article 14 of the Romanian Labour Code: [T]he employer is the natural person or the legal person, who, according to the law, can employ a work force on the grounds of an employment contract.32

More broadly, the definition of ‘the employer’ in the Social Dialogue Law includes individuals who have concluded an ‘employment relationship’ (raport de serviciu) with an employee (for instance, public authorities and institutions where public servants work). The employer can be a natural or a legal person. An entity lacking legal personality (for instance, an establishment of an undertaking without legal personality) cannot act as an employer.33 The concept of ‘employer’ is not synonymous with that of ‘owner’ (patron); the latter concept is defined in the Social Dialogue Law as a legal entity or individual that operates a business in order to obtain profit.34 As a general rule, as stated by the High Court of Cassation and Justice: [T]he multiplicity of subjects (active or passive) is excluded, which implies that there may not exist in and by the same individual employment contract more

in Annex 1 (Occupational family of budgetary functions in public administration) between ‘payment of public servants’ (c I) and ‘payment of contractual personnel in central public administration’ (c II). 31 Article 5 lett a) of Law No 319/2006 on safety and health at work, published in the Official Gazette No 646 of 26 July 2006; art 7(3) of Law No 202/2002 on equal opportunities and equal treatment between women and men in employment relationships, republished in the Official Gazette of Romania No 326 of 5 June 2013. 32  Labour Code, art 14. 33  S Beligrădeanu, ‘Inadmisibilitatea încheierii contractelor individuale de muncă în nume propriu de către dezmembrămintele fără personalitate juridică ale societăților comerciale’ (2009) 7 Dreptul 133. 34  Article 1 v: ‘the owner is the registered person, who is self-employed according to the law or the person who independently carries out a profession or trade, who manages and uses capital to gain profit in a market driven by competition, and who employs salaried work’.

The Concept of ‘Employee’: The Position in Romania 563 individuals who together enjoy employee status and, usually, neither more people who together enjoy the status of employer.35

III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Romanian legislation tends to level the legal status of all those who conclude a contract of employment, be they standard contracts or atypical contracts. Indeed, Romanian labour law is the law of the employment contract; it therefore only regulates the legal regime of employers and employees. There are different categories of employees, most of who fall under the legal regime regulated by the Labour Code: part-time employees, home workers, employees with a fixed-term contract, temporary agency workers, apprentices etc. Separate laws regulate the legal regime of other categories of employees: mobile workers (persons performing mobile road transport activities),36 workers on fishing boats, port workers, maternal assistants,37 nannies38 etc. In spite of the differences in regulation, they all qualify as employees; they are in a subordinated relationship with the employer, who has the power of direction and control and disciplinary prerogatives. Some examples of sub-types of employees and the specificities are as follows. Executives: a separate legal regime on disciplinary action, probation period, period of notice in the case of termination of the contract by the employee applies to those who hold executive positions. Social Dialogue Law No 62/2011 did not retain the prohibition found in the former Trade Union Law No 54/2003 (Article 4) on the formation of a trade union; executive staff members currently enjoy the same trade union rights as ‘regular’ employees.

35  Decision No 41/2008 on the examination of the referral in the interests of the law on the legal capacity in the trial of health insurance companies in disputes concerning the payment of salary an individual is entitled to, arising from contracts of employment concluded between the medical staff and the hospital unit where they perform their activity, published in the Official Gazette of Romania No 313 of 12 May 2009. 36  Mobile workers’ legal regime is governed by Government Decision No 38/2008 on the organisation of working time of persons performing mobile road transport activities, published in the Official Gazette of Romania No 49 of 22 January 2008. This law transposed the provisions of Directive 2002/15/EC on the organisation of working time of persons performing mobile road transport activities. 37  Their legal regime is governed by Government Decision No 679/2003 on the conditions for obtaining certification, the certification procedures and the statute of professional maternal assistance, published in the Official Gazette of Romania No 443 of 23 June 2003. 38  Regulated by Law No 167/2014, published in the Official Gazette of Romania No 922 of 18 December 2014.

564  Raluca Dimitriu In contrast to employees with executive duties, there are managers in the top ranks of companies, who are not employees. In the case of capital companies, the director operates under a management agreement. Moreover, the law actually prohibits director(s) from concluding an employment contract with the company at which they work. According to Article 137.1(3) of Company Law No 31/1990,39 during their mandate, directors may not conclude an individual employment contract with the company. If an individual who is appointed as a director used to be an employee of the company, his or her individual employment contract is suspended during his or her mandate. Apprentices: they work on the basis of an apprenticeship contract, which, according to the Labour Code and a special law, are considered a type of contract of employment; in other words, apprentices benefit from the provisions in labour law.40 Home workers: the contract concluded by such workers is an employment contract.41 The home worker is entitled to all rights granted by law and collective labour agreements, which apply to the employees who work on the premises of the employer. However, some specific norms stipulated in Articles 108–110 of the Labour Code apply. Accordingly, home workers organise their own working hours. The employer is entitled to check their activity following a predetermined schedule of visits specified in the employment contract. The employer is obliged to ensure transportation to and from the home of the employee, as the case may be, of the supplies and materials used in the activity as well as the finished products. There is no provision requesting the employer to fully or partially reimburse the costs incurred by the home worker during the completion of work duties (heat, electricity, water etc), an omission that has been criticised in the legal literature.42 Temporary agency workers: they are deemed employees; the legal regime that applies to them is the Labour Code in addition to a number of special rules.43

39 

Published in the Official Gazette of Romania No 1066 of 17 November 2004. No 279/2005 on apprenticeships in the workplace published in the Official Gazette of Romania No 498 of 7 August 2013. The apprenticeship contract is defined as a special employment contract concluded for a fixed-term period, under which a natural person, called an apprentice, receives professional training and to work for and under the authority of a legal and natural person, the employer, who is required to provide the payment of wages and all necessary conditions applicable to employment relationships. 41  On the other hand, telework is neither regulated by legislation nor by collective labour agreements. Although this type of contract is concluded in practice, it is only the result of individual negotiations. Currently, no collective agreements regulating telework exist. 42 O Ținca, ‘Contractul individual de muncă la domiciliu’ (2003) 8 Dreptul 35. 43 Government Decision No 1256/2011 on the conditions for employment and the procedure for authorisation of a temporary agency worker published in the Official Gazette of Romania No 5 of 4 January 2012. 40  Law

The Concept of ‘Employee’: The Position in Romania 565 Seafarers’ boarding agreement: this agreement is governed by a special normative act that derogates from the Labour Code;44 however, it is considered a type of employment contract.45 Professional athletes’ contracts: although the law governing professional athletes’ contracts46 stipulates that they may conclude contracts of employment or civil agreements, in the case law, the legal nature of all sports contracts is that of an employment contract.47 Contractual staff in the public sector are fully subject to the provisions of the Labour Code.48 There are, however, special provisions, especially as regards the content of the collective labour agreements that may not include clauses on rights to pay, in money or in kind, other than those stipulated by law for that type of staff.49 B.  The Establishment of a Specific Category of ‘Workers’ There are specific categories of staff in Romanian legislation who are party to an employment relationship without being employees, such as clerical staff, casual workers, members of cooperatives or salaried lawyers. A special legal regime applies to clerical staff. It is widely acknowledged that priests are not employees, but are in an employment relationship. The exercise of their collective rights, including the right to join a trade union, entails certain particularities, as the European Court of Human Rights recently ruled.50 Until April 2011, the law had made no distinction between persons employed on a fixed-term contract of one year or one day. The Law on

44  Government Decision No 83/2003 on the authorisation of commercial companies that recruit and employ Romanian seafarers on ships sailing under either the Romanian or a foreign flag, published in the Official Gazette of Romania No 84 of 11 February 2003. 45 S Beligrădeanu, ‘Natura juridică a contractului individual de îmbarcare’ (2003) 5 Dreptul 28. 46  Law No 69/2000 on physical education and sport, published in the Official Gazette of Romania No 200 of 9 May 2000. 47  High Court of Cassation and Justice, Civil section I, decision No 8661 of 8 December 2011, www.scj.ro/1093/Detalii-jurisprudenta?customQuery[0].Key=id&customQuery[0].Value= 81878; High Court of Cassation and Justice, Administrative and Tax Litigation Section, decision No 4767 of 18 October 2011, www.legeaz.net/spete-contencios-inalta-curte-iccj-2011/ decizia-4767-2011. 48  Unlike civil servants (funcționari publici); see section I.B above. 49  Article 138 of Social Dialogue Law No 62/2011. 50 The Grand Chamber of the European Court of Human Rights (ECtHR) ruled in its Decision of 9 July 2013 in the case of Sindicatul ‘Păstorul cel Bun’ v Romania that the Romanian state did not violate the right to freedom of association when it denied the registration of a trade union of priests, ‘Păstorul cel Bun’. The Grand Chamber stated that ‘the County Court’s refusal to register the applicant union did not overstep the margin of appreciation afforded to the national authorities in this sphere, and accordingly was not disproportionate. There has therefore been no violation of Art 11 of the Convention’.

566  Raluca Dimitriu Casual Workers No 52/201151 regulated casual work for the first time. The purpose of this Law was to eliminate undeclared work by casual workers and to provide a legal framework for such activity, especially for unskilled workers. Casual workers are employed on a temporary basis and are paid according to each day worked. The employment relationship of casual workers is based on a written or verbal agreement between the employer and the day worker, specifying the performance of occasional or temporary activities by the latter. Occasional activities can be performed in the following fields of activity: housework, agriculture, hunting and fishing, forestry and forest exploitation, pisciculture and aquaculture, pomiculture, shows, cinema and audio-visual production, and cultural events. In practice, casual workers are primarily used in agriculture, tourism, and the entertainment and audiovisual industries. The minimum duration of work is one day, c­ orresponding to eight hours of work. A day worker can work for the same beneficiary for up to 90 days (not necessarily continuously), calculated within a calendar year. Cooperative workers (cooperatori) have a legal status that is vaguely defined in a special law adopted in 2005.52 They conclude so-called ‘work agreements’ (convenţii de muncă) and have the right to establish trade unions according to an express provision in the Social Dialogue Law.53 Lawyers can carry out their activity as freelancers, but may conclude a special contract with a law firm under an ambiguous legal ground: ‘contract of salary within the profession’ (contract de salarizare în interiorul profesiei). This is not a contract of employment and it is not regulated by labour law, but it establishes a legal relationship of dependent work.54

51  Law No 18/2014, published in the Official Gazette of Romania No 192 of 19 March 2014 and Government Emergency Ordinance No 36/2014, published in the Official Journal of Romania No 431 of 12 June 2014, modified and complemented Law No 52/2011 on the performance of occasional activities by casual workers. See also Order No 831/600 of 2015 issued by the Minister of Labour on the approval of the methodological norms for the application of Law No 52/2011 on activities occasionally performed by daily workers, published in the Official Gazette of Romania No 385 of 3 July 2015. The Law on Casual Workers has been officially republished in December 2015. 52  Law No 1/2005 on the operation and functioning of the cooperation, published in the Official Gazette of Romania No 368 of 20 May 2014. 53  Article 3(1) of Law No 62/2011. 54  Decision of the National Union of Bars No 64/2011 on the adoption of the Statute of the Legal Profession, published in the Official Gazette of Romania No 898 of 19 December 2011, states that ‘due to the specificity of the work, the legal professional working on salary undertakes to draw on his experience and competence to carry out the professional duties requested’.

The Concept of ‘Employee’: The Position in Romania 567 IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration Romanian law is relatively formalistic concerning the identification of the contract of employment. The contract of employment can only be concluded in writing; it is void (absolute nullity) if it is not concluded in writing. Voidness only produces effects for the future, consequently, an individual who carried out work may request the court to recognise the fact that the contract under which he or she performed duties in the past was a contract of employment and that he or she therefore had the status of employee. However, in practice, such actions are rare.55 Significantly more frequent in practice is the claim by the tax authorities of a subordinate relationship in order to requalify the contract as one of employment in accordance with the provisions of the Fiscal Code. Regardless of the title that the parties chose for the contract, there is a set of criteria against which the contract is compared and may be determined as one of employment. Thus, for instance, even if a contract had been concluded as a civil contract (a contract for services), the tax authorities can establish that in reality it is a contract of employment when considering the nature of the relationship between the parties. One drawback is that these criteria are stipulated not by labour legislation, but by tax regulations and therefore a requalification of the contract as one of employment cannot be carried out by labour inspection authorities (such as the Labour Inspectorate), but by the tax authorities. Moreover, the purpose of requalifying a contract under the Fiscal Code is not to protect the rights of the worker and to apply the provisions of the Labour Code, but rather to secure the retroactive pay of contributions due to the state by the parties and the provisions of social security law. Even if the parties refer to the contract they concluded as a contract for services or a contract of collaboration, if, by examining its content, it is consistent with an employment relationship, the tax inspection authorities can requalify it. The consequence of such a requalification would be the possibility of establishing the level of taxes and contributions applicable to a contract of employment.

55  They used to be more frequent before 2011, when the written form was not required by law for the validity of the employment contract; the existence of the employment agreement could even be proven through witnesses: Iaşi Court of Appeal, Decision No 463 of 11 July 2008; Bucharest Court of Appeal, Civil Decision No 4618R of 22 June 2009; Bucharest Tribunal, Civil Decision No 5604 of 25 June 2009, Decision No 398 of 9 May 2006, Ploiești Court of Appeal etc. Recently the High Court of Cassation and Justice decided that such actions are still admissible (Decision No 37/2016 on the examination of the referral in the interests of the law, published in the Official Gazette of Romania No 114 of 10 February 2017).

568  Raluca Dimitriu Previously, the Fiscal Code defined dependent work by indicating four legal criteria; any activity that did not meet these criteria was therefore considered independent activity. This regulation has been changed and the identification of dependent work has been reversed: criteria for identifying independent work are defined instead and work that does not meet these criteria will be considered dependent work.56 In the case of requalification of the contract as one of employment, the income tax and social security contributions established by law will be recalculated and must be paid jointly by the payer of the income and its beneficiary. In this case, the method of calculation for the income received outside the person’s primary job is used. The tax inspection authority may request either the payer of the income or its beneficiary, ie, the person performing the work, to pay the contributions that would have been due had the contractual relationship been defined from the outset as an individual employment contract. Another change introduced by the new regulation is that the requalification of the contract can be made even in relation to freelancers (lawyers, pharmacists, architects etc), which previously was not possible.57 The obligation of the employee is an obligation of means (obligaţie de mijloace) in comparison to the obligation of the service performer, which is an obligation of result (obligaţie de rezultat). Consequently, the right of control exercised by the employer represents an essential criterion in the identification of the employment relationship. It is expressly stipulated in the Labour Code.58 Even in the case of home workers, Article 105(3) of the Labour Code determines that the employer has the right to check on their activity under the conditions set forth by the employment contract. Subordination denotes the beneficiary’s right to give direction on how the work is performed (usually duration, place of work, programme and content). It is not a question of direction in terms of the outcome of the work, which the beneficiary might benefit from on the basis of a civil contract as well; rather, it is about the right (and obligation) of the beneficiary to guide the employee in the performance of the work, which implies: (i)

56 

on the one hand, taking the risk in case the work performed according to the directions received does not meet expectations;

See section IV.B below. 2015, activities performed independently, which generate income from freelancers, as well as intellectual property rights and related rights, could, according to the law, never be requalified as dependent. 58  Article 40, para 1 d: ‘the employer has the right to exercise control over the manner of fulfilment of the job duties’. 57  Until

The Concept of ‘Employee’: The Position in Romania 569 (ii)

on the other hand, the right to take disciplinary action in case the worker does not comply with the directions received from his or her superior, regardless of the degree to which the outcome of the work has met expectations.

The subordinate character of work is reflected in a number of rights employers enjoy under a contract of employment, listed in Article 40 of the Romanian Labour Code. For example, the employer is entitled to ‘determine the organisation and operation of the unit’, ‘to establish the tasks of each employee, according to the law’, ‘to issue orders with a compulsory character for the employee, subject to their legality’ and ‘to exert control over the performance of the tasks’. The subordination of the worker to the beneficiary of the work is reflected in the latter’s right to issue instructions and control the work not only regarding the outcome, but also during its performance. As stated by the High Court of Cessation and Justice: [O]ne of the specific characteristics of the individual employment contract is that the employer enjoys exclusive competency to organise the activity by establishing a rational operational unit, to assign all employees to different jobs with specific tasks and responsibilities, and also to exert control on the performance of job duties.59

One of the consequences of the character of subordination is the possibility of the employment contract instating vicarious liability under the terms of Article 1373 of the Civil Code.60 Typically, in the case of an employment contract, the employer will act as the principal and the employee as the agent.61 However, by way of exception, it is sometimes not the employer who exercises direction, supervision and control. Thus, as has been shown in the case of a temporary work relationship, the principal is not the temporary work agency (employer of the temporary employee), but the user of the temporary employee.62 Notably, neither legislation nor practice mentions the criterion of the worker belonging to an organisational structure or team.

59 

Decision of the High Court of Cessation and Justice No 41/2008, cited above in section B. to art 1373(1) and (2): ‘The principal is obliged to repair the damage caused by its agents whenever their wrongdoings are related to the duties and/or to the purpose of the functions entrusted to them. The principal, pursuant to a contract or to the law, exercises direction, surveillance and control of the person who performs certain functions and assignments on behalf of the former or on behalf of a third party.’ 61  However, some categories of employees who enjoy decisional independence in the performance of their activity are not considered to act as agents. These include, for instance, doctors when they are effectively providing medical care. See L Boilă, ‘Comentariu la art 1373’ in F Baias et al, Noul Cod civil. Comentariu pe articole (Bucharest, CH Beck, 2012) 1438. 62  E Lipcanu, ‘Unele reflecţii asupra reglementării răspunderii comitenţilor pentru prepuşi în noul Cod civil român’ (2010) 10 Dreptul 33. 60  According

570  Raluca Dimitriu B. Indicators Until 2015, the tax law (the previous Fiscal Code—Article 7(1), point 2.2) stipulated the right of the tax authorities to requalify a contract as one of employment on the identification of at least one of the following criteria: (i)

The beneficiary of the income is in a relationship of subordination to the payer of the income and to the governing bodies of the payer of the income, respectively, and observes the working conditions imposed by them, such as specific tasks and how these are performed, the place of work and the work schedule. (ii) In performing the activity, the beneficiary of the income exclusively uses the materials of the payer of the income, ie, adequate areas of work, special work and protection equipment, tools or the like, and contributes with physical or intellectual capacity, but not with capital. (iii) The payer of the income bears the costs incurred by the beneficiary of the income when travelling for business purposes, such as per diem for travel in Romania or abroad, and other expenses of a similar nature. (iv) The payer of the income reimburses the annual leave entitlement and the temporary disability insurance benefits on the account of the beneficiary of the income. As already mentioned, the approach has now been reversed: the Fiscal Code specifies the criteria to identify independent work. As a consequence, the indicators for identifying an employment contract consist in the absence of the criteria for the qualification of the work as independent. Therefore, the previous Fiscal Code has been amended by Law No 187/2015,63 and the new Fiscal Code (entered into force in 2016) maintained the definition of ‘independent work’ as any activity carried out by a person in order to obtain revenue, which meets at least four of the following criteria:64 (i) (ii)

63 

the natural person is free to choose the place and way in which the work is carried out, as well as the work schedule;65 the natural person is free to perform activities for more clients;66

Published in the Official Gazette of Romania No 499 of 7 July 2015. Article 7, point 3 of the Fiscal Code approved by Law No 227/2015. 65  On the contrary, in the case of a dependent work relationship, the place of work and work schedule are, in principle, predetermined. While there may be some flexibility in this regard, the scope of this flexibility must be defined in an employment contract from the outset. Once the contract is concluded, any modification of these components must be made by agreement between the parties, as the Labour Code prohibits—with a few exceptions—a unilateral amendment of the employment contract. 66  The difficulty in applying this criterion is that it does not specify the actual pursuit of business with more customers, but only the possibility of performing activities for multiple clients. 64 

The Concept of ‘Employee’: The Position in Romania 571 (iii) the natural person performing the activity assumes the risks inherent to the business. This is a decisive criterion, as an employee would not assume financial risks under a contract of employment; (iv) the activity is carried out using the patrimony of the natural person performing the work;67 (v) the activity is carried out by the natural person using his or her intellectual and/or physical capacity, depending on the type of activity; (vi) the natural person is a member of a professional body/association which has the role of representation, regulation and supervision within the profession, in accordance with the laws and bylaws regulating the organisation and practice of the given profession;68 (vii) the natural person is free to carry out the activity directly, using employed staff or third-party contractors under the terms of the law.69 As already mentioned, the entire construction lies within the framework of a normative act of tax law and not of labour law. In order to challenge the decision of the tax authorities to requalify a legal relationship, an action has to be brought before the administrative court, not before the labour courts. C.  The Relevance of ‘Economic Dependence’ Romanian labour law is not sufficiently familiar with the intermediate notions of para-subordinated work or quasi-employees. The criterion of economic dependence of a person registered as an independent worker is not taken into account, and a civil law contract can therefore not be requalified as one of employment for this reason. Interestingly, the question of economically dependent work has not yet been subject of a dialogue, either on a tripartite or a bipartite level. Moreover, there have been very few signs of an extension of the coverage of collective agreements to others apart from typical, traditional employees.

67  The previous regulation contained this criterion (although in the reverse) where dependent work was identified, inter alia, in relation to the criterion of using the materials of the payer of the income. 68  Such professional bodies include, for example, the Body of Expert and Licensed Accountants of Romania, the National Union of Notaries Public from Romania, the National Association of the Romanian Bar, the National Union of Insolvency Practitioners of Romania, the Chamber of Financial Auditors of Romania, the Romanian Chamber of Patent Attorneys and the Chamber of Tax Advisers. 69  The possibility to employ staff is a clear criterion for ‘independent work’, because the employee never has the right to delegate his or her tasks to a third party or to hire staff to do so. On the other hand, if an employee (hired under a contract of employment) delegates his or her tasks to someone else, this does not mean that he or she is no longer an employee, but simply that he or she has not properly fulfilled his or her job duties.

572  Raluca Dimitriu Under these circumstances, the employment relationship is sometimes objectively ambiguous, while at other times it is deliberately disguised.70 Consequently, at this juncture, the traditional classification of work as dependent or independent is rigid and insufficient. V.  THE PRINCIPLE OF PRIMACY OF FACTS

In Romanian civil law, the principle of primacy of facts applies. However, when it comes to labour law, things are somewhat different. Accordingly, if the contract is concluded in writing, pursuant to the formal standards for employment contracts, the parties in practice cannot prove that the contract is not in fact a contract of employment (being, for instance, a contract for services). On the other hand, if the employment contract is not concluded in writing, it is null and void. The nullity will, however, only be effective in the future, so the principle of the primacy of facts is applied to the past existence of a contract of employment (ex tunc), between the time of its conclusion in breach of the legal requirement to be concluded in writing as a condition of validity and the time it is established as void (when it ceases de jure).71 VI.  QUALIFICATION IN FULL

In Romanian law, it is not possible to only have part of a contract qualified as a contract of employment and another part qualified as another type of contract, such as a civil law contract (contract for services). For instance, the non-competition clause takes effect72 after the termination of the contract of employment, when the parties are already released from their mutual obligations. With the non-competition clause, the employee agrees to not compete against the employer for a determined period of time after the contract of employment has ceased. However, because the non-competition clause is concluded during the performance of the contract of employment, albeit relatively autonomously, it is considered to be a clause of the contract of employment and is subject to the restrictive norms of the Labour Code. The parties may conclude additional contracts during the performance of the contract of employment. These, however, may not lead to an evasion of the legal provisions. For instance, if the parties conclude a contract of voluntary work within the same period as the contract of employment

70 F Roşioru, ‘The Changing Concept of Subordination’, http://mta-pte.ajk.pte.hu/downloads/felicia_rosioru.pdf, 19. 71  According to art 56, letter d) of the Labour Code. See section I.A above. 72  According to ibid art 21.

The Concept of ‘Employee’: The Position in Romania 573 under which similar activities are carried out, then the Labour Inspectorate might hold that the parties thereby sought to evade the legal provisions on the minimum wage or working time.73 VII.  LIMITS TO THE FREEDOM OF CONTRACT

The norms that regulate the legal status of employees are imperative, so that the parties cannot remove the contract of employment from the regulatory scope of the labour law. Moreover, the employee cannot waive the rights granted by law; any clause by which an employee waives any of his or her rights would be null and void.74 In addition, in the legal literature, it is considered that the employee does not have the right to waive any of his or her rights not only when these rights are afforded by law, but also when they are stipulated in the applicable collective labour agreement.75 Romanian labour law is relatively formalistic. As mentioned above, the contract of employment must be concluded in writing to be valid. Additionally, even the contract of service is only lawfully concluded if the person performing the work previously registered as an authorised natural person or a freelancer. If the parties qualify as having concluded a ‘contract for services’, a contract that by its nature entails the same criteria as a contract of employment, then the tax inspection authorities can requalify the contract, requiring the parties to pay the mandatory social insurance contributions retroactively.76 Consequently, the parties have very limited possibilities to choose which type of contract to conclude; they cannot simply disregard the legal regime of a contract of employment and the applicability of the Labour Code provisions at will. On the other hand, once the parties have concluded a contract of employment in writing, which has undergone the registration procedure required by law, the fact that it might not fully fall into the typology of contracts of employment becomes irrelevant; the employee automatically becomes subject to the provisions of labour legislation.

73  Article 10(2) of Law No 78/2014 on the regulation of volunteering in Romania, published in the Official Gazette No 469 of 26 June 2014, prohibits the conclusion of a contract for voluntary work in order to avoid the conclusion of an employment contract. 74  According to art 38 of the Labour Code, ‘The employees may not waive the rights granted by law. Any transaction designed to waive the rights granted by law to employees or to limit such rights shall be void.’ In Decision No 356/2005, published in the Official Gazette No 825 of 13 September 2005, the Constitutional Court held that ‘art 38 of the Labour Code, which prohibits the employee from waiving his or her rights, but not the employer, does not breach the provisions of art 16(1) of the Constitution on equality before the law, as it is a measure of protection for the employees aimed at ensuring unimpeded exercise of rights … to avoid the consequences of potential abuses’. 75  Ștefănescu (n 23). 76  See section IV.B above.

574  Raluca Dimitriu VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

As a general rule, the parties to an employment contract do not have the freedom to derogate from the legal provisions on the status of the employee, either through individual employment contracts or through collective labour agreements. Such derogation would be considered a waiver of the rights granted by law, which is expressis verbis prohibited under Article 38 of the Labour Code with reference to the person performing the work. Usually, collective labour agreements do not define the term ‘employee’ or ‘contract of employment’, but derive the concepts directly from the law. Notably, the possibility of derogating from the law on the grounds of customs or practice is even lower. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

The conclusion of an individual employment contract in writing unconditionally presumes that such a contract has been agreed between the parties. Under tax law, the presumption that a contract that the parties label a civil law contract for the provision of services entails the actual content of a civil law contract is rebuttable. The tax authorities may rebut this presumption by requalifying such a contract as a contract of employment each time they determine the existence of one or more criteria applicable to an employment relationship in accordance with tax law. The decision of the tax authorities can be appealed by the parties in court. In principle, the burden of proof lies with the party claiming that the contract has erroneously been requalified as one of employment. In this context, he or she must prove that the relationship is in fact governed by a civil law contract and not a contract of employment, and thus the requalification is unfounded.77 A practical problem that arises is that the tax inspection authority’s assessment of the contract and its requalification is an administrative decision; hence, the parties can appeal this decision before an administrative court, not a labour court. Ultimately, the problem of requalification will not be reviewed by a court that specialises in labour law, but by judges who specialise in administrative law.

77  eg, by Decision 5099 of 1 December 2011, the High Court of Cassation and Justice rejected the argument of the plaintiffs—professional athletes—that they performed an independent activity and maintained the decision of the tax control authorities to requalify these relationships as employment relationships; see www.legeaz.net/spete-contencios-inalta-curte-iccj-2011/ decizia-5099-2011.

The Concept of ‘Employee’: The Position in Romania 575 When an employee brings an action before a court to requalify a contract, the circumstances are different. In labour disputes, the burden of proof always lies with the employer. However, in order to shift the burden of proof, the contract needs to already have been qualified as one of employment (the condition for referring a labour dispute to a court).78 Until then, the individual who performed work on the basis of a civil contract and who challenges the ‘civil’ nature of this contract, claiming that in reality it is a contract of employment, must prove the dependent nature of the relationship (the characteristics of a contract of employment).79 X.  SPECIFIC PROCEDURES

There is no specific procedure for requalifying a contract as a contract of employment other than the one initiated by the tax inspection authorities outlined above. An action by which the employee requests an evaluation of his or her contract, claiming that it is in fact a contract of employment, would be a declaratory judgment.80 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons Romanian law does not cover the concept of ‘employee-like’ persons. Under the current legal regime, the following separation applies: on the one hand, there are employees who have concluded an individual employment contract; on the other hand, there are individuals who carry out independent activities based on a civil law contract. Therefore, the answer to the 78  Decision of the High Court of Cassation and Justice No 2900 of 26 September 2013, www.iccj.ro/cautare.php?id=94691. 79  In practice, sometimes even this does not suffice. In order to prove the simulation, the worker must show that the public legal act (the civil contract) is false and that the secret one (the employment contract) is true. In one case, the subject matter was the requalification of a contract concluded by a self-employed person (as beneficiary) with another physical person. Although the latter proved that the act concluded contained references to hierarchical subordination and annual leave, the court dismissed the case, asserting that ‘the mere existence of a relationship of subordination does not mean that a contract concluded between two physical persons would necessarily be one of employment, as such a relationship can also be found in civil or commercial contracts’. It was considered that, in order to prove the simulation, the plaintiff had to document the existence of the secret act—Bucharest Court of Appeal, Civil Section VIII for labour disputes and social insurance, civil decision No 5964 of 21 September 2011, www.legeaz.net/spete-dreptul-muncii/contract-de-munca-si-contract-5964-2011. 80  According to art 35, thesis I of the Code of Civil Procedure, Law No 134/2010, republished in the Official Gazette of Romania No 545 of 3 August 2012, he or she who has an interest can request the establishment of the existence or inexistence of a right.

576  Raluca Dimitriu question ‘who does labour law protect?’ is very definite: as the law now stands (de lege lata), it can only be ‘employees’. The categories of persons who work without having employee status are only subjects of interest and regulatory action in traditional labour law in exceptional cases. Occasionally, some rules are introduced on the health and safety of certain categories of persons who do not work under a contract of employment.81 Vocational training is regulated in pieces of legislation beyond the narrow scope of the employment contract etc. Generally, however, non-employees do not benefit from the protection granted by the provisions of labour law. B.  Equality and Anti-discrimination Law All workers, including those who perform independent activities as well as farmers, benefit from the provisions of Law No 202/2002 on equal opportunities and equal treatment between women and men in employment relationships.82 In addition, Government Ordinance No 137/2000 on preventing and sanctioning all forms of discrimination83 ensures protection against discrimination for all categories of persons involved in a work relationship, regardless of the type of contract governing their activity. The terms used such as ‘economic equality in matters of employment and profession’ are deliberately broad, so the protection provided by such normative acts is not limited in any way to the category of employees.

81  According to art 5 a) of Law No 319/2006 on security and health at work, health and safety norms must be applied to all persons hired by an employer, including students during an internship and apprenticeship, as well as to all other participants in the work environment. 82  Republished in the Official Gazette of Romania No 326 of 5 June 2013. 83  Republished in the Official Gazette of Romania No 166 of 7 March 2014.

28 The Concept of ‘Employee’: The Position in Russia NIKITA LYUTOV AND ELENA GERASIMOVA

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

A

BASIC DEFINITION of ‘employment contract’ is provided in the Labour Code of the Russian Federation (Trudovoy Kodeks Rossiyskoy Federatsii, hereinafter Labour Code). According to Article 56 of the Labour Code, an: [E]mployment contract is an agreement between an employer and an employee, according to which the employer obliges himself to provide the employee with work with a specific work function, to ensure the work conditions prescribed in the labour legislation as well as in other acts that contain labour law norms, collective agreements and accords, local normative acts and this agreement, to pay wages on time and in full, while the worker obliges himself to personally carry out the work function defined in this agreement in the interest and under the management and control of the employer, and to observe the internal work regulations adopted by the employer.1

The term ‘work function’ is used to emphasise the distinct nature of the employment relationship compared to civil law relationships and generally that the employment contract regulates the process of work itself rather than the outcome of work, as would be the case in civil law. According to the Labour Code, the employment contract shall be concluded in writing, and two copies should be made available.

1 Sobraniye Zakonodatelstva Rossiyskoy Federazii of 7 January 2002, No 1, Item 3, as amended by the Federal Law of 2 May 2014 No 116-FZ (Sobraniye Zakonodatelstva ­Rossiyskoy Federazii of 12 May 2014, No 19, Item 2321).

578  Nikita Lyutov and Elena Gerasimova The parties to the contract should include information in the contract on the employer and the employee2 and should agree on the obligatory conditions as well as additional conditions. Obligatory conditions of the employment contract include: the place of work, including the branch, representative office or structural division of the organisation; work function; the date of commencement of work; for temporary contracts, the term and reasons for concluding a temporary contract in accordance with the law; conditions of payment, including rate of salary, additional payments and bonuses; working hours and rest periods, if different from other employees; guarantees and compensations for working under harmful or dangerous conditions of work, and characteristics of the working conditions; conditions of work at the workplace; conditions of the character of work (travelling, mobile, in transit etc); conditions on obligatory social security in accordance with the law; other conditions as required by labour legislation, the Labour Code and other federal laws. In case the employee is entitled to compensations or privileges, or where certain limitations are guaranteed in accordance with the Labour Code, other federal laws applicable to work in special professions or positions, titles of these professions or positions and qualification requirements should correspond to the titles and requirements of qualification directories, approved by the Government of the Russian Federation or in accordance with professional standards.3 Parties to the contract of employment may agree on additional conditions which may not worsen the employee’s working conditions as stipulated in the legislation, collective agreements or normative acts. These conditions may include clarification of the place of work (such as the structural division of the employer and its location) and/or working place; probation; prohibition from disseminating confidential information protected by law (state, commercial, official or other); an obligation to work for the employer for a certain period after receiving training paid by the employer; types and conditions of additional insurance for employees; certain social and living conditions for employees and members of his or her family; clarification of the rights and obligations of the employee and employer; supplementary private pension scheme etc. The employee must receive a copy of his or her employment contract, which shall be confirmed by the employee’s signature on the employer’s copy of the contract.4 However, an employment contract that was not concluded in writing will also be considered to have been concluded if the employee has commenced working under the direction of the employer or its representative who is authorised to conclude an employment contract. In such a

2 

Labour Code, art 57, para 1. ibid art 57, para 2. 4  ibid art 67, para 1. 3 

The Concept of ‘Employee’: The Position in Russia 579 case, the employer is obliged to conclude an employment contract in writing within three working days after the de facto authorisation for the employee to work.5 If a relationship entails the performance of work in person and has been officially defined as an employment relationship,6 an employment contract must be concluded within three working days following the decision of the court on the matter or as defined by the court.7 An employee may have been assigned to work by a person who was not authorised by the employer to do so. A new article was added to the Labour Code at the end of 2013 for such situations.8 If the employer denies the existence of an employment relationship, the employer is still under an obligation to pay for the time the employee actually worked. An employee who has assigned the person to work for the employer without proper authorisation by the employer to do so is liable for disciplinary sanctions and damages in the case of payment made by the employer to the person who was assigned to work. However, the law is silent about cases in which the person is assigned to work by the person who is not an employee of the beneficiary of work.9 In 2013, special provisions on the conclusion of an employment contract with distant workers have been introduced into the Labour Code.10 According to the new regulations, an employment contract with distant workers may be concluded by means of electronic documents.11 For certain types of work,12 additional preconditions may be established by law prior to the signing of the employment contract. For example, employment contracts with university professors may only be concluded following a special competition procedure.13 Additional prerequisites are listed as preconditions of the employment relationship (see section I.B below).14

5 

ibid art 67, para 2. may be done by the court, the state labour inspector or the beneficiary of the work itself—art 19-1 of the Labour Code. 7  Labour Code, art 67, para 2. 8 ibid art 67.1, implemented by the Federal Law of 28 December 2013 No 421-FZ (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 30 December 2013, No 52, Item 6986). 9  Due to the content of the norm of the Labour Code, in situations in which the employee has been assigned to work by the person who was not authorised to do so by the employer and who is not employed by the employer in question, the employer is not obliged to pay wages and there is no personal liability of the person who assigned the work. 10 Labour Code, c 49.1, introduced by the Federal Law of 5 April 2013 No 60-FZ FZ (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 8 April 2013, No 14, Item 1668). 11  Labour Code, art 312.2. 12 This includes the medical examination for workers under the age of 18 (Labour Code, art 69) and for dangerous and harmful types of work. The list of such types of work is approved by the Order of the Ministry of Healthcare and Social Development of 12 April 2011 No 302n (Rossiyskaya Gazeta of 28 October 2011), as well as some other requirements; see section I.B below. 13  Labour Code, art 332, para 2. 14  ibid art 16, para 2. 6  This

580  Nikita Lyutov and Elena Gerasimova A breach of the requirement to conclude an employment contract in writing does not make a contract null and void.15 This rule is in contrast to that of basic civil law. According to the Civil Code of the Russian Federation, the contract is null and void if it is concluded in breach of the legal requirement to conclude the contract in writing16 if such provision on a specific type of contract is established by law.17 The differentiated approach of labour law aims to protect employees from abuses by the employer. Nevertheless, employment contracts may be terminated if the regulations on their conclusion have been violated and this violation makes a continuation of work impossible in the cases prescribed in law.18 These cases include: (i)

the conclusion of an employment contract contrary to a court decision prohibiting the employee in question from taking certain positions or performing certain types of activities (eg, company management); (ii) the conclusion of an employment contract for work that is not suitable for the employee in accordance with an official medical statement; (iii) the lack of a document confirming the education or qualification of the employee if the given type of work requires special knowledge according to the law. The termination of the employment contract in such situations is permitted if it is impossible to assign the employee to other work upon the employee’s consent. If the described situations do not result from an offence committed by the employee, the employee is entitled to severance pay equal to one month’s average salary. B.  Employment Relationship: Basic Definition ‘Employment relationship’ (trudovye otnosheniya) is defined in Article 15 of the Labour Code as: [R]elationships that are based on an agreement between the employee and the employer concerning the personal and paid performance of work function (the work in a certain position in accordance with internal work regulations, profession, specialisation and qualification; specific type of assignment, specialisation and qualification; specific type of work) in the interest, under the management and control of the employer, whereby the employee follows the internal work regulations, while the employer guarantees the working conditions prescribed in the labour legislation as well as other acts that contain norms of labour law, collective agreements and accords, normative acts and the employment contract. 15 

ibid art 67, para 2. Code of the Russian Federation, art 162, para 2 (Sobraniye Zakonodatelstva ­Rossiyskoy Federazii of 5 December 1994, No 32, Item 3301). 17  Such provisions exist for the majority of civil law contracts. 18  Labour Code, art 84. 16 Civil

The Concept of ‘Employee’: The Position in Russia 581 According to the Labour Code,19 an employment relationship is only established upon the conclusion of the employment contract. If the employer did not conclude the employment contract in writing after the de facto assignment of the employee to work (see section I.A above), the employment contract is considered to have been concluded since the commencement of work, even if the agreement was not made in writing. All types of employment relationships (ie, different categories of employees) or specific situations, such as transfers of undertakings or others, are covered by the statutory definition contained in Article 15. Additional prerequisites are listed as preconditions of the employment relationship.20 They include: election to certain positions; winning a tender for a vacancy; appointment or approval to certain positions; assignment to work by an administrative body according to special quotas; court decisions on the conclusion of an employment contract; and recognition of relationships associated with personal work and carried out according to a civil law contract as employment relationships. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition The definition of ‘employee’ (rabotnik) is provided in the Labour Code: An employee is a physical person who has entered into an employment relationships with an employer.21

As a general rule, anyone who is person who is at least16 years of age or over can be an employee. However, an employment contract may be concluded with persons who have reached the age of 15 years for the performance of light work that is not harmful to their health if they have completed the general education programme or are in the process of completing their general education.22 A youth who has reached the age of 14 years may, with the consent of one of his or her parents and the state body for child services, conclude an employment contract for light work for the time during which he or she is not in school, on condition that this work does not represent an obstacle to completing his or her education.23 Children who are under the age of 14 years and work in cinema, theatre, the circus or perform concerts may conclude an employment contract. An employment contract may also

19 

ibid art 16, para 1. ibid art 16, para 2. 21  ibid art 20, para 2. 22  ibid art 63, para 2. 23  ibid art 63, para 3. 20 

582  Nikita Lyutov and Elena Gerasimova be concluded upon the consent of the state body for child services. In such cases, the contract is signed by one of the parents or another guardian of the child.24 However, the child himself or herself is considered to be a party to the contract. For any persons below the age of 18 years, the working time is reduced (to 35 hours per week for employees between the ages of 16 and 18, 24 hours per week for employees below the age of 16 years; it is further reduced by 50 per cent for youth who are still completing their education).25 Unlike civil law, labour legislation is silent on the possibility of concluding an employment contract with persons with limited civil legal capacity due to a mental disorder or other reason. No direct prohibition for such persons from being a party to the employment contract has been established.26 B.  Employer: Basic Definition According to the Labour Code, an employer is: [A] physical or legal entity (a company) that has entered into an employment relationship with an employee. In cases established by federal laws, other persons may act as employers.

There are two types of physical persons who may enter into an employment relationship as an employer. The first type is any person who may employ people for his or her personal assistance without participating in the business activity. The second type is the physical person who acts as a private entrepreneur or private notary or advocate. For both types of employers which are not registered as companies, specific regulations exist.27 Most notable among these is the possibility to stipulate additional grounds for dismissal in the employment contract28 compared to the exhaustive list provided in the law for ordinary employment relationships. ‘Other persons’ mentioned in the legal definition are international organisations that employ technical staff in Russia or state authorities which are not employers according to the Labour Code but registered as legal entities. One of the largest gaps in the regulation on the status of employer in Russia is the lack of a regulation of situations in which the groups of affiliated companies act as a single employer, but are formally different employers.29

24 

ibid art 63, para 3. ibid art 91, para 1. 26  ibid art 20, para 4. 27  ibid c 48. 28  ibid art 307, para 1. 29 See Хаваяшхов А.А, Аффилированные лица в трудовом праве (2012) 4 Кадровик. Трудовое право для кдровика 8. 25 

The Concept of ‘Employee’: The Position in Russia 583 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees A number of special norms exist that cover the legal status of different categories of employees30 and workers. In general, they can be divided into three broad types: (1) special categories of employees whose status is regulated by specific norms of the Labour Code; (2) employees whose status is established by separate legislation, whereas labour legislation applies to them in the case of a lack of regulations in certain situations; (3) workers to whom labour law does not apply. Part 4, section 12 of the Labour Code contains special norms on specific categories of employees. These are separate chapters containing norms on the regulation of work for women and persons with family responsibilities; workers under the age of 18; company directors and members of boards of directors; persons who work secondary jobs (in addition to their main job on the basis of another employment contract); employees with short-term contracts (less than two months); seasonal employees; rotational employees; employees employed by physical persons; home workers; distant employees; employees working in the Far North regions; transport employees; underground workers; pedagogical employees; academic research staff; employees of diplomatic representation offices and consulates of the Russian Federation abroad; temporary agency workers; employees of religious organisations; athletes and trainers; and other categories.31 When ‘physical persons’ employ someone, they do not have to issue the plant-level norms that companies, for example, have to issue. They may include additional grounds for dismissal to those stipulated in law. Employers who are physical persons and their employees can also agree to sign a temporary employment contract, even if the work is not limited in terms of time or is not concluded for a particular task. They can establish shorter terms of notice on dismissal that those specified in the Labour Code and agree on dismissal compensation that is lower than in the Labour Code.32 The regulation of the work of ‘company directors’ and members of the legal entities’ collective corporate bodies is far more flexible. Their liability for employer’s damages is higher than that of other employees. They usually have to compensate all damages caused to the legal entity;33 they may be dismissed upon the decision of the owner of the employer without cause

30  The term ‘employee’ is used for those covered by Russian labour law. The term ‘worker’ includes employees and other workers who are not party to an employment relationship and are not covered by Russian labour law. 31  Labour Code c 41–54. 32  ibid arts 303–09. 33  ibid art 277; Civil Code, art 53.1; Law on joint-stock companies, art 71, para 2 etc.

584  Nikita Lyutov and Elena Gerasimova or explanation, with three months’ average salary compensation for such dismissals.34 In the employment contract, additional reasons for dismissal may be agreed by the parties.35 Norms covering the work of ‘athletes and trainers’ (the possibility by the employee to determine the amount of compensation in case of termination of the employment contract on his or her initiative, flexible working time arrangements etc).36 ‘Domestic workers’ and ‘teleworkers’ are covered by most regulations of the Labour Code, but several exceptions exist. Domestic workers37 and teleworkers38 can be dismissed on the grounds established not only in the Labour Code, but also in the employment contract. Teleworkers can usually decide on their working hours and rest periods if these are not established in the employment contract. ‘Women and employees with family responsibilities’ are entitled to more protective norms than regular employees. A list of tasks, professions and positions that women are prohibited from carrying out because the work entails harmful working conditions has been established by the Government of the Russian Federation in accordance with the Labour Code and includes 456 posts.39 The prohibition for women from working in dangerous and unhealthy conditions was contested (unsuccessfully) in the courts in Russia as discrimination.40 The list of dangerous and unhealthy professions was criticised for many years at the international level,41 and the necessity of revising it is finally being discussed in Russia. Pregnant women cannot work in dangerous or unsafe working conditions and should be transferred to safe working places, and their average salary should continue to be paid in the event of transfers. They have the right to paid pregnancy leave (usually for 140 calendar days). Mothers and other relatives who care for babies can use childcare leave until the child reaches the age of three years, though maternity leave is only paid during the first 18 months of the child’s life.

34 

ibid arts 278 and 279. ibid art 278, para 3. 36  ibid c 41. 37  ibid art 312. 38  ibid art 312.5. 39  Ruling of the Government of the Russian Federation of 25 February 2000, No 162. 40  See the Supreme Court of the Russian Federation Decision of 2 March 2009, No GKPI09-36, Consultant Database. Available at www.consultant.ru/document/cons_doc_LAW_90184. 41  See International Labour Conference, 100th Session, 2011, Report of the Committee of Experts on the Application of Conventions and Recommendations (CEACR), Report III (Part 1A) (Geneva, ILO, 2011) 464, Normlex Database; United Nations, Committee on Economic, Social and Cultural Rights. Report on the Forty-Sixth and Forty-Seventh Sessions (2–20 May 2011, 14 November–2 December 2011); Economic and Social Council Official Records, 2012, Supplement No 2, UN Doc No E/2012/22, E/C.12/2011/3 (New York and Geneva, United Nations, 2012) 37; United Nations, Committee on the Elimination of Discrimination against Women (15 February–4 March 2016) (New York and Geneva, United Nations, 2016) 1 ff. 35 

The Concept of ‘Employee’: The Position in Russia 585 The Labour Code stipulates that parents may not work overtime, at night, on weekends or be required to go on business trips without their agreement.42 There is also a chapter on ‘other categories of employees’43 in the Labour Code that contains separate articles on additional categories of workers. These include civil employees in companies belonging to the military forces; employees of state corporations (a specific organisational form of state companies); employees of foundations of the Russian Federation in charge of specific types of social security; employees in banking; medical employees; creative professionals in mass media, cinema production, television and other filming production units, theatres and concert organising companies, circuses44 etc; employees involved in special evaluation exercises of workplaces (the recently introduced occupational safety and health workplace evaluation procedure); notary assistants; employees working to advance economic development; and employees involved in the organisation of the FIFA World Cup in 2018 and the Confederation Cup in 2017. The last of these groups—‘employees involved in the organisation of the FIFA World Cup and the Confederation Cup in 2017’—are excluded from regulations of the Labour Code as regards working time if they work for employers included in the special list of contractors, confederations and national federations approved by the Government of the Russian ­Federation.45 These norms are clearly discriminative. These workers may be required to work unlimited hours. The conditions of night work and of payment for night work, work on weekends and holidays, and of overtime work may be established in the collective agreement, normative acts or individual labour contracts. Article 154 of the Labour Code on night work, Articles 113 and 153 of the Labour Code on work on weekends and holidays, and Article 152 of the Labour Code on payment of overtime work do not apply to them during sport and other events, as stipulated in the Act of Government. It is also permitted to hire foreign workers outside the regular licensing regime.46

42 

Labour Code, art 259. ibid c 55. 44  ‘Creative employees’ are covered by a number of special arrangements with a more flexible regulation of working time, including the exception from the regular norms on breaks, night work, work on holidays, length of daily work etc; ibid art 351. 45  Federal Law on changes of the Federal Law on preparation and carrying out the FIFA World Football Championship of 2018 and the Confederations’ Cup of FIFA in 2017 in the Russian Federation, as well as on the amendment of certain legal acts of the Russian Federation of 8 June 2015 #141-FZ (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 15 June 2015, No 24, Item 3368). 46  Articles 10 and 11 of the Federal Law on preparation and carrying out the FIFA World Football Championship of 2018 and the Confederations’ Cup of FIFA in 2017 in the Russian Federation, as well as on the amendment of certain legal acts of the Russian Federation of 7 June 2013 (as amended on 8 June 2015) (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 10 June 2013, No 23, Item 2866). 43 

586  Nikita Lyutov and Elena Gerasimova According to the Labour Code,47 the status of civil state and of municipal servants is regulated in separate legislation.48 Civil state and municipal servants are not necessarily employed by state civil authorities at the federal or regional level, but as state officials. If, for example, a car driver is employed by such an authority, general labour legislation applies to the employment relationship. Legislation that regulates service in state security forces— police,49 customs,50 procurators’ offices51 and others—contains similar provisions, and labour legislation applies to service in such structures in the event of a lack of special regulations. The Labour Code provides52 that labour legislation does not apply to military servicemen (civilians employed by the military are covered by general labour law), members of boards of directors of companies (unless they have concluded an employment contract with the company) and persons who work under civil law contracts. Other persons in cases established by federal law, for example, members of agricultural and manufacturing cooperative societies, are not considered to be employees.53 However, their status may not be inferior to that of employees. B.  The Establishment of a Specific Category of ‘Workers’ There is no unified definition of ‘workers distinct from employees’ in ­Russian law. Any specific group of workers is determined by statutory norms (see above).

47 

Labour Code, art 11, para 7. Federal Law on civil state service of 27 July 2004 No79-FZ (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 2 August 2004, No 31, Item 3215); Federal Law on municipal service of 2 March 2007 No 25-FZ (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 5 March 2007, No 10, Item 1152). 49 Federal Law on police of 7 February 2011 No 3-FZ (Sobraniye Zakonodatelstva ­Rossiyskoy Federazii of 14 February 2011, No 7, Item 900). 50  Federal Law on service in the customs bodies of the Russian Federation of 21 July 1997 No 114-FZ (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 28 July 1997, No 30, Item 3586). 51 Federal Law on the procurators’ office of the Russian Federation of 17 January 1992 No 2202-1 (Rossiyskaya Gazeta, No 39, 18 February 1992). 52  Labour Code, art 11, para 8. 53  Although the relationships of members of cooperatives with the cooperative are referred to as ‘employment relationships’ (trudovye otnosheniya—literally ‘labour relationships’, a term that is used for all employment relationships); art 19 of the Federal Law on manufacturing cooperative societies of 8 May 1996 No 41-FZ (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 13 May 1996, No 20, Item 2321). A similar approach is used for agricultural cooperatives; art 40 of the Federal Law on agricultural cooperation of 8 December 1995 No 193-FZ (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 11 December 1995, No 50, Item 4870). 48 

The Concept of ‘Employee’: The Position in Russia 587 IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The criteria for determining the existence of an employment r­elationship and an employment contract follow from their statutory definitions (see sections I.A and I.B above). The criteria associated with work instructions, control over the work and integration into the company are found in Articles 15 and 56 of the Labour Code: (i)

An employment contract is concluded to perform the ‘work function’ (trudovaya funktsiya), which is explained in the statutory definition of the employment relationship as ‘work in a certain position in accordance with internal work regulations, the profession, specialisation and qualification; specific type of assigned work’. This ‘work function’ is used to distinguish whether to conclude a civil law or employment contract. Under civil law contracts, the subject of the agreement is considered to be a result of the work and the notion of ‘work function’ implies that the employment contract regulates the work as more of a continuous process.54 (ii) Both definitions of Articles 15 and 56 contain references to the fact that the work covered by the employment contract is carried out ‘in the interest of the employer’. This mention of ‘in the interest of a party’ is the result of an amendment to the Labour Code in 2014. (iii) The reference to ‘management and control’ of the employer was also added to the definitions in Articles 15 and 56 in the Labour Code amendment of 2014. (iv) The subordination element of the employment relationship is emphasised in the reference to the employee’s obligation to ‘observe the internal work regulations’ adopted by the employer. Internal work regulations are the plant-level norms regulating the internal organisation of work and rules. Internal work regulations are adopted55 in a procedure which takes the recommendations of the plant trade union into account and ‘as a rule’ are an addendum to the plant-level collective agreement. In practice, the subordination element of the employment relationship is not limited to the employee’s obligation to observe the internal work regulations. Any other legal acts of the employer that are applicable to a specific

54  55 

A Kurennoy (ed) Trudovoye pravo Rossii, 3rd edn (Moscow, Prospect, 2016) 103. According to art 190 of the Labour Code.

588  Nikita Lyutov and Elena Gerasimova employee are binding. The employer also has the power to issue individual instructions connected with the performance of work, as long as they do not fall outside the scope of the employment contract and are not illegal. There are no known cases in which the courts interpreted these definitions in a narrow way and limited the subordination of the employee to observance of internal work regulations only. In the vast majority56 of court decisions57 that deal with qualifications of the employment relationship as such, the main indicator for the existence of an employment relationship is the fact that the object of the relationship is the ‘process of work rather than its result’. The second most commonly used criterion is ‘subordination’ of the employee to the employer. This criterion is usually included as an additional

56  We have used the bulk of the case law that was researched by master students of the Law Faculty of the National Research University Higher School of Economics during the special course on methodology of labour law in the fall semester of 2015. Most cases rely on numerous criteria for distinguishing the existence of an employment relationship. Therefore, the same cases are further used in different contexts. 57 See, eg, Decision of Basmanny District Court of Moscow of 25 July 2011 on Case No 2-1553/11 (hereinafter Case 2-1553/11); Resolution of the First Moscow Appeal Arbitration Court of 3 September 2015 No 01АП-5227/15 (hereinafter Case 01АП-5227/15); Resolution of the Fifth Appeal Arbitration Court of 9 July 2015 No 05АП-5317/15 (hereinafter Case 05АП-5317/15); Appeal Ruling of the Khanty-Mansiiysk Yugra Autonomous Regional Court on Case No 33-2422/2015 (hereinafter Case 33-2422/2015); Appeal Ruling of the Saint-Petersburg City Court of 21 October 2012 No 33-14515/2012 (hereinafter Case 33-14515/2012); Ruling of the Supreme Court of the Russian Federation of 17 August 2015 No 41-ГК 15-14 (hereinafter Case 41-ГК 15-14); Cassation Ruling of the Perm Regional Court of 20 April 2011 No 33-3818 (hereinafter Case 33-3818); Decision of the Norilsk City Court on Case No 2-873/2011 of 25 March 2011 (hereinafter Case 2-873/2011); Appeal Ruling of the Omsk City Court of 12 August 2015 on Case No 33-5407/2015 (hereinafter Case 33-5407/2015); Decision of the Kemerovo City Court of 22 September 2015 on Case No 33-9847/2015 (herein­ after Case 33-9847/2015); Decision of the Yuzhno-Kurilsk District Court of 18 September 2015 on Case No 2-260/2015 ~ М-240/2015 (hereinafter Case 2-260/2015); Decision of the Syktyvkar City Court of 8 September 2015 on Case No 2-6696/2015 ~ М-5212/2015 (hereinafter Case 2-6696/2015); Decision of the Anapa City Court of 17 September 2015 on Case No 2-3138/2015 ~ М-2655/2015 (hereinafter Case 2-3138/2015); Ruling of the Supreme Court of the Russian Federation of 21 March 2008 No 25-В07-27 (hereinafter Case 25-В07-27); Decision of the Kogalym City Court of 29 June 2012 on Case No 2-612/2012 (hereinafter Case 2-612/2012); Moscow Regional Court Ruling of 23 September 2010 on Case No 33-18274 (hereinafter Case 33-18274); Appeal Ruling of Berezovski Regional Court of 27 October 2012 on Case No А33-8600/2012 (hereinafter Case А33-8600/2012); Decision of the Berezovski Regional Court of 25 August 2015 on Case No 2-847/2015 (hereinafter Case 2-847/2015); Decision of Central District Court of Barnaul of 15 June 2015 on Case No 2-3189/2015 (hereinafter Case 2-3189/2015); Appeal Ruling of the Supreme Court of Republic Buryatia of 13 May 2015 on Case No 33-1589 (hereinafter Case 33-1589); Appeal Ruling of the Supreme Court of the Republic of Tatarstan of 22 June 2015 on Case No 33-9164/2015 (hereinafter Case 33-9164/2015); Appeal Ruling of the Moscow City Court of 8 October 2014 on Case No 33-26729 (hereinafter Case 33-26729); Appeal Ruling of the Khabarovsk Regional Court of 29 January 2014 on Case No 33-401/2014 (hereinafter Case 33-401/2014); Appeal Ruling of the Supreme Court of Sakha Republic (Yakutia) of 27 August 2014 on Case No 33-2931/14 (hereinafter Case 33-2931/14).

The Concept of ‘Employee’: The Position in Russia 589 argument in court decisions that already have references to work as a process and not a result. Although such criteria as in the ‘interest’ of the employer have been added to definitions of the employment relationship and the employment contract, no case law seems to have used these. The notion of ‘management and control’ by the employer is difficult to distinguish from subordination. However, numerous decisions make direct references to the management and/or control over the process of work by the employer.58 As long as ‘internal work regulations’ refer to formal acts issued by the employer, the reference or lack of reference to their applicability to the person performing the work is fairly common for the courts.59 B. Indicators Various indicators are used by the courts to determine the existence of an employment relationship beyond the formal criteria mentioned in the Labour Code (see Section 4.1). One of the most common indicators used by the courts is the inaccurate usage by the employer of certain ‘formalities due in an employment relationship’, despite the fact that the employer claims that the contract is in fact based on civil law. Those may include the listing of the job in an advertisement (jobs schedule),60 or description of the worker’s occupational duties,61 providing information about the work the worker performs in a labour

58  Appeal Ruling of the Supreme Court of the Republic of Tatarstan of 8 June 2015 on Case No 33-8229/2015 (hereinafter Case 33-8229/2015); Resolution of the Arbitration Court of the North Caucasus Region of 29 May 2015 on Case No А32-17466/2014 (hereinafter Case А3217466/2014); Case 05АП-5317/15; Case 2-260/2015; Case 25-В07-27; Case 2-3189/2015; Case 33-1589; Case 33-401/2014. 59  Appeal Ruling of the Moscow City Court of 14 August 2015 on Case No 33-26150/2015 (hereinafter Case 33-26150/2015); Resolution of the Far East Region Arbitration Court of 26 March 2015 on Case No А24-2955/2014 (hereinafter Case А24-2955/2014); Appeal Ruling of the Sverdlovsk Region Court of 18 March 2015 on Case No 33-3524/2015 (hereinafter Case 33-3524/2015); Appeal Ruling of the Pskov Regional Court of 29 April 2014 on Case No 33-642/2014 (hereinafter Case 33-642/2014); Ruling of the Moscow City Court of 15 December 2011 No 4г/4-11228 (hereinafter Case 4г/4-11228); Decision of the ­Kuybyshev District Court of Omsk of 3 August 2015 on Case No 2-1828/2015 (hereinafter Case 2-1828/2015); Case 2-1553/11; Case 05АП-5317/15; Case 33-8229/2015; Case 33-2422/2015; Case 33-14515/2012; Appeal Ruling of the Rostov Regional Court of 17 November 2014 on Case No 33-14545/2014 (hereinafter Case No 33-14545/2014); Case 2-873/2011; Case 33-5407/2015; Case 2-260/2015; Case 2-6696/2015; Case 2-3138/2015; Case 33-18274; Case А33-8600/2012; Case 2-847/2015; Case 33-1589; Case 33-9164/2015; Case 33-401/2014; Case 33-2931/14. 60  Case 33-8229/2015; Case 33-3818; Case 2-3138/2015. 61 Case 2-1553/11; Case 33-14515/2012; Case 33-3818; Case 25-В07-27; Case А338600/2012; Case 2-847/2015.

590  Nikita Lyutov and Elena Gerasimova booklet,62 the conclusion of a mandatory medical insurance contract,63 issuing the order to hire the worker,64 notions on the possibility to post the worker,65 reference to additional education offered to the worker66 or some other formal ‘labour law activities’ on behalf of the employer. Similarly, the lack of such activities may also be used by the courts as evidence of the lack of existence of an employment relationship. An employment contract will be deemed to exist for the performance of a ‘similar job’ within the enterprise for which a contract has either been concluded earlier with the same worker who is currently working under a civil law contract or with different employees at the same time as with the worker in question.67 ‘Personal scope’ of the relationship is also a frequently used indicator for the existence of an employment relationship.68 The existence of a specified ‘place of work’ is also frequently used by the courts.69 Numerous court decisions have made references to the regulation in civil law contracts of the conditions on ‘working time or rest periods’,70 as well as ‘wages’.71 The notion of the courts that an employment contract is less specific in defining the exact obligations of the worker (sometimes with an additional reference to the lack of the one-time nature of the work) is fairly common.72 Reference to the long ‘duration of the contract’73 or, on the contrary, the lack of such a reference may indicate a civil law relationship.74 In one case, the fact that ‘additional work’ was being carried out, which was 62 Appeal Ruling of the Saint-Petersburg City Court of 27 April 2015 on Case No 2-2214/2014 (hereinafter Case 2-2214/2014); Case 4г/4-11228; Case 33-3524/2015. 63  Case 4г/4-11228. 64  Case 33-9164/2015. 65  Case 01АП-5227/15; Case 33-8229/2015; Case 2-3189/2015. 66 Case А32-17466/2014. 67 Case 01АП-5227/15; Case 33-14515/2012; Case А32-17466/2014; Case 25-В07-27; Case 4г/4-11228; Case 2-3189/2015. 68 Case 01АП-5227/15; Case 05АП-5317/15; Case 33-26150/2015; Case 33-3818; Case 33-9847/2015; Case 2-260/2015; Case 33-401/2014; Case 33-2931/14. 69 Case 01АП-5227/15; Case 05АП-5317/15; Case 41-ГК 15-14; Case 33-3818; Case 2-873/2011; Case 33-5407/2015; Case 2-260/2015; Case 33-642/2014; Case 25-В07-27; Case 2-1828/2015; Case 2-3189/2015; Case 33-1589; Case 33-401/2014. 70  Moscow Regional Court Ruling of 16 September 201 on Case No 33-17882 (hereinafter Case 33-17882); Case 05АП-5317/15; Case 33-2422/2015; Case 33-26150/2015; Case 33-3818; Case А24-2955/2014; Case 33-3524/2015; Case 2-873/2011; Case 2-260/2015; Case 33-642/2014; Case 33-18274; Case 2-3189/2015; Case 33-1589; Case 33-26729; Case 33-401/2014; Case 33-2931/14. 71  Case 2-1553/11; Case 05АП-5317/15; Case 33-8229/2015; Case 33-14515/2012; Case 41-ГК 15-14; Case 2-2214/2014; Case 33-3818; Case А32-17466/2014; Case 33-9847/2015; Case 2-3138/2015; Case 33-642/2014; Case 2-612/2012; Case 33-17882; Case А338600/2012; Case 2-3189/2015; Case 33-14545/2014; Case 33-401/2014. 72  Case 01АП-5227/15; Case 05АП-5317/15; Case А32-17466/2014; Case 33-5407/2015; Case 2-6696/2015; Case 2-612/2012; Case А33-8600/2012; Case 2-847/2015; Case 2-3189/ 2015; Case 33-1589; Case 33-401/2014; Case 33-2931/14. 73  Case 01АП-5227/15; Case 05АП-5317/15; Case 41-ГК 15-14; Case А32-17466/2014. 74  Case 33-26729.

The Concept of ‘Employee’: The Position in Russia 591 not specifically mentioned in the contract, was used as an indicator of the existence of an employment relationship.75 In some cases, references were made to the ‘standard and repetitive nature of the contract’ as an indicator for the existence of an employment relationship.76 C.  The Relevance of ‘Economic Dependence’ It seems that no case law exists on the economic dependence of the employee as an indicator of the existence of an employment relationship. This seems to be irrelevant for Russian courts from the point of view of qualifying the type of relationship. V.  THE PRINCIPLE OF PRIMACY OF FACTS

In Russia, the principle of ‘primacy of facts’ has not been explicitly affirmed in law. On the basis of the Civil Procedural Code of the Russian Federation, the courts should properly evaluate and resolve disputes,77 and evidence is defined as information on facts.78 Based on these general provisions, the courts should analyse the factual circumstances of each case and base their decisions on these facts. These general provisions are implemented in practice. The courts assess the nature of relationships between workers and employers (contractor) and examine whether the characteristics of the employment contract are implemented in practice. If the evidence shows that the nature of the relationship is one of employment, the court will qualify the contract as such, irrespective of its ‘labelling’ by the parties. If the evidence submitted to the court indicates that an employment contract was de facto concluded by the parties,79 it will thus be qualified as an employment contract de jure with all the corresponding consequences. The courts have ruled in numerous cases that no employment contract was established because the evidence was insufficient to prove that an employment relationship had in fact been concluded.80 75 

Case 33-8229/2015. Case 05АП-5317/15; Case А32-17466/2014. 77 Civil Procedural Code of Russian Federation of 14 November 2002 No 138-ФЗ 18 November 2002 (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 18 November 2002, No 46, Item 4532. art 2). 78  Civil Procedural Code of Russian Federation art 55. 79  Appeal ruling of the Supreme Court of the Republic of Tatarstan of 7 December 2015 on Case No 33-18431/2015; appeal ruling of the Moscow City Court of 12 December 2015 on Case No 33-37684/15. 80  Appeal rulings of the Moscow City Court of 2 December 2015 on Case No 33-36709/2015 and of 22 July 2015 on Case No 33-25840/2015. 76 

592  Nikita Lyutov and Elena Gerasimova VI.  QUALIFICATION IN FULL

A contract between two parties can either be a contract of employment or a civil law contract. Article 57 of the Labour Code contains a list of all the necessary and supplementary conditions of the employment contract. In addition to the conditions listed in the Labour Code, the parties may agree to include other rights and obligations of the employee and of the employer in the employment contract, established by labour legislation and other normative acts, containing norms of labour law, company norms and collective agreements. The possibility of including provisions of a civil law nature in the employment contract is recognised in practice, though the law does not include direct provisions thereof. According to the Resolution of the Plenum of the Supreme Court of the Russian Federation’s ‘On Application by Courts of the Russian Federation of Labour Code of the Russian Federation’,81 in the event of a dispute on the failure to exercise or an improper exercise of the terms of the employment contract, which contains civil law obligations (for example, on the provision of premises or payment to the employee for the purchase of residential premises), despite the fact that these conditions are included in the employment contract, they are civil law obligations of the employer and therefore the jurisdiction of such disputes (the district court or magistrate) must be determined on the basis of common rules for determining jurisdiction, established by Articles 23 and 24 of the Civil Procedural Law Code of the Russian Federation. No clear regulation exists on such agreements, but they are used fairly often in practice. The civil conditions of such contracts may include the provision of housing, loans, optional agreements to buy shares etc.82 In the event that an employment contract includes civil rights and obligations, civil legislation may apply to the civil provisions of the employment contract.83 There are several groups of employees whose employment contracts often include civil rights and obligations: professional athletes, top management etc. For example, common civil law conditions for top management employees can be agreed in optional contracts84 on purchases of company

81  Resolution of the Plenum of the Supreme Court of the Russian Federation on application by courts of the Russian Federation of the Labour Code of the Russian Federation of 17 March 2004 No 2 (Bulletin of the Supreme Court of the Russian Federation [Bulleten Verhovnogo Suda Rossiyskoy Federacii] No March 2004) para 1. 82  Огородов ДВ, Служебные объекты интеллектуальной собственности и смешанные договоры, заключаемые с работниками (соотношение гражданского и трудового права) // (2006) 11 Коллегия 18–22. 83  Еремина СН, Спорные вопросы формирования правового статуса руководителя: трудовое или гражданское законодательство? (2011) 17 Юрист 30–37. 84  Civil Code, art 429.3.

The Concept of ‘Employee’: The Position in Russia 593 stocks or shares at the given price at the time, which can be included in the employment contract or stipulated in a separate agreement.85 A discussion on the nature of professional athletes’ contracts is ongoing. Some researchers argue that contracts between professional athletes and employers are of a ‘mixed nature’ and exist as ‘inter-branch employment contracts’.86 An employee and an employer are free to conclude other agreements, such as an apprenticeship agreement.87 VII.  LIMITS TO THE FREEDOM OF CONTRACT

The Labour Code provides special provisions on how to alter the nature of the contract or legal relationship, but this is a one-way street. Parties to the employment contract cannot alter a contract’s legal nature by insisting that it is not a contract of employment. The law does not provide any legal regulation on this aspect and, in practice, no court cases on modifying the legal nature of an employment contract have been tried. However, the opposite situation occurs quite frequently. As mentioned above, the Labour Code was amended in 2014 with the addition of norms aimed at strengthening the employment relationship.88 Parties to the civil contract can agree to change its legal nature, or the qualification of the legal nature of the contract can be changed by State Labour Inspector or court. A person who acts as a customer under a civil law contract can recognise that the contractual relationship is an employment relationship on the basis of a written application of the worker. In this case, their mutual agreement on the qualification is vital, not an objective qualification.89 Another option for modifying the nature of the contract is to requalify it on the basis of the decision of the State Labour Inspector, but the contractor can, if he or she disagrees with the requalification of the contract, appeal it in court. The Labour Inspector’s decision may be based on a worker’s request or be made independently of the worker’s opinion on the matter. Workers can also appeal directly to court with the request to have their contract recognised as an employment contract. In all court cases, unavoidable doubts should be interpreted in favour of the existence of an employment relationship.90 85  There are synonyms in English for this, such as ‘warrant’ or ‘call premium’. See www. multitran.ru/c/m.exe?CL=1&s=%EE%EF%F6%E8%EE%ED&l1=1. 86  Шевченко ОА, Правовая доктрина регулирования труда в сфере профессионального спорта и пути ее реализации в России: диссертация на соискание ученой степени доктора юридических наук. (Москва, Московская государственная юридическая академия имени ОЕ Кутафина, 2014) 371. 87  Labour Code, c 32. 88 Federal Law 28 December 2013 No 421-FZ (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 30 December 2013, No 52, Item 6986). 89  Labour Code, art 19-1, para 1. 90  ibid art 19-1, para 3.

594  Nikita Lyutov and Elena Gerasimova After the termination of the contract, the parties lose the opportunity to question its legal nature and a civil contract may only be qualified as an employment contract by the court.91 In practice, the courts often dismiss such claims due to the missed limitation period.92 The status of employee cannot be voluntarily waived. However, employers have the option of achieving this result in practice. In certain sectors of the economy, for example, in film production, all workers register as private entrepreneurs. They conclude contracts as contractors (of services of an actor or director of photography etc) and despite the fact that the nature of their relationship is one of employment, their status as entrepreneurs places them within the scope of civil law. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The legal notions of ‘employee’, ‘contract of employment’ and ‘employment relationship’ are of a statutory nature and cannot be disposed of by the parties to the contract (see above). Parties cannot agree on the notions of these terms that diverge from those established in the Labour Code. Under the Labour Code, collective agreements may not contain conditions, limitations or a reduction of workers’ rights or guarantees stipulated in the legislation; in the event of such breaches, the conditions of the collective agreement shall not be applied.93 In collective bargaining, the parties’ interests focus on working conditions at the local94 or other95 levels. They do not negotiate the notion and characteristics of the contract of employment or employment relationship, though they are not limited to develop norms that substantiate or improve workers’ rights and guarantees. In practice, some collective agreements limit the maximum number of temporary agency workers in companies; some trade unions negotiate the transformation of the status of persons who work as temporary agency workers96 or as individual civil contractors into employees.

91 

ibid art 19-1, para 2. of the Tverskoy Regional Court of 16 June 2015 on Case No 33-2104/2015; Irkutskiy Regional Court of 09 April 2015 on Case No 33-2901/15; Supreme Court of the Bashkortostan Republic of 1 September 2015 on Case No 33-14873/2015. 93  Labour Code, art 9, para 2. 94  ibid art 41, para 2. 95  ibid art 46, para 2. 96  Гусев АВ (ред), Рабочее и профсоюзное движение: из прошлого в будущее (Москва, URSS, 2016) 202. 92  Rulings

The Concept of ‘Employee’: The Position in Russia 595 B.  Custom and Practice Deviations on the basis of custom and practice are not acknowledged in Russia. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions In labour and social security law, there are no regulations on the shifting of the burden of proof in cases on the establishment of an employment relationship or presumptions. An amendment of the Labour Code of December 201397 provides that in court cases on qualifying a relationship based on a civil law contract as an employment relationship, unavoidable doubts should be interpreted by courts in favour of the existence of an employment relationship.98 Though the courts refer to the provisions mentioned in the Labour Code for this category of cases, they use it more as a citation of the law than as a base for decision-making in unclear cases.99 They try to identify the unambiguous characteristics of the employment relationship and, in case of their absence, will dismiss the claim.100 As a result, in order to win a case on the qualification of a relationship as one of employment in court, almost all the evidence must point towards the existence of an employment relationship.101 This is rare in practice. It can be concluded that the regulation of the Labour Code on unavoidable doubts is poorly implemented in practice. B.  The Burden of Proof According to the Civil Procedural Code of the Russian Federation, each party should prove the circumstances to which it makes reference as grounds for claims or objections, unless otherwise stipulated in federal law.102 97 

Federal Law of 28 December 2013 No 421-FZ. Labour Code, art 19-1, para 3. 99  Ruling of the appeal of the Sverdlovskiy Regional Court of 14 August 2015 on Case No 33-11444/2015; Ruling of the appeal of the Kostromskoi Regional Court of 2 November 2015 on Case No 33-1982/2015. 100  Ruling of the appeal of the Moscow City Court of 14 April 2014 on Case No 33-19410. 101  Саурин СА, Проблемы защиты прав работников, занятых в неформальном секторе (2014) 4 Трудовое право в России и за рубежом 48. 102  Civil Procedural Code of Russia of 14 November 2002 No 138-ФЗ 18, November 2002 (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 18 November 2002, No 46, Item 4532) art 56. 98 

596  Nikita Lyutov and Elena Gerasimova No special rules on the burden of proof are established in law for cases on the qualification of a contract as one of employment. It is the obligation of the worker to prove that the characteristics of the employment relationship were present in the relationship. Usually, workers have difficulty obtaining documents that they could use as evidence; it is difficult to find evidence involving other employees if they want to continue working with the same employer. In practice, this leads to serious complications for workers who are plaintiffs in the courts. In many cases, the courts deny claims citing that the plaintiff did not prove the existence of an employment relationship.103 In numerous decisions, they have emphasised that the plaintiff did not present written evidence confirming the existence of an employment relationship.104 X.  SPECIFIC PROCEDURES

The courts are authorised to issue decisions on the existence of a contract of employment and the employment relationship both in cases when the person started working without signing a contract of employment and when the contract was qualified by the parties as a civil law contract.105 Since 2014,106 new procedures have been introduced by the Labour Code for the requalification of civil law contracts. Recognition of an employment relationship can be determined: (i) (ii)

by the contractor (employer) on the basis of a written application of the worker and/or on the basis of the decision of the State Labour Inspector, which was not appealed to court; or by the court on the basis of the worker’s application directly to the court, or on the basis of an application of the State Labour Inspectorate or other bodies or officials authorised by the federal law.107

Another procedure is used on the basis of the Tax Code of the Russian Federation. According to the Tax Code, the courts can levy taxes not paid

103 Ruling of the Permskiy kraevoi Court of 12 August 2013 on Case No 33-7279-201; ruling of the Kirovskiy Regional Court of 11 October 2012 on Case No 33-3373; ruling of the Sverdlovskiy Regional Court of 11 July 2013 on Case No 33-75752013; ruling of the Supreme Court of Bashkortostan of 20 December 2012 on Case No 33-148242012; ruling of the Vladimirskiy Regional Court of 3 September 2013 on Case No 33-27612013; ruling of the Altay Regional Court of 10 June 2013 on Case No 33-53422013; ruling of the Moscow City Court of 14 August 2013 on Case No 11-261792013; ruling of the Supreme Court of ­Chuvashiya of 17 June 2013 on Case No 33-20022013. 104 Ruling of the Altayskiy Regional Court of 10 July 2013 on Case No 33-53422013; ruling of the Vladimirskiy Regional Court of 3 September 2013 on Case No 33-27612013. 105  Labour Code, art 11, para 4. 106  Federal Law 28 December 2013 №421-FZ. 107  Labour Code, art 19-1, para 1.

The Concept of ‘Employee’: The Position in Russia 597 by the taxpayer in a number of cases, including corporate taxes or taxes paid by self-employed persons whose contracts were requalified by the tax authority.108 The tax authorities frequently use this opportunity and change civil law contracts into employment contracts. As grounds for the requalification, they use indicators based on characteristics of the employment contract listed in the Labour Code in addition to others (see section IV.B above). The grounds applied by the arbitration courts include: regularity of salary payments,109 a long-lasting relationship,110 provisions in the contract, such as obligations on liability of damages of the worker,111 the obligation of the worker to fulfil the work personally112 or follow the internal regulations of the contractor,113 the obligation of the contractor to provide a healthy and safe working environment,114 social insurance,115 provisions on the ‘work function’116 and provisions on working hours.117 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons No category of ‘employee-like’ persons is recognised in Russian legislation. B.  Equality and Anti-discrimination Law According to the Labour Code, no one may be excluded from labour rights and liberties or be disadvantaged based on sex, race, colour, nationality,

108  Tax Code of the Russian Federation, Part 1, Federal Law of 31 July 1998 No 146-ФЗ with changes and amendments (Sobraniye Zakonodatelstva Rossiyskoy Federazii of 3 August 1998, No 31, Item 3824) art 45, para 2, pt 3. 109  Ruling of the Federal Arbitration Court of the Volgo-Vyatsky District of 16 July 2012 on Case No А43-14361/2011. 110  Ruling of the Federal Arbitration Court of the Volgo-Vyatsky District of 16 July 2012 on Case No А43-14361/2011; ruling of the Federal Arbitration Court of the West-Siberian District from 27 April 2011 on Case No А27-6452/2010. 111 ibid. 112  ibid; ruling of the Federal Arbitration Court of the West-Siberian District of 24 N ­ ovember 2010 on Case No А33-15600/2009. 113 ibid. 114  Ruling of the Federal Arbitration Court of the Volgo-Vyatsky District of 16 July 2012 on Case No А43-14361/2011; ruling of the Federal Arbitration Court of the West-Siberian District of 27 April 2011 on Case No А27-6452/2010. 115  Ruling of the Federal Arbitration Court of the West-Siberian District of 9 November 2010 on Case No А66-2676/2010. 116  Ruling of the Federal Arbitration Court of the West-Siberian District of 27 April 2011 on Case No А27-6452/2010; ruling of the Federal Arbitration Court of the West-Siberian District of 9 November 2011 on Case No А66-2676/2010. 117 ibid.

598  Nikita Lyutov and Elena Gerasimova language, origin, property, family, social and work position, age, place of residence, religion, convictions, belonging or not belonging to public associations or any social groups, as well as other circumstances not related to the ability of the employee to perform the specified work (delovye kachestva rabotnika—literally, the ‘business qualities of the employee’). This principle must be widely applied to all types of employees. However, cases on discrimination are rarely won due to a lack of alleviation of the burden of proof and some other gaps in Russian anti-discrimination law.118

118  The list of forms of evidence that may be used in court is quite limited, the notion of ‘discrimination’ is not clear enough, the courts are not used to dealing with discrimination and many other issues make protection against employment discrimination quite difficult to enforce from a practical point of view. For more details, see Лютов НЛ and Герасимова ЕС, Международные трудовые стандарты и российское трудовое законодательство. 2-е изд. (Москва, Центр социально-трудовых прав, 2015) 77–105.

29 The Concept of ‘Employee’: The Position in Serbia SENAD JAŠAREVIĆ

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

I

N SERBIAN LEGISLATION, there is no legal definition of the term ­‘contract of employment’ (ugovor o radu). This concept is neither defined by the Labour Code (Zakon o radu, hereinafter referred to as the LC),1 which regulates employment relationships, nor by the Civil Code (Zakon o obligacionim odnosima, hereinafter referred to as the CC),2 which regulates contractual issues (contract law). The LC only indirectly defines the employment contract as a contract by which an employment relationship is entered into.3 This provision of the LC only applies to the private sector, public companies and services. Civil servants are appointed by an act called ‘decision’ (for further information, see section I.B below). In addition, Chapter II LC (Establishing employment relationships— Zasnivanje radnog odnosa) contains a separate heading 2, dedicated’ to employment contracts (Ugovor o radu).4 These articles stipulate that ­specific

1  The Code was published in the Official Gazette of the Republic of Serbia (hereinafter RS), No 24/2005, and the remaining amendments in Nos 61/2005, 54/2009, 32/2013 and 74/2014. Note that in Serbian legislation, the date of the actual enforcement of the law is not considered to be of major importance and no particular evidence is necessary in this respect, so the date itself was not included. 2  The Civil Code was published in the Official Herald of the Socialist Federative Republic of Yugoslavia (SFRJ), Nos 29/1978, 39/1985, 45/1989, 57/1989, Official Herald of the Federal Republic of Yugoslavia, No 31/1993, Official Gazette of the RS, No 1/2003. 3  See art 30, para 1 LC; ‘The employment relationship shall be established by an employment contract.’ 4  ibid arts 30–33.

600  Senad Jašarević rules must be applied to contracts of employment. Any other issues related to such contracts are regulated by the general contractual rules governed by the CC.5 The LC provides for/includes few formal requirements to be met in order to enter into the employment contract. It must be concluded in writing before the employee actually starts performing work, and three copies must be signed by the employee and the director and/or the entrepreneur.6 Moreover, the LC specifies the mandatory content of an employment contract.7 The LC does not require additional verification by a notary or any other body. However, the employer is bound to keep the employment contract or any other contract concluded under the LC or a copy of such a contract at its headquarters or other premises or the place of work of the employee or any other person engaged to work for him or her.8 As a general rule, the employment contract cannot be entered into by verbal agreement. However, if the employee starts working for an employee based on a verbal agreement with the employer, it ‘shall be deemed that the employee has entered into an employment relationship for an indefinite term on the day he or she has assumed work’.9 In this case, entering into a contract of employment is considered a ‘concludent action’ (konkludentna radnja), ie, an action following as a result of conduct implying an intention to establish a contract of employment. The Supreme Cassation Court held that in such a case, even though a contract/agreement has not formally been entered into, there is a legal presumption that the employee has entered into an employment relationship for an indefinite period.10 5 

Part I of the Code, arts 1–453. See art 30, para 2–4 i 32, para 2 LC. 7  Pursuant to art 33: ‘The employment contract shall contain: 1) the name and registered office of the employer; 2) the first name and family name of the employee, place of residence or address of the employee; 3) type and level of qualification or education of the employee required to perform the tasks for which the employment contract is concluded; 4) type and description of tasks the employee is to perform; 5) place of work; 6) type of employment relationship (indefinite or definite period); 7) duration of the employment contract for a fixed period and the basis for entering into an employment relationship for a fixed; 8) day of commencement of employment; 9) working hours (full-time, part-time or reduced hours); 10) pecuniary amount of base salary on the date of conclusion of the employment contract; 11) elements for establishing the pecuniary amount of the base salary, work performance, compensation of salary, salary increase and other forms of emoluments; 12) terms for payment of salary and other emoluments the employee is entitled to; 13) duration of daily and weekly working time.’ 8  Article 35 LC. 9  ibid art 32, para 2; see also the decision brought by the Municipal Court (Opštinski sud) in the town of G Milanovac, P No 396/03 of 29 April 2004, the decision of the District Court (Okružni sud) of the town of Čačak, Gž No 756/04 of 7 July 2004 and the decision brought by the Supreme Court of the Republic of Serbia (Vrhovni Sud Republike Srbije), Rev 1248/04 of 22 September 2005. 10  According to the Supreme Cassation Court of the Republic of Serbia (Vrhovni kasacioni sud Republike Srbije): ‘This legal fiction allows the realisation of an employment relationship without concluding a contract in writing. For its application it suffices to prove that the individual has commenced working and it will hence be deemed that such an individual entered 6 

The Concept of ‘Employee’: The Position in Serbia 601 Interestingly, this law introduces fines for employers who fail to conclude a contract with an employee (ranging from RSD 800,000 to 2,000,000 ie, approximately €6,500–16,500).11 Nonetheless, the very conclusion of a contract does not suffice for entering into an employment relationship. Pursuant to Article 34 LC, the employee must commence working as well. Should the employee fail to perform work, the employment relationship shall be deemed as having not been entered into, despite the fact that an employment contract has been signed.12 A contract of employment can be void or voidable (ništav ili rušljiv) under the same conditions as provided for in any civil contract (ie, if it jeopardises regulations in force, public order, the concept/idea of goodwill or in the case of ‘faults of the declaration of intent’ of one of the parties that has entered into the contract, such as incapacity or misapprehension.13 The rules concerning the conclusion of ­contracts are abundant and have been established to meet the standard rules of contract law in comparative law practice; therefore, these will not be discussed further here. We will only mention Article 105, paragraph 1 CC, which stipulates that the invalidity of any provision in the contract does not affect the validity of the contract itself if the contract can be sustained without the void provision and in the event that such a provision was not a precondition to the agreement or the main reason for entering into the contract. This, in fact, can be an issue of great significance for employment contracts, which may contain numerous clauses of different character and importance.

into an employment relationship from the day of commencement of such work. Art 30 and Art 32 apply to all forms of employment relationships … In case an individual has already entered into an employment relationship, it is not necessary (as ruled by the appellate court) to examine the will of the contractual parties. The implication that the will exists is based on the fact that the employer has agreed to hire the individual to work and that the individual employed receives compensation (a salary). If the employer does not want this provision to apply (ie fiction of the existence of an employment relationship), the employer will have to conclude a contract for occasional and temporary work, if the work to be performed falls within the scope of the business carried out by the employer, or some other contract that does not expressly create an employment relationship.’ See Decision of the Supreme Cassation Court, Rev 2 761/2012, of 23 January 2013, Belgrade, and the Decision of the Supreme Cassation Court, Rev 2 602/2014 of 23 October 2014. 11  For small employers (entrepreneurs), the fines are somewhat lower—RSD 300,000–500,000 (approximately €2,500–4,170). Anticipated fines for management employees at the employer range from RSD 50,000 to 150,000 (approximately €420–1,250). 12  Article 34, para 2 LC states that ‘should the employee fail to assume work on the day specified in the employment contract, the employment relationship shall be deemed as not ­having been entered into, unless the individual was prevented from assuming work for justified reasons or the employer and employee agreed otherwise’. 13  According to arts 103 and 111 CC. See s 4 of the Law (‘Invalidity of contracts’; 1. Void and voidable contracts—arts 103–18).

602  Senad Jašarević According to Article 9, paragraph 2 LC: Provisions in the employment contract that stipulate less favourable working ­conditions than those specified in law and in the ‘general act of the employer’,14 ie those that are based on incorrect information on certain rights, duties and responsibilities provided by the employer shall be invalid.

The invalidity of certain provisions of employment contracts is determined by ordinary civil courts. There are no statutory of limitations for the right to establish such invalidity. In other words, the right to request the establishment of the invalidity of a contract does not expire (there are no time limits for filing a claim before the court).15 There is no specific regulation on the consequences of a contract’s invalidity. However, the LC implies that the parties will have to adapt their relationship to the provisions in law (and the employment contract) from the starting date of the employment relationship. On the one hand, a salary and other benefits received by the employee shall not, in principle, be returned and the employee will be entitled to any payments unduly withheld. On the other hand, if the employee received more than he or she was rightfully due to receive (ie contrary to the existing public sector regulations), he or she will have to return the surplus.16 If a person was not eligible to enter into an employment contract (eg, if the person is underage, that is, fails to meet the minimum age requirements),17 it shall be deemed that an employment relationship existed only de facto so that the employee shall have no right to avail himself or herself of any benefit ensuing from the employment relationship (such as pension benefits and compensation in case of unemployment).18 B.  Employment Relationship: Basic Definition In Serbian legislation, there is no legal definition for ‘employment relationship’, although in many instances the legislator uses the term ‘employment relationship’ (radni odnos) in various regulations. The term ‘employment relationship’ is obviously considered to be commonly known so that it does not need to be specifically defined (while, on the other hand, terms such

14  Pursuant to art 8 LC, collective agreements and work regulations are considered to be general acts. 15  According to art 11 LC. 16  This issue is not regulated by current legislation and there is no recent case law on this issue. In practice, by inertia, the provisions from the socialist period continue to apply. 17  According to art 24 LC, it is 15 years of age. 18  Recent court decisions on this issue are still lacking. Courts have applied previous laws (from the socialist period) to employment relationships.

The Concept of ‘Employee’: The Position in Serbia 603 as ‘employer’ and ‘employee’ are defined). The legislator indirectly defines parties to an employment relationship by naming those to whom the LC applies. Accordingly, pursuant to Article 2 LC, it applies to the ‘employees’ working in the territory of the Republic of Serbia with a domestic or foreign legal entity or natural persons, including those employed by public bodies. Hence, the concept of ‘employment relationship’ covers employees of both the private and public sectors (public institutions and public services) as well as civil servants. Interestingly, the Serbian legislator clearly differentiates between ‘employment’ and ‘employment relationship’. In particular, Article 2, paragraph 1, section 2 of one of the recently issued regulations, the Act on Employment of Foreign Citizens,19 reads as follows: Employment of foreign citizens is established by entering into a contract of employment or any other contract, without entering into an employment relationship by which a foreign citizen ensures the rights arising from his work in accordance with the law.

Consequently, it can be assumed that in Serbian legislation, the term ‘employment’ has a much wider scope than the term ‘employment relationship’ and that it includes both employed persons and other individuals who perform work for the employer on any other legal ground (eg, through flexible forms of employment20 or a contract for services—which is considered a civil law contract, albeit also regulated by the LC).21 Moreover, Serbian legislation clearly distinguishes between ‘entering into an employment relationship’ and a ‘work engagement’, which applies to all individuals who work but are not in an employment relationship (see section III.B below).22 An employment relationship generally results from a contractual agreement between the parties. The LC, in Article 30, paragraph 1, explicitly states that: An employment relationship is effectuated by an employment contract/An employment relationship shall be established by an employment contract.

However, the legislator does not apply this stipulation consistently. In the Law on Government Employees of 2005,23 the term ‘employment relationship’ is used, although it stems from a different legal ground. Pursuant to this law, upon the first application of a person to work for the government, a chief government official in charge shall make and deliver his or 19 

Official Gazette of the RS, No 128/2014. Temporary or occasional/periodical work contracts, fixed-term work contracts etc. 21  See art 199 LC. There is no interesting case law on the issue in question. 22  For instance, see art 5 i 35 LC. 23  Official Gazette of the RS, Nos 79/2005, 81/2005, 83/2005, 64/2007, 67/2007, 116/2008, 104/2009, 99/2014. 20 

604  Senad Jašarević her d ­ ecision on the appointment of the applicant.24 Hence, in this case, an employment relationship is established by an administrative act. As a result, it is assumed that the civil servant has acknowledged entering into an employment ­relationship by the mere application for service. In some cases, mutual agreement between the employee and the employer is not sufficient. This is specifically the case with underage persons. Pursuant to Article 25 LC, when a person under 18 enters into an employment relationship, the written consent of a parent, foster parent or guardian is needed.25 In addition, the possibility to ‘transfer an employment relationship’ (ie, a contract of employment in the event of a transfer of an employee to another employer or an undertaking/part of the undertaking to another owner) is also specified. This takes place when a worker transfers to another employer or if a business or part of a business passes to another owner. According to the LC, in the event of a change in status, ie, a change of employer, the succeeding employer shall, pursuant to the law, take over the ‘general act’ (collective agreement or work rules) and the employment contracts from the preceding employer that are in force on the date of the transfer. As a general rule: [T]he preceding employer shall notify the employees, whose employment contracts have been transferred, about the transfer of their employment contracts to the succeeding employer in writing. Should any employee reject the transfer of the employment contract or fail to agree to it five days after the notification of the transfer referred to in paragraph 1 of this Article, the preceding employer may terminate the employment contract of the respective employee.26

The term ‘employment relationship’ is also important in the context of social security law. This issue is, indirectly and for the purposes of social security law, regulated by the Act on Social Security Contributions.27 The latter regulates the concept of the employment relationship indirectly by providing the definition of an employee. According to Article 6, paragraph 1, section 4, ‘an employee is the insured person—a natural person in an employment relationship performing work for the employer in accordance with the law’. Since the law mentioned in this definition refers to the LC, the concept of ‘employee’ used in social security law coincides with the definition used in employment law. However, it should be noted that social security law has a much wider scope of coverage.28 24 

Article 57, para 3 of the Law on Governmental Employees of 2005. the condition that such work does not jeopardise their health, morality or education, and is not prohibited under the law. 26  Articles 147 and 149 LC. 27  Official Gazette of the RS, Nos 84/2004, 61/2005, 62/2006, 5/2009, 52/2011, 101/2011, 7/2012, 8/2013, 47/2013, 108/2013, 6/2014, 57/2014 and 68/2014. 28  Besides employees, it includes civil servants, self-employed persons, flexible form w ­ orkers (eg, persons who perform temporary and occasional work), workers in agriculture, artists, clergy, detached workers (detaširani radnici), independent workers and some others categories in which individuals do not actually work, but receive benefits arising from employment, such as unemployment benefits and benefits from health insurance. See art 7 of the Act on Social Security Contributions. 25  Under

The Concept of ‘Employee’: The Position in Serbia 605 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition Pursuant to the definition of ‘employee’ provided in Article 5, paragraph 1 LC, ‘an employee [zaposleni], pursuant to this law, shall be a natural person in an employment relationship with the employer’. This definition is evidently not very precise. Accordingly, neither whether this only refers to those individuals that work in the private sector nor what kind of work is performed and how it is performed can be deduced from this definition. Under Article 2 LC, which delineates the personal scope of the coverage of the LC, the concept of ‘employee’ includes civil servants and all other persons who work for the state (ie, employees of the state administration, territorially autonomous bodies (Serbia has two autonomous provinces), local self-government (municipalities), as well as public services and public enterprises). Hence, the term ‘employee’ is a uniform term that refers to any person whose work is directed by another person or, in other words, a person who is subordinated and personally dependent on another (the employer can be the state itself). Any amendments and, more precisely, the interpretation of the legal definition of the term employee are indirectly derived from the case law.29 However, the criteria related to the existence of an employment relationship have never been clearly defined by the courts. Instead, the judges are usually led by their own ‘personal judgement’ in this regard (see section IV.B below). Also, besides the LC, the concept of ‘employee’ is regulated by some other laws, such as the Act on Health and Safety at Work (Article 4)30 and the Act on Social Security Contributions (Article 6),31 which it either largely corresponds to or uses elements provided under the LC.32 B.  Employer: Basic Definition In Article 2, paragraph 2 LC, the following definition of the term ‘employer’ (poslodavac) is provided: An employer, pursuant to this law, is a domestic or foreign legal or natural person who is employed or hired/engaged to work for one or more persons. 29  This is a general point based on the total case law, which at the same time is not ­formulated. In Serbian legal practice, many legal principles and standards are implied automatically. 30  ‘An employee is a domestic or foreign natural person in an employment relationship with the employer, as well as any other person who performs work for the employer or is trained by the employer, except for persons hired as household help.’ The Law was published in the Official Gazette of the RS, No 101/2005. 31  ‘An employee is a natural person in an employment relationship with the employer in accordance with labour laws.’ 32  Čl 199. Zakona o radu.

606  Senad Jašarević As already mentioned, this term includes employers from both the private and public sectors (the employer may be a private entity as well as the state itself).33 A group of companies cannot be an employer since it lacks the legal personality quality/characteristics. The definition of the term ‘employer’ is found in some other laws where it appears to be indispensable, such as the Act on Health and Safety at Work,34 the Act on Social Security Contributions35 and the Act on Employment and Insurance in Case of Unemployment.36 It should be noted that the Act on Health and Safety at Work has almost an identical definition to that established under the LC. On the other hand, although following the concept followed by the LC, other laws use adjusted versions of this definition tailored to the specificities/requirements of a particular act.37 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees The differentiation introduced in some other countries between different sub-types of employees is not common in Serbia. For example, there is no distinction between blue-collar workers and white-collar workers (although a differentiation did exist 50 years ago). Also, managerial employees are not treated differently from other employees in law, specifically with regard to working conditions or dismissal. Special treatment applies only for executives or persons who represent, ie, lead, the company. According to Article 48 LC, the executive or other legal representative of the employer (hereinafter referred to as the Director) may enter into an employment relationship for a definite or indefinite term. An employment relationship is established by concluding an employment contract. A fixed-term employment relationship may last until the expiry of the term to which the Director has been appointed or until his or her dismissal. The mutual rights, duties and responsibilities of a Director who has not 33 

See section II.A above (art 2 LC). Article 4 of the Act on Health and Safety at Work. 35  Article 6 of the Act on Social Security Contributions. 36  Article 4 of the Act on Employment and Insurance in Case of Unemployment, published in the Official Gazette of the RS, Nos 36/2009, 88/2010. 37  According to the Act on Social Security Contributions: ‘The employer is a legal or natural person or other legal entity that is a contribution payer, liable for the calculation and payment of contributions for employees, natural persons engaged in temporary and occasional work and the elected, nominated and appointed officials who achieve deference to salaries or wages. Co-operatives shall be considered employers, for natural persons who perform temporary and occasional work through the co-operative.’ According to the Law on Employment: ‘The employer, in accordance with this Law, is a domestic or foreign legal or natural person who acknowledges the need to employ employees, who employs workers and pays contributions to unemployment insurance.’ 34 

The Concept of ‘Employee’: The Position in Serbia 607 entered into an employment relationship and those of his or her employer shall be regulated by contract (whose form and content are not determined by the law).38 Such a contract is concluded with a Director by the competent authority as defined by law (in the case of a public corporation) or by the general act of the employer. A person performing the role of a Director is entitled to compensation for work as well as to other rights, duties and responsibilities pursuant to such a contract. In conclusion, all employees in Serbia enjoy the same basic rights if they are in an employment relationship. Accordingly, even though certain particular professions (eg, the police, the Army, the judicature, teaching staff, clergy, firemen, medical care employees and flight control officers) fall under separate laws which partly modify their working conditions due to the specific characteristics of particular activities (ie, work organisation and performance of work),39 these aberrations are not substantial.40 This conclusion can be validated by the fact that the law provides that all persons within these categories shall be subject to general labour law regulations (the LC) if not stipulated otherwise and that each will be allowed to sign a collective agreement.41 Artists can perform work on the basis of a contract for service or other civil law contract. Basically, if these individuals are employed, the LC applies to them as well in the same manner as it does to athletes. The signing of collective agreements is also foreseen in such cases.42 The Law on Churches and Religious Communities grants churches a wide range of autonomy with regard to clergy and other employees who work within religious communities.43 However, several claims have been brought before the court by clergy seeking court protection when, in their opinion, 38 

See Decision of the District Court in Valjevo, Gž I br 266/05 of 26 May 2005. difference is also seen in the fact that the majority of employees seeking court protection usually address civil courts, while civil servants (including the Army and the police) address the ­administrative court. 40  Discrepancies found with some types of activities merely result from adjustments imposed by work organisation and the performance of work. The difference is also seen in the fact that the majority of employees seeking court protection usually address civil courts, while civil servants (including the Army and the police) address the administrative court. 41 At present, there are 13 active branch collective agreements in the special categories (eg, the police, the Army, the judicature, teaching staff, clergy, firemen, medical care employees and flight control officers). There were much more of them prior to the introduction of amendments to the LC of July 2014, according to which all collective agreements became invalid as of 29 January 2015. See, for instance, separate (branch) collective agreements for police employees (Official Gazette of the RS, No 22/2015), separate collective agreements for government bodies (Official Gazette of the RS, No 22/2015), separate collective agreements for employees in elementary, secondary schools and pupils’ homes (Official Gazette of the RS, No 21/2015). 42 See The separate branch collective agreement for entertainers (Official Gazette of the RS, No 23/2015). 43  See art 6–8 of the Law on Churches and Religious Communities, Official Gazette of the RS, No 36/2006. According to art, 6 para 3 of this Law, churches and religious communities are granted independence in terms of their own organisation and functioning as well as ­carrying out all internal and public affairs. See also arts 6–8. 39 The

608  Senad Jašarević their basic human rights granted by the Constitution and labour legislation were jeopardised by the decisions of their religious communities.

B.  The Establishment of a Specific Category of ‘Workers’ A category of ‘workers’ (radnici) does not formally exist in Serbia. However, while elaborating the protection of certain work categories, labour legislation uses the term ‘work engagement’ in addition to the already known term ‘employment relationship’. The term ‘work engagement’ is considered to be broader than the term ‘employment relationship’ (a person engaged to perform work could, in some countries, be considered ‘a worker’). For example, according to the Act on Protection of ­Whistleblowers of 2014:44 ‘[W]ork engagement’ is an employment relationship, work performed outside the employment relationship, volunteering, performing of a function as well as any other work performed for the employer.45

As mentioned earlier, Articles 5 and 35 LC refer to employees and other work-performing individuals (in fact, individuals who work under temporary or occasional work contracts, a contract for services, a contract on training and advanced training or an additional/supplementary work contract).46 Those individuals are entitled to basic protection (equal pay, prohibition of discrimination, health and safety at work, social security) which is regulated for each of the categories by a separate set of laws (the Act on Prohibition of Discrimination, the Act on Gender Equality, the Act on Health and Safety at Work and the Act on Social Security Contributions).47 IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration Any research on the case law related to basic elements of employment relationships in Serbia is difficult for the following three reasons. First, the 44  Article 2, para 1, s 5 of the Act on Protection of Whistleblowers of 2014, Official Gazette of the RS, No 57/2014. 45  It is, for example, also mentioned in the Law on Gender Equality (Official Gazette of the RS, No 104/2009), in art 10, para 1, al 9. 46  They are mentioned in art 5 LC, which defines the concepts of ‘employee’ and ‘employer’. 47  See, eg, arts 7–8 of the Act on Social Security Contributions (stipulating that the abovementioned persons are entitled to retirement and disability insurance as well as to health care).

The Concept of ‘Employee’: The Position in Serbia 609 records of case law are usually not kept or published.48 The majority of courts never publish their court decisions or, if they do, only selected ones are published so that the case law available in Serbia is limited in size and is not presented in a systematised manner. Second, there are quite a few decisions that corroborate the existence of an employment relationship. This is mainly due to the fact that during the socialist period (until the 1990s), it was common to become employed by entering into an employment relationship. Other forms of employment (flexible forms of work or work under civil contracts) were quite rare and therefore there were not many court cases related to proving the existence of an employment relationship. The situation today is very similar, despite the fact that the number of cases related to false flexible work contracts/ disguised employment contracts, ie, fictive engagement through occasional and temporary work or fixed-term work, have increased slightly over the past 20 years. The third reason relates to the fact that the concept of ‘employee’ has never clearly or systematically defined in the case law (it has instead been dealt with only in theory—see the next section). In the absence of a common approach, which should be provided by the Supreme Cassation Court (the highest court in Serbia),49 when determining whether an employment relationship exists or not, judges are led primarily by their ‘personal feeling or understanding’, which may or may not be based on theory.50 However, based on existing practice,51 it could be concluded that the courts consider that someone is in an employment relationship if: (1) the person is under the control of another person—ie, an employer (personal dependence or subordination); (2) the services provided are those typically provided by an employee (within the business carried out by the employer) and if they are carried out regularly; (3) the services provided do not have the characteristics of occasional and temporary work or services p ­ rovided under

48 For example, the webpage of the Serbian courts provides a link for court statistics. However, this link cannot be opened (ie, it was not created). See www.portal.sud.rs/code/navigate.aspx?Id=621. 49  By the Act on Organisation of Courts of 2008 (Official Gazette of the RS, Nos 116/2008, 104/2009, 101/2010, 31/2011, 78/2011, 101/2011 and 101/2013), it is foreseen that labour disputes in the first instance shall be referred to the regular civil courts. Higher courts in the first instance shall have jurisdiction over disputes related to discrimination and mobbing. Complaints are resolved before the appellate courts (of which there are four in Serbia). Revisions in labour disputes (as an extraordinary legal remedy) are only made in exceptional cases brought before the Supreme Cassation Court. 50  Jurisprudence in Serbia in this area is extremely modest. To gather as much information as possible, an interview with the President of the Civil Division of the Supreme Court of Cassation was arranged. 51  In combination with the general practice of employment relationships, analysis of existing court decisions and an interview with the President of the Civil Division of the Supreme Court of Cassation.

610  Senad Jašarević civil law contracts;52 (4) the work performed is carried out p ­ rofessionally and with the aim of acquiring wages as a means for living.53 In essence, while establishing the existence of an employment relationship, the courts in Serbia use the criteria found in relevant comparative studies54 (dependence/subordination, work instructions, work control,­ integration,55 control of working time, and place of work); however, they rarely make open and clear references. Instead, they apply a holistic view by taking into account all the relevant indicators of a particular case dealt with by the court and usually make their judgment based on the predomination of elements of an employment relationship or some other form of work. As mentioned earlier, even though it is not explicitly stated, the courts resort to legal theory (labour law textbooks), according to which the following constitute the crucial elements of an employment relationship: (1) subordination; (2) personal engagement; (3) working for a wage; and (4) voluntary acceptance.56 In addition, there are two more crucial elements of the employment relationship in Serbian theory: (5) work as a profession; and (6) inclusion of a worker in a working community (integration).57 The highest importance is given to the element of subordination, which is seen through the prism of organisational, operational and material control

52  For example, according to the decision of the Supreme Cassation Court, Rev 2 1153/2012 of 27 February 2013: ‘of the performance of work under a contract of occasional or temporary work is considered to be work outside the employment relationship, ie an employment relationship is not entered into when concluding such a contract and it can therefore not become an employment relationship concluded for a definite and subsequently indefinite period of time.’ See also the decision of the Supreme Court of the Republic of Serbia, Rev II 1696/07 of 27 December 2007: ‘The performance of occasional or temporary work is work outside the employment relationship, hence, the person engaged in such work neither has nor can acquire the status of an employee based on such work.’ 53 See, for example, the decision of the Supreme Cassation Court, Rev 2 761/2012 of 23 January 2013, Belgrade, and the Decision of the Supreme Cassation Court, Rev 2 602/2014 of 23 October 2014 (n 11). 54  See reports of the ILO, the EU etc. For example, ‘Green Paper, Modernising Labour Law to Meet the Challenges of the 21st Century; Characteristics of the Employment Relationship’, Thematic Report 2009, European Labour Law Network, 2009, www.labourlawnetwork.eu; ‘The Employment Relationship’, International Labour Conference, 95th Session, International Labour Office, 2006, www.ilo.org/public/english/standards/relm/ilc/ilc95/pdf/rep-v-1.pdf. 55  In the 1960s, the so-called ‘integration test’ was one of the most commonly used among other criteria for discerning ‘full-time labour force/staff’ (in an employment relationship) from occasional or temporary labour force/staff (mainly in labour law theory and often referred to by the courts). This differentiation has, in the meantime, become outdated. 56  See P Jovanović, Labour Law (Novi Sad, Faculty of Law in Novi Sad, 2015) 163, 177; N Tintić, ‘Labour and Social Law’ (1972) People’s Journal 335. 57 For further information on the essential elements of the employment relationship in ­Serbian theory, see A Baltić and M Despotović, Foundation of Labour Law in Yugoslavia and the Main Issue in Work-Related Sociology (Belgrade, Savremena administracija, 1971) 30; R Pešić and V Brajić, Labour Law, (Senta, Društvo ekonomista Senta, 1979) 96; B Šunderić, Labour Relationship (Theory, Norms and Practice) (Belgrade, Kultura, 1990) 46.

The Concept of ‘Employee’: The Position in Serbia 611 over the work of an employee. Furthermore, the employment relationship cannot be deemed to exist if the last two criteria are not met. B. Indicators Much like the fact that the courts do not disclose their formal opinions on crucial elements qualifying an employment relationship, they have also only indirectly published their opinions on other indicators of an employment relationship (such as work instructions, working hours, agreed place of work, entrepreneurial risk, duration of work, performance by the employee alone, ie, in person, provision of tools, remuneration, compensation for annual leave, travel expenses, paid leave and bonuses). However, each case is considered as a separate one by the court, without setting common principles for further practice. Let us take the following decision by the Supreme Cassation Court as an example. Working for an employer without having concluded a contract of employment which establishes an employment relationship pursuant to Article 32 LC should not only include the willingness on the part of the employer to give the employee work or acceptance on the part of the employee to assume the work, but should also incorporate the characteristics of an employment relationship in terms of the rights and duties ensuing from an employment relationship, such as the expected quality of work to be provided by the employee, working hours, payment of wages and other benefits arising from an employment relationship.58 Notably, under current Serbian legislation, the location at which the work is being performed is not of crucial importance for establishing the existence of an employment relationship. Article 42 LC, which envisages the possibility of performing work for the employer outside the employer’s premises, ie, at home, was introduced in 2001 when the former LC entered into force.59 However, in an employment relationship, the work performed by the employee must be carried out in person. Prior to the amendments to the LC introduced in July 2014, the employee who worked for an employer outside the employer’s premises was allowed to engage family members to help him or her. This provision was omitted and no longer exists. C.  The Relevance of ‘Economic Dependence’ In the case law, economic dependence has thus far not been considered a condition for the existence of an employment relationship. The LC also 58 

See the decision of the Supreme Cassation Court, Rev 2 705/2014 of 1 October 2014. to art 29 of the former Labour Code of 2001 (Official Gazette of the RS, Nos 70/2001 and 73/2001). 59 According

612  Senad Jašarević makes no reference to the connection between economic dependence and the employment relationship. However, it has recently been observed that redundant employees return to perform the same work for the same employer,60 but with a different status, ie, as ‘quasi-self-employed persons’ or ‘quasi-salaried workers’. It is therefore not unrealistic to expect that proving the existence of an employment relationship arising from these quasi-categories will be addressed in the case law. The point to be made is that ‘quasi-self-employed persons’ work for the same (former) employer and that they are completely economically dependent upon that employer. Such workers frequently receive their tools for work from the employer or the employer readily gives such tools to the employee on credit. V.  THE PRINCIPLE OF PRIMACY OF FACTS

As in many other countries, the courts in Serbia follow the principle of ­‘primacy of facts’, irrespective of the ‘labelling’ of the contract accepted by the parties. False contracts (ie, disguised employment) have recently been concluded for occasional and temporary work, fixed-term contracts, contracts for the recruitment of workers through work agencies (which is still not regulated by law) and civil contracts (among which the contract for services is the most commonly used type) when the services or work to be performed in fact fulfil the criteria of an employment relationship.61 When assessing whether an employment relationship exists or not, the courts not only take into account the parties’ statements in the contract; they are mainly guided by the ‘real legal nature’ of the contract, ie, the essential components of the work performed by the employee (type of work, duration of work and relationship to the employer). This is the main reason why it is prohibited to conclude a civil law contract or a ‘false flexible work contract’ when the services or work to be performed coincide in essence with the characteristics of an employment relationship or fall within the employer’s regular scope of business. For example, according to the decision of the District Court in the town of Valjevo: The employer may conclude a contract for services with a specific individual who is expected to perform services that are not included within the employer’s regular scope of business, if such services imply that the individual makes or repairs certain items on his own or performs physical or intellectual work independently. The employer is not entitled to conclude a contract for services for

60 

eg, for the purpose of the transportation of goods by truck. the Decision of the Supreme Cassation Court, Rev 2 761/2012 of 23 January 2013, Belgrade, and the Decision of the Supreme Cassation Court, Rev 2 602/2014 of 23 October 2014 (n 11); see also the Decision of the District Court in Valjevo, Gž I br 266/05 of 26 May 2005. 61  See

The Concept of ‘Employee’: The Position in Serbia 613 those tasks that fall within the scope of his business, ie if signed, such a contract remains invalid and has no legal force.62

VI.  QUALIFICATION IN FULL

In Serbia, there is no legal possibility of excluding of some parts of a contract to labour law regulations. As a rule, the relationship between the employee and the employer is regulated by an employment contract or by some flexible work contract that is used in the case of atypical work arrangements. Non-contractual legal relationships between employees and employers are extremely rare. In Serbian legislation, an employee and an employer are free to conclude an additional contract aimed at arranging their mutual relationship concerning property and other issues outside the already existing employment relationship (such as a contract for the purchase of a vehicle used by the employee during work or a contract for leasing an apartment to the employee). An employment relationship involving household assistance is an exception, as it is already regulated by law, which stipulates that payment for the part of the salary in kind shall comprise the provision of board and lodging, ie, only providing board and lodging. The value of the income provided in kind shall be expressed in monetary terms. The lowest percentage of income that must be calculated and paid in cash shall be determined in the employment contract and cannot be below 50 per cent of the total salary of such an employee. If the salary has been agreed to be partly in cash and partly in kind, the employer shall pay the monetary part as compensation during absence from work (with compensation). VII.  LIMITS TO THE FREEDOM OF CONTRACT

Although the LC does not address the issue of modifying the legal nature of the legal relationship by the parties directly, the legal concept of ‘employee’ is mandatory and cannot be disposed of by the parties to the contract. ­Accordingly, if in the opinion of the court a person qualifies as an ‘employee’, the parties are not allowed to change this.63 The court will take objective circumstances into account, regardless of the content f­ormally included in the contract. As already mentioned, in practice employers ­violate this rule

62  63 

See the Decision of the District Court in Valjevo, Gž I br 266/05 of 26 May 2005. To see an example from the case law, see section IV.B above.

614  Senad Jašarević by concluding flexible work contracts or contracts for services, thus giving rise to an increased number of labour disputes in the last few years. On the other hand, parties are free to enter into an employment relationship even if it does not objectively qualify as one. Basically, the employer may conclude a contract of employment with anyone (for example, a spouse or relative), even if that person does not actually work. What matters is that the employer pays all the relevant contributions to the state and other fees for the employee. One exception is the employment relationship with household assistance. According to Article 45, paragraph 7 LC, an employment relationship with household help cannot be concluded with a spouse, immediate relatives (regardless of the degree of kinship) and the collateral line to the second degree, as well as in-laws and relatives up to the second degree. Although it is not explicitly stipulated in the legislation, it could be deduced from the interpretation of the LC and the relevant case law that the status of ‘employee’ as such cannot be waived by the employee. This conclusion is supported by Article 9, paragraph 2 LC, which provides that: [C]ertain provisions of the employment contract stipulating less favourable working conditions than those established by law and the general act, and/or are based on incorrect information provided by the employer on certain rights, duties and responsibilities of employees—shall be invalid.

The same issue is indirectly addressed by the aforementioned Article 32, paragraph 2 LC: Should an employer fail to conclude an employment contract pursuant to paragraph 1 of this Article, it shall be deemed that the employee has entered into an employment relationship for an indefinite term on the day he/she has assumed work.

Consequently, as soon as an employee starts to work for the employer, it is deemed that he or she is in an employment relationship, regardless of whether he or she waives this entitlement. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The vast majority of collective agreements in Serbia do not deal with the concept of ‘employed person’ (employee); instead, they largely resort to the provisions of the LC. For instance, a collective agreement of a public utility

The Concept of ‘Employee’: The Position in Serbia 615 company on the territory of the Republic of Serbia64 in Article 2, paragraph 2 contains the following provision: The employed person is an individual who entered into an employment relationship with the employer, in accordance with the Labour Code.

However, some collective agreements, albeit infrequently, indicate a specific category of employees to whom they relate65 and, in addition, occasionally use different terms. For example, in the collective agreement for employees of the police, the term ‘police person’ is used instead of the term ‘employee’, whereas in the collective agreement for the entertainment industry,66 the term ‘entertainer’ is used instead. Flexible and other forms of work are still quite rare in Serbia and thus persons falling into these categories are not included in collective agreements. B.  Custom and Practice Any deviations on the basis of custom or practice are not acknowledged in Serbia. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions As previously mentioned, according to labour legislation, if an employee has assumed (ie, if he or she is carrying out) work, the presumption is that an employment relationship has been entered into, even if the employee has not concluded an employment contract (see section I.A above). Also, according to Article 31 LC, an employment contract may be concluded for a definite or indefinite term. An employment contract in which the duration of the contract is not specified shall be considered an open-ended contract of employment.

64 

Official Gazette of the RS, No 27/2015. example, in a separate collective agreement of cultural institutions founded by the RS, autonomous province and local self-government units (Official Gazette of the RS, No 10/2015), art 1, para 2 of the collective agreement states: ‘An employee, under the terms of this contract, is a person working with a cultural institution established by the Republic of Serbia, autonomous province or local self-government units under the terms set by the law.’ In the collective agreement for the bodies of the Autonomous Province of Vojvodina (Official Gazette of the AP Vojvodina, No 8/2015), art 2 para 4 states: ‘An employee, under the terms of this contract, is a person in an employment relationship in the provincial body.’ 66  Official Gazette of the RS, No 23/2015. 65 For

616  Senad Jašarević Social security law or tax law does not address hypothetical misuses related to the status of employment or to proving the existence of an employment relationship. The main reason for this is based on the fact that social security is made available to all working individuals, whether they have or have not entered into an employment relationship (ie, wage earners, selfemployed workers and farmers, including priests and clergy; persons temporarily working abroad, foreigners working within the country and domestic citizens employed by foreign employers; temporary workers; persons with fixed-term contracts; high school and college students; unemployed persons participating in vocational retraining; persons employed through youth and student associations; and volunteers, participants in public works and persons undergoing defence training).67 B.  The Burden of Proof Specific provisions on the burden of proof have neither been discussed nor do they exist in Serbia. Therefore, it is basically the task of the employee to prove the existence of an employment relationship in court.68 In practice, this appears to be a very difficult task since the employees concerned usually do not possess the necessary written documents as evidence and, in addition, their co-workers are often unwilling to testify for fear of retaliatory action by the employer. Proving the existence of an employment relationship is generally easier in the field of services, particularly if an employee has had contracts with the employer’s clients, in which case it is very difficult for the employer to deny the work performed by the employee. X.  SPECIFIC PROCEDURES

Thus far, no specific procedures that bring about decisions on the existence of an employment relationship exist in Serbia. Indirectly, however, the issue of the existence of an employment relationship is dealt with by the labour inspectorate. According to Article 268 LC, in the process of ­inspection,

67  See, eg, arts 7 and 8 of the Act on Social Security Contributions and arts 10–13 of the Act on Pension and Disability Insurance of 2003 (Official Gazette of the RS, Nos 34/2003, 64/2004, 84/2004, 85/2005, 101/2005, 63/2006, 106/2006, 101/2010, 93/2012, 62/2013, 108/2013, 75/2014 and 142/2014). 68  The general rule in civil litigation procedure (and also labour disputes) is that the burden of proof is on the person who sues. According to art 7 of the Civil Procedure Law of Serbia, 2011 (Official Gazette of the Republic of Serbia Nos 72/2011, 49/2013 74/2013 and 55/2014): ‘The parties are required to present all facts on which they base their claims and to propose evidence in support of such facts.’

The Concept of ‘Employee’: The Position in Serbia 617 an inspector shall be authorised to: (1) inspect general and individual ­documents, records and other documentation to determine the relevant facts; (2) determine the identity of a person and take statements from the employer, responsible persons, employees and other persons present at the workplace with the employer; (3) check whether compulsory social insurance contributions have been registered based on the data from the Central Registry of Compulsory Social Insurance; and (4) inspect the business premises, facilities, plants, devices etc. The labour inspector has the authority to impose the decision on the employer, stating that the employer should conclude an employment contract in writing with an employee who entered the employment relationship without signing an employment contract. The employer shall inform the labour inspectorate no later than 15 days after the expiry of the term for elimination of the identified violation on the implementation of the relevant decision. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons One category of workers who are neither ‘ordinary’ self-employed persons nor employees has not yet been formally established, hence there is no formal regulation on this type of worker. Under social security law, all categories that include workers who find themselves in between self-employed persons or employees are covered, regardless of whether they have or have not entered into an employment relationship. As regards the regulations on social insurance, wage earners, self-employed workers and farmers, priests and clergy; persons temporarily working abroad and temporary workers; high school and college students; unemployed persons undergoing vocational retraining; persons employed through youth and student associations; volunteers, participants in public works and persons undergoing defence training are treated as ‘quasi-workers’ in some European countries and are entitled to social insurance just like employees.69 Similar treatment to an employee as regards certain rights is granted to individuals engaged in flexible forms of work (temporary or occasional work contracts, contracts for services—locatio operis, apprenticeships or professional development contracts, or volunteers).70 Thus, for example, such persons have the right to protection of health and safety at work71 and 69  See arts 7 and 8 of the Act on Social Security Contributions and arts 10–13 of the Act on Pension and Disability Insurance. 70  These contracts are regulated by arts 197–202 LC. 71  See art 5 of the Act on Health and Safety at Work.

618  Senad Jašarević are entitled to health, unemployment, pension and disability insurance.72 They are generally denied collective labour law rights (such as rights of association and the right to strike), since these categories are not mentioned in the regulations governing this area and, in this respect, they do not enjoy judicial protection. B.  Equality and Anti-discrimination Law According to the Anti-discrimination Act of 2009,73 one specific kind of discrimination is ‘discrimination at work’. According to Article 16 of this Act, discrimination at work is prohibited. The former denotes violations of equal rights in the sphere of work, ie, violations of equal employment opportunities or the equal enjoyment of all rights pertaining to the sphere of work. Protection against discrimination shall include all persons in employment relationships, as well as all persons who work under an occasional or temporary work contract, perform additional work or carry out a public function, members of the Army, persons seeking employment, students and students undergoing training, persons engaged in vocational or professional training carried our without entering into an employment relationship, volunteers and any other person performing any work based on any other ground. The Act on Gender Equality of 200974 provides protection for ‘employees’ and ‘other workers’. For example, Article 15 contains the following provision: In public announcements for job vacancies that state the required conditions and in the subsequent selection of a person with whom an employment relationship or any other form of work agreement will be entered into … it shall not be permitted to make any discrimination based on gender, the only exception in this respect shall be based on justifiable reasons set in accordance with the relevant law.

Also, protection against ‘termination of the employment relationship or work engagement’ is envisaged75 in order to initiate court proceedings in case of discrimination based on gender. Finally, the Act on Prevention of Discrimination against Persons with ­Disabilities of 200676 only provides protection to employees or persons seeking employment.77 72 See arts 7–9 of the Act on Social Security Contributions, art 11 of the Act on Pension and Disability Insurance, art 17 of the Act on Health Insurance (Official Gazette of the RS, Nos 107/2005, 109/2005, 57/2011, 110/2012, 119/2012, 99/2014, 123/2014 and 126/2014). See also Jovanović (n 56) 179. 73  Official Gazette of the RS, No 22/2009. 74  Official Gazette of the RS, No 14/2009. 75  Article 20 of the Act on Gender Equality of 2009. 76  Official Gazette of the RS, No 33/2006. 77  See art 21 of the Act. Protection also applies to an assistant to a disabled person.

30 The Concept of ‘Employee’: The Position in Slovakia ROBERT SCHRONK

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HERE IS NO legislative definition of the term ‘contract of employment’1 in Slovak labour law. The contract of employment is a bilateral legal act and its form and content are regulated by law. The subject of employment relationships is dependent work (závislá práca). The Slovak Labour Code2 regulates individual employment relationships in connection with the performance of dependent work by natural persons for legal persons or natural persons and collective labour law relationships.3 According to Article 1(3) of the Labour Code, business activities or any other gainful activity based on a contractual relationship under civil or commercial law shall not be considered dependent work. That is, civil law (or commercial law) contracts cannot establish an employment relationship. The substance of the relationship, as opposed to the form of the contract, determines the legal nature of the contract. The contract of employment as a bilateral legal act is regulated in the Labour Code. Notably, this Code, which was adopted in 2001, ended the strict separation of labour law and civil law that had existed since 1966.4

1 

In Slovak labour law, the term ‘labour contract’ (pracovná zmluva) is used. No 311/2001 Collection of Laws—‘Coll’ in the wording of later legislation (Labour Code—Zákonník práce). 3  Labour Code, art 1(1). 4  The first Labour Code No 65/1965 Coll. 2  Act

620  Robert Schronk Since 2002, the principle of subsidiarity of the Civil Code (Občiansky zákonník) applies to certain areas, eg, to legal acts and the process of ­contract conclusion. According to Article 1(4) of the Labour Code, unless otherwise stipulated by Part I of the Labour Code (General Provisions), the general provisions of the Civil Code shall apply. Nevertheless, as regards the contractual system, there are considerable differences between the legal regulations in the Labour Code and those in the Civil Code. A contract according to the Labour Code or other labour law regulations shall be concluded immediately upon the agreement of the parties on the contents thereof.5 This means that there is no contracti innominati in labour law as is the case in civil law. According to Article 51 of the Civil Code, the participants may also conclude an agreement that is not explicitly regulated; however, the agreement may not be at variance with the content or purpose of this Act. In labour law, only agreements that are explicitly regulated or permitted can be concluded. The most important elements of a contract of employment are the form and content of the contract. According to Article 42(1) of the Labour Code, an employment relationship shall be established by a written contract of employment between the employer (zamestnávate) and the employee (zamestnanec). The employer is obliged to provide the employee with a written copy of the contract of employment. As regards the form of the legal act, there is a considerable difference between the legal regulations in the Labour Code and the Civil Code. Any legal act that is not concluded according to the form prescribed under the Labour Code shall be deemed void, unless explicitly provided for in the Labour Code or by special regulation.6 For example, the probation period must be agreed in writing, otherwise it shall be invalid.7 This implies that the contract of employment ought to be concluded in writing, but it may also be concluded in another form (verbally or implied). Article 42(1) of the Labour Code does not contain a clause of invalidity within the meaning of Article 17(2) of the Labour Code. Still, if the employer does not respect the regulation on the written form of the contract of employment, the Labour Inspectorate is authorised to impose a penalty on the employer. As regards the content of the contract of employment, the Labour Code distinguishes between substantial, regular and incidental elements of a legal act. In order to establish a valid employment relationship, the employer must agree with the employee on the substantial elements of the employment contract. According to Article 43(1) of the Labour Code, in a contract

5 

Labour Code, art 18. ibid art 17(2). 7  ibid art 45(3). 6 

The Concept of ‘Employee’: The Position in Slovakia 621 of employment, the employer is obliged to agree on the following substantial elements with the employee: (i)

the type of work for which the employee was accepted and a brief description thereof; (ii) the place of work performance (municipality, part of municipality or place otherwise determined); (iii) the day of the commencement of work; (iv) wage conditions, unless agreed in a collective agreement. If no agreement is reached on these issues (or on some of these issues), no contract of employment is established. In addition, regular elements may be agreed on in the contract—for example, the probation period,8 a fixed-term employment relationship9 or an employment relationship with reduced working time.10 As mentioned above, according to Article 1(4) of the Labour Code, unless otherwise stipulated by Part I of the Labour Code (General Provisions), the general provisions of the Civil Code shall apply. As regards the invalidity of legal acts, the Labour Code provides that: (i)

a legal act whereby an employee disclaims his or her rights in advance shall be invalid;11 (ii) the invalidity of a legal act may not be to the detriment of the employee unless the invalidity was caused by himself or herself. If an employee sustains damage as a result of an invalid legal act, the employer shall be obliged to provide indemnification for it;12 (iii) a party that has acted in error and which the other party had to have been aware of shall be entitled to withdraw from the contract if the error pertains to such circumstances without which the contract would not have transpired.13 The legal act is invalid ex tunc. If the reason for invalidity is related to only part of the legal act, only that part shall be invalid, unless it follows from the nature of the legal act or from its content or from other circumstances under which the act came to pass, and hence that this part of the act cannot be separated from the other content. There is also a special provision on the possibility of withdrawing from a contract of employment. This withdrawal from the contract of employment is possible until the employee begins to perform work.14 8 

ibid art 45. ibid art 48. 10  ibid art 49. 11  ibid art 17(1). 12  ibid art 17(3). 13  ibid art 19(1). 14  According to art 19 of the Labour Code, an employer shall have the right to withdraw from a contract of employment if: (a) the employee does not take up the work on the agreed date for taking up the work, unless prevented by an obstacle to work; (b) the employee does 9 

622  Robert Schronk In principle, an employment relationship can only result from a contractual agreement between the parties concerned. Only a few exceptions exist, which are as follows: (i)

The transfer of rights and obligations resulting from employment relationships in the case of transfers of undertakings or parts thereof (business transfer).15 (ii) Upon the death of the employer who is a natural person, the rights and obligations arising from employment relationships shall pass to his or her heirs.16 (iii) Temporary employment agencies often misuse temporary workers in practice. The National Council of the Slovak Republic (the Parliament) recently adopted an amendment to the Labour Code on temporary employment agencies.17 Since 1 March 2015, according to Article 58(6) of the Labour Code, a temporary assignment may be agreed for a maximum of 24 months. Temporary assignments with the same user employer may be extended or renewed four times at most within that 24-month period. If an employee is temporarily assigned in violation of Article 58(6) of the Labour Code, the employment relationship between the employee and the employer or the temporary employment agency is terminated and a new employment relationship for an indefinite period is established between the employee and the user employer.18 The cited provisions of the Labour Code apply to the private sphere and to the public service.19 B.  Employment Relationship: Basic Definition No legislative definition of the term ‘employment relationship’ exists in Slovak labour law. No definition has been developed in the case law. Yet

not inform the employer within three working days of an obstacle to work, preventing him or her from taking up the work on the date agreed for the commencement of work; or (c) the employee was lawfully convicted of an intentional criminal offence after the conclusion of the employment contract. Withdrawal from the contract of employment must be done in writing, otherwise it shall be invalid. 15 

Labour Code, arts 27–31. ibid art 30. 17  Act No 14/2015 Coll. 18  Labour Code, art 58(7). 19  Employment relationships in the public service are regulated by Act No 552/2003 Coll on the Performance of Work in the Public Interest, in the wording of later legislation and Act No 553/2003 Coll on the Remuneration of Certain Employees for Work in the Public Interest, in the wording of later legislation. 16 

The Concept of ‘Employee’: The Position in Slovakia 623 the legal criteria for determining the existence of an employment relationship are so clear-cut that its definition does not raise any questions, either in theory or in practice. The Slovak Labour Code shall govern individual employment relationships in connection with the performance of dependent work by natural persons for legal persons or natural persons. The labour law relationships in Slovak labour law are divided into basic (core) labour law relationships, labour law relationships derived from or directly related to basic labour law relationships and other labour law relationships. Basic labour law relationships are established on the basis of a contract of employment and upon agreements on work performed outside the employment relationship.20 Since 1 September 2007, the main legal basis for the criteria to determine the existence of an employment contract has been Article 1(2) of the Labour Code.21 The definition of ‘employment relationship’ is derived from the following legal provisions: (i)

According to Article 11(1) of the Labour Code, an employee is a natural person who is in an employment relationship and, if specified in a special regulation in similar labour relationships as well, performs dependent work for the employer. (ii) Article 1(2) of the Labour Code states that dependent work is work carried out in a relationship in which the employer is superior and the employee is subordinate, and in which the employee carries out work in person for the employer, in accordance with the employer’s instructions, in the employer’s name and during working hours set by the employer (there are no differences between these criteria as regards their significance/weight in the legal definition). (iii) According to Article 1(3) of the Labour Code, dependent work may only be performed in an employment relationship, a similar work relationship or in exceptional cases defined therein in another form of employment relationship. A business activity or another gainful ­activity based on a contractual relationship under civil or commercial law shall not be considered dependent work. An employment relationship (pracovný pomer) is established on the basis of a contract of employment (pracovná zmluva). The employment relationship is a contractual relationship in which one subject (the employee) undertakes to carry out dependent work in exchange for remuneration for another subject (the employer). The obligations resulting from the employment

20  These agreements are the work performance agreement, the agreement on work activities and the agreement on temporary work (jobs) for students (arts 223–28a of the Labour Code). 21  Act No 48/2007 Coll amending the Labour Code.

624  Robert Schronk r­elationship apply from the day of the commencement of work agreed in the employment contract: (i)

(ii)

An employer shall be obliged to assign work to the employee in accordance with the contract of employment, to pay him or her a wage for the performance of work, to create conditions for the performance of work tasks and to maintain other work conditions stipulated by legal regulations, the collective agreement and the employment contract. An employee shall be obliged, in accordance with the employer’s instructions, to perform the work in person according to the contract of employment during the determined working hours and to maintain work discipline.22

The cited provisions of the Labour Code (as regards the employment contract) apply to the private sphere and to the public service. These general rules of labour law do not apply to civil servants (armed forces, the police, customs officers etc), who are considered to work under a service relationship and not an employment relationship.23 As already mentioned, the Slovak Labour Code allows employers to conclude (with the exception of employment/labour contracts establishing an employment relationship) so-called agreements on work performed outside an employment relationship24 with natural persons. According to Article 223(1) of the Labour Code, in order to perform their tasks or to fulfil their needs, employers may conclude agreements with natural persons on work performed outside an employment relationship (work performance agreements, agreements on work activities and agreements on temporary jobs for students) for work that is limited in its results (work performance agreement—dohoda o vykonaní práce)25 or occasional activities limited by 22  The Labour Code more concretely states the fundamental obligations of employees in art 81 (to work responsibly and properly, and to follow the instructions of superiors issued in accordance with legal regulations, to be at the workplace at the beginning of the working time, to utilise the working time for assigned work etc) and the fundamental obligations of executive employees in art 82 (to manage and check the work of employees, to create favourable working conditions and ensure the safety and health protection at work etc). 23 There are six separate Acts for civil service: Act No 73/1998 Coll on civil service of members of the Police Force, of the Slovak Intelligence Service, of the Prison Wardens and Judiciary Guards Corps of the Slovak Republic and of the Railway Police, Act No 200/1998 Coll on civil service of customs officers, Act No 154/2001 Coll on prosecutors and legal trainees of the prosecution, Act No 315/2001 Coll on the Fire Fighting and Rescuing Corps, Act No 281/2015 Coll on civil service of professional soldiers (in force since 1 January 2016) and Act No 400/2009 Coll on civil service. Similar labour law relationships (art 1(3) of the Labour Code) are, eg, the relationships performed under these acts. 24  Labour Code, arts 223–28a. 25  An employer may conclude a work performance agreement if the anticipated extent of work (work tasks) for which the agreement is concluded is not in excess of 350 hours in a calendar year. The anticipated period of work shall include work performed by the employee for the employer pursuant to a different work performance agreement (art 226 of the Labour Code).

The Concept of ‘Employee’: The Position in Slovakia 625 the type of work (agreement on work activity—dohoda o pracovnej činnosti; agreement on temporary work for students—dohoda o brigádnickej práci študentov).26 These agreements have supplemental character only. They also establish labour law relationships that are not outside labour law.27 They represent what could be called special atypical forms of employment. This may also be one of the reasons why new atypical forms of employment are not yet as widespread in Slovakia as they are in the old EU Member States. Until 31 December 2012, labour law relationships based on these agreements were regulated only by the provisions of Part I (General Provisions) and Part VI (Labour Protection) of the Labour Code. These labour law relationships were less protected—unless otherwise agreed in the agreements, the employees still have no paid holiday or no wage compensation in the event of obstacles at work. Another factor that was of considerable importance, especially for employers (although also for employees), was that they did not pay any contributions to social insurance and health insurance schemes, eg, sickness insurance and pension insurance. For these reasons, employers used such agreements very often, especially agreements on work activities. The performance of work in this case is in practice very similar to the performance of work under the employment (labour) contract, hence this agreement was often misused in practice. Since 1 January 2013, employees who have concluded such an agreement are more protected. According to the new wording of Article 92(2) of the Labour Code the provisions on, for example, working time and rest periods, night work, minimum wage and labour protection, will also be applied to these relationships.28 Employment relationships (pracovný pomer) are established on the basis of an employment contract (labour contract/pracovná zmluva). A labour law relationship can also be concluded on the basis of an agreement on work performed outside an employment relationship. But the Labour Code does not give such labour law relationships a concrete name; they are simply labour law relationships.

26  An agreement on temporary jobs for students can be concluded with a natural person who has the status of a student. On the basis of an agreement for a temporary job for students, work exceeding half of the predetermined weekly working hours, on average, may not be performed (art 227 of the Labour Code). On the basis of an agreement on work activities, these work activities may be performed for up to 10 hours per week (art 228a of the Labour Code). 27  Considering the common past with the Czech Republic (Czechoslovakia—Labour Code No 65/1965 Coll), two of these agreements are also found in the Labour Code of the Czech Republic. 28 Since 1 January 2013, the social and health insurance contributions are practically the same for employers and employees as in the employment relationship under an employment (labour) contract. The only exceptions are students (agreement on temporary work for students) and pensioners.

626  Robert Schronk II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition In the Slovak Republic, there is a statutory definition of the parties to the employment relationship. However, no judicial definition exists. The legal regulation strictly defines the term ‘employee’ (zamestnanec) in connection with the term ‘dependent work’ (závislá práca). According to Article 11(1) of the Labour Code, an employee shall be a natural person who works in an employment relationship and, if stipulated in a special regulation, in similar work relationships performs dependent work for the employer. The term ‘dependent work’, as already mentioned, is defined in Article 1(2) of the Labour Code. Child labour is prohibited, but the Labour Code also regulates work by children under the age of 15 years in accordance with Council Directive 94/33/EC of 22 June 1994 on the protection of young people at work.29 An employee who is younger than 18 years of age shall be deemed an ­adolescent employee.30 Basically, there are no discrepancies across the law. Under tax law,31 employment law32 and social security law,33 an employee is primarily a natural person in an employment relationship.34 B.  Employer: Basic Definition The term ‘employer’ (zamestnávatel) is legally defined in Slovak labour law. According to Article 7(1) of the Labour Code, an employer shall be a legal or a natural person employing at least one natural person in an ­employment relationship and, if stipulated by a special regulation, in similar work relationships. An employer shall act in his or her own name in an employment relationship and shall have responsibility arising from the relationship.35

29 

Labour Code, art 11(4) and (5). ibid art 40(3). Working conditions for adolescent employees are regulated in arts 171–76. 31  Article 5 of Act No 595/2003 Coll on income tax. 32  Article 4(1) of Act No 5/2004 Coll on employment services. 33  Article 4(1)a of Act No 461/2003 Coll on social insurance. 34 The capacity of a natural person to have rights and obligations in an employment ­relationship as an employee and the capacity to acquire such rights and assume such obligations by his or her own legal acts arises, unless otherwise stipulated in the Labour Code, on the day the natural person reaches the age of 15 years; however, an employer may not agree on the date of the commencement of the employment contract by a natural person prior to the date of completion of compulsory full-time schooling (art 11(2) of the Labour Code). 35  If a statutory body or member of a statutory body or empowered employee overstepped their competence in employment relationships, by way of a legal act, such acts shall not be 30 

The Concept of ‘Employee’: The Position in Slovakia 627 An organisational unit of an employer shall also be considered an employer if stipulated by a special regulation or statutes under a special regulation. If a party to an employment relationship is an employer, his or her organisational unit cannot simultaneously be a party and vice versa.36 As regards the legal person, its creation and legal personality is regulated in the Civil Code, the Commercial Code or in special acts. As regards the natural person, its legal personality is regulated in the Labour Code.37 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees As regards sub-types of employees or the specific legal provisions for specific categories of employees (with an employment contract—labour contract/pracovná zmluva), there are generally no major differences in the legal regulation of their working conditions. There is no relevant case law on this issue. Managerial employees: managerial employees (vedúci zamestnanci) have specific positions in employment relationships, but only a few provisions exist regulating some differences. First, the Labour Code defines the term ‘managerial employees’. According to Article 9(3), the managerial employees of an employer are those employees who, at a given level of the employer’s management structure, are entitled to determine and assign work tasks to subordinate employees of the employer, to organise, manage and check their work, and to give them binding instructions for this purpose.

binding for the employer if the employee was aware, or must have been aware, that such statutory body or empowered employee overstepped their competence (art 10(2) of the Labour Code). 36  Labour Code, art 7(2). An organisational unit of an employer can also be an employer. For example, according to art 7 of the Commercial Code (Act No 513/1991 Coll), the term ‘organisational unit of an enterprise’ shall mean a branch or another organisational unit of an enterprise referred to in this Act or in a special act. The branch of an enterprise shall be an organisational unit of an enterprise, which is registered as a branch in the Companies Register. A branch shall use the name of the enterprise with an addendum, indicating the branch concerned. According to Art 6(2)e of Act No 83/1990 Coll on Association of Citizens, the statute of the association should also contain provisions on organisational units if it is established and if they act on their own behalf. 37  The capacity of a natural person to be entitled to the rights and obligations pursuant to an employment relationship as an employer shall arise at birth. A conceived child, if born alive, shall also possess such capacity. The capacity of a natural person to acquire rights and assume obligations as an employer pursuant to an employment relationship by their own legal actions shall arise upon reaching their majority; until that time, a legal representative shall act on the person’s behalf (art 8 of the Labour Code).

628  Robert Schronk Managerial employees shall be entitled as bodies of the employer to execute legal acts on behalf of the employer arising from their functions as determined by organisational regulations.38 According to Article 82 of the Labour Code, managerial employees, apart from the obligations stipulated in Article 81 (Fundamental obligations of employees), shall also specifically: (i) (ii)

manage and check the work of employees; create favourable work conditions and ensure health and safety protection at work; (iii) secure the remuneration of employees in accordance with the generally binding legal regulations, collective agreements and employment contracts, and to comply with the principle of equal pay for equivalent work or work of equal value pursuant to Article 119a; (iv) create favourable conditions for improving employees’ professional development and meeting their social needs; (v) ensure that breaches of labour discipline shall not transpire; (vi) ensure the adoption of timely and effective measures for protection of the employer’s property. Managerial employees may have a longer probation period. According to Article 45(1) of the Labour Code, a probation period may be agreed in an employment contract for a maximum of three months, except in the case of a managerial employee who reports directly to the statutory body or a member of the statutory, in which case the maximum shall be six months. With the exception of the cited obligations, the only special provision as regards managerial employees can be found in the framework of the legal regulations on compensation for damages. There is a special liability of employees for a shortage in entrusted values which the employee shall be obliged to account for where the fault of the employee is presumed.39 As regards collective liability for damages, the share of damages for individual employees shall be determined according to the proportion of their average earnings, whereas the share of their superior and his or her deputy shall be calculated as double their average earnings.40 The share of compensation thus determined may not, with the exception of the superior and his or her deputy, exceed the amount equal to the individual employees’ average monthly earnings prior to the occurrence of the damage. If the determined shares do not cover the entire damage caused, the superior and his or her deputy shall be obliged to settle the remaining portion according to the proportion of their average earnings.41 Fixed-term workers: according to Article 48/2 of the Labour Code, a fixed-term employment relationship (pracovný pomer na čas určitý) may 38 

Ibid art 9. ibid art 182. 40  ibid art 189(2). 41 ibid. 39 

The Concept of ‘Employee’: The Position in Slovakia 629 last two years at most. The contract of employment must be concluded in writing, otherwise the employment relationship will be deemed to have been concluded for an indefinite period. A fixed-term employment relationship may not be extended or renewed more than twice within a two-year period. A renewed fixed-term employment relationship is an employment relationship that begins less than six months after the end of the previous fixed-term employment relationship between the same parties. A further extension or renewal of the fixed-term employment relationship over two years is only possible in the cases referred to in Article 48(4) of the Labour Code.42 An employee in a fixed-term employment relationship may not be given either more or less favourable treatment than an employee with an employment relationship of indefinite duration, especially with reference to ­working conditions relating to occupational health and safety. The limitations provided in Article 48 of the Labour Code shall not apply to employment in a temporary employment agency. Employees with reduced working time: an employee in an employment relationship with reduced working time (zamestnanec s kratším pracovným časom) shall be entitled to wages corresponding to the agreed reduced working time. In general, an employee in an employment relationship with reduced working time may neither be advantaged nor constrained in comparison to a comparable employee employed for the determined (full) weekly working time.43 Home workers and teleworkers: the employment relationship of an employee who performs work for an employer at home (domácky zamestnanec) or at another agreed place, pursuant to the conditions agreed in the contract of employment (home work), or who performs work for an employer at home or at another agreed place, pursuant to the conditions agreed in the employment contract, using information technology (telework) within the working time arranged by himself or herself, is governed by the Labour Code, with the following deviations: (i)

provisions on the arrangement of determined weekly working time and on stoppage shall not apply to such employees;

42  A further extension or renewal of the fixed-term employment relationship to two years or beyond can only be agreed for the following reasons: (a) substitution of an employee during maternity leave, parental leave, leave immediately linked to maternity leave or parental leave, temporary incapacity for work or an employee who has been given long-term leave to perform a public function or trade union function; (b) the performance of work in which it is necessary to increase employee numbers significantly for a temporary period not exceeding eight months of the calendar year; (c) the performance of work that is linked to the seasonal cycle, which repeats every year and does not exceed eight months in the calendar year (seasonal work); (d) the performance of work agreed in a collective agreement. 43  Labour Code, art 49(5).

630  Robert Schronk (ii)

in cases of substantive personal obstacles to work, the employee shall not be entitled to wage compensation from the employer, except in the case of the death of a family member; (iii) such employees shall not be entitled to wages for overtime work, wage surcharges for a period of work on a public holiday, wage surcharges for a period of night work and wage compensation for work in constrained working environments. The employer shall adopt measures to facilitate telework. In particular: (i)

he or she shall provide, install and perform regular maintenance of hardware and software necessary for the performance of telework, except in cases where an employee performing telework uses his or her own equipment; (ii) he or she shall ensure, especially with regard to software, protection for data processed and used in telework; (iii) he or she shall inform the employee of all restrictions on the use of hardware and software and of the penalties for any breach of these restrictions. Working conditions for employees who work from home or telework may not disadvantage them in comparison with comparable employees who work in the employer’s workplace.44 Employees performing a clerical activity: Article 3(3) of the Labour Code is quite noteworthy. According to this Article, employment relationships of employees of churches and religious communities that perform clerical activities shall be governed by the Labour Code, unless otherwise stipulated by the Labour Code, special regulation, an international treaty binding the Slovak Republic, a treaty concluded between the Slovak Republic and churches and religious communities, or internal regulations of churches and religious communities.45 Provisions on working time and on collective employment relationships shall not apply to employment relationships of employees of churches and religious communities who perform clerical activity.46 Employees in health care occupations: certain working conditions of employees in health-care occupations are based on separate legal regulations. The Labour Code includes some provisions on working time and overtime work.47

44 

ibid art 52. regards, eg, international treaties binding the Slovak Republic, there is a non-cancellable treaty with the Vatican State. Based on this, treaties were concluded between the Slovak Republic and churches and religious communities in Slovakia. 46  Labour Code, art 52a. 47  ibid arts 85a and 97(12). 45  As

The Concept of ‘Employee’: The Position in Slovakia 631 The average weekly working time of an employee including overtime may exceed 48 hours for a period of four consecutive months in the case of a health-care employee under other relevant regulations if the employee with such scope of working time agrees. The average weekly working time of an employee falling under the first sentence shall not exceed 56 hours. An employer of an employee who works under a working time agreement is obliged: (i) (ii)

to provide information to the relevant Labour Inspectorate or supervisory body for safety and protection of health at work, if requested; to maintain actual registers on employees, whose working time is agreed on the basis of a working time agreement, and to submit these registers to the relevant Labour Inspectorate or supervisory body for safety and protection of health at work, if requested.

An employee shall be not prosecuted or sanctioned by the employer for not agreeing with the extent of working time over 48 hours per week in average. According to Article 85a(4) of the Labour Code, an employee shall have the right to revoke such consent; revocation of the consent comes into effect one month after the written notification thereof to the employer. An employee whose job falls under the category of health care pursuant to relevant regulations and who is over the age of 50 may not be ordered to perform overtime work. Overtime work is only admissible with the employee’s consent. Teachers: as regards the working conditions of teachers (učitelia), the Labour Code only includes one special provision. According to Article 103(3), the paid holiday of the headmaster of a school, the director of a school and education facility, the director of special educational facilities and their deputies, a teacher, a teacher’s assistant, a vocational training instructor and an educator shall be at least eight weeks per calendar year. In addition, there are some special acts—for example, Act No 131/2002 Coll on Higher Education. This Act includes the very important Article 77 on the contract of employment. An employee who does not have a ­scientificpedagogical degree of professor or associate professor (docent) may be employed as an academic teacher based on competitive selection for a period of not more than five years. The employment of academic teachers terminates at the end of the academic year in which they reach the age of 70, unless their employment is terminated earlier by special regulation (Labour Code).48

48  The Rector or Dean may accept an employee in part-time employment for a position of academic teacher for a maximum of one year without undergoing the competitive selection process or to conclude agreements on work performed outside an employment relationship (art 77(8) of the Act).

632  Robert Schronk Employees in transport: special regulations on certain aspects of working conditions apply to employees in the transport sector (zamestnanci v doprave). Act No 462/2007 Coll on Organisation of Working Time in Transport is one such regulation. The organisation of working time refers to employees in the transport sector who work for an employer in an employment relationship, excluding crew members of seagoing ships under the flag of the Slovak Republic. Working conditions of the letter are regulated in Act No 435/2000 Coll on Maritime Sailing. This concerns, in particular, the creation and termination of employment, specific obligations of employees and employers, and working time. Other special acts include Act No 513/2009 Coll on Railways and Act No 143/1998 Coll on Civil Aviation (Aviation Act). In this case, the special regulation mainly consists in the definition of specific assumptions and health capability of the employees who perform work in the employment relationship as employees on railroads and air transport. Agency workers/temporary assignments: Slovak labour law also regulates temporary assignments (dočasné pridelenie). The employer or the temporary work agency in accordance with a separate regulation may agree with the employee in writing to temporarily perform work for another employer.49 Labour law regulates practically in the same manner the legal position of the agency workers and so-called temporarily assigned employees. The employer or the temporary work agency in accordance with separate regulations may agree with the employee in writing to temporarily assign him or her to perform work for another legal or natural person (user employer). Details are specified in Article 58 of the Labour Code. According to Article 58a(1) of the Labour Code, the employer or temporary work agency may agree with the user employer on the temporary assignment of an employee in an employment relationship to perform work. The employer may agree on a temporary assignment with the user employer only where there are objective operational reasons for such an assignment. Provisions of the employment contract or agreement pursuant to Article 58a of the Labour Code prohibiting the conclusion of an employment relationship between a user employer and the employee after his or her assignment by a temporary work agency or by an employer or preventing the conclusion of such contracts or agreements shall be invalid.50 Professional athletes: on 26 November 2015, the Slovak Parliament adopted Act No 440/2015 Coll on Sport. The employment relationships of professional athletes (profesionálni športovci) are also regulated within the framework of this Act, which also regulates contractual relationships

49  50 

Labour Code, art 58(1). ibid art 58b.

The Concept of ‘Employee’: The Position in Slovakia 633 in sport. Articles 31–46 regulate contracts on the professional performance of sport (content of the contract, remuneration, working time etc). In this regard, Articles 2 and 3 of the Labour Code were amended as well. Until now, a relationship of subsidiarity existed with the Labour Code. In the new Act, a relationship of delegation has been introduced. Article 46 of the new Act specifies concrete articles of the Labour Code that will be applied. The Act has been in force since 1 January 2016. Employees in public service: labour relationships in the public service (verejná služba) are regulated by Act No 552/2003 Coll on the Performance of Work in the Public Interest and Act No 553/2003 Coll on Remuneration of Certain Employees for Work in the Public Interest. Act No 552/2003 Coll contains only 16 articles which regulate, for example, the conditions of work in the public interest, the selection procedure of managerial employees, the obligations of and restrictions on employees, the subordination of employees,51 the business performance of other gainful activities of leading employees who perform the function of a statutory body, and membership in management, control or supervisory bodies, the declaration of assets of managerial employees and severance allowances. With the exception of remuneration, all other aspects of the employment relationship of public employees are regulated in the Labour Code. Slovak labour law does not differentiate between blue-collar and white-collar workers. These terms are unknown in the legal regulation. There is, however, one (minor) exception in the public service. According to Article 1(5) of Act No 552/2003 Coll, this Act does not apply to employees who perform craftwork activities, manual labour or carry out predominantly physical labour. Their employment relationship is regulated by the Labour Code. As already mentioned, all these regulations of labour law do not apply to civil servants (the armed forces, the police, customs officers etc), who are considered to be in a service relationship and not an employment relationship.52

51  Employees who are close relatives, and employees and individuals performing public functions who are close relatives may not be included in mutual direct subordination or superiority or so that one is subject to cash control or financial control by another, except for employees of diplomatic missions of the Slovak Republic abroad and employees of the employer, for which there was only one managerial employee who is a statutory body (art 7 of the Act). 52  Six separate Acts for civil service exist (see n 23). As regards the members of a cooperative, according to art 226(2) of the Commercial Code (Act No 513/1991 Coll), if the bylaws of the cooperative also require labour relationships of the members to the cooperative, the bylaws may contain provisions regulating such labour relationships. Such provisions shall not contradict labour law, unless the provisions of the bylaws are more beneficial to the members. If no specific provisions concerning labour relationships are contained in the bylaws, labour law shall apply.

634  Robert Schronk B.  The Establishment of a Specific Category of ‘Workers’ The category of ‘workers’ does not exist in Slovak labour law. Slovak labour law also does not include the term ‘economically dependent worker’. Selfemployed workers remain outside the scope of labour law. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration As regards the criteria for determining the existence of an employment relationship, the main legal basis of these criteria since 1 September 2007 has been Article 1(2) of the Labour Code.53 This legislation is relatively new and straightforward, hence no relevant case law exists to date. The key element of an employment relationship is dependent work. Article 1(2) of the Labour Code states that dependent work is work carried out in a relationship in which the employer is superior and the employee is subordinate, and in which the employee carries out work in person for the employer, according to the employer’s instructions, in the employer’s name, during the working time set by the employer (there are no differences between these criteria as regards their significance/weight in the legal definition). As regards work instructions and work control, according to Article 9(3) of the Labour Code, an employer’s managerial employees are those employees who, at a given level of the employer’s management structure, are entitled to determine and assign work tasks to subordinate employees, to organise, manage and check their work, and to give them binding instructions for this purpose. As mentioned above, according to Article 43(1) of the Labour Code, the employer shall be obliged to agree with the employee on the following substantial elements in the contract of employment: (i)

the type of work for which the employee was accepted, and a brief description thereof; (ii) the place of work performance (municipality, part of municipality or place otherwise determined); (iii) the day of the commencement of work; (iv) wage conditions, unless agreed in a collective agreement. The type of work and place of work performance, together with the agreed (or determined by the employer) working time schedule, represent the framework upon which the employer’s instructions and work control are built. 53 

Act No 48/2007 Coll amending the Labour Code.

The Concept of ‘Employee’: The Position in Slovakia 635 The Labour Code does not explicitly mention integration in the employer’s organisation. It is implicitly assumed, but the situation may be quite different. The best example is home workers and teleworkers. They perform work for an employer at home or at another agreed place, pursuant to the conditions agreed in the contract of employment within the working time arranged by himself or herself.54 Integration usually also means using the employer’s means of production. However, the employee may use his or her own equipment as well. According to Article 145(2) of the Labour Code, under the conditions agreed in the collective agreement or employment contract, an employer shall provide an employee with compensation for the use of his or her own tools, equipment and instruments necessary for the performance of work, if these are used with the employer’s consent. B. Indicators The definition of ‘dependent work’ in Article 1(2) of the Labour Code is quite clear. What should be added is a brief overview of this definition. The definition of dependent work was introduced in the Labour Code in 2007.55 Article 1(2) stated that: [D]ependent work is work, which is carried out in a relationship where the employer is the superior and the employee is subordinate, is defined solely as work carried out in person as an employee for an employer, according to the employer’s instructions, in the employer’s name, for a wage or remuneration, during working time, at the expense of the employer, using the employer’s means of production and with the employer’s liability, and also consisting mainly of certain repeated activities.

This definition had too many components, which caused problems in practice and the definition was therefore amended and simplified. Since 1 January 2013, ‘dependent work is work which is carried out in a relationship where the employer is the superior and the employee is subordinate, is defined solely as work carried out personally as an employee for an employer, according to the employer’s instructions, in the employer’s name, during working time determined by the employer, for a wage or remuneration’. The new definition excluded reference to: (i) (ii) (iii) (iv)

54  55 

at the expense of the employer; using the employer’s means of production; the employer’s liability; consisting mainly of certain repeated activities.

Labour Code, art 52. Act No 348/2007 Coll.

636  Robert Schronk Within the scope of the next amendment of the Labour Code,56 the wording ‘for a wage or remuneration’ was deleted. Since 1 March 2015, dependent work is work carried out in a relationship in which the employer is superior and the employee is subordinate, and in which the employee carries out work in person for the employer, according to the employer’s instructions, in the employer’s name, during the working time set by the employer. C.  The Relevance of ‘Economic Dependence’ Slovak labour law does not include the term ‘economically dependent worker’ or ‘economic dependence’. Economic dependence is very often a crucial factor, but from the point of view of the legal regulations in force, it is fairly irrelevant. There is no relevant case law on this issue. V.  THE PRINCIPLE OF PRIMACY OF FACTS

As mentioned above, according to Article 1(3) of the Labour Code, any business activity or other gainful activity based on a contractual relationship under civil or commercial law shall not be considered dependent work. Civil law (or commercial law) contracts cannot establish an employment relationship. How the parties to a contract describe their legal relationship is not decisive; the only thing that matters is the actual content of the contract. If the actual content of the relationship fulfils the definition of dependent work in accordance with Article 1(2) of the Labour Code, an employment relationship will be deemed to exist. VI.  QUALIFICATION IN FULL

As regards the contractual system, there is a considerable difference between the legal regulations in labour law and civil law. A contract according to the Labour Code or other labour law regulations shall be concluded immediately upon the agreement of the parties on the contents thereof.57 This means that the principle of contracti innominati does not apply, as is the case in civil law;58 rather, it is a closed system of contracts. In labour law, only contracts regulated in labour law acts can be concluded. Civil law (or commercial law) contracts cannot establish or change an employment relationship. 56 

Act No 14/2015 Coll. Labour Code, art 18. 58  Civil Code, art 51. 57 

The Concept of ‘Employee’: The Position in Slovakia 637 If the parties of the contract agree substantial elements of the employment contract as stated in Article 43(1) of the Labour Code (type of work for which the employee was hired and a brief description thereof, place of work performance, day of commencement of work and wage conditions, unless agreed in a collective agreement), the contract is deemed to be concluded and valid. The parties can, of course, conclude other contracts as well. These can be labour law contracts within the framework of the closed system of contracts in labour law or contracts in other branches of law. For instance, the employer may lease an apartment to the employee with regard to the existence of an employment relationship. But this lease is a civil law contract. VII.  LIMITS TO THE FREEDOM OF CONTRACT

All the cited provisions of the Labour Code (concept of ‘employee’, definition of dependent work, mandatory content of the employment contract etc) are of a mandatory nature. Accordingly, they cannot be changed by the parties to the contract of employment. The actual content of the relationship determines the legal nature of the contract. The main limitation is the closed system of contracts. In labour law, only contracts that are regulated in labour law acts can be concluded. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Social dialogue and/or collective bargaining do not play a role in defining employment relationships. In the Slovak Republic’s current legal regulations, there is practically no room for social dialogue mechanisms and collective bargaining as regards defining employment relationships. The parties to collective bargaining cannot modify or extend the legal terms and definitions. B.  Custom and Practice Custom and practice is in line with the applicable legal regulations. Deviations are not acknowledged.

638  Robert Schronk IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions No presumptions apply in Slovak labour law. B.  The Burden of Proof There are no specific provisions on the burden of proof. An easing or shifting of the burden of proof with regard to determining the existence of an employment relationship does not exist. It is basically up to the employee to prove the existence of an employment relationship. X.  SPECIFIC PROCEDURES

There are no specific procedures for determining the existence of a contract of employment or employment relationship. The Labour Inspectorate has the authority to investigate the actual nature of a relationship in individual cases. If the employer does not respect the regulation on dependent work, the Labour Inspectorate is authorised to impose a penalty on the employer.59 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like Persons’ Slovak labour law does not cover the term ‘economically dependent worker’ or ‘employee-like persons’. Self-employed persons are outside the scope of labour law. B.  Equality and Anti-discrimination Law According to Article 13(1) of the Labour Code, the employer shall be obliged to treat employees in an employment relationship in accordance with the principle of equal treatment as stipulated in the Act on Equal Treatment in Certain Areas and on the Protection against Discrimination and on ­Amending and Supplementing Certain Acts (Anti-discrimination Act).60 59  60 

Act No 125/2006 Coll on Labour Inspection. Act No 365/2004 Coll.

The Concept of ‘Employee’: The Position in Slovakia 639 According to Article 6(1) of the Anti-discrimination Act in conformity with the principle of equal treatment, any discrimination shall be prohibited in employment relationships, similar legal relationships and related legal relationships on the grounds of sex, religion or belief, racial, national or ethnic origin, disability, age and sexual orientation. An employee who claims that his or her rights or interests protected by law have been violated due to a failure to comply with the principle of equal treatment or by a failure to comply with the conditions set forth in Article 13(3) of the Labour Code may have recourse to a court and claim legal protection as stipulated in the Act on Equal Treatment in Certain Areas and on the Protection against Discrimination.61

61 

Labour Code, art 13(6).

640 

31 The Concept of ‘Employee’: The Position in Slovenia POLONCA KONČAR

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

I

N SLOVENIA, THERE is no statutory definition of the term ‘contract of employment’ (pogodba o zaposlitvi). In theory and in practice, the contract of employment falls within the scope of labour law, not civil law (contract of services—locatio conduction operarum).1 An employment relationship is concluded when a contract of employment is signed. Taking the statutory definition of the employment relationship and the so-called basic components of this relationship as provided in Article 4 of the Employment Relationships Act (hereinafter ERA-1)2 into consideration, the main characteristics of the contract of employment can be summarised as follows: the contract of employment is a bilateral contract, it is of permanent duration (continuous work), it is a remunerated

1  There are historical grounds for such a concept. The system of socialist self-management and the existence of so-called social ownership between the end of the Second World War and the late 1980s influenced the legal nature of the employment relationship. It was not viewed as a contractual relationship between two parties, ie, the employer and the worker, but as a relationship between the workers themselves working with socially owned resources. The nonexistence of the features characteristic of the traditional civil law contract in the employment relationship contributed to the complete shift of labour law from the civil law framework. Hence, when the employment contract and the contractual nature of the employment relationship were reintroduced in 1989/1990, the contract was defined as a contract that falls within the scope of labour law. Thereby the specificities of the employment contract as compared with those of the traditional civil law contract can be taken into consideration. 2  Official Gazette of the RS, No 21/2013. The unofficial translation of the Act is available at: www.mddszem.gov.si/en/legislation. The ERA-1 has replaced the Employment Relationships Act (ERA) 2002 (Official Gazette of the RS, Nos 42/2002, 79/2006, 46/2007, 103/2007, 45/ 2008, 83/2009, 40/2012).

642  Polonca Končar contract (work is paid), it is an intuitu personae3 contract, and it serves as a legal basis for the performance of work by the worker in accordance with the instructions and under the supervision of the employer (subordination). Subordination is the main component by which the employment relationship is distinguished from a contract for services. However, the existence of a contract of employment may also be determined based on the inclusion of a worker in the organised working process. This means that the conclusion of an employment contract and thereby the establishment of an employment relationship ensues when the worker performs work within the working process which is defined from an organisational perspective. This working process is covered in the employer’s general act,4 usually referred to as the systemisation of work posts and/or of types of work. Such an act covers work posts that are of a permanent nature: A worker who concludes an employment contract must meet the requirements for the performance of work set and laid down in a collective agreement or the employer’s general act or as required by the employer and published (in a public notice of vacancies).5

The Obligations Code6 (hereinafter OZ) does not contain special provisions relating to the contract of employment. As the ERA-1 does not cover all issues related to the contract of employment, the OZ provides that: In respect of the conclusion, validity and termination of and other issues related to the employment contract, general rules of civil law shall apply mutatis mutandis unless otherwise stipulated by this Act or another Act.7

According to the ERA-1, contracts of employment must be concluded in writing.8 Yet: [T]he existence and validity of an employment contract shall not be affected by the failure of the contracting parties to conclude the employment contract in writing 3 

Work is performed by the worker himself or herself. to art 10 of the ERA-1, the employer may unilaterally lay down two types of general acts: a so-called organisational general act such as the ‘systemisation of work posts’ or acts defining the manner in which the legal obligations must be fulfilled, or acts on rights and obligations which are usually covered by collective agreements. The second type of general act may be issued if no trade union is organised by the employer and/or when such acts are more favourable for workers than regular acts or collective agreements binding the employer (collective agreements at a higher level). Employers’ general acts are normative legal acts. See P Končar, ‘Neue gesetzliche Regelung individueller Arbeitsvehältnisse in Slowenien stärkt die normativen Befugnisse des Arbeitsgebers’ in A Höland, C Hohmann-Dennhardt, M Schmidt and A Seifert (eds), Arbeitnehmermitwirkung in einer sich globalisierenden Arbeitwelt (Liber Amicorum Manfred Weiss, BWV, 2005) 383–91. 5  ERA-1, art 22(1). 6  Official Gazette of the RS, Nos 83/01-OZ, 40/07, 97/07 (OZ-A). 7  ERA-1, art 13. 8  Article 17(1) of the ERA-1 states that if the worker is not provided with an employment contract in writing, he or she may request its delivery from the employer and judicial protection at any time during the employment relationship (art 17(3) of the ERA-1). 4  Pursuant

The Concept of ‘Employee’: The Position in Slovenia 643 or where not all components of the employment contract referred to in Article 31 have been laid down in writing.9

The prerequisite for the conclusion and existence of the contract of employment is that the contracting parties have reached consensus on the essential elements of the contract and/or the employment relationship.10 A contract in writing is also required for fixed-term contracts of employment. If such a contract ‘is not concluded in writing upon the commencement of work, the employment contract shall be assumed to be concluded for an indefinite duration’.11 The non-competition clause (contractual prohibition of competitive activity) must also be laid down in writing, otherwise it shall be assumed that the clause has not been agreed.12 According to the OZ, every contract, including contracts of employment, is null when it breaches the Constitution, compulsory regulations and moral principles13 or when the subject matter of the obligations defined in the contract is unlawful, indefinite or indefinable.14 The ERA-1 furthermore provides that a contract of employment concluded with an individual who has not reached the age of 15 shall be deemed null and void.15 Any contract concluded with a foreign citizen that is in contravention to the Act regulating the employment of foreigners16 shall be null. The ERA-1 covers two forms of invalidity of the contract of employment: nullity and voidability.17 The invalidity of a contract can be claimed before the competent labour court. The labour court must ex officio consider the nullity of an employment contract as this might be necessary to protect public order, and any interested party may invoke its nullity.18 The voidability of the employment contract may be claimed before the competent labour court when the interest of one of the parties to the contract

9  Article 17(4) of the ERA-1 specifies that a written form is required in the following cases: termination of the employment contract by agreement (art 81 of the ERA-1) and ordinary or extraordinary termination of the employment contract (art 87 of the ERA-1). 10  ibid art 4. 11  ibid art 12(2). 12  ibid art 40(5). 13 A legally permissible cause is required. A cause, for example, is not permissible when the contract is fictitious or unreal. The Supreme Court affirmed the judgment of the Labour Courts in the first and second instances, stating that the employment contract is null when the parties had not intended to regulate the relationship in accordance with art 4 of the ERA-1 and the employment contract has no cause (Judgment of the Supreme Court of the RS VIII Ips 168/2014, 27 January 2015). 14  Article 14 of the ERA-1 provides that by determining the consequences of nullity and voidability of an employment contract, the general rules of civil law shall apply mutatis mutandis, unless otherwise stipulated by the Act. 15  ibid art 21. 16  ibid art 23. 17  ibid arts 14–16. 18  According to art 15 of the ERA-1, the right to claim nullity of an employment contract does not lapse.

644  Polonca Končar must be protected. The contract is void when concluded by a person with limited contractual capacity or in the case of flawed intention at the conclusion of the contract. The right to demand the annulment of a voidable contract expires 30 days after the day that the eligible person learned of the reason of its voidability or after the cessation of duress. This right expires one year after the day of signing of the contract.19 The ERA-1 contains special provisions on the content of the contract: If a provision in an employment contract contradicts the general provisions on the minimum rights and obligations of contracting parties laid down in an Act, collective agreement and/or the employer’s general act, the provisions of the Act, collective agreement and/or the employer’s general act, which partly lay down the content of the employment contract, shall be used as a constituent part of the employment contract.20

B.  Employment Relationship: Basic Definition There is a statutory definition of the term ‘employment relationship’. The ERA-1 provides: An employment relationship is a relationship between a worker and an employer whereby the worker voluntarily integrates in the employer’s organised working process and in which he, in return for remuneration, continuously performs work in person according to the instructions and under the supervision of the employer.21

It can only be entered into on the basis of an employment contract.22 The above-mentioned definition includes the so-called ‘basic components’ of the employment relationship: (1) inclusion in the organised working process; (2) remunerated work; (3) work in person; (4) continuous work; and (5) subordination (work according to the instructions and under supervision of the employer). The employment relationship is a bilateral legal relationship. According to the ERA-1: [E]ach of the contracting parties in an employment relationship shall exercise the agreed and prescribed rights and obligations.23

In the event of a dispute on the existence of an employment relationship between the worker and the employer, it shall be presumed that the employment relationship exists if the components of an employment relationship 19 

ibid art 16(2) and (3). ibid art 32. 21  ibid art 4(1). 22  ibid art 11(1). 23  ibid art 4(2). 20 

The Concept of ‘Employee’: The Position in Slovenia 645 exist.24 The provision on the presumption of the existence of an employment relationship means that the labour courts have to take the basic components included in the definition of the employment relationship into consideration and interpret them when deciding individual cases.25 They are of course free to complete the components provided for in the definition of the employment relationship and include other components/criteria26 into their considerations when determining the existence of an employment relationship. The definition of the contract of employment provided in the ERA-1 is referred to in social security law. For example, the Pension and Invalidity Insurance Act (hereinafter ZPIZ-2)27 provides that for the purposes of the Act, the term ‘employment relationship’ means: [A] legal relationship, which is, in accordance with the regulations covering employment relationships, entered upon on the basis of the contract of employment.28

II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition In Slovenia, the term ‘worker’ (delavec) is used as a uniform legal term applying to all persons who are in an employment relationship on the basis of an employment contract. The term ‘employee’ (zaposleni) as a rule is not used in legal texts. The term ‘worker’ is used in the respective provisions of the Constitution of the Republic of Slovenia.29 The ERA-1 provides the following definition: Worker shall be any natural person who has entered into an employment relationship on the basis of a concluded contract of employment.30

The ERA-1 is the most important act in the field of employment relationships and the terminology used by the Act shall apply consistently. This, however, is not the case. The inconsistency of the use of terminology can be traced in practice. In everyday life, the term ‘employee’/employed person (zaposleni) is often used.31 The context in the concrete cases shows that the term is used as a synonym for ‘worker’ (delavec). The inconsistency of the

24 

ibid art 18. The judgment of the Supreme Court VIII Ips 6/2015, 8 June 2015 is the newest example. 26  eg, instructions regarding the duration or organisation of working time, the location of work etc. 27  Official Gazette of the RS, No 96/1012. 28  ZPIZ-2, art 7. 29  Reference can be made to arts 75 and 76 relating to the participation in management and the right to strike. 30  ERA-1, art 5(1). 31  Nevertheless, the term ‘worker’ is used in the case law. 25 

646  Polonca Končar terminology’s use is also reflected in translations of legal texts into ­English. Accordingly, the term ‘employee’ is very frequently used instead of the term ‘worker’. The lack of legal precision can be misleading and may give the impression that the Slovenian legal system differentiates between two categories: ‘workers’ and ‘employees’. It is worth noting that the term ‘employee’ is not used in legal texts in Slovenia. From the perspective of the focus of our discussion, it is important to emphasise that the term ‘worker’ denotes a person who performs dependent work on the basis of an employment contract in the Slovenian labour law system and who is distinguished from a self-employed person performing work on the basis of a civil law contract (contract for services, locatio conductio operis). Attention must also be drawn to the following: when the reforms of the labour law system were initiated soon after the political and economic transformation and the dissolution of the former Yugoslavia, there was a debate about whether the term delojemalec, which is the Slovenian translation of the German term Arbeitnehmer and corresponds to the term delodajalec (Arbeitgeber), should be introduced in the new labour legislation.32 Since 2002, the legislator has decisively used the term ‘worker’, but in colloquial language, the term delojemalec continues to be used. It might be interesting to mention that in comparison to the ERA-1, the Occupational Health and Safety at Work Act (hereafter ZVZD-1)33 applies an extended version of the term ‘worker’. For the purposes of this Act, the term ‘worker’ applies not only to a person who performs work for an employer under an employment contract, but also to a person who performs work on any other legal basis (for example, under a civil law contract) or who performs work for an employer for training purposes. This extension is important from the perspective of the personal scope of the Act, but it also reflects the trend that employment protection is expanding to include persons who are not in an employment relationship.34 B.  Employer: Basic Definition In Slovenia, ‘employer’ is also legally defined. For the purposes of the ERA-1: [A]n ‘employer’ shall be any legal or natural person or any other entity, such as a state authority, a local community, a subsidiary of a foreign company or a

32 

For a limited period of time, the term was even used in some legal texts. Official Gazette of the RS, No 43/2011. 34  eg, voluntary trainees, children under the age of 15 years performing work in compliance with the law, economically dependent self-employed persons, apprentices etc. 33 

The Concept of ‘Employee’: The Position in Slovenia 647 diplomatic or consular mission, which employs workers on the basis of a contract of employment.35

For the purposes of the ZVZD-1, in turn: [A]n ‘employer’ means any legal or natural person and other entity, such as a state authority, local community, foreign company branch and consular post employing a worker under an employment contract, and an owner of a ship registered in the Slovenian Ship Register, a person who, on any other legal basis, guarantees to provide work to a worker, except persons who guarantee work to workers in a household, and the heads of holdings performing work on farms with members of their family in accordance with the regulations pertaining to agriculture, a natural person who with members of his/her business or family performs a gainful or other activity and a user to whom workers are posted to another user by a temporary employment agency in accordance with employment relationship regulations.36

III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees As already explained above (see section II.A), in Slovenia, the term ‘worker’ is used as a uniform legal term applying to all persons who are in an employment relationship on the basis of an employment contract. Having this in mind, it has to be pointed out that no differentiation has been made between blue-collar and white-collar workers in the private sector since 1957. Such a differentiation exists to a certain extent for civil servants. Accordingly, in state bodies and the administration of self-governing local communities, two categories of civil servants exist: officials and professional-technical civil servants (performing ancillary work). Such a differentiation/separation derives from the ERA-137 and from the Civil Servants Act,38 which provide that: [T]he employment of civil servants and the rights and duties arising thereof shall be regulated by regulations governing employment and by collective agreements, unless otherwise provided by the Civil Servants Act or other particular acts.

In accordance with the uniform concept of ‘workers’, home workers, teleworkers, persons employed by close relatives, temporary agency workers, posted workers and workers in cooperatives may not be treated as sub-types of workers. They also conclude employment contracts, which may contain some special features, and have the status of ‘worker’.

35 

ERA-1, art 5(2). ZVZD-1, art 3. 37  ERA-1, art 2(1). 38  Official Gazette of the RS, Nos 56/2002, 23/2005, art 5(1). 36 

648  Polonca Končar In Slovenia, no legislation exists that explicitly provides that persons ­ erforming work in specific occupations are excluded from the legal c­ ategory p of persons in employment relationships (‘workers’) or that individual forms of work performance are not considered to be employment relationships. However, some authors are of the opinion that such legislation should be introduced, for example, for managerial staff. According to the ERA-1,39 managers40 and procurement holders may—despite the non-existence of subordination—either conclude a contract of employment41 or perform their function on the basis of a civil law contract (contract for services), ie, outside the employment relationship. The main argument for this is that certain basic components of the employment relationship do not apply, such as subordination. Controversies have also arisen with reference to the ERA-2 provision according to which executives, who manage a business field or organisational unit at the employer and are authorised to conclude legal transactions or to make independent personnel or organisational decisions, may enter into employment relationships on the basis of fixed-term employment contracts.42 In fact, the existence of an employment relationship is in this case not being questioned. Some are of the opinion that executives should conclude indefinite employment contracts. The duration of their employment relationship should not depend on the duration of the manager’s mandate. Artists and journalists, in turn, can, as in many other countries, perform their work either on the basis of a contract of employment (indefinite or fixed-term) or on the basis of a contract for services. Both categories belong to ‘other self-employed persons’ (inter alia, those engaged in clerical or any other religious office), who are covered by the compulsory pension and invalidity insurance scheme.43 39 

ERA-1, art 73. status is regulated by the Companies Act (Official Gazette of the RS, Nos 42/06, 26/07-ZSDU-B, 33/07-ZSReg-B, 67/07-ZTF1, 10/08, 62/08, 42/09, 33/11, 91/11, 100/11-Skl US, 32/12, 57/12, 44/13-Odl US). Under the ERA-1, the term ‘managers’ refers to members of management, the management board, executive directors in a joint stock company and managers in limited liability companies, provided that they have entered into an employment contract. 41  In the contract, issues like limitation of fixed-term employment, working time, provision of breaks and rest periods, remuneration, disciplinary responsibility and the termination of the contract of employment may be specified differently in comparison with those of regular workers. Managers, executives and family members of management are not entitled to vote for representatives of the works council and have no right to be elected into the works council; see arts 12 and 14 of the Workers Participation in Management Act (Official Gazette of the RS, No 42/1993, 56/2001, 26/2007). 42  ERA-1, art 74. 43  Article 19 of the Pension and Invalidity Insurance Act (Official Gazette of the RS, Nos 96/2012, 39/2013, 53/2013, ZPIZ-2) provides: ‘Compulsory insurance shall cover persons: … contributing their personal labour, engaged in artistic activity or any other cultural activity or an activity in the field of media, and have, in accordance with law, entered in the Register of Independent Activities, if such a Register is stipulated; … engaged in clerical or any other religious office.’ 40  Their

The Concept of ‘Employee’: The Position in Slovenia 649 As regards persons in church service, Article 19 of the ZPIZ-2 clearly provides that they are considered self-employed and not employed persons. Their activity is not gainful in nature.44 B.  The Establishment of a Specific Category of ‘Workers’ See the information provided in the previous section. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The statutory definition of ‘employment relationship’ is relatively detailed. By providing that the employment relationship is a relationship whereby the worker performs work in accordance with the instructions and under the supervision of the employer, the ERA-1 underlines the ‘subordination’ of the worker to the employer by stipulating the basic components of the employment relationship.45 According to doctrine,46 subordination (personal legal subordination) is in fact the basic characteristic of the contract of employment and the most important component that determines the employment relationship. It is well known that the foundations of labour law were closely linked to the subordination of the worker to the employer. The purpose of labour law is to minimise the fact that the parties to the ­contract of employment are not equal. A major underlying function of labour law is the employment protection the worker enjoys in exchange for subordination to the employer. In theory, subordination is understood as a counterbalance to the business risk on the side of the employer. Subordination can be established on the basis of different criteria. In several cases, the Supreme Court of the Republic of Slovenia ruled that in addition to other components deriving from the employment relationship, it is crucial to take into consideration the component of the ‘continuous performance of work in accordance with the instructions and under the supervision of the employer’ (the so-called power of the employer to direct the work). Employment relationships differ from other legal relationships,

44  B Košir and A Naglič, ‘Odgovornost katoliške Cerkve za dejanja duhovnikov’ (2010) 70 Bogoslovni vestnik 3. 45  ERA-1, art 4. 46 See N Belopavlovič et al, Zakon o delovnih razmerjih s komentarjem (Ljubljana, GV Založba, 2008) 36–38; D Senčur Peček, ‘Komu zagotavljati delovnopravno varstvo’ (2007) XXXIII(6–7) Podjetje in delo 1223–37; L Tičar, Nove oblike dela (Ljubljana, Pravna fakulteta, Manet, 2012).

650  Polonca Končar especially at the level of personal subordination. The right of the employer to give instructions relates to the content, performance, working time, duration and location of work. The Supreme Court has also maintained that the criteria necessary to establish the existence of an employment relationship must be evaluated on a case-by-case basis and cannot be generally formulated in advance.47 Different viewpoints can be traced in the doctrine relating to the issue of ‘control’. Some authors are of the opinion that control only relates to the fulfilment of the instructions given to the worker, while others maintain that control relates to the fulfilment of so-called contractual and other duties deriving from the employment relationship when no concrete instructions were given to the worker.48 The issue has in particular been raised in relation to control over managers. ‘Integration into the organised working process’ is another basic (statutory) component of the employment contract in Slovenia. It is undoubtedly an important indicator of the existence of an employment relationship. Doctrine indicates that a voluntary integration into the organised working ­process denotes voluntary work performance for the employer who carries out the activity in an organised way. This presumes, inter alia, that the employer manages the business (at the defined location, with the given materials and tools) assumes responsibility and has control over the activity.49 The legal literature emphasises50 that when the vertical organisational scheme loosens and workers become more independent and autonomous, the significance of the criterion ‘integration into the working process’ increases when we assess the existence of an employment relationship. B. Indicators The fairly detailed definition of the employment relationship considerably helps the labour courts when dealing with disputes on the existence of an employment relationship. The labour courts have to take the basic components included in the definition of the employment relationship into consideration and interpret them when deciding individual cases. They must also consider other components/criteria. In this context, it is worth noting that in the period immediately following the adoption of the 2002 Employment

47  Decision VIII Ips 337/2006, 15 January 2008; Decision VIII Ips 129/2008, 18 December 2007; Decision VIII Ips 35/2008, 10 February 2009. 48  See Tičar (n 47) 28. 49  M Debelak, ‘Sodna praksa v sporih o obstoju delovnega razmerja med delavci in delodajalci’ (2008) 2/3 Delavci in delodajalci 450. 50  ibid 30.

The Concept of ‘Employee’: The Position in Slovenia 651 Relationships Act (ERA),51 practically no cases involving the existence of the components that comprise the legal prerequisites for the establishment or existence of an employment relationship have been lodged in the Slovenian labour courts. Recently, however, there has been a slight increase in the number of disputes on this subject matter. The Supreme Court has not yet had the opportunity to answer all questions essential to the existence of the employment relationship. To date, the following issues have been addressed:52 1. criteria regarding the element ‘work under instructions’; 2. the significance and/or role of the will of the contracting parties; and 3. time limitations regarding the term in which claims may be lodged in the court. With reference in particular to cases of disguised employment relationships, it is important to note that the Supreme Court decided that the ‘will’ of the contracting parties when choosing between different contracts/legal relationships is not decisive53 and should only be taken into consideration in exceptional cases. As a result, when the contracting parties enter into a relationship that contains all the components of an employment relationship, their autonomy is limited. In other words, they have to comply with the ERA (which was in force at the time) and its provisions on the definition of employment relationship and on the legal presumption of the existence of an employment relationship.54 The ‘will’ as stated by the Court is not crucial when the components of the employment relationship exist. The autonomy of the parties is limited by the legal presumption that an employment relationship exists if the components of such a relationship exist.55

51  The definition of the employment relationship which is still in force today has been laid down in this Act. 52 For more on the issue, see I Robnik, ‘Odločbe Vrhovnega sodišča RS’ (2008) VIII(1) Delavci in delodajalci 65–73; Debelak (n 50) 439–58. 53  Decisions of the Supreme Court VIII Ips 337/2006, 15 January 2008, VIII Ips 129/2008, 18 December 2007 and VIII Ips 16/2015, 8 June 2015. In the first case, a person with the status of student performed so-called student work on the basis of the referral form (outside the employment relationship), and the issue under discussion was whether the status of student and the status of worker exclude each other or not. The second case related to a person performing work for the employer on the basis of a civil law contract (copyright contract). In the third case, the Supreme Court rejected the revision of the Labour Court in the Second Instance as the conditions for the revision had not been fulfilled. The case again related to the establishment of the employment relationship of a stewardess who performed work that fell within the scope of so-called student work. On the position of the Supreme Court as regards the role of the will of the contracting parties, see also Judgments VIII Ips 145/2014, 17 February 2015, VIII Ips 54/2014, 13 May 2014, VIII Ips 266/2009, 5 September 2011. 54  Article 18 of the ERA 2002 and of the ERA-1. 55  It is provided for in art 13(2) of the ERA-2 that work may not be performed on the basis of civil law contracts, except in cases determined by the Act, if components of an employment relationship exist.

652  Polonca Končar In relation to the will of the parties, only the voluntary integration into the working process is decisive. In the past, the labour courts have rejected some claims to establish an employment relationship, as they were in breach of the procedural rules of the ERA.56 The claimants tried to enforce their claim after the expiry of the time limitation provided for in the Act. The Supreme Court explained its rejection of the claim by pointing out that judicial protection is guaranteed within the time limitations laid down in the ERA (30 days following the termination of the performance of work).57 Disputes may also arise during the performance of work, when the person carrying out the work requests recognition of the existence of an employment relationship instead of, eg, a civil law relationship. However, the procedure is different. The ‘worker’ may at any time during the performance of work request the delivery of a written employment contract and judicial protection (Article 17 of the ERA-1). If the court identifies the existence of the (basic) components of the employment relationship, it may oblige the employer to deliver a contract in writing to the worker. Finally, it might be interesting to add that the majority of disputes related to the existence of an employment relationship involved students and ­journalists. The former usually perform so-called student work on the basis of a student referral form58 issued by an authorised job brokerage agency. Journalists very often perform their work on the basis of a contract for services or copyright contract despite the existence of the basic components of an employment contract. C.  The Relevance of ‘Economic Dependence’ The ERA-1 recognises the existence of economically dependent persons,59 but the Act does not grant them ‘worker status’. An economically dependent person is defined as: [A] self-employed person who on the basis of a civil law contract performs work in person, independently and for remuneration for a longer period of time, in circumstances of economic dependency and does not employ workers. Economic dependency means that a person obtains at least 80 per cent of his or her annual income from the same contracting party.

56  Decisions of the Supreme Court of the RS VIII Ips 373/08, 4 December 2007, VIII Ips 339/06, 25 October 2007. 57  The ERA-1 contains the same provision in art 200. 58  The written document on the basis of which the student is directed/posted to work at the employer is for a limited period of time. Student work is performed within a triangular relationship. It does not constitute an employment relationship. 59  ERA-1, art 213.

The Concept of ‘Employee’: The Position in Slovenia 653 The ERA-1 has extended the personal scope to economically dependent persons. Accordingly, under the ERA-1, an economically dependent person shall be provided with limited labour law protection.60 Unless otherwise stipulated by a special regulation, the provisions of the ERA-1 on the prohibition of discrimination, guarantee of minimum notice periods, prohibition of termination of the contract without founded reasons, guarantee of payment for contractually agreed work and the enforcement of liability for damages shall apply to an economically dependent person.61 V.  THE PRINCIPLE OF PRIMACY OF FACTS

In Slovenia, the principle of primacy of facts according to which the determination of the existence of an employment relationship must rest on the facts, ie, on what was actually agreed and performed by the parties, and not on how the parties themselves designate the relationship, derives from the ERA-1,62 which provides: If components of an employment relationship exist pursuant to Article 4 and in connection with Articles [sic] 22 (conditions for concluding an employment contract) or 54 (fixed-term contract) of this Act, work may not be performed on the basis of a civil law contract, except in cases determined by an act.

The contracting parties are therefore not free to define the legal nature of their relationship by choosing between an employment and a civil law relationship. The nature of the relationship must be assessed in relation to the actual substance of the relationship. This has already been confirmed by the case law.63 As already mentioned, in the case of a disguised relationship, the court must base its decision on the factual circumstances under which the work has been performed. The will of the contracting parties when choosing between a civil law contract and a contract of employment shall not be considered crucial. VI.  QUALIFICATION IN FULL

According to labour legislation currently in force, legal relationships cannot qualify as mixed ones. Any contract concluded in accordance with an act cannot contain both components of a contract of employment and of a

60 

ibid art 214. also L Tičar, ‘Delovnopravno varstvo ekonomsko odvisnih oseb- novost ZDR-1’ (2013) XII(2–3) Delavci in delodajalci 151–65; D Senčur ‘Peček, Samozaposleni, ekonomsko odvisne osebe in obstoj delovnega razmerja’ (2014) XIV(2–3) Delavci in delodajalci 201–20. 62  ERA-1, art 4(2). 63  See section IV.B above. 61 See

654  Polonca Končar c­ ontract for services. Parties can only conclude either an employment contract or a civil law contract. However, parties are free to conclude an additional contract at any time. The ERA-1 in relation to the right of workers to training expressly provides, for example, that the duration, the course of training and the rights of the contracting parties during and after the training shall be laid down in a ‘contract of training’ and/or collective agreement.64 Some other contractual relationships, eg, relating to the leasing of apartments and the use of cars or phones, are possible in practice as well. VII.  LIMITS TO THE FREEDOM OF CONTRACT

Pursuant to the already-mentioned Articles 13 and 18 of the ERA-1, where components of the employment relationship exist as stipulated in the provision on the definition of the employment relationship, work may not be performed on the basis of a civil law contract, except in cases provided by law. In the event of a dispute on the existence of an employment relationship,65 it shall be presumed that an employment relationship exists if the components of an employment relationship exist. According to the Supreme Court, the criteria for the establishment of the existence of an employment relationship depend on actual circumstances of the concrete case and cannot be generally formulated in advance. If the existence of the employment relationship has been established by the parties before concluding the contract or by the labour court in the event of a dispute, the contracting parties cannot circumvent the facts. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

Slovenian labour legislation formally restored relatively good and solid foundations for the establishment of the existence of an employment relationship, so that social dialogue mechanisms and collective bargaining do not play a role in determining the existence of an employment relationship or the status of ‘worker’. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions The provision of Article 18 of the ERA-1 on the presumption of the existence of an employment relationship has been referred to several times. 64  65 

ERA-1, art 171(2). This might be very relevant in the case of disguised relationships.

The Concept of ‘Employee’: The Position in Slovenia 655 The presumption is of a general nature, hence presumptions that apply to specific groups of persons or specific situations are not needed. B.  The Burden of Proof The worker may request judicial protection and the establishment of the existence of an employment contract. If the contracting parties concluded, in contradiction to the legal provisions, a civil law contract (disguised employment relationship), the court shall cancel the relevant contract and establish an employment relationship. The burden of proof of the existence of the components of the employment relationship shall lie with the worker.66 The situation would differ in cases covered by the above-mentioned Article 18 containing the legal presumption: In the event of a dispute about the existence of an employment relationship between the worker and the employee, it shall be presumed that an employment relationship exists if the components of an employment relationship exist, where the existence of an employment relationship is presumed.67

X.  SPECIFIC PROCEDURES

As regards labour law, no such procedures exist. However, there have been several disputes involving pension insurance. The Labour Court had to determine in a preliminary procedure whether the components of the employment relationship existed in individual cases to decide in the main procedure on the duration of the pension insurance upon which the right to the pension depends.68 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons The legal categories of ‘employee-like’ persons and ‘persons comparable to employees’ are not recognised in Slovenian labour law or doctrine. Nevertheless, a trend is evident that limited employment protection is being

66  In relation to the question whether the employer also carries the burden of proof when the status of the worker is contested, one might point out that it is of very minor relevance, as the employer as a rule appears in the role of defendant in individual labour disputes. 67  One should not confuse the legal presumption with the rules on the shift of the burden of proof. See Debelak (n 50) 443. 68  eg, Judgment of the Supreme Court of the RS VIII Ips 193/97, VIII Ips 82/2002, Decision VIII Ips 8/2004, VIII Ips 116/2004.

656  Polonca Končar extended by respective acts to certain categories of persons who perform work, but do not qualify as workers in an employment relationship. In addition to ‘economically dependent persons’, discussed above, the following categories can be mentioned: voluntary trainees,69 children under the age of 15 and secondary school and university students,70 and pensioners performing work on the basis of so-called temporary or occasional work contracts.71 B.  Equality and Anti-discrimination Law All four categories of persons mentioned above are entitled to protection in relation to the prohibition of discrimination as regards gender, working time, breaks and rest periods, and liability for damages. With the exception of children and pensioners, they are also entitled to the so-called special protection of workers under the age of 18.

69 

ERA-1, art 124. ibid art 211(7). 71  Articles 27a and 27b of the Labour Market Regulation Act (Official Gazette of the RS, No 80/2100, 40/2012 (ZUJF), 21/2013-ZUTD-A, 63/3013-ZUTD-B, 100/2013-ZUTD-C). 70 

32 The Concept of ‘Employee’: The Position in Spain JOAQUÍN GARCÍA MURCIA AND IVÁN ANTONIO RODRÍGUEZ CARDO

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

T

HERE IS NO statutory definition of ‘contract of employment’ in Spanish labour law (Derecho del Trabajo). Article 8.1 of the Labour Code (Estatuto de los Trabajadores)1 states that a work contract shall be presumed to exist between anyone rendering a service on behalf of and within the scope of the organisation and management of another, and the person receiving it in exchange for compensation paid to the f­ormer. Therefore, labour law applies to those workers who voluntarily provide paid services for another, under the management/direction and within the organisational sphere of that natural person or legal entity, called the employer.2 This definition is valid for both workers in private companies and in public administration. Accordingly, under Spanish labour law, a contract of employment exists even if the parties have not signed a written document, by virtue of the principle of freedom of contract.3 The contract of employment may be in written, oral or even implicit form. In any case, it must meet four requirements: voluntariness, activity/performance on behalf of another, dependence and remuneration. However, it is true that Article 8.2 of the Labour Code requires certain contracts to be concluded in writing. According to that Article, the only employment contracts that may be concluded orally 1 Royal Legislative Decree (Real Decreto Legislativo) 1/1995 of 24 March (www.boe.es/ buscar/act.php?id=BOE-A-1995-7730). 2  Labour Code, art 1.1. 3  ibid art 8.

658  Joaquín García Murcia and Iván Antonio Rodríguez Cardo are permanent contracts and temporary contracts with a duration of less than four weeks. In any case, the lack of a written form of such contracts is a violation of labour law, but the employment contract will be valid and will, as a general rule, be considered a permanent and full-time contract. The same conclusion can be inferred from Article 8.5 of the Labour Code, which requires the employer to inform the employee of the essential elements of the contract in writing if the employment relationship lasts longer than four weeks. In practice, there are two key characteristics of the employment contract: (1) an activity on behalf of another; and (2) dependence. However, the legal provisions do not explicitly state this and do not provide clear criteria. The courts therefore play a decisive role in determining the scope of these criteria.4 For example, thousands of rulings apply these criteria to distinguish a contract of employment from autonomous work, as mentioned below (see section IV.A). Obviously, the employment contract, like any other contract, can be invalid for several reasons (according to general civil law), including lack of consent or breach of a legal prohibition (eg, work involving children under 16 years of age).5 In such cases, Article 9 of the Labour Code recognises the worker’s right to equal pay compared to what he or she would have received if the contract had been valid. As a general rule, the employment contract of a foreigner (a national of a third country) is invalid if the worker lacks a work permit. However, the Aliens Act,6 as interpreted by the Constitutional Court (Tribunal Constitucional) and the Supreme Court (Tribunal Supremo),7 grants them additional rights such as freedom of association and the right to strike, as well as rights associated with the individual employment relationship, such as severance pay for dismissal. In addition, illegal aliens are entitled to social security benefits for accidents at work.8 Finally, Article 9.1 of the Labour Code states that the contract can be partially invalid. In that case, one part of the employment contract may be invalid, but the other part(s) will remain valid. B.  Employment Relationship: Basic Definition Article 1.1 of the Labour Code states its applicability to those workers who voluntarily provide paid services for someone else, under the ­management

4 

eg, Supreme Court of 9 December 2004 (Id Cendoj: 28079140012004101242). Labour Code, art 6. 6  Organic Law 4/2000, 11 January (www.boe.es/buscar/act.php?id=BOE-A-2000-544). 7  Constitutional Court 236/2007 of 7 November (www.boe.es/diario_boe/txt.php?id=BOET-2007-21162). 8  Supreme Court of 17 September 2013 (Id Cendoj: 28079140012013100660). 5 

The Concept of ‘Employee’: The Position in Spain 659 and within the organisational sphere of another natural person or legal entity, called the employer. In other words, the Labour Code does not provide two different definitions for ‘contract of employment’ and ‘employment relationship’. Consequently, there is no employment relationship without a contract of employment and vice versa. The contract of employment is a direct and natural consequence of an employment relationship. Still, since the principle of freedom of contract allows written, oral or even implicit contracts, the employment relationship is established although no express consent is given. This applies, for example, when the worker continues to carry out his or her activity after the date on which the termination of a fixed-term contract was agreed upon. In such cases, the employment relationship (and the employment contract), as a general rule, continues.9 According to Article 44 of the Labour Code, when a business or part of a business transfers to another owner by legal transaction, the latter takes over the rights and duties under the employment relationships that existed at the time of the transfer. In case of temporary agency work (Empresa de Trabajo Temporal), if the agency does not hold the required permission from the state authority, or if the contract between the temporary employment agency and the user undertaking does not exist or has ended, an employment relationship is deemed to exist between the temporary agency worker and the user undertaking according to Article 43 of the Labour Code and Article 7.2 of the Act on Temporary Agency Work.10 Finally, it should be noted that Spain has two types of public employees: civil servants/public officials (who do not have an employment contract) and workers with an employment contract. Both are public employees, because their employer is a public administration, but labour law only applies to workers with an employment contract and not to public officials. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition As mentioned above, an employee is a person who voluntarily renders services for remuneration/compensation on behalf of another, within the scope of the organisation and under the management/direction of another physical or legal person called the employer. There is no difference between ‘employee’ (empleado) and ‘worker’ (trabajador) under Spanish law. Both words can be used interchangeably, although the term ‘worker’ is more common in practice. As an exception, the term ‘public employee’ (empleado público) instead of ‘public worker’ is used in the field of public administration. 9 

10 

Labour Code, arts 15 and 49. Law 14/1994, 1 June (www.boe.es/buscar/act.php?id=BOE-A-1994-12554).

660  Joaquín García Murcia and Iván Antonio Rodríguez Cardo Nevertheless, it should also be noted that ‘worker’ is not a term created or only used in the field of labour law. A worker is a person who performs work and ‘work’ (trabajo) is a polysemic word with many meanings in Spanish. Even though ‘work’ could be identified as ‘productive activity’ (actividad productiva), not all productive activities are regulated by labour law. Therefore, whenever Spanish law refers to ‘worker’, the personal scope of that rule is not always limited to that established under labour law. This applies as a general rule. For example, as regards the right to strike, Article 28 of the Spanish Constitution (Constitución Española) recognises this right for ‘workers’, which appears to be limited to the sphere of labour law. Nevertheless, the Constitutional Court extended this right to civil ­servants.11 Therefore, the context in which ‘worker’ is used is crucial in order to assess its personal scope of coverage in Spain. Similarly, Article 1.2 of the Act on Freedom of Association (Libertad ­Sindical)12 states: For the purposes of this Act, ‘employees’ refers to both those subject to a labour relationship and those subject to an administrative one.

Article 3.1 of the Act on Occupational Risk Prevention (Prevención de ­Riesgos Laborales)13 provides a similar definition. In addition, slightly different definitions apply in other legal fields. The concept of ‘employee’ in social security law is not identical to that in the Labour Code, as Articles 7 and 97 of the General Act on Social Security (Ley General de la Seguridad Social)14 refer to ‘those considered employees’ (asimilados a trabajadores), a rather vague category which includes priests, Members of Parliament and others who are usually excluded from labour law. Likewise, the Criminal Code15 offers a broader notion of ‘employee’, which includes, inter alia, self-employed persons. Tax law, however, lacks its own definition and refers in this regard to labour law.16 It should be mentioned that the concept of ‘worker’ or ‘employee’ has not changed as a result of the economic crisis in Spain, even though the government aims to promote the ‘entrepreneurial spirit’, which favours

11  Constitutional Court 11/1981, 8 April (www.hj.tribunalconstitucional.es/es-ES/Resolucion/ Show/SENTENCIA/1981/11). 12 Organic Law (Ley Orgánica) 11/1985, 2 August (www.boe.es/buscar/act.php?id=BOE-A1985-16660). 13  Law 31/1995, 8 November (www.boe.es/buscar/act.php?id=BOE-A-1995-24292). 14  Royal Legislative Decree 1/1994, 20 June (www.boe.es/buscar/act.php?id=BOE-A-199414960). 15 Organic Law 10/1995, 23 November (www.boe.es/buscar/act.php?id=BOE-A-199525444). 16 Article 7 of Act 35/2006, 28 November (www.boe.es/buscar/act.php?id=BOE-A-200620764).

The Concept of ‘Employee’: The Position in Spain 661 s­elf-employment. Under Spanish law, a self-employed worker is a person who works autonomously and/or independently. The Self-Employed Workers’ Statute (Estatuto del Trabajo Autónomo) applies to all self-employed workers, and no special rules for new forms of employment have been approved to date. The new forms of employment are therefore activities that are created and evolve within the general legal framework (the Labour Code or the Self-Employed Workers’ Statute). B.  Employer: Basic Definition Article 1.2 of the Labour Code defines ‘employer’ (empresario) as every natural person or legal entity (or common joint ownership—comunidad de bienes)17 for whom an employee provides services. This concept applies to all employers in all sectors and of all sizes, including public administrations. Temporary employment agencies, and not user enterprises, are employers of the persons contracted.18 There is no definition of ‘group of companies’ under Spanish labour law, but a group of companies is not an employer. It has no legal personality or legal entity; hence, the employer is one of the companies included in the group. However, other companies of the group could be held liable for defaults on wages or social security contributions, even though they are not the actual employer of the worker, when the employee performed activities for more than one company within the group.19 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Article 2 of the Labour Code provides a list of ‘employment relationships of a special nature’ (relaciones laborales de carácter especial): senior management (personal de alta dirección),20 domestic servants (empleados de hogar),21 convicts in penitentiaries (penados en instituciones ­ penitenciarias),22

17  There is common joint ownership or community of property when the ownership of a thing or right belongs to different persons undividedly. For example, when the community of owners of a building hires a janitor or a person to clean the common areas, the employer is the community of owners itself. 18  Article 10 of Law 14/1994, 1 June (www.boe.es/buscar/act.php?id=BOE-A-1994-12554). 19  Supreme Court of 22 September 2014 (Id Cendoj: 28079140012014100633). 20  Royal Decree 1382/1985, 1 August (www.boe.es/buscar/act.php?id=BOE-A-1985-17006). 21  Royal Decree 1602/2011, 14 November (www.boe.es/buscar/act.php?id=BOE-A-201117975). 22  Royal Decree-Law 782/2001, 6 July (www.boe.es/buscar/act.php?id=BOE-A-2001-13171).

662  Joaquín García Murcia and Iván Antonio Rodríguez Cardo ­ rofessional athletes (deportistas profesionales),23 artists in p p ­ ublic performances (artistas en espectáculos públicos),24 persons involved in trade operations on behalf of one or more entrepreneurs without assuming full risk (commercial employees/agents—operadores mercantiles),25 persons with disabilities employed in special centres of employment (minusválidos en centros especiales de empleo),26 dockers (estibadores portuarios),27 lawyers working for law firms (abogados en despachos de abogados),28 juveniles in detention centres (menores en centros de internamiento)29 and young medical doctors in their final training stage at public hospitals or Resident Medical Interns (médicos internos residentes).30 Each ‘special relationship’ has its own rules (an Act or a Royal Decree), but references to the Labour Code are frequent. In essence, these special rules often affect the form of the contract, the duration of the employment relationship, the working hours, and the rights and duties of the parties, as well as the termination of the contract. Notably, neither collective bargaining agreements nor the majority of basic labour law regulations apply to the employment relationship of senior management, because in that special relationship, the employment contract is the main source of regulation, and the Civil Code (Código Civil) and the Commercial Code (Código de Commercio) apply as default rules. As mentioned above, in the employment relationship of persons involved in trade operations on behalf of one or more entrepreneurs without assuming full risk (commercial employees), special rules apply when dependence is not strong. However, if subordination is stronger, such workers will be considered to be working under a common employment relationship. In both cases, labour law rules apply to them. Only if there is no subordination at all or if the worker assumes the full risk of operations does the basis constitute a contract for services and not an employment contract.31 Artists and professional athletes who work for a club or firm that pays them are employees, and their employment contract entails specific regulations,

23 

Royal Decree 1006/1985, 26 June (www.boe.es/buscar/act.php?id=BOE-A-1985-12313). Royal Decree 1435/1985, 1 August (www.boe.es/buscar/act.php?id=BOE-A-1985-17303). 25  Royal Decree 1438/1985, 1 August (www.boe.es/buscar/act.php?id=BOE-A-1985-17410). 26 Royal Decree 1368/1985, 17 July (www.boe.es/diario_boe/txt.php?id=BOE-A-198516663). 27  Royal Legislative Decree 2/2011 5 September, in particular arts 152–55 (www.boe.es/boe/ dias/2011/10/20/pdfs/BOE-A-2011-16467.pdf). 28 Royal Decree 1331/2006, 17 November (www.boe.es/buscar/act.php?id=BOE-A-200620113). 29  Royal Decree-Law 782/2001, 6 July (www.boe.es/buscar/act.php?id=BOE-A-2001-13171). 30  Royal Decree 1146/2006, 6 October (www.boe.es/buscar/act.php?id=BOE-A-2006-17498). 31  Supreme Court of 5 March 1990 (www.poderjudicial.es/search/index.jsp). 24 

The Concept of ‘Employee’: The Position in Spain 663 which allow artists, for example, to engage in a valid employment contract before reaching the age of 16.32 According to Article 1.3.c) of the Labour Code, the members of the board of directors of a company are not considered employees and labour law does not apply to them. However, if they carry out their managerial duties personally and on a regular and direct basis in exchange for remuneration, and they do not have control over the company (like major shareholders), they are included in the General Scheme of the Social Security System, but they do not receive unemployment benefits. This activity falls within the scope of the Self-Employed Workers’ Statute. The shareholders of a company are considered employees only if they are not major shareholders themselves or together with their families. In such cases, they are not employees and labour law does not apply to them because they do not work on behalf of another.33 Persons who perform mobile transport activities are not considered employees when they have administrative authorisation to develop their activity (which is necessary for vehicles of more than two tonnes) and have their own vehicle. In that case, labour law does not apply to them.34 It is worth noting that even if labour law does not categorise some relationships as special employment relationships, special rules for other groups of workers do exist. In this sense, public employees (and not civil servants) as well as employees in military establishments, seafarers or religious teachers in public schools can also be considered a special type of employee, although they are not listed in Article 2 of the Labour Code. Specific regulations also apply to journalists, allowing them, for example, to resign if the ideological line of the medium for which they work changes (the so-called conscience clause—cláusula de conciencia).35 Therefore, although labour law could establish different rules for certain groups, they are not considered employment relationships of a special nature because they are not included in Article 2 of the Labour Code and there is no specific Act or Royal Decree for that purpose. Close relatives may or may not be workers, as mentioned in section VII below, but if they are, the same rules apply. Students are not workers. A specific contract for trainees exists, but they are not a sub-type of employees. There is no distinction between blue-collar and white-collar workers under Spanish labour law.

32 

Labour Code, art 6.4. Provision 27 of the General Act on Social Security, Royal Legislative Decree 1/1994, 20 June (www.boe.es/buscar/act.php?id=BOE-A-1994-14960). 34  Labour Code, art 1.3.g. 35 A Martín Valverde, F Rodríguez-Sañudo Gutiérrez and J García Murcia, Derecho del Trabajo, 24th edn (Madrid, Tecnos, 2015) 191–213. 33  Additonal

664  Joaquín García Murcia and Iván Antonio Rodríguez Cardo It should be noted that some rights originally granted to employees have been extended to civil servants, although they are not workers and labour law does not apply to them (prevention of occupational risks,36 freedom of association,37 collective bargaining,38 representation39 and the right to strike).40 B.  The Establishment of a Specific Category of ‘Workers’ As already pointed out, labour law does not entail a differentiation of ‘workers’ and ‘employees’, and both terms can be used interchangeably in Spain. However, it is true that the Labour Code occasionally distinguishes between workers and employees. For example, Article 14 of the Labour Code provides that the duration of the probation period may not exceed six months for qualified technicians and two months for other workers. Moreover, Article 71 of the Labour Code provides special rules for the election of representatives of workers in companies with more than 50 employees, since the census of voters and candidates is divided into two groups, one composed of the technical and administrative staff and the other of specialists and unskilled workers. These are, in any case, exceptional rules. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration Dependence/subordination is a key element of the employment contract. It is not decisive on its own, but Article 8.1 of the Labour Code states that there is a presumption (presunción) of an employment contract between anyone rendering a service on behalf of and within the scope of the organisation and management of another, and the person benefiting from the services in exchange for compensation of the former. Under Spanish labour law, subordination means functional dependence, ie, the employee’s integration into the company’s supervision, management, organisation and power. Therefore, dependence or subordination is not defined in professional terms. Highly skilled employees are considered workers/employees; an employment contract exists, although the employer 36 

Act 31/1995 of 8 November (www.boe.es/buscar/act.php?id=BOE-A-1995-24292). Organic Law 11/1985 of 2 August (www.boe.es/buscar/act.php?id=BOE-A-1985-16660). 38  Articles 31 ff of Act 7/2007 of 12 April (www.boe.es/buscar/act.php?id=BOE-A-2007-7788). 39 ibid. 40 Royal Decree-Law 17/1977 of 4 March (www.boe.es/buscar/act.php?id=BOE-A-19776061). 37 

The Concept of ‘Employee’: The Position in Spain 665 is not qualified to instruct the employee on the way/manner in which the task must be performed due to the special nature of the job. Economic dependence per se does not determine employee status.41 Interestingly, although dependence is a key element of an employment relationship, the Labour Code does not explicitly use the terms ‘dependence’ (dependencia) and ‘subordination’ (subordinación). As a general rule, dependence might be established whenever the worker is included in the scope of organisation and decision of the employer (círculo rector y organizativo del empresario).42 Certainly, the integration of the worker (compliance with orders and work schedules) into the company is a relevant factor, but not a decisive one. For instance, the use of corporate equipment or display of the company logo on work clothes might also indicate an employment relationship.43 Under Spanish labour law, the lack of a worker’s power to determine the time and place of his or her work is an indicator of the existence of an employment contract, but this is not the case vice versa. In other words, the fact that a worker may to a certain extent determine the time and place of his or her work does not automatically mean that he or she is not an employee. Work dependence is not a rigid principle under Spanish labour law and it is therefore possible for an employee to keep a certain degree of autonomy as regards his or her working hours (the worker is not always obliged to work on the basis of a predetermined schedule) or workplace (when the employee is a home worker or teleworker, for example, who works from home or from a different place he or she chooses, without being controlled by the employer). In Spain, being under the employer’s control and direction has decisive and determinative repercussions on the employee’s duties and on the way in which the provision of services must be performed. In general, S­ panish labour law empowers the employer with outstanding supervisory and control powers over the employees, and authorises the undertaking to give very specific instructions and rules to employees that must be followed in accordance with their duty of obedience, even if the legality of these instructions is unclear.44 This issue is driven by the solve et repete principle, according to which an employee must carry out an order prior to making a claim against it.45 In essence, the courts take a ‘holistic’ approach to qualifying an activity as an employment relationship or a person as an employee. There is

41 

Martín Valverde, Rodríguez-Sañudo Gutiérrez and García Murcia (n 35) 177–78. Supreme Court of 19 May 2002 (Id Cendoj: 28079140012002101309). 43  Supreme Court of 9 December 2004 (Id Cendoj: 28079140012004101242). 44  Supreme Court of 4 February 1988 (www.poderjudicial.es/search/index.jsp). 45  The employee has the duty of care, high performance, fair competition and must respect the good faith principle (art 5 of the Labour Code). 42 

666  Joaquín García Murcia and Iván Antonio Rodríguez Cardo no ­decisive criterion, so a comprehensive and holistic assessment of each ­individual ­situation must be conducted.46 B. Indicators There are no decisive formal criteria to identify an employee, but some factors may indicate a lack of dependence (ie, self-employment status). For example, registration in the self-employment scheme of social security or holding a tax licence may be such indicators. However, all these circumstances are not decisive in classifying a given activity because they can be used to create a merely formal appearance. It is therefore always necessary to check all the circumstances of a case. Subordination has been largely shaped by the case law, which, depending upon the specificities of the case, considers work during a set number of hours each day, carrying out the company’s assignments, regular presence at the workplace, the continuity or long-term provision of services, working for one company only or the absence of a right of substitution as indicators of dependence .47 Pursuant to the established case law, several indicators of the existence of subordination are taken into consideration. Accordingly, dependence not only implies fixing working hours, but also the employee’s attendance time or availability (the employee must be available to the company during the agreed time, it being possible to negotiate availability at different times other than the strictly defined working hours).48 Another indicator of subordination might be place dependence, deriving from the employer’s general authority to determine the workplace and the resultant lack on the worker’s side of the freedom to choose the place where he or she performs work-related activities. In a similar vein, the employer’s obligation to provide the work materials and equipment may be an indication of dependence. There are other indicators of an employment contract, such as the duration and extension of job duties or regular payment, but neither of them is decisive on its own. For example, an economically dependent self-employed person can also provide his or her services to an employer with a similar duration and extension of job duties as those of a regular employee, and a self-employed worker may also receive compensation on a monthly basis.49

46 

Supreme Court of 9 July 2013 (Id Cendoj: 28079140012013100588). Supreme Court of 19 February 2014, 25 March 2013, 7 October 2009, 10 July 2007 and 9 December 2004 (www.poderjudicial.es/search/index.jsp). 48 Supreme Court of 16 December 2008 and 27 January 2009 (www.poderjudicial.es/ search/index.jsp). 49  See sections IV.C and XI.A. 47 

The Concept of ‘Employee’: The Position in Spain 667 It is also not conclusive that the job constitutes the worker’s sole or main source of income, nor whether the payment is in cash or in kind.50 In that sense, the usual form of wage is a fixed amount of money paid on a regular basis. Nevertheless, remuneration based on results—on a commission basis—does not always on its own exclude classification as an employment contract. All of these are indicators, and a holistic approach is necessary for each single case. An employment contract involves an employee and an employer, and the employee must, in principle, carry out the activity himself or herself. When the employee uses a substitute to perform the activity, the courts will consider this an indicator of the absence of an employment contract.51 However, this is not a decisive indicator, as the Supreme Court has occasionally found that an employment relationship exists even if the worker was s­ poradically substituted (eg, carriers or cleaners).52 Obviously, the worker must provide services, and the employer must organise the work and pay wages. All these circumstances indicate an employment relationship. In addition, as a general rule, Article 26 of the Labour Code provides that the employee and the employer must fulfil their tax and social security obligations. An agreement by which these obligations are transferred to the other party is not valid. A worker who pays taxes and social security contributions on his or her own is considered self-employed, unless fraud can be proven and the employer is forcing the worker to meet an obligation the employer should actually assume responsibility for. Finally, it should be noted that when someone else bears any risk related to the work and the outcome of the activity or business, an employment relationship is deemed to have been established. However, if a worker bears the risk, he or she will be considered self-employed. The employment contract requires the activity to be carried out in someone else’s interest in exchange for a wage or remuneration, ie, the utility of the work benefits someone other than the worker. C.  The Relevance of ‘Economic Dependence’ As mentioned above,53 economic dependence is neither required nor in itself sufficient for the qualification of existence of an employment contract. Accordingly, under Spanish law, the same person can—legally—perform more than one job (part-time or full-time) at the same time (pluriempleo)

50 

Supreme Court of 2 April 2009 (Id Cendoj: 28079140012009100246). Supreme Court of 3 May 2011 (Id Cendoj: 28079140012011100381). 52  Supreme Court of 25 January 2000 (Id Cendoj: 28079140012000100913). 53  See section IV.A. 51 

668  Joaquín García Murcia and Iván Antonio Rodríguez Cardo for different companies, provided that there is no unfair competition. Obviously, when a person carries out an activity for one undertaking only and all of his or her income derives from that employer, it is an indicator for an employment contract, but this circumstance is not decisive on its own, because Article 35 of the Spanish Constitution recognises the freedom of work. According to Article 11 of the Self-Employed Workers’ Statute, economically dependent self-employed persons (trabajadores autómonos económicamente dependientes) are individuals who perform an economic or professional activity for profit in a usual, personal, direct and predominant way for a natural person or legal entity (known as the client). The client must provide at least 75 per cent of the total income of the economically dependent self-employed person. Labour law does not cover such workers, but certain protective rules apply to some extent. For example, these workers enjoy specific rights that are similar to employee rights, such as the interruption of activity for various reasons and annual leave of 18 days, and causes and consequences of the termination of their special contract with the client are regulated as well.54 V.  THE PRINCIPLE OF PRIMACY OF FACTS

Under Spanish law, an employment relationship exists when a worker voluntarily provides paid services for someone else under the direction and within the organisational sphere of another natural person or legal entity called the employer.55 Therefore, the decisive factor for the establishment of such a relationship is that all the necessary components of employee status come together in practice, regardless of how the parties have named the contract. It is not conclusive that the employer recognises the existence of an employment relationship. On the other hand, when someone works independently without guidance ie, outside someone else’s area of management and organisation, this person is considered self-employed, working directly in the market on his or her own, without an intermediary. The aforementioned economically dependent self-employed persons are thus not employees, although they share the feature of dependence (from an economic perspective) with regular employees. According to the established case law, the mere name given to the contract by the parties is not decisive for its legal classification. What is decisive is

54  Articles 11–18 of Law 20/2007, 11 July (www.boe.es/buscar/act.php?id=BOE-A-200713409). 55  Labour Code, art 1.1.

The Concept of ‘Employee’: The Position in Spain 669 its substance, not the name or formal appearance chosen by the contractual partners. Consequently, if the factual situation matches the characteristics of an employment relationship according to labour law, the latter must be compulsorily applied.56 Theoretically, some professional activities can legally be performed under either an employment contract or a contract for services, but it is not for the parties to choose, because the legal characterisation of the contract depends on the factual existence (or lack thereof) of the components that characterise an employment relationship. The main examples in practice arise in the commercial and services sectors, because the activity of commercial agents or sales representatives can be performed under a commercial contract or under an employment contract. When the activity corresponds to the characteristics described in the Labour Code, an employment contract will be deemed to exist, even if the parties declare otherwise. On the other hand, if the worker performs the work ‘autonomously’ (eg, he or she determines his or her working hours) and is directly responsible for the success of the operation, the contract is deemed to be a commercial contract. The contract’s classification will determine the individual’s rights and duties. Therefore, the features of the contract, the level of autonomy and the way in which the activity or the provision of services is carried out must be assessed. The contract’s purpose also plays a relevant role (just an activity or a final result), as does the form of payment or remuneration, as was mentioned in section IV.B above. VI.  QUALIFICATION IN FULL

Under Spanish labour law, if the services provided meet the four required components of an employment contract, labour regulations shall be applicable without the option of applying another legal regime to the same contract. In the case of conflict, the courts will decide on the nature of the contract according to the indicators, as discussed above.57 Again, ­qualification of only a part of a contract as a contract of employment is not possible. In other words, it is not possible for the parties to agree on designating a law that is applicable for some parts of the employment contract. A sui generis exception to this rule is senior management contracts. As mentioned above (see section III.A), this is an employment relationship of a special nature. All employment relationships of a special nature have their own regulatory standard—usually a Royal Decree—which sets down the specificities. Those Royal Decrees frequently refer to the Labour Code as a default rule. ­However, the Royal Decree that regulates the employment relationship of 56  57 

Supreme Court of 25 March 2013 (Id Cendoj: 28079140012013100331). See section IV.B.

670  Joaquín García Murcia and Iván Antonio Rodríguez Cardo senior management does not refer to the Labour Code, but to the Civil Code and the Commercial Code as default rules. This is not necessarily an exclusion of the possibility to subject some parts of a contract to regulations other than those of labour law, but the final result might be similar. Apart from contractual relationships, non-contractual legal relationships between parties often exist. Theoretically, the parties may be liable under tort law in the event that damage is caused to the other party. However, the application of tort law is restricted by the courts. As a rule, the compensation provided by the Labour Code (eg, in the case of dismissal) suffices to repair any damage without the need for tort law. As an exception, the worker is entitled to a specific amount of compensation set by the courts when he or she suffers an accident at work58 or when a fundamental right has been violated.59 Apart from contractual relationships, non-contractual legal relationships often exist between the parties. Spanish labour law contains few references, but it is certainly possible for the employer to lease a house to the employee. Article 285 of the Law Regulating Social Jurisdiction60 gives the worker one month from the termination of the employment contract to leave the house he or she occupied for reasons of work. VII.  LIMITS TO THE FREEDOM OF CONTRACT

The legal concept of ‘employee’ is mandatory and cannot be disposed of by the parties to the contract. If a person is qualified as an ‘employee’ on the basis of an objective legal assessment, the parties are not allowed to set this qualification aside by insisting that the contract is not a contract of employment.61 In general, the provision of personal work can fit into an employment contract when subordination exists. However, the parties cannot enter into a contract of employment if the activity does not correspond to the elements of an employment contract, because the concepts of ‘employee’ and ‘employment contract’ are mandatory.62 When the parties choose the contract of employment, that employment contract is not valid, even if the objective criteria point towards a contract for services, and the employer may be fined an administrative penalty for failing to comply with labour law. As regards social security, the contributions made to the General Scheme for Employees are transferred to the Social Security Scheme for Self-Employed Persons. 58 

Supreme Court of 17 July 2007 (www.poderjudicial.es/search/index.jsp). Article 283 of the Law Regulating the Social Jurisdiction (Ley Reguladora de la Jurisdicción Social) Law 36/2011, 10 October (www.boe.es/buscar/act.php?id=BOE-A-2011-15936). 60  Law 36/2011 of 10 October (www.boe.es/buscar/act.php?id=BOE-A-2011-15936). 61  Supreme Court of 29 November 2010 (www.poderjudicial.es/search/index.jsp). 62  Labour Code, art 1.1. 59 

The Concept of ‘Employee’: The Position in Spain 671 There is only one exception: although the work carried out by close relatives is, as a general rule, excluded from the Labour Code (they would be considered self-employed workers), the law allows parents to sign an employment contract with their descendants who are under the age of 30 (or older if they have severe disabilities), but these workers are excluded from unemployment benefits in any case.63 Article 3.5 of the Labour Code states that employees may not waive the rights recognised by law or collective agreements. This is a provision designed to protect the worker, because the employer has extensive powers of pressure that could force the worker to give up certain rights to keep the job. Hence, employee status cannot be waived by the employee. VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Collective bargaining can regulate working conditions, but cannot change the legal concept of the employment relationship or the concept of ‘worker’ or ‘employer’.64 These are key characteristics of labour law and are mandatory by law according to Article 1.1 of the Labour Code. In this sense, collective bargaining must include the concepts of ‘employment relationship’, ‘employee’ and ‘employer’ as provided by law. Hence, neither social dialogue nor collective bargaining can requalify a contract of employment as another type of contract. However, some collective agreements require companies to hire workers directly instead of outsourcing their activities by sub-contracting work to other firms or to self-employed persons. B.  Custom and Practice There are no deviations on the basis of custom and practice in Spain. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions Article 8 of the Labour Code includes an ‘iuris tantum’ (rebuttable) presumption of employment relationship (see section I.A). This presumption, 63  64 

Additional Provision 10 of the Self-Employed Workers’ Statute. Labour Code, art 1.

672  Joaquín García Murcia and Iván Antonio Rodríguez Cardo which has a general scope and also applies in the field of social security and tax law, is extremely useful for classifying activities whose legal nature is ambiguous due to similar features with an employment relationship. B.  The Burden of Proof As a general rule, in Spanish procedural law, the claimant has the duty to provide evidence. Nevertheless, there are specific cases of burden of proof inversion, for example, when a worker brings an action before the company for being dismissed or claims recognition of employee status and provides certain indications or evidence of subordination. The employer is usually in a better position to prove the lack of subordination. In this regard, Article 94 of the Law Regulating Social Jurisdiction65 provides that the documents and other means to obtain certainty on relevant facts which are in the possession of the parties shall be provided if they were offered as evidence by the opposing party. Otherwise, the judge may consider the allegations to be proven. For example, if the employee claims that he or she starts or ends work at the same time every day (ie, he or she has a work schedule, which is an indicator of a contract of employment), he or she has no the means of obtaining proof, and hence the employer is obliged to demonstrate that the opposite is true, because he or she is in a better condition to do so (he or she could have a log system that records the time of arrival and departure of the workers). X.  SPECIFIC PROCEDURES

The issue of qualification as an employee is usually addressed before the courts. There is a special jurisdiction in the field of labour law (jurisdicción social), which is generally fast and efficient.66 There are other ways of resolving conflicts (at the national and regional levels) which the parties can voluntarily choose, but these are not used for qualifications of contracts, because they are not designed to do so. In fact, non-judicial dispute settlement schemes that are organised or supervised by the public administration are often designed to resolve disputes whose origin lies in discrepancies of a collective nature and are a prerequisite to calling a strike.67

65 

Law 36/2011 of 10 October (www.boe.es/buscar/act.php?id=BOE-A-2011-15936). Law 36/2011 of 10 October (www.boe.es/buscar/act.php?id=BOE-A-2011-15936). 67  At the state level, the Interconfederal Service of Mediation and Arbitration was established in 1996. Today, it is regulated in the Fifth Agreement on autonomous solutions of labour disputes, signed by the most representative trade unions and business organisations (www.boe. es/diario_boe/txt.php?id=BOE-A-2012-2655). Similar bodies exist at the regional level. 66 

The Concept of ‘Employee’: The Position in Spain 673 However, it is worth noting that although the labour courts play a ­decisive role, the Labour Inspectorate can provide supporting evidence, because labour inspectors can investigate the facts and provide evidence before the courts or the administrative authority.68 Yet, since there is no ­administrative procedure to determine the nature of an employment relationship in advance and collective bargaining is not an adequate instrument for this purpose in Spain, the labour courts are the only body with the power to declare whether or not a contract of employment exists. Usually, the person who formally does not have an employment contract files a lawsuit claiming a labour right (eg, severance pay) and, at the same time, requests the court to declare his or her status as that of an employee. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons As already pointed out above,69 qualification as an employee is not based on economic dependence criteria. Nevertheless, economic dependence is relevant under Article 11 of the Self-Employed Workers’ Statute (Estatuto del Trabajo Autónomo), which defines economically dependent self-employed persons (trabajadores autómonos económicamente dependientes) as individuals who perform an economic or professional activity for profit in a usual, personal, direct and predominant way for a natural person or legal entity (known as the client). The main characteristics of economically dependent self-employed p ­ ersons are legally established in Article 11 of the Self-Employed Workers’ Statute70 and constitute: (1) the direct and personal performance of a professional activity, mainly for just one client on a regular basis and in exchange for remuneration; (2) economic dependence on that client, ie, receiving at least 75 per cent of all the income related to that work or professional activity or business from that client; (3) as a general rule, they are not allowed to hire employees or to contract or sub-contract their activity to third parties;71 (4) the manner in which they provide their services differs from that of the client’s employees; (5) possession/existence of their own productive structures and their own equipment and materials; (6) performance of the work activity under their own management criteria; (7) dependence of economic remuneration on the results achieved through their activity and assuming

68 

Articles 12 ff of Act 23/2015 of 21 July (www.boe.es/buscar/act.php?id=BOE-A-2015-8168). See section IV.C. 70  Law 20/2007 of 11 July (www.boe.es/buscar/act.php?id=BOE-A-2007-13409). 71  Article 11 of Law 20/2007, amended by Law 31/2015 of 9 June (www.boe.es/buscar/act. php?id=BOE-A-2015-9735). 69 

674  Joaquín García Murcia and Iván Antonio Rodríguez Cardo the risks thereof; (8) lack of offices or premises open to the public or performance of their work activity on a corporate basis. Although the conflicts between economically dependent self-employed persons and their clients are resolved by the labour courts, labour law does not apply to such workers, but certain protective rules are applied to some extent. For example, these workers enjoy specific rights that are similar to employee rights, such as interruption of their activity for various reasons and annual leave of 18 days, and the causes and consequences of termination of their special contract with the client are regulated as well.72 ­Furthermore, economically dependent self-employed persons can join a union, and the law allows these unions to conclude professional interest agreements (­acuerdos de interés profesional) on behalf of those workers, which are very similar to collective agreements.73 A combination of elements of salaried workers and of self-employed persons exists in the field of cooperatives (cooperativas). Parliament passed a Cooperatives Act (Ley de Cooperativas),74 but each autonomous region can adopt its own standards. Members of cooperatives are not workers (not even a sub-type of employee) and they do not conclude an employment contract (they bear their own risk as regards work), but some of their rights are very similar to those of employees (minimum age for employment, working time, wages, extended leave of absence or end of activity), and, according to the General Act on Social Security, they can choose their social security scheme, because they have the right to classify themselves as employees or as self-employed workers.75 B.  Equality and Anti-discrimination Law According to Article 14 of the Spanish Constitution: Spaniards are equal before the law and may not in any way be discriminated against on account of birth, race, sex, religion, opinion or any other personal or social condition or circumstance. This general principle of equality and nondiscrimination applies to everyone, ie, workers are included.

Article 17 of the Labour Code fully incorporates this principle and reads as follows: The regulatory precepts, clauses of collective bargaining agreements, individual pacts and the unilateral decision of employers containing direct or indirect 72  Articles 12 ff of Law 20/2007 of 11 July (www.boe.es/buscar/act.php?id=BOE-A-200713409). 73  ibid art 13. 74  Law 27/1999 of 16 July. 75  Fourth Additional Provision of the Royal Legislative Decree 1/1994, 20 June (www.boe. es/buscar/act.php?id=BOE-A-1994-14960).

The Concept of ‘Employee’: The Position in Spain 675 unfavourable discrimination by reason of age or disability, or favourable or adverse discrimination in employment, as well as with regard to compensation, working days and other working conditions owing to circumstances of sex, origin—including racial or ethnic—civil or social status, religion or convictions, political ideas, sexual orientation, adhesion or non-adhesion to unions and to their agreements, family relationships with other workers in the company, and language within the Spanish State, shall be understood as null and void.

Orders to discriminate and employers’ decisions involving unfavourable treatment of workers in response to a complaint made in the company or against an administrative or legal action intended to require compliance of the principle of equality in treatment and non-discrimination shall be equally null and void. The Law for Effective Equality of Women and Men (Ley para la Igualdad efectiva de mujeres y hombres) also applies to the employment relationship,76 as does the General Law on Rights of Persons with Disabilities and their social inclusion.77 Both laws guarantee equal treatment and protection from discrimination. In addition, the Constitutional Court has extended fundamental rights to the employment contract, so that workers have the right to privacy78 or freedom of expression79 and religion,80 among others.81

76 

Organic Law 3/2007 of 22 March (www.boe.es/buscar/act.php?id=BOE-A-2007-6115). Legislative Decree 1/2013, 29 November (www.boe.es/diario_boe/txt. php?id=BOE-A-2013-12632). 78  The Data Protection Act applies to workers. See Organic Law 15/1999 of 13 December (www.boe.es/buscar/act.php?id=BOE-A-1999-23750) and Constitutional Court 29/2013, 11 February. 79  Spanish Constitution, art 20. 80  ibid art 16. 81  Constitutional Court 196/2004, 15 November and 140/2014, 11 September. 77  Royal

676 

33 The Concept of ‘Employee’: The Position in Sweden1 ANDREAS INGHAMMAR

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

I

N SWEDEN, THERE is no statutory definition of the term ‘contract of employment’ (anställningsavtal), but the concept has, as will be described further below, been developed primarily in the case law from labour courts and in doctrine. However, the employment relationship, the contract between an employer and an employee, is outlined in the case law and doctrinal work, and the consequences of a contract of employment are, in general, significant in many areas of law, even outside the labour relationship, such as in relation to taxation and social security. Swedish labour law strongly emphasises permanent employment contracts, but recognises a number of fixed-term contracts and probationary employment as well. Under these provisions, fixed-term contracts may automatically turn into permanent contracts if the employer does not (properly) terminate the contract or does not (properly) communicate to the employee that the contract will not be extended. In other words, a permanent employment contract may be entered into without the express and unanimous intention by the parties to the contract.2

1 An early preliminary version of a Swedish Restatement text was drafted together with ­ rofessor Mia Rönnmar and was based on her previous work presented in 2004/2005 as P referred to below, and I am indebted to her for her support and generous sharing of ideas and material during the finalisation of the Restatement text. As regards this final text, any mistakes or misunderstandings are solely the responsibility of the author. 2  Employment Protection Act (lagen (1982:80) om anställningsskydd) paras 4, 5 and 6.

678  Andreas Inghammar The fact that a relationship is classified as an employment relationship does not necessarily result in protection or inclusion under employment ­protection legislation, as is further developed below.3 Since employment contracts under Swedish law are not subject to any ­formal requirements, non-written agreements based on the actions of the parties or verbal agreements have the same legal effect as written employment agreements. It is the perception of the parties and the factual contractual features of the contract that are decisive for establishing the existence of an employment contract. A contract might be considered invalid or void if the situation is perceived as one of pactum turpe, a case in which the employer is not able to request the employee to fulfil his or her contractual duties. The invalidity of the employment contract has effects on the worker’s ­statutory rights under employment law, as well as under social security law.4 In different areas of law—primarily civil and social law, but also to some extent tax law—the courts traditionally applied alternative notions of the concept of ‘employee’. The civil law notion focused on the contract, while the social law notion was based on a wider perspective acknowledging additional social factors. On this issue, the Supreme Court concluded (apparently with the aim of unifying different notions of employee) in a well-known case from 1949 that further emphasis should be put on the economic and social situation of the individual. It also stated that the courts should generally recognise the contractual and factual circumstances of the legal arrangement between the employer/principal and the employee/service provider.5 Since this case was decided in 1949, Swedish labour standards have developed on the basis of the idea to provide a coherent notion of the concept of ‘employee’. However, as briefly discussed later, these intentions have thus far led neither to a homogeneous definition nor to homogeneous practice in all areas of law.6 In social security and tax legislation, the focus when examining the notion of ‘employee’ is to differentiate employees from self-employed p ­ersons ­(uppdragstagare), since these two groups are subject to significantly d ­ ifferent regimes in terms of tax liability and contributions to mandatory social insurance. While Swedish employers have to pay social insurance contributions and withhold preliminary income tax for their employees, ­self-employed

3 

See section III.A below. Labour Court decision AD 2004 No 18 (chairman of a non-governmental organisation for the hearing impaired was not recognised as an employee in relation to contractual benefits in the collective agreement), AD 2005 No 33 (a chimney cleaner was not considered employed by the municipality, but was considered self-employed) and AD 2006 No 34. See also on previous law Axel Adlercreutz, Arbetstagarbegreppet (Stockholm, Norstedts förlag, 1964). 5  Supreme Court case NJA 1949 s 768. 6  M Rönnmar, ‘The Personal Scope of Labour Law and the Notion of Employee in Sweden’ (2004) JILPT Comparative Labor Law Seminar, Tokyo, 6. 4 

The Concept of ‘Employee’: The Position in Sweden 679 persons must register for a Business Tax Certificate ­(F-skattsedel) and are required to pay the corresponding social contributions and ­ preliminary income tax themselves.7 However, a significant number of people do ­combine a registration for a Business Tax Certificate for a part-time ­business with traditional full-time/part-time employment.8 It is important to note that the tax authority’s opinion (and eventually the case law from administrative courts) regarding the status of employment or self-employment is not necessarily relevant for the definition of a certain employment status in a (private) employment dispute. However, its opinion could, together with other features of contractual arrangements, as will be discussed below, indicate whether a contract of employment exists or not.9 B.  Employment Relationship: Basic Definition There is no regulatory definition of the term ‘employment relationship’ (anställningsförhållande). Employment relationships in Swedish jurisdiction are based on an employment contract between the employer and the employee regulating the exchange of work for pay under a contract.10 While the employer is likely to be a juridical person (legal entity), the employee can only be a natural person. A contract between an employer/principal and a juridical person would therefore signal a contractual arrangement outside the scope of an employment relationship. The case law has nevertheless repeatedly shown that the courts might, when questioned in a case falling under the Employment Protection Act, determine that the actual relationship between the parties, regardless of the heading of the contract, constitutes an employment contract protected under the legislation.11

7 The Business Tax Certificate is generally also combined with an obligation to register for VAT. See Tax Proceedings Act (Skatteförfarandelagen (2011:1244)) c 9 and the VAT Act (Mervärdesskattelagen (1994:200)). 8 If he or she is running a registered business in addition to ordinary employment, the individual will be registered for a combined Business and Employment Tax (FA-skatt). 9 Supreme Court case NJA 1981 s 601 discusses the employment status in relation to ­bankruptcy. See also L Lunning and G Toijer, Anställningsskyddslagen: En lagkommentar, 10th edn (Stockholm, Norstedts Juridik, 2010) 29. 10  See generally the discussion and references in Samuel Engblom, ‘Self-Employed and the Personal Scope of Labour Law’ (Doctoral Thesis, Florence, European University Institute, 2003) 142 ff; and Lunning and Toijer (n 9) 20 ff. 11  See section V below. The issue of the grey area between employment and self-employment is of minor relevance for the labour market as such, since most persons are in fact ‘properly’ employed, but for a number of individuals, the definition is crucial for reasons relating to labour, social security and tax provisions. See Labour Court decisions AD 1994 No 130, AD 1990 No 116; and Lunning and Toijer (n 9) 23–27.

680  Andreas Inghammar II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition There is no statutory definition of ‘employee’ (arbetstagare) under ­Swedish law, even though the term frequently appears in legislation and other ­provisions. The definition has been developed in legal sources and does not seem to constitute any major problem when applied to the labour market, and relates primarily to significant indicators such as the personal/individual obligation to carry out the duties under the contract and subordination in relation to the employer, but also continuity of the contractual arrangement, even though the latter has lost most of its significance as an indicator due to the flexibilisation of the labour market over the past 35 years. The Swedish courts (primarily the Labour Courts) have developed the so-called civil law notion of ‘employee’ (det civilrättsliga arbetstagarbegreppet). This normative notion concludes, in short, that a person is to be considered an employee if he or she, based on a ‘contract’, ‘personally’ performs work for ‘someone else’ and is ‘instructed’ to do so by the other party to the contract (employer) in return for ‘remuneration’.12 The ‘list of features’ discussed under the civil law notion of ‘employment relationship’ also includes physical persons/employees, voluntary arrangements, performance of work (for someone else) and that the work is personally carried out by the employee.13 Since there is no statutory minimum wage provision, the question of the scope of remuneration might be ambiguous. In other words, even persons with very low or ‘alternative’ forms of remuneration could be considered employees.14 A debate as to whether there is a need for a statutory definition of the notion of ‘employee’ took place in Sweden, but a government investigation concluded in the ‘Government White Paper’ report15 that such a definition was not necessary due to the lack of serious problems related to it. The existing problems were left to be resolved by the courts for the dynamics of the changing labour market.16 In an interesting case dealt with in the Labour Court (AD 1982 No 105), the parents of children attending a public kindergarten participated in the care of children (not their own) at the kindergarten for several days as part of an educational experiment. The parents were entitled to compensation 12 

See Lunning and Toijer (n 9) 20–41. and Toijer (ibid 24) conclude that an overall assessment based on the relevant aspects should be conducted. See also Labour Court decisions AD 1994 No 104, AD 1998 No 138 and AD 2005 No 46. 14  Labour Court AD 1996 No 135; see also K Källström, J Malmberg, A ­ nställningsförhållandet: Inledning till den individuella arbetsrätten, 4th edn (Uppsala, Iustus Förlag, 2013) 26 f. 15  Government White Paper (Ds, 2002:56). 16  ibid 75 ff, Hållfast arbetsrätt—för ett föränderligt arbetsliv; see also Rönnmar (n 6) 11. 13  Lunning

The Concept of ‘Employee’: The Position in Sweden 681 for loss of their ordinary income for the days they participated in childcare activities. The kindergarten was covered by a collective agreement and the Labour Court determined that the participation of the parents in the childcare was to be considered employment ‘under the collective agreement’, though not necessarily under the Employment Protection Act.17 Doctrinal work concludes that the application of the Employment Protection Act would have hardly been appropriate for this type of ‘employee’, since the situation in this case was most extraordinary.18 B.  Employer: Basic Definition There is no statutory definition of the notion of ‘employer’ (arbetsgivare). However, the definition has been developed in the case law and in other sources of national law. An employer, in short, is a natural or legal person who is bound by a contract with another person on terms and conditions constituting an employment relationship.19 The Co-determination Act20 broadens the concept of ‘employer’ (in terms of ‘employer responsibilities’) to also include those who, without employing them as employees, are hired for a position which essentially is similar to that of an employee.21 In the previous regulation, collective agreements included a broader scope of ‘workers’22 and the concern of decreased or limited coverage at the time of implementation of the Co-determination Act in 1976−77 brought about this special provision in the Act, ie, § 2 section.23 However, since then, the case law and legal developments have broadened the concept, and the ­special provision on ‘dependent contractor’ is considered outdated by many,24 although there is some doctrinal work that continues to support the ­definition of ‘dependent contractor’.25

17 

See Labour Court decision AD 1982 No 105; and Lunning and Toijer (n 9) 22. Lunning and Toijer (n 9) 22. doctrine has not developed the concept of ‘employer’ as thoroughly as that of ‘employee’. See Lunning and Toijer (n 9) 43–56. 20  The Co-determination Act (lagen (1976:580) om medbestämmande i arbetslivet). 21  ibid para 1; see also D Holke and E Olauson, Medbestämmandelagen—med kommentar, 6th edn (Lund, Studentlitteratur, 2014) pp 22 ff. 22  See, eg, section XI.A below. 23 Holke and Olauson (n 21) 22. See also K Källström, ‘Employment Agreements and Contract Work in the Nordic Countries’ in P Wahlgren (ed), Stability and Change in Nordic Labour Law. Scandinavian Studies in Law (Mölnlycke, Elanders, 2002) 77–86. 24  Holke and Olauson (n 21) 22; Rönnmar (n 6) 8 f; O Bergqvist, L Lunning, and G Toijer, Medbestämmandelagen. Lagtext med kommentarer, 2nd edn (Stockholm, Norstedts Juridik, 1997) 45 ff; Engblom (n 10) 143; and F Schmidt, et al, L ­ öntagarrätt (Stockholm, Juristförlaget, 1994) 70. 25  Most prominently, T Sigeman, ‘Anmälan av Olof Bergqvist och L Lunning: Medbestämmandelagen’ (1987) Svensk Juristtidning 609–15. 18 

19 The

682  Andreas Inghammar III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees Swedish labour law recognises various sub-types of employees or, more ­ correctly, various employment statuses for the different sub-types ­established in the legislation (and under collective agreements). While not regulated in legislation, the application of collective agreements reinforces the ­categorisation of white-collar (tjänstemän) and blue-collar (arbetare) workers.26 This classic dichotomy is still of crucial importance in major parts of ­Sweden’s industrial sector, despite the fact that the Swedish labour market, in a comparative perspective, is predominantly non-hierarchical. Most general labour law provisions are applicable to more or less all categories of employees. The deviations from the general provisions relate to the specific status of the employee, such as executive managers. The legal differences between blue-collar and white-collar workers and between public sector and private sector employees are comparatively less significant. Even though additional provisions are applicable to public employees, they are also subject to ordinary labour law legislation, and the major variations between blue-collar and white-collar sectors are manifested in sectorial collective agreements and not in legislation. Home workers/teleworkers ­ (persons who carry out some of or all of their job-related duties at home) are not treated as a special category, but are ‘squeezed’ into the category of ordinary employment. Temporary agency workers are covered by specific legislation in the Private Employment Agencies and Temporary Labour Act.27 In general, temporary agency workers are employees of the temporary agency and are thereby covered by general labour legislation, including employment protection. The greater part of the temporary agency work sector and its workers are covered by collective bargaining and collective agreements.28 Apart from this collectively organised categorisation of employees, some major sub-types can be distinguished which are not, or are only to a lesser extent, covered by ordinary labour legislation such as employment ­protection.29 As discussed below, some major sub-categories of employees 26  The main features of the work being performed will determine which collective agreement applies. The inclusion criteria in the different collective agreements are generally not debated, but as seen in case AD 2010 No 69 (referred to in more detail below), conflicts can emerge. In that particular case, there was a dispute as to whether to apply the Car Rental Workers Agreement (Biluthyrningsavtalet) instead of the White Collar Employee Agreement for the Transportation Industry (Tjänstemannaavtalet, Unionen). 27  Private Employment Agencies and Temporary Labour Act (1993:440). 28  A special collective agreement covers these workers, the so-called Bemanningsavtalet. 29  A Government Inquiry (SOU 2012:80) resulted in a draft proposal for the establishment of ‘educational employment’ (utbildningsanställning), mainly to decrease high youth unemployment. The proposal suggests that this sub-type of employment applies to persons under 23 years of age who in parallel to performing employment-related duties are also pursuing

The Concept of ‘Employee’: The Position in Sweden 683 are mentioned in Swedish law, but there are significantly fewer categories than in most other comparable countries. On the contrary, the major category of ‘employee’ prevails, leaving little space for other variants. ‘Executives’ and persons in high managerial positions are explicitly excluded from the Employment Protection Act, even though they fall under the concept of ‘employee’.30 The reasons for the exclusion of this category, which appears to be comparatively narrow since it focuses on chief executives or managers of very large departments only, relate to managerial positions and the close relationship and trust between executive managers and the owner of the business or the Board of Directors. Other pieces of legislation, such as the Discrimination Act and the Health and Safety at Work Act, also apply to executives as well as to other employees.31 ‘Domestic workers’ have been excluded from statutory employment protection legislation for quite some time, even though their contractual arrangements are still considered employment contracts and they qualify as employees in terms of aspects such as social security and taxation.32 Domestic work has been an exception in Sweden since the late 1960s, despite the fact that emancipation in working life is at a comparatively high level and, in the last few years, domestic work has increased due to tax subsidies, organised by self-employed persons or by staff employed in small and medium-sized enterprises.33 Employees who are part of the employer’s family, although they are considered to be employees, are excluded from the Employment Protection Act.34 This also applies to employees in sheltered employment and in some forms of supported employment, in which workers who have a reduced working capacity due to a disability are supported in the labour market through financial subsidies to their employers.35

an education. The proposal was partly accepted by Parliament (§ 1 pt 2 p 5), but only ­covers high school educational employment (gymnasial lärlingsanställning). For a brief comment, see Källström and Malmberg (n 14) 35. 30  Employment Protection Act, para 1: ‘1. Arbetstagare som med hänsyn till arbetsuppgifter och anställningsvillkor får anses ha företagsledande eller därmed jämförlig ställning.’ 31 The legal technical concept of explicitly excluding executives from the Employment ­Protection Act is not applied to other pieces of legislation such as the Discrimination Act, the Health and Safety at Work Act (Arbetsmiljölagen (1977.1160)) or the Vacation Act (Semesterlagen (1977:480)). 32  Employment Protection Act, para 1, pt 3. 33 The previous Liberal-Conservative government introduced tax incentives for domestic work in order to change undeclared work into declared work (and to promote female entrepreneurship). The tax incentives were partly reduced by the current Social Democrat-Green government in 2016. Discussions about the effects on declared and undeclared work in the sector are ongoing. 34  Employment Protection Act, para 1, pt 3. 35  ibid, para 1, pt 4; see also Andreas Inghammar, Funktionshindrad—med rätt till arbete (Lund, Juristförlaget i Lund, 2007) 148–49.

684  Andreas Inghammar It is worth pointing out that the notion of ‘employee’ is broadly applied and that the application of other parts of labour law, such as the Health and Safety at Work Act (Arbetsmiljölagen),36 the Discrimination Act (Diskrimineringslagen)37 and tax law provisions, apply, even though the Employment Protection Act, for one reason or another, does not regulate the contractual situation between the parties. However, major differences exist between the different sub-types of employment explicitly excluded from the ­Employment Protection Act. The Working Hours Act ­(Arbetstidslagen)38 does not apply to domestic workers or executives, even though the former are ­covered by similar provisions in the Domestic Work Act.39 The reasons for the ­differentiated treatment of these sub-types of employees vary between the different categories, as do their typical abilities to compensate the partial lack of labour law protection by contractual means, such as payment during the notice period. Unlike many other countries, Swedish labour law does not (any longer) include a specific sub-type of ‘public employee’. There are, however, a ­number of provisions that reflect the special situation that (at least some) public employees face, but in most situations/cases, the same legislation and standards on the notion of ‘employee’ generally apply.40 B.  The Establishment of a Specific Category of ‘Workers’ A special statutory or even legal definition of ‘worker’ does not exist in Swedish labour law, even though the term ‘worker’ (arbetare) is commonly used to describe blue-collar employees. A clear distinction between such ‘categories of workers’ is sometimes difficult to establish and has been subject to scrutiny in the Labour Court.41 In Case AD 2010 No 69, the Labour Court had to decide which collective agreement to apply in a situation in which the employees of a car rental business were employed to perform ‘dual’ or ‘split’ duties, including both administrative work and rental car service. The employer applied the collective agreement for white-collar employees only, although a substantial part of the work fell within the scope of the blue-collar workers agreement, leaving the employees with less (or no) pay for overtime work, for example. The Labour Court referred to the previous case law in which the balance 36 

Health and Safety at Work Act. Discrimination Act (2008:567). 38  Working Hours Act (1982:673). 39  Working Hours Act (Arbetstidslagen (1982:673)) para 2, as well as the Domestic Work Act (lagen (1970:943) om husligt arbete m.m) paras 2 and 3. 40  See Public Employment Act (lagen (1994:260) om offentlig anställning). 41 See Labour Court decision AD 2010 No 69 and a comment in A Adlercreutz and BJ Mulder, Svensk arbetsrätt, 14th edn (Stockholm, Norstedts Juridik, 2013) 67 ff. 37 

The Concept of ‘Employee’: The Position in Sweden 685 in ‘dual’ work situations had been discussed, but also underscored the lack of stringency in the definitions. The Court came to the conclusion that the blue-collar agreement ought to apply, primarily based on the fact that the main tasks appeared to be related to car service and transportation and less to administration. In relation to employees who could prove that they were mainly involved in blue-collar work, the Court concluded that the bluecollar agreement (and overtime pay) should apply, while for those workers for whom the ‘dual’ situation leaned more towards blue-collar work, the Court decided that the white-collar agreement was applicable.42 IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration As regards the definitions of ‘employment’ and ‘employee’, Swedish case law considers worker subordination to be one of the most decisive and significant indicators for the existence of such a contract.43 In this context, it should be added that the Swedish labour market is generally considered to be comparatively ‘flat’ with less emphasis on subordination of the employee than in other countries.44 As we will see in the next section on ‘Indicators’, criteria such as subordination as well as work control and integration into the workplace are components in an overall assessment, a multi-factor test, of the definition of ‘employee’ and are not stand-alone factors for the definition. Westregård concludes that these factors or indicators are ‘not decisive individually, but rather constitute “items of circumstantial evidence” that indicate one or the other category’.45 B. Indicators The preparatory works of legislation (förarbeten) are crucial as a legal source in Swedish law, and the courts are most likely to draw on the ­conclusions in these documents. In 1975, the preparatory works to the Swedish Co-­determination Act46 presented a ‘multi-factor test’ for the definition of 42 

The Labour Court also refers to AD 1978 No 18, AD 1989 No 12 and 1961 No 29. See Källström and Malmberg (n 14) 26–27. 44  See Rönnmar (n 6) 4–5; and Engblom (n 10) 206 ff. 45 A Westregård, ‘Self-Employment versus Traditional Employment—An Analysis from the Perspectives of the Labour Market and the Individual’, Conference Paper, Labour Law Research Network Conference, Amsterdam, 2015, 4. 46  Co-determination Act. 43 

686  Andreas Inghammar ‘employee’ in relation to independent contractors. This list has since been repeatedly referred to in doctrine and preparatory works.47 The multi-­factor test comprises the following indicators for establishing or indicating an employment relationship, though a general assessment of all factors in the individual case is suggested in leading doctrine.48 A person is likely to be an employee if he or she:49 (i)

is personally obliged to perform the work, whether it is stated in a (written or oral) contract or could be presumed by the parties to the contract; (ii) has himself or herself, personally or practically personally, performed the work; (iii) is at the disposal (of the employer) continuously for work arising within the business of the employer,; (iv) has a contractual relationship with the other party, the employer, which is of a continuous, or of a ‘more lasting’, character; (v) is prohibited, under the contractual arrangement or as a consequence of the conditions of work (time or capacity for other work), from undertaking similar work on behalf of someone else; (vi) is, for the performance of the work, subject to the employer’s instructions or control in relation to how, where and when to carry out the work; (vii) has to use the machinery, tools or material provided for by the other party (the employer); (viii) is compensated for direct expenses, such as travel costs; (ix) is remunerated for the work effort, at least partially, through a guaranteed salary; (x) is, economically and socially, in a similar position to an employee.50 Most employment relationships are likely to entail nearly all of the above criteria. There are no data available, to the best knowledge of the author, on how many contractual relationships at a national level fall short when the ‘multi-factor test’ is applied. However, ‘the devil is in the detail’ and a number of arrangements are probably on the brink of qualifying as an employment

47  See generally in SOU 1993:32, 216 ff, SOU 1994:141, 74 ff; Rönnmar (n 6) 3; Källström and Malmberg (n 14) 26. 48  Adlercreutz (n 4); Adlercreutz and Mulder (n 41) 60. See also Labour Court decisions AD 1958 No 31, AD 2002 No 40, AD 2004 No 18, AD 2005 No 16, AD 2005 No 33, AD 2012 No 24 and AD 2013 No 32. 49  The factors listed below were first combined in Government Inquiry SOU 1975:1, 721 f and repeatedly referred to in subsequent government inquiries over the years, as well as in doctrinal work. See further SOU 1993:32 p 227 ff; Engblom (n 10) 150–51; and Rönnmar (n 6) 3. 50  SOU 1993:32, 227 (translated into English by this author) and SOU 1975:1, 691, 722. See also Engblom (n 10) 149–55.

The Concept of ‘Employee’: The Position in Sweden 687 relationship. It is important to keep in mind that the d ­ ifference between an employee and a self-employed person may be difficult to r­ ecognise and that many self-employed persons holding a registered Business Tax Certificate would meet a number of the above-mentioned requirements without ever challenging their contractual status as self-employed persons, since they, and their contractor, might prefer this contractual arrangement. The existence of Business Tax Certificates could be an indicator of self-employment, but the Certificate’s significance should not be over-estimated if questioned in court. C.  The Relevance of ‘Economic Dependence’ Even though ‘economic dependence’ is one of the more significant parameters for establishing whether an employment relationship exists in the ‘multi-factor test’, it does not on its own suffice to determine the existence of such a relationship. The legal perception inevitably depends on the specificities of the sector and, indeed, the very relationship in the individual case.51 The Labour Court has addressed this in a number of cases over the past 30 years, pointing to the social and economic position of the ‘worker’, the duration of the relationship and even the age of the worker as decisive factors. In a series of cases on hairdressers working for different hair salons, the Labour Court arrived at the conclusion that a young and inexperienced hairdresser (who had been laid off) had indeed been an employee,52 while a more or less identical case of an older and more established hairdresser under the same type of contract was deemed to have been an independent contractor.53 Furthermore, the Labour Court concluded that freelancing journalists were independent contractors even though they were economically dependent on the ‘employer’ and had been so for a long period of time.54 The overall ­picture of the assessment—also in a comparative perspective—is discussed in more detail by Engblom.55

51 

SOU 1993:32, 230. AD 1978 No 7. 53 Labour Court cases AD 1979 No 12 (a hairdresser who was conducting his business at a hair salon was not considered to be an employee, but self-employed due to his degree of autonomy) and AD 1982 No 134. See also Engblom (n 10) 154; K Källström, ‘Employment and Contract Work’ (1999) 21 Comparative Labor Law and Policy Journal 157, 181 f. 54 AD 1993 No 104 as well as AD 1998 No 138. See also Freelance Agreement 1994 (Kollektivavtal mellan Svenska Tidningsutgivarföreningen och Svenska Journalistförbundet för frilansmedarbetare) para 3. 55  Engblom (n 10). Engblom conducted a comparative study while finishing his doctoral degree at the European University Institute in Florence. 52 

688  Andreas Inghammar V.  THE PRINCIPLE OF PRIMACY OF FACTS

In Swedish labour law, the notion of the primacy of facts exists ­regarding the classification of a work relationship. Accordingly, the substance of the relationship, as opposed to the form of the contract or formal criteria, determines the legal nature of the contract. The heading of the contract as such and the description of the relationship between the contracting parties are, as shown in repeated case law, not binding on the courts, even though it clearly provides an indication regarding the content of the agreement.56 For instance, in Case AD 2005 No 33, the Labour Court came to a more/ rather unusual conclusion that a chimneysweep was not employed despite the fact that his contract had been phrased as ‘employment’ twice by the municipality/principal organising the work.57 VI.  QUALIFICATION IN FULL

There are no general provisions in Swedish employment law prohibiting or contradicting the simultaneous existence of both an employment c­ ontract and a contractual arrangement outside such a contract. The limits of and interplay between such different parallel legal relationships have not been scrutinised by the case law or doctrine. The Labour Court touched upon such a situation in a case reported in 1989.58 In this particular case, the Court concluded that the consultancy agreement and the duties performed under this agreement (approximately 1,000−1,200 hours per year) did not differ from the duties under a parallel employment contract concluded between the same parties, and that the consultancy agreement constituted an employment contract and hence fell under employment legislation. The Court assessed the core components of the contractual agreement, regardless of the ‘formal’ criteria stipulated in that contract and determined that the contractual arrangement should be deemed an employment contract. However, the Court did not find that such an arrangement could not be applied in other situations.59 In the recent corresponding case law, the Court took a similar perspective.60 The issue relates, or could relate, to the 56  See, eg, Labour Court decision AD 2005 No 33 and Government White Paper Ds 2002:56 113 ff; Lunning and Toijer (n 9) 24–25. For a critical comment, see Källström and Malmberg (n 14) 27–29. 57  The Labour Court made it clear that the outcome was extraordinary and that a party to a contract could usually rely on such information; see AD 2005 No 33. 58  Labour Court decision AD 1989 No 81. 59 ibid. 60  Labour Court decisions AD 2012 No 24, AD 2010 No 42 and AD 2008 No 31. These cases all touch upon the balance between employment and self-employment, even though they do not directly relate to the issue of qualification in full, but rather to the consequences of a contractual arrangement being perceived as an employment contract.

The Concept of ‘Employee’: The Position in Sweden 689 recent discussion on bogus self-employment, in which employment arrangements are bogusly organised to look like self-employment.61 VII.  LIMITS TO THE FREEDOM OF CONTRACT

The Swedish labour market is characterised by the freedom of contract. The contracting parties are free to enter into (more or less) whatever contractual relationship they choose to in order to organise and perform work. The doctrine of pactum turpe constitutes a limit to contractual arrangements which might not have support under legislation. Illegal contracts, such as prostitution, have been described as such arrangements, while applying the doctrine of pactum turpe on any part of an illegal employment contract has been argued to be unjust.62 There are, from a comparative point of view, some features that should be monitored/scrutinised. As a general rule, before an employer who is bound by a collective agreement allows a person ‘to perform certain work on his behalf or in his business’ without that person being or becoming an employee of the given employer, the employer is required to initiate negotiations with the trade union if the work to be performed is long term in nature or necessitates specific expertise. If the trade union concludes that such action may be in violation of the law, collective agreements or generally accepted practices, it can prohibit the employer from concluding such ‘arrangements’.63 These legal provisions significantly strengthened the position of trade unions which conclude collective agreements at the ­workplace.64 Furthermore, they also constitute a deviation from the overarching principles of contractual freedom, with the aim of preventing the concept of employment and rights associated with employment from being diluted. Based on the objective of preventing circumventions of labour law ­provisions and the corresponding risk of denial of employee rights ­(primarily employment protection and rights connected to working time regulations and holidays), the Labour Court has repeatedly ‘seen through’ contractual arrangements and has ruled that they are employment contracts.65 In general, 61  Bogus self-employment in Swedish labour law has recently been discussed by Westregård. See generally Westregård (n 45) 1–2. 62  In relation to the employment arrangements of undocumented migrant workers, what is considered highly problematic is the denial of all rights to ‘employees’ derived from their work for the benefit of their similarly irregular employer. See also A Inghammar, ‘The Employment Contract Revisited: Undocumented Migrant Workers and the Intersection between International Standards, Immigration Policy and Employment Law’ (2010) 12(2) European Journal of Migration and Law 193. See also SOU 2010:63 EU:s direktiv om sanktioner mot arbetsgivare, 172–74; and generally the Swedish Supreme Court in NJA 1997 s 93. 63  Co-determination Act, ss 38 and 39. 64  For an introduction in English, see R Eklund, T Sigeman and L Carlson, Swedish Labour and Employment Law: Cases and Materials (Uppsala, Iustus Förlag, 2008) 39 f. 65  See, eg, Labour Court decision AD 2002 No 40. The Court found that the applicant, an insurance broker, was not an employee with the insurance provided, but a self-employed person.

690  Andreas Inghammar the Labour Court is vigilant when it comes to exposing employers’ attempts to dress up/disguise employment relationships as other forms of contractual arrangement.66 Such a ‘relabelling’ of employment relationships between employers and employees/self-employed persons has implications under tax and social security law. When a person no longer qualifies as a selfemployed person but rather as an employee, the employer has to pay taxes and social insurance contributions in accordance with the law and the applicable collective agreement.67 These costs are comparatively high in S­ weden (contribution to social security ranges between 32 and 52 per cent and the preliminary individual income tax withheld and administered by the employer lies within a progressive range of between 30 and 58 per cent of the income). VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

The notion of ‘employee’ in relation to the most important legal provisions, the Employment Protection Act68 and the Co-determination Act,69 is mandatorily applied and, as such, is not open to modification in collective agreements. However, when ruling on cases involving the notion of ‘employment relationship’, the Swedish Labour Court has repeatedly taken note of regulations in collective agreements.70 The rationale behind this, although the notion of ‘employee’ is not really subject to definition by collective agreements, may vary. In some cases, it has been argued that the contractual arrangement ought to fall under the collective agreement concluded by the parties—as an employment contract—without triggering the employment status under the law.71 In other cases, acceptance of a contract as an employment contract under a collective agreement has also been shown/proven to be decisive, which is not very surprising, given the importance of collective agreements in Swedish labour law.72 An interesting 66 

See generally Rönnmar (n 6) 4. social contributions are primarily regulated in the Social Contributions Act (Socialavgiftslagen (2000:980)). Most workplaces in Sweden are covered by collective agreements which usually stipulate additional contributions—not least to supplementary pension schemes—in the range of an additional 5–18 per cent. 68  Employment Protection Act. 69  Co-determination Act. 70  AD 1982 No 105, AD 1985 No 70, AD 1994 No 104. However, Lunning and Toijer conclude that these results should not be considered as implying that the notion of ‘employee’ or of ‘employment relationship’ as such is decided by collective partners, only that collective agreements have had normative influence, in addition to other aspects, on the decisions. See Lunning and Toijer (n 9) 25. 71  Compare AD 1982 No 105; see also Rönnmar (n 6) 4; and cf Engblom (n 10) 154 f and Ds 2002:56, 120 ff. 72  See generally AD 1987 No 21; cf Engblom (n 10) 159. 67  Mandatory

The Concept of ‘Employee’: The Position in Sweden 691 agreement in this regard is the collective agreement between the ­Swedish Newspaper ­Federation (employer) and the Swedish Union of Journalists (employee), the so-called Freelance Agreement 1994. This agreement in a sector ­characterised by a variety of contractual arrangements excludes the notion of ‘freelance ­journalists’ from the scope of ‘employee’.73 A.  Social Partners The importance of the social partners for the definition of the employment relationship is primarily related to the collective bargaining process and collective agreements. The Swedish labour market is a ‘single channel model’ placing the collective authority of the employees in the hands of trade unions with some exemptions in parts of the health and safety at work legislation, where employees are represented by a workplace representative (skyddsombud).74 There are no Work Councils in Sweden as there are in many other Member States. Responsibilities and rights otherwise assumed by the Work Councils are usually a mandate of the local branch of the trade union. B.  Custom and Practice Custom plays a special role with regard to the determination of a work relationship as an employment relationship, especially in connection with definitions included in collective agreements. Established customs and provisions in collective agreements might influence the notion of ‘employee’ and in court turn out to be decisive for the categorisation of a person’s status as an employee or self-employed person. Some situations have brought about specific solutions with regard to the perception of a person as an employee under a regular employment contract or in relation to a collective agreement and collective labour law. The Labour Court already concluded in 1982 that pre-scheduled parental participation in municipal childcare (kindergarten), which resulted in lower childcare fees for participating parents, could be considered work and could fall under the applicable collective agreement.75 The case concerned the issue whether the municipality had violated the collective agreement by not applying the provisions in the collective agreement to the participating parents. However, it is not clear whether this would work the other way around, ie, that the participating parents can claim 73 

See Freelance Agreement, paras 1–3. Health and Safety at the Workplace representative is primarily appointed by the trade union, if there is a collective agreement in the workplace, but he or she represents all employees. 75  Labour Court decision AD 1982 No 105; see also AD 1985 No 70 and 1994 No 104. 74 The

692  Andreas Inghammar rights under employment law based on the arrangement. It is important to interpret the notion of ‘employment’ in relation to the specific legislation and circumstances examined in the individual case.76 It should also be added that the social partners in different sectors and branches of the industry have the possibility of furthering negotiate collective agreements in order to adapt the notion of employee to their specific conditions. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions There are no legal presumptions as regards the status of the individual and the notion of ‘employee’. In addition, there is no easing or shifting of the burden of proof as regards determinations of employment relationships. General civil law standards on the burden of proof apply.77 B.  The Burden of Proof Likewise, no presumption exists on the categorisation of specific groups of working persons as employees or self-employed persons. Instead, the general notion of ‘employee’—and the courts’ assessments of this notion— applies. Most temporary agency workers are employees (of the temporary agency firm).78 When an employment contract is concluded, there is a legal presumption in favour of a permanent employment contract over a fixedterm contract and the employer will have to prove that the parties agreed upon the employment relationship being concluded for a fixed term and not permanently.79 X.  SPECIFIC PROCEDURES

There is no administrative procedure for parties to determine the nature of the employment relationship. Disputes on the notion of ‘employee’ and 76 

Lunning and Toijer (n 9) 25. eg, R Nordh, ‘Bevisbörda och beviskrav i tvistemål’ (2012) Svensk Juristtidning 781–99, with further references, primarily to doctrinal work. 78  For a recent legal examination of Swedish agency workers, see A Berg, Bemanningsarbete, flexibilitet och likabehandling. En studie av svensk rätt och kollektivavtalsreglering med komparativa inslag (Lund, Juristförlaget, 2008). 79  Employment Protection Act, para 4; see also Lunning and Toijer (n 9) 168–70. 77 See,

The Concept of ‘Employee’: The Position in Sweden 693 other issues relating to labour law and collective agreements are settled in court under private (civil) law provisions. Apart from the administrative conclusions by the Swedish Tax Authority and the partly corresponding Swedish Social Insurance Agency (Försäkringskassan), which only provide guidance without being mandatory for the Labour Court, there are no administrative procedures to determine whether a relationship is one of employment or not. Registration for a Business Tax Certificate and payment of taxes and social security contributions are not indicative features for the Labour Court.80 As discussed above, the real nature of an employment relationship is reviewed in a general, comprehensive way, in which the Labour Court takes administrative perceptions of employment (tax and social insurance) into account, without being normatively bound to these perceptions. It is not possible to determine the nature of an employment relationship in advance. Apart from Health and Safety Inspectors, there are no Labour Inspectors in Sweden, but the implementation of the provisions in employment contracts and collective agreements is monitored by the trade unions, primarily at the local level.81 Since the vast majority of labour disputes are settled before they reach court, primarily with the involvement of strong negotiating bodies (trade unions), the number of cases settled in the Labour Court amounts to approximately 400 per year, but a significant number of these cases are not reported, many of which are settled directly by the parties before the Court.82 For cases involving employees represented by their trade union, the Labour Court is the first and only court to hear the case. The court proceedings in such cases are preceded by collective negotiations at the local and central levels. If the dispute concerns an unorganised labourer, which is more likely to be the case in disputes on the distinction between employment or self-employment, the case is initially heard in the District Court, with the possibility of appeal to the Labour Court.83 XI.  THE EXTENSION OF RIGHTS

The rights of employees—and employers’ duties—which generally apply within the employment contract can, to some extent, be extended to persons who are comparable to employees. This applies most significantly

80 

See section I.A above. This structure is implied in the Co-determination Act. 82  The Annual Report 2014 of the Labour Court is available at www.arbetsdomstolen.se. The Labour Court website provides statistical information and full text cases. 83 Labour Dispute Procedural Act (lagen (1974:371) om rättegången i arbetstvister) c 2, para 2. 81 

694  Andreas Inghammar in three different situations. First, so-called dependent contractors under ­paragraph 1 part 2 Co-determination Act84 will in relation to the provisions of that ­specific legislation be considered employees.85 Second, employer duties could, under the Health and Safety at Work Act (Arbetsmiljölagen),86 be extended to cover sub-contractors, self-employed and other personnel not employed by the employer.87 Third, employee rights can be extended to persons who are not regularly employed, such as agency workers as well as job applicants under the scope of anti-discrimination law. In relation to the applicable sections, discrimination law will have the same coverage for these persons as for employees.88 The most important feature of this development is not directly to manifest or expand the concept of ‘employee or employment contract’, but to establish a responsibility for the ‘employer’ (or at least someone) in control of the business in which the work is undertaken. A.  ‘Employee-Like’ Persons Persons conducting work at a workplace without being ‘employees’ of the employer controlling the workplace might, in some senses, have similar rights to those regularly employed in the business. As mentioned above, individuals in paragraph 1 part 2 part Co-determination Act89 are considered employees as regards the provisions of the co-determination legislation. It is argued that the importance of the category ‘dependent contractors’ has decreased in light of the broadening of the notion of ‘employee’ and the inclusion of these individuals under the concept of ‘employment’.90 B.  Equality and Anti-discrimination Law The equal treatment legislation has broadened the concept of ‘employee’ in relation to discrimination. The Swedish development in this field started with the Equality Act91 (lagen om jämställdhet mellan kvinnor och män i

84 

Co-determination Act, para 1, pt 2. Labour Court decisions AD 2006 No 24, AD 2004 No 18 and AD 1982 No 105. 86  Health and Safety at Work Act. 87 See ibid c 3; the provisions focus the responsibilities of the employer/actor actually ­controlling the work site. 88  Discrimination Act, c 2, s 1(2)–(4). 89  Co-determination Act, para 1. 90  See further Prop 1975/76:105 Bilaga 1, 323, Prop 1978/79:175, 110 (in which the ­concept is discussed in relation to the then-introduced Equality Act). See also Adlercreutz and Mulder (n 41) 82; Rönnmar (n 6) 9; and Engblom (n 10) 143, 160 ff. 91  Equality Act (1979:1118). 85 

The Concept of ‘Employee’: The Position in Sweden 695 arbetslivet),92 which has now been replaced by the Discrimination Act ­(Diskrimineringslagen),93 which implements EU law on discrimination (not only in working life). The provisions specifically addressing discrimination ‘at work’ cover individuals who:94 (i) are employees; (ii) make an inquiry about a position or apply for a job; (iii) apply for a position as a trainee or are participating in practical training (school pupils); (iv) are hired temporarily or recruited from another employer as temporary agency workers.95 The broader scope of inclusion in the Discrimination Act96 has importance when addressing the previously discussed exclusions of certain categories of employees from the Employment Protection Act97 and other provisions in labour law. The discrimination legislation, in contrast to other significant parts of employment and labour law, is compulsory and cannot be replaced by a collective agreement.98 Moreover, the concept is also scrutinised under EU law and does not lie in the exclusive hands of national definition.99 The definition of ‘employee’ under the Discrimination Act relies on the traditional concept in labour law discussed above in this chapter, without the exclusion of specific groups, such as managers, home workers or ­relatives.100 The expansion to other groups of ‘soon-to-be’ or even ‘not-to-be’ employees is more innovative. Job applicants and persons making inquiries about a position101 are explicitly covered by the protection against discrimination, while in contrast to the legislation of some other Member States, the Swedish Act does not cover employment advertisements, which could be discriminatory without being covered by the law.102 When it comes to temporary agency workers, who have been

92 

See the preparatory works in Prop 1978/79:175. Discrimination Act. 94  ibid c 2, para 1. 95 This coverage is significantly broader than the corresponding definition (or lack of ­definition) in other parts of Swedish employment law. See also S Fransson and E Stüber, ­Diskrimineringslagen, En kommentar (Stockholm, Norstedts Juridik, 2010) 136 ff. 96  Discrimination Act. 97  Employment Protection Act. 98  Discrimination Act, c 1, para 3. 99  Case 256/01 Allonby v Accrington & Rossendale College [2004] ECR I-875; see also Case 357/89 Raulin v Minister van Onderwijs en Wetenschappen [1992] ECR I-1027. 100  See also Fransson and Stüber (n 95) 137–38. 101  Persons ‘making inquiries’ were included since the government concluded that persons of foreign origin at times were rejected at a very early stage, even before actually applying for a position. See also Prop 2007/08:95 s 135 and Fransson and Stüber (n 95) 141. 102 See SOU 2004:55, 217; Fransson and Stüber (n 95) 139 f. However, discriminatory ­decisions undertaken in line with such an advertisement would be covered by the Act. 93 

696  Andreas Inghammar protected by the Act since 2008,103 there could be some confusion, since the employer’s major duties remain with the work agency (bemanningsföretag) and only some managerial duties are transferred to the business contracting the worker. However, decisions made at the workplace level could be scrutinised in relation to this ‘employer’, while other decisions, primarily as regards salary, will still be reflected in the employer (work agency)–employee relationship and will be subject to claims of discrimination that may emerge in that relationship.

103 

See Prop 2007/08:95 s 136.

34 The Concept of ‘Employee’: The Position in Switzerland WOLFGANG PORTMANN

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

I

N SWITZERLAND, THERE is a statutory definition (Legaldefinition) of the term ‘contract of employment’ (Arbeitsvertrag). This term is defined in Article 319(1) of the Code of Obligations (Obligationenrecht)1 as follows: By means of an individual contract of employment, the employee undertakes to work in the service of the employer for a limited or unlimited period and the employer undertakes to pay him a salary based on the amount of time he works (time wage) or the tasks he performs (piece work).2

According to case law, this means that the following four elements are constituent: work performed by the employee; work performed for a given time (Dauerschuldverhältnis); payment of wages by the employer; and integration of the employee into another’s organisational structure.3 The fourth element indicates in particular that the employee is in a subordinate

1 

SR (classified compilation, Systematische Rechtssammlung) 220. According to s 1173a art 1(1) of the Civil Code (Allgemeines Bürgerliches Gesetzbuch, LR 210.0), the same applies in Liechtenstein, where Swiss labour and employment law has been incorporated to a large extent and often without modification. For this reason, this chapter also contains references to the law of Liechtenstein. The courts in Liechtenstein usually follow Swiss legal doctrine and case law. Nevertheless, certain differences can be explained by the fact that, unlike Switzerland, Liechtenstein is a member of the European Economic Area. 3 Federal Supreme Court of 25 February 2004—4C.226/2003—JAR (Jahrbuch des Schweizerischen Arbeitsrechts) 2005, 150. 2 

698  Wolfgang Portmann relationship to the employer.4 However, it does not mean that the employee must be physically present on the premises of the enterprise to perform his or her work. In general, no formal requirements exist for concluding a contract of employment (Grundsatz der Formfreiheit). Thus, the contract of employment can be concluded by an oral agreement or certain conduct implying an intention to form a contract of employment (konkludentes Verhalten).5 However, an apprenticeship contract (Lehrvertrag) is valid only if it is in writing (Gültigkeitsvorschrift).6 The same applies to the contract between the employer and the members of a ship’s crew (Heuervertrag).7 The commercial traveller’s contract (Handelsreisendenvertrag) must also be concluded in writing. However, if this requirement is disregarded, the contract is nevertheless valid (Ordnungsvorschrift): in the absence of a written contract, the employment relationship is determined by statutory provisions and customary working conditions;8 this covers the salary in particular. If the parties to the contract differ on the amount of the salary which is usually paid in the corresponding sector, the courts will have to determine the owed amount.9 The same applies analogously to the contract with a temporary agency worker (Leiharbeitsvertrag).10 Sometimes, collective agreements (Gesamtarbeitsverträge), works agreements (Betriebsvereinbarungen) or agreements between individual parties provide that contracts of employment need to be concluded in writing.11 In any case, attention has to be paid to the employer’s duty to inform the employee in writing of the core elements concerning the employment relationship.12 Where the employment contract has been concluded for an indefinite duration or for longer than one month, within one month of the beginning of the employment relationship, the employer must inform the employee in writing of the names of the contracting parties, the date of the commencement of the employment relationship, the employee’s function, the salary and any additional benefits, as well as the length of the working week.13 4  The employer is entitled to issue general directives and specific instructions regarding the performance of the work and the conduct of employees in his or her business; the employee must comply in good faith with the employer’s general directives and specific instructions (art 321d of the Code of Obligations). 5  W Portmann and JF Stöckli, Schweizerisches Arbeitsrecht, 3rd edn (Zurich, Dike, 2013) para 108. 6  Article 344a(1) of the Code of Obligations. 7  Article 69(2) of the Navigation Act (Seeschifffahrtsgesetz, SR 747.30). 8  Article 347a(1) and (2) of the Code of Obligations. 9  Federal Supreme Court of 4 May 2005—BGE 131 III 439. 10  Article 19(1) and (3) of the Recruitment Act (Arbeitsvermittlungsgesetz, SR 823.11). 11  See, eg, art 9(1) of the collective agreement in the bakery trade 2015–2018 and art 3.1 of the collective agreement in the retail trade Geneva 2013–18. 12  See W Portmann, ‘Die Informationspflicht des Arbeitgebers gemäss art 330b OR—Ein neues Instrument gegen Lohn- und Sozialdumping’ (2007) Zeitschrift für Arbeitsrecht und Arbeitslosenversicherung (ARV) 1. 13  Article 330b(1) of the Code of Obligations.

The Concept of ‘Employee’: The Position in Switzerland 699 A contract of employment may be void if, in particular, its terms are impossible (Unmöglichkeit), it breaches the law (Rechtswidrigkeit) or it is contrary to public mores (Sittenwidrigkeit).14 On the other hand, it is merely voidable if, in particular, there is a defect in consent such as an error, fraud or duress (Willensmangel).15 Often, the nullity does not cover the contract of employment as such, but only the unlawful parts of it (Teilnichtigkeit). There are statutory provisions from which no derogation is permissible to the detriment of either the employer or the employee.16 Any individual or collective agreement that derogates from these provisions to the detriment of the employer or the employee is void.17 Furthermore, there are statutory provisions from which no derogation is permissible that is only to the detriment of the employee.18 Again, any individual or collective agreement that derogates from such provisions to the detriment of the employee is void.19 In addition, any agreement between participating employers and employees that contradicts the compulsory provisions of a collective agreement is void and replaced by those provisions; however, such an agreement may be valid if it is to the benefit of the employee (Günstigkeitsprinzip).20 Where an employee performs work in good faith for the employer under a contract which is subsequently found to be invalid, both parties must discharge their obligations under the employment relationship as if the contract had been valid until such time as one party terminates the relationship on the grounds of the invalidity of the contract.21 Thus, if work that has been performed is based on a contract of employment that is in principle invalid because of defects as to content, form, capacity to act or lack of will, the contract will be deemed valid as regards the past.22 B.  Employment Relationship: Basic Definition There is no statutory definition of the term ‘employment relationship’ (Arbeitsverhältnis). According to case law, the definition of ‘employment

14 

ibid art 20(1). ibid arts 23–31. 16  Bilateral mandatory provisions (beidseitig zwingende Bestimmungen) (art 361(1) of the Code of Obligations). For instance, parties may not derogate from the employee’s duty to perform overtime if necessary or from the right to terminate a fixed-term contract of employment after 10 years. 17  ibid art 361(2). 18  Unilateral mandatory provisions (einseitig zwingende Bestimmungen) (art 362(1) of the Code of Obligations); eg, parties may not aggravate the employee’s liability or diminish the employee’s right to be paid in the event of sickness. 19  ibid art 362(2). 20  ibid art 357(2). 21  ibid art 320(3). 22  See section IX.A below. 15 

700  Wolfgang Portmann relationship’ derives directly from the definition of ‘contract of employment’ provided in the statute. Therefore, the following four elements are constituent: work performed by the employee; work performed for a given time (Dauerschuldverhältnis); payment of wages by the employer; and integration of an employee into another’s organisational structure.23 The fact that the employment relationship must be based on a contract of employment does not mean, however, that the contract of employment must be based on a real agreement. According to Article 320(2) of the Code of Obligations, the contract of employment is deemed to have been concluded where the employer accepts the performance of work over a certain period in his or her service which in the circumstances could reasonably be expected only in exchange for a salary.24 Furthermore, no agreement between the parties to the contract of employment is needed in the case of a transfer of undertaking. Where the employer transfers the business or a part thereof to a third party, the employment relationship and all attendant rights and obligations pass to the acquirer as of the day of the transfer, unless the employee refuses such a transfer.25 Thus, the contract of employment between the new owner and the employee results from a legal provision, not from a contractual agreement between the parties concerned. An exception exists in the case of a transfer of a company in insolvency.26 In the case of temporary agency work, there is an ordinary employment relationship between the temporary agency and the worker, but not between the user undertaking and the worker. However, the latter relationship can be seen as a ‘de facto employment relationship’ (faktisches Arbeitsverhältnis), as some rights and duties of the employer (like the power to direct and the duty of care) are legally transferred to the user undertaking.27 The employment relationship in the public sector (öffentlichrechtliches Dienstverhältnis) is, in general, established by a written contract of employment28 or sometimes by an administrative order (Verfügung). According to Article 342(1)(a) of the Code of Obligations, the provisions of the Confederation, cantons and communes regarding employment relationships under public law are reserved.29 The same applies to public law corporations and bodies (öffentlichrechtliche Körperschaften und Anstalten). Thus, about 2,000 different public employment laws exist in Switzerland.

23 

Federal Supreme Court of 9 February 2009—4A_553/2008. See also section I.A above. The same applies in Liechtenstein as provided by s 1173a art 2(2) of the Civil Code. 25  Article 333(1) of the Code of Obligations. 26  ibid art 333b, in force since 1 January 2014. 27  W Portmann and R Rudolph, in H Honsell et al (eds), Basler Kommentar—Obligationenrecht I, 6th edn (Basel, Helbing Lichtenhahn, 2015) art 319, para 23. 28  See, eg, art 8(1) of the Federal Personnel Act (Bundespersonalgesetz, SR 172.220.1). 29  In Liechtenstein, the State Personnel Act applies (Staatspersonalgesetz, LR 174.11). 24 

The Concept of ‘Employee’: The Position in Switzerland 701 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition The term ‘employee’ is not defined in the Code of Obligations. According to case law, the definition of ‘employee’ results directly from the definition of ‘contract of employment’ which is derived from the statute.30 An employee is a person who performs work based on a contract of employment for a given time against wages while being integrated into another’s organisational structure. He or she is subordinated to the employer and is personally dependent upon him or her. The employee must comply in good faith with the employer’s general directives and specific instructions ­(Befolgungspflicht).31 According to the dominant legal doctrine, only natural persons (unlike legal persons) can qualify as employees.32 Beyond employment contract law, different definitions of the term ‘employee’ exist. In occupational health and safety law ­(Arbeitsschutzrecht),33 an employee is any person who permanently or temporarily is employed by an establishment (Betrieb) subject to the Employment Act (Arbeitsgesetz) during the entire working time or a part of it. Also regarded as employees are apprentices, trainees, volunteers and other persons who work in an undertaking mainly for their education or professional development.34 Consequently, employment in an establishment is of crucial importance in determining employee status. Contrary to the definition of ‘employee’ in private labour law, it is not required that the employment is based on a contract of employment.35 Thus, persons who perform work in a user undertaking, in a charitable organisation without remuneration or based on an innominate or mixed contract36 must also be considered employees in this sense. The term ‘employee’ is limited in other respects by the fact that the ­Employment Act is generally not applicable to certain categories of employees, for instance, to members of the clergy, employees who perform a senior managerial function (höhere leitende Tätigkeit) or who are engaged in an

30 

See section I.A above and also Federal Supreme Court of 9 February 2009—4A_553/2008. Article 321d(2) of the Code of Obligations. 32 This is derived from art 321 of the Code of Obligations, whereby, in principle, the employee must carry out the contractually assumed tasks in person; see M Rehbinder and JF Stöckli, in H Hausheer et al (eds), Berner Kommentar, vol VI/2/2/1 (Berne, Stämpfli, 2010) art 319, para 19; A Staehelin, in P Gauch et al (eds), Zürcher Kommentar, vol. V/2c, 4th edn (Zurich, Schulthess, 2006) art 319, para 4. 33  Which contains provisions on, for example, maximum weekly working hours, night time and Sunday work. 34  Article 1 of the Ordinance 1 to the Employment Act (Verordnung 1 zum Arbeitsgesetz, SR 822.111). 35 Staatssekretariat für Wirtschaft SECO, Direktion für Arbeit, Arbeitsbedingungen (ed), Wegleitung zum Arbeitsgesetz, 6th edn (Berne, Loseblattsammlung, 2011) art 1 s 2. 36  See section VI below. 31 

702  Wolfgang Portmann academic or independent artistic activity (wissenschaftliche oder selbständige künstlerische Tätigkeit), homeworkers and commercial travellers.37 Furthermore, specific rules apply to employees in the public sector.38 An employee in this sense is one whose employment is based on a contract of employment under public law or an administrative order (Verfügung). In the area of social security law and tax law, there is no uniform definition of ‘employee’. Generally, it can be said that the classification is made in terms of dependent and independent work. There are examples in connection with the duty to pay contributions and taxes.39 Central criteria are considered to be the existence of a subordinate relationship and the bearing of a specific business risk.40 Contrary to private labour law, it is not required that dependent work is performed based on a contract of employment. In principle, someone who qualifies as an employee under private labour law is at the same time a dependent worker according to social security law, while someone who is not an employee under private labour law may also qualify as a dependent worker according to social security law.41 B.  Employer: Basic Definition There is no statutory definition of the term ‘employer’ in the Code of Obligations. According to case law, the definition of this term stems from the definition of ‘contract of employment’ deriving from the statute42 and, correspondingly, from the term ‘employee’.43 Accordingly, an employer is one who receives work based on a contract of employment for a given time under integration into his or her organisational structure and who pays wages. The employer is entitled to issue general directives and specific instructions regarding the performance of the work and the conduct of employees in his or her business (Weisungsrecht).44 Natural persons, legal entities and even a plurality of persons without legal personality45 (Rechtsgemeinschaften)

37 

Article 3 of the Employment Act (Arbeitsgesetz, SR 822.11). See section I.B above. 39 Articles 4–9bis of the Old Age and Survivors Insurance Act (Bundesgesetz über die Alters- und Hinterlassenenversicherung, SR 831.10); arts 2–3 of the Disability Insurance Act ­(Bundesgesetz über die Invalidenversicherung, SR 831.20); arts 17–19 of the Federal Act on Direct Federal Taxation (Bundesgesetz über die direkte Bundessteuer, SR 642.11). 40  Federal Supreme Court of 17 September 1996—BGE 122 V 281. 41 Federal Supreme Court of 27 June 1996—BGE 122 V 169; Labour Court of Appeal Geneva of 27 May 2004—JAR 2005, 374; G Aubert, in L Thévenoz et al (eds), Commentaire romand—Code des obligations I, 2nd edn (Basel, Helbing Lichtenhahn, 2012) art 319, para 24. 42  Federal Supreme Court of 9 February 2009—4A_553/2008. See also section I.A above. 43  See section II.A above. 44  Article 321d(1) of the Code of Obligations. 45  Such as groups of companies or when using employee sharing. 38 

The Concept of ‘Employee’: The Position in Switzerland 703 can qualify as employers.46 Possible employers under public law are the Confederation, cantons, communes, public law corporations and bodies.47 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees There are basically two different sub-types of employees. On the one hand, there are sub-types of employees to which specific statutory rules apply. In particular, mention may be made of apprentices (lernende ­Personen), commercial travellers (Handelsreisende), homeworkers ­(Heimarbeitnehmer), temporary agency workers (Leiharbeitnehmer), members of a ship’s crew (Mitglieder der Schiffsbesatzung, Seeleute), posted workers (entsandte Ar­beitnehmer) and employees in the public sector (Angestellte im ­öffentlichen Dienst). With regard to all the above-mentioned categories, the general ­provisions on ordinary employees apply subsidiarily.48 An apprenticeship contract is a contract whereby the employer undertakes to provide an apprentice with the requisite training for a particular vocation and the apprentice undertakes to work in the employer’s service in order to acquire such training.49 The apprenticeship contract is ruled by special provisions of the Code of Obligations50 and the Vocational and Professional Education Training Act (Berufsbildungsgesetz).51 Under a commercial traveller’s contract, the commercial traveller undertakes to broker or conclude all manner of transactions on behalf of the owner of a trading, manufacturing or other type of commercial company off the employer’s business premises in exchange for payment of a salary. Any employee who is not primarily engaged in itinerant activities or who works only occasionally or temporarily for the employer or who acts as a travelling salesman for his or her own account is not considered a commercial traveller.52 The commercial traveller’s contract is ruled by special provisions of the Code of Obligations.53 The employment protection regulated by the Employment Act does not generally apply to commercial travellers.54 Under a homeworker’s contract, the homeworker undertakes to work for the employer in return for a salary; such work will be carried out alone 46  Federal Supreme Court of 12 August 2010—9C_142/2010—BGE 136 V 268; Staehelin, Zürcher Kommentar (n 32) art 319, para 3. 47  See section I.B above. 48  Article 355 of the Code of Obligations. 49  ibid art 344. 50  ibid arts 344a–46a. 51  ibid art 14 (SR 412.10). 52  ibid art 347. 53  ibid art 347a–50a. 54  Article 3(g) of the Employment Act (Arbeitsgesetz, SR 822.11).

704  Wolfgang Portmann or with members of his or her family and in his or her home or on other premises of his or her choosing.55 The homeworker’s contract is ruled by special provisions of the Code of Obligations56 and the Homeworker’s Act (Heimarbeitsgesetz),57 which provides for specific employment protection, in particular relating to salary as well as health and safety. In addition, the employer has to inform the employee comprehensively and in writing about the working conditions before beginning the work.58 A temporary agency worker is a worker under a contract of employment with a temporary work agency with a view to being assigned to a user undertaking to work temporarily under its supervision and direction. This special contract of employment is primarily governed by the Recruitment Act (Arbeitsvermittlungsgesetz).59 A special regulation of the contract between the employer and the members of a ship’s crew (Heuervertrag) can be found in the Navigation Act (Seeschifffahrtsgesetz).60 Posted workers are subject to the specific provisions laid down in the Posted Workers Act (Entsendegesetz).61 Whoever declares himself or herself to be self-employed must prove this upon request by the control authorities in charge.62 As to employees in the public service, reference is made to the explanations above regarding their employment relationship.63 Only a few and particular provisions—notably on health and safety issues— exist regarding artists,64 journalists,65 persons working in the transport66 or agricultural sector67 and employees in family undertakings.68

55 

art 351 of the Code of Obligations. ibid arts 351a–54. 57  SR 822.31. The Employment Act does not apply additionally: art 3(f) of the Employment Act (Arbeitsgesetz, SR 822.11). 58  Article 3 of the Homeworker’s Act. 59  Article 19 (SR 823.11). 60  Articles 68–81 (SR 747.30). 61  SR 823.20. 62  Article 1a(1) of the Posted Workers Act (Entsendegesetz, SR 823.20). 63  See section I.B above. 64  See especially arts 35, 36 and 38 of the Ordinance 2 to the Employment Act (Verordnung 2 zum Arbeitsgesetz, SR 822.112). 65  ibid arts 30 and 31. 66 See Federal Act on employment in the public transport sector (Bundesgesetz über die Arbeit in Unternehmen des öffentlichen Verkehrs, Arbeitszeitgesetz, SR 822.21). 67  Pursuant to art 359(2) of the Code of Obligations, the cantons draw up standard employment contracts (Normalarbeitsverträge) for agricultural workers to regulate in particular working hours, leisure time and employment conditions for female employees and minors. The standard employment contract is a specific type of Ordinance decreed by the government. 68  The Employment Act (which regulates health and safety issues) is not applicable to undertakings in which only the spouse of the proprietor, his or her blood relatives in the ascending and descending line and their spouses and his or her stepchildren and adoptive childern are employed; see art 4(1) of the Employment Act (Arbeitsgesetz, SR 822.11). 56 

The Concept of ‘Employee’: The Position in Switzerland 705 On the other hand, there are sub-types of employees to which some specific judge-made rules apply—for instance, managerial employees (leitende Angestellte).69 According to case law, managerial employees may generally not claim payment or compensation time off for overtime.70 In addition, they are subject to an increased duty of loyalty.71 This applies equally to employees of undertakings pursuing ideological aims (Tendenzbetriebe) provided that they are representing their employer (Tendenzträger). Even outside employment, these employees are not permitted to interfere with the ideological aims of the undertaking.72 Moreover, mention may be made of the following: (i)

Part-time workers. The Code of Obligations mentions part-time work, but does not regulate it. The judge-made specific rules apply in particular to matters such as the duty of loyalty, the prohibition of competition, overtime, leisure time, holidays and salary in the event that the employee is prevented from working.73 Short-time work is a special type of part-time work which is, however, regulated by social security law.74 (ii) Fixed-term workers.75 The main problem in case law is chain contracts, which are unlawful provided there are no objective justifying reasons.76 (iii) Casual workers. In the case of casual work, typically every new assignment is based on a new contract of employment.77 (iv) Job sharers.78 There are no statutory provisions and almost no rulings on job sharing. A main issue is if one job sharer has to assume the tasks of his or her job-sharer colleague who is temporarily prevented from working.79

69  See, eg, C Hutterli, Der leitende Angestellte im Arbeitsrecht, 3rd edn (Berne, Stämpfli, 1984) 1 ff. 70  Federal Supreme Court of 8 January 2003—4C.342/2002—BGE 129 III 171. 71  Federal Supreme Court of 19 December 2000—BGE 127 III 86. 72  Portmann and Rudolph (n 27) art 321a, paras 10, 14 and art 321d, para 7; High Court of Zurich of 20 April 2001—JAR 2002, 172 (concerning an employee of a Landlord Association). 73 Staehelin, Zürcher Kommentar (n 32) art 319 OR paras 50–54. 74 Articles 31 ff of the Federal Act on the Mandatory Unemployment Insurance and the Insolvency Compensation (Bundesgesetz über die obligatorische Arbeitslosenversicherung und die Insolvenzentschädigung, SR 837.0). 75 F Vischer and RM Müller, Der Arbeitsvertrag, 4th edn (Basel, Helbing Lichtenhahn, 2014) 299–304. The Code of Obligations contains only one article on fixed-term work. 76  Federal Supreme Court of 26 January 1993—BGE 119 V 46; Federal Supreme Court of 18 July 2003—4C.126/2003—BGE 129 III 618. 77  Rehbinder and Stöckli (n 32) art 319, para 28; Labour Court of Basel of 21 September 1987—JAR 1989, 99; High Court of Fribourg of 15 October 2001—JAR 2002, 149. 78  JM Futterknecht, ‘Job Sharing’ (thesis, University of Berne, 1985) 1 ff. 79  Portmann and Stöckli (n 5) para 909.

706  Wolfgang Portmann (v)

On-call workers.80 On-call work is not regulated by law.81 According to case law, on-call work is, in principle, permitted.82 However, the employer may not suddenly reduce the usual average amount of work83 and has to pay for the employee’s on-call duty on top of his or her normal salary.84

The formerly drawn distinction between white-collar and blue-collar workers has almost lost its practical relevance. Only the Employment Act still contains a few provisions regarding white-collar workers.85 B.  The Establishment of a Specific Category of ‘Workers’ A specific category of ‘workers’ is not known in Switzerland.86 IV.  SUBORDINATION: CRITERIA AND INDICATORS/ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration According to Article 319(1) of the Swiss Code of Obligations, the employee undertakes to work ‘in the service of the employer’ (im Dienst des ­Arbeitgebers).87 Accordingly, the crucial criteria to assess whether there is dependent work or not are integration into another’s organisational structure (Eingliederung in eine fremde Arbeitsorganisation)88 and subordination (in the sense of being subject to work instructions and work control).89 The relationship between these two criteria is unclear and the legal literature on the matter is inconsistent. This author agrees with those who consider

80 

ibid paras 915–23. from standby service in the case of emergency or breakdown in the establishment (arts 14 and 15 of Ordinance 1 to the Employment Act (Verordnung 1 zum Arbeitsgesetz, SR 822.111)). 82  Federal Supreme Court of 6 May 1998—BGE 124 III 249. 83  Federal Supreme Court of 14 December 1998—BGE 125 III 65. 84  Federal Supreme Court of 6 May 1998—BGE 124 III 249. 85  See arts 9(1)(a), 9(5) and 13(1) of the Employment Act (Arbeitsgesetz, SR 822.11). These provisions cover the maximum weekly working hours and the premium for overtime. 86  The same applies in Liechtenstein. However, see the remarks on ‘employee-like’ persons in section XI.A below. 87  The same applies in Liechtenstein as provided by s 1173a art 1(1) of the Civil Code. 88 This can refer to the organisational structure of an employer or a third party; see art 333(4) of the Code of Obligations. 89  See ibid art 321d. 81  Apart

The Concept of ‘Employee’: The Position in Switzerland 707 the criterion of integration as being the more general term (Oberbegriff ), embracing subordination as its core value.90 Yet, subordination alone is not sufficient since comparatively far-reaching rights to give work instructions may exist in relation to independent service providers such as agents (Beauftragte) and contractors for work and services (Unternehmer im Werkvertrag).91 On the other hand, certain employees, in particular highly skilled professionals, are to a large extent free from instructions from their employer (fachlich weisungsfreie Arbeitnehmer),92 yet remain integrated into the employer’s organisational structure (for example, the editor-in-chief of a media company). Pursuant to Article 321d of the Code of Obligations, the employer is entitled to issue general directives and specific instructions regarding the performance of the work and the conduct of employees in his or her business, and the employee must comply in good faith with the employer’s general directives and specific instructions.93 From this power to direct, legal doctrine deduces the employer’s right to control.94 The more extensive the right to give instructions and to control the work in a specific case, the more likely it is that an employment relationship can be assumed.95 Apart from the degree of subordination, additional factors have to be considered, such as a commitment to mandatory working hours, an allocation of a workplace in an enterprise or the provision of tools and materials for work.96 The courts have to examine the facts of each case and to consider the circumstances in total in order to decide whether or not an employment relationship exists.97 In other words, a typological method is applied (typologische Würdigung des Gesamtbildes).98 This has the advantage of allowing flexibility and justice in each individual case (Einzelfallgerechtigkeit); however, the drawback is the increased difficulty in predicting a court decision, that is, a lack of legal certainty (Rechtssicherheit).

90  eg, Rehbinder and Stöckli (n 32) art 319, para 6; U Streiff, A von Kaenel and R Rudolph, Arbeitsvertrag—Praxiskommentar, 7th edn (Zurich, Schulthess, 2012) art 319, para 2; see also Federal Supreme Court of 9 February 2009—4A_553/2008. 91  cf, eg, art 397 of the Code of Obligations. 92  G Hüber, Der fachlich weisungsfreie Arbeitnehmer (Zurich, Juris, 1975) pp 1 ff. 93  The same applies in Liechtenstein, see s 1173a art 7 of the Civil Code. The employer’s right to direct and supervise the work can be exercised by superiors or even by third parties, which is in particular the case in temporary agency work. 94  Portmann and Rudolph (n 27) art 321d, para 4. 95  A high degree of subordination speaks for a contract of employment; see Federal Supreme Court of 4 February 1986—BGE 112 II 41. 96  See the indicators in section IV.B below. 97  Federal Supreme Court of 25 February 2004—4C.226/2003. 98  Vischer and Müller (n 75) 26; Rehbinder and Stöckli (n 32) art 319, para 43.

708  Wolfgang Portmann B. Indicators In addition to the major criterion of subordination—which implies that the employee is subject to work instructions and control—there are many other judge-made indicators to assess the existence of an employment relationship:99 Commitment to mandatory working hours and control thereof.100 However, there are employees who are not subject to fixed working hours, for instance, managerial employees (leitende Angestellte), homeworkers and job sharers. (ii) Allocation of a workplace in an enterprise.101 However, certain employees perform their work outside the premises of the enterprise (commercial travellers) or may freely choose their workplace (homeworkers). (iii) No bearing of a business risk. A direct considerable share in profits and losses argues against integration into another’s organisational structure and therefore against an employment relationship.102 If the employer defaults as creditor (Gläubigerverzug, Annahmeverzug) because he or she either does not or cannot accept the offer of work performance (due, for example, to the loss of anticipated orders), he or she remains obliged to pay the salary, but the employee is not obliged to make up the time thus lost.103 A deviant stipulation would constitute an illegal shifting of risk and is therefore prohibited.104 Yet there are cases where employees bear at least indirectly a certain business risk, for instance, if their salary equals a share in the business results (Anteil am Geschäftsergebnis)105 or if they perform short-time work (Kurzarbeit) or on-call work (Arbeit auf Abruf).106 (iv) Provision of tools and materials for work. Unless otherwise provided by agreement or custom, the employer must provide the employee with the tools and materials that the work requires.107 (i)

99  Streiff, von Kaenel and Rudolph (n 90) art 319 OR paras 2–13; Rehbinder and Stöckli (n 32) art 319 OR paras 44–45. 100 Federal Supreme Court of 24 November 1964—BGE 90 II 483; Court of Appeal of Berne of 30 March 1988—JAR 1989, 91. 101  Labour Court of Basel of 20 November 1980—JAR 1981, 216; High Court Lucerne of 18 December 2000—JAR 2001, 138. 102  For example, someone who works in another person’s hairdressing salon, who introduces his or her own clientele and is entitled to payment of 40 per cent of the turnover, is not an employee, Federal Supreme Court of 12 May 1980—BGE 106 II 45. 103  Article 324(1) of the Code of Obligations. 104  ibid art 362(1). 105  ibid art 322a. 106  On-call work has generally been declared admissible by case law; see Federal Supreme Court of 6 May 1998—BGE 124 III 249. 107 Article 327(1) of the Code of Obligations; Mixed Court of Geneva of 4 December 1986—JAR 1987, 87 (provision of a lorry).

The Concept of ‘Employee’: The Position in Switzerland 709 Fixed and/or periodic payments.108 Although the employer must generally pay wages to the employee at the end of each month, deviations thereof are possible based, in particular, on agreement or custom.109 Particularly in short employment relationships (such as fixed-term and casual work), the work performance may be remunerated with a single wage payment. Remuneration can also consist exclusively of commission,110 which can be paid irregularly. (vi) Obligation to perform duties personally. According to Article 321 of the Code of Obligations, the employee must carry out the contractually assumed tasks in person, unless arranged otherwise by agreement or the circumstances. Thus, the homeworker is allowed to carry out the work alone or ‘with members of his family’.111 (vii) Payment or compensation for overtime. Where the overtime is not compensated by time off in lieu, the employer must compensate the employee for the overtime worked by paying the normal salary and a supplement of at least one-quarter thereof, unless otherwise agreed upon in writing or under a standard contract of employment (Normalarbeitsvertrag) or collective agreement (Gesamtarbeitsvertrag).112 (viii) Commitment to a non-competition clause or prohibition of secondary employment.113 Employees may normally undertake secondary employment unless otherwise agreed upon. Exceptions are made if the secondary employment competes with the employer, harms his or her reputation or results in a decline in the employee’s performance.114 (ix) Labelling of the agreement by the parties. A contract may still qualify as a contract of employment even if the parties have labelled it otherwise, for example, as an agency contract (Auftrag).115 (x) Payment of social security contributions by an employer.116 However, even if an employee is paying the total amount of social security contributions himself or herself, he or she may nonetheless be regarded as an employee.117 (v)

108 

Federal Supreme Court of 24 February 1997—JAR 1998, 104. Article 323(1) of the Code of Obligations. 110  ibid art 349a(2). 111  ibid art 351. 112  ibid art 321c(3). 113  Federal Supreme Court of 4 February 1986—BGE 112 II 41 and of 9 February 2009— 4A_553/2008; High Court of Jura of 11 September 2000—RJJ (Revue jurassienne de jurisprudence) 2001, 145 (in a case concerning the director of a dairy). 114  Portmann and Stöckli (n 5) para 374. 115  See Federal Supreme Court of 5 September 2003—4C.78/2003—BGE 129 III 664. 116  Federal Supreme Court of 9 December 1969—BGE 95 II 623 and of 24 February 1997— JAR 1998, 104; Mixed Court Geneva of 4 December 1986—JAR 1987, 87. 117  High Court Zurich of 9 September 1999—JAR 2001, 154. 109 

710  Wolfgang Portmann (xi)

Qualification as an employment relationship according to social security and tax law. Nevertheless, in the particular case of a freelancer, the court ruled that the elements of a contract of employment were missing, even though the freelancer had been qualified as a dependent worker according to social security law.118 (xii) The person performing the work has no personal presence in the market.119 (xiii) The taking of holidays.120 (xiv) Acting in a third party’s name and for a third account.121 (xv) Full-time activity for a contract party.122 (xvi) The existence of a probation period.123 (xvii) Agreement on a long notice period124 or fixed-term work of at least one year.125 (xviii) The way of executing the contract by the parties.126 (xix) Subordination to persons who themselves work in the service of the employer (superiors).127 (xx) Dependence on an external organisational structure (whereas selfemployed persons have their own organisational structure).128 Pursuant to the aforementioned indicators, the contract of employment differs both from civil law contracts (agency contracts,129 commercial agency contracts130 and contracts for work and services)131 and company law contracts. The characteristic feature of the latter is the partnership of convenience (Zweckgemeinschaft), the equal status of the parties, the absence of 118  Labour Court of Appeal of Geneva of 27 May 2004—JAR 2005, 374; for a different assessment under tax law, see Federal Supreme Court of 5 September 2003—4C.78/2003— BGE 129 III 664. 119 Portmann and Stöckli (n 5) para 13; see also Federal Supreme Court of 17 January 1952—BGE 78 II 32. 120  High Court of Jura of 11 September 2000—RJJ 2001, 145. 121  cf Federal Supreme Court of 17 January 1952—BGE 78 II 32. 122  Federal Supreme Court of 30 October 1973—BGE 99 II 313 and of 9 February 2009— 4A_553/2008; Mixed Court of Geneva of 4 December 1986—JAR 1987, 87. 123  Court of Appeal of Ticino of 10 March 1993—JAR 1994, 113. 124  Court of Appeal of Berne of 30 March 1988—JAR 1989, 91. 125  Federal Supreme Court of 24 February 1997—JAR 1998, 104. 126  Federal Supreme Court of 7 November 2003—4C.145/2003; High Court of Lucerne of 23 November 2005—JAR 2006, 496. 127  cf Federal Supreme Court of 23 November 1904—BGE 30 II 495. 128  Federal Supreme Court of 27 June 1996—BGE 122 V 169. 129 An agency contract (Auftrag) is a contract whereby the agent undertakes to conduct certain business or provide certain services in accordance with the terms of the contract (art 394(1) of the Code of Obligations). 130  A commercial agent (Agent) is a person who undertakes to act on a continuous basis as an intermediary for one or more principals in facilitating or concluding transactions on their behalf and for their account without entering into an employment relationship with them (art 418a(1) of the Code of Obligations). 131 A contract for work and services (Werkvertrag) is a contract whereby the contractor undertakes to carry out work and the customer undertakes to pay him or her for that work (art 363 of the Code of Obligations).

The Concept of ‘Employee’: The Position in Switzerland 711 periodic payments and the bearing of a business risk. In contrast, in contracts of employment, there exists a clash of interests between the parties (Interessengegensatzvertrag), subordination in lieu of equality, periodic payments in general and the absence of a business risk borne by the employee.132 Remuneration plays a special role; however, it is not an indicator for a contract of employment since many other contracts also stipulate remuneration. Nevertheless, it can be said that remuneration is compulsory for a contract of employment.133 In other words, there can be no (proper) contract of employment if the parties have agreed that the performance will be unpaid, as is the case, for example, regarding charitable activities.134 Some authors qualify these cases as mixed contracts (gemischter Vertrag).135 Notably, according to a ruling of the Federal Supreme Court, a governing officer who from an economic point of view is identical to a legal person cannot qualify as an employee.136 Someone who performs work in the framework of a marital or kinsman-like relationship does not qualify as an employee as long as there is no additional contract of employment.137 C.  The Relevance of ‘Economic Dependence’ ‘Economic dependence’ is not a relevant criterion to assess whether or not a contract of employment exists in any given case. However, it plays a crucial role when deciding whether someone qualifies as an ‘employee-like’ person (arbeitnehmerähnliche Person).138 V.  THE PRINCIPLE OF PRIMACY OF FACTS

The principle of primacy of facts is recognised in the legal system of Switzerland.139 Accordingly, the substance as opposed to the labelling determines the legal nature of the contract.140 If all the elements of a contract of employment are fulfilled, the labelling that the parties have chosen is not relevant. If, for instance, a contract is labelled as an ‘agency contract’, it will 132 

Portmann and Stöckli (n 5) paras 26–27. Article 319(1) of the Code of Obligations. See, eg, Federal Supreme Court of 24 November 2004—4P.194/2004—JAR 2005, 304. 134  In a case where moderators were helping to build up a local radio station free of charge, the court nevertheless assumed a contract of employment; Labour Court of Zurich of 3 March 2004—ARV 2004, 170. 135 Staehelin, Zürcher Kommentar (n 32) art 319, para 24; Vischer and Müller, Der ­Arbeitsvertrag (n 75), 6; see also s 6.1 below. 136  Federal Supreme Court of 21 December 1998—BGE 125 III 78. 137  In such cases, the law grants specific ‘reasonable compensation’ claims; see art 165(1) and (2) and art 334 of the Swiss Civil Code (Schweizerisches Zivilgesetzbuch, SR 210). 138  See section XI.A below. 139  The same applies to Liechtenstein. 140  Federal Supreme Court of 5 September 2003—4C.78/2003—BGE 129 III 664. 133 

712  Wolfgang Portmann nevertheless be legally treated as a contract of employment provided that the above-mentioned elements are fulfilled.141 If the practical implementation of a contract differs from the contractual terms agreed, and provided that there is consent between the parties regarding this deviation, the courts will focus on the parties’ real actions (gelebtes Arbeitsverhältnis) and not on their initial agreement. VI.  QUALIFICATION IN FULL

As a general rule, the courts either qualify a contract as a contract of employment fully or as a different kind of contract, for example, as an agency contract (Auftrag) or a contract for work and services (Werkvertrag). If a contract as a whole qualifies as a contract of employment, the parties are barred from subjecting some parts of the contract to rules other than that of employment law.142 However, the parties are of course free to deviate from non-compulsory employment law provisions (dispositives Recht).143 The Federal Supreme Court has held that in the field of service contracts, so-called innominate contracts (Innominatverträge) and mixed contracts (gemischte Verträge) are admissible.144 Thus, legal relationships which result in the dependence of one party and which do not qualify as a contract of employment as a whole are subject to specifically adapted legal consequences.145 The condition of dependency has to reach a significant degree of intensity to justify the application of certain protective employment law provisions.146 Some authors, however, refuse to acknowledge mixed and innominate contracts, as in their view there is a numerus clausus of service contracts, and instead advocate applying the commercial agency contract provisions (Agenturvertragsrecht).147 In another case, the Federal Supreme Court assumed in principle a franchise contract, yet applied some protective employment law provisions. The reasoning behind this was that the dependence of the franchisee to the franchisor was similar to that of an employee to his or her employer. Accordingly,

141 

Court of Appeal of Basel of 21 September 1982—JAR 1983, 63. See Vischer and Müller (n 75) 36–37. 143  eg, the parties may rule out the payment for overtime (art 321c(3) of the Code of Obligations) or shorten the notice periods to a certain extent (art 335c(2) of the Code of Obligations). 144  Innominate contracts: Federal Supreme Court of 4 February 1986—BGE 112 II 41 and of 11 April 1989—BGE 115 II 108; mixed contracts: Federal Supreme Court of 13 December 1983—BGE 109 II 462 and of 12 June 1984—BGE 110 II 380. 145  Streiff, von Kaenel and Rudolph (n 90) art 319, para 2. 146  Federal Supreme Court of 9 February 2009—4A_553/2008. 147  F Schwabe, ‘Arbeitnehmerähnliche Personen—Erscheinungsformen und R ­ echtsprobleme’ (thesis, University of Zurich, 1983) 96 ff; Rehbinder and Stöckli (n 32) art 319, paras 49, 70. 142 

The Concept of ‘Employee’: The Position in Switzerland 713 the Court awarded the franchisee compensation as provided for in employment law for wrongful termination of the contract by the franchisor.148 In a similar vein, the caretaker’s contract (Hauswartvertrag) can be a mixed contract, containing elements of a lease and a contract of employment. The Federal Supreme Court has ruled that with regard to the caretaker’s performance, the caretaker’s contract is subject to employment law provisions, whereas with regard to the caretaker’s apartment, the contract is subject to the lease provisions. However, upon termination, only the statutory provisions relevant to the contract with the prevailing importance apply.149 A hybrid legal relationship also exists between a legal entity and its governing officers, for instance, between a company limited by shares (Aktiengesellschaft) and the members of the board of directors (Mitglieder des Verwaltungsrats). On the one hand, it consists of an agency contract or a contract of employment (depending on the specific case) and, on the other hand, of components which are regulated by the statutes (Statuten) and company law (the so-called ‘double relationship’—Doppelverhältnis). According to company law, the revocation of a governing officer is possible at all times; however, this does not automatically lead to the termination of the agency contract or the contract of employment.150 In legal doctrine, if there is a high degree of subordination and only limited flexibility in the organisation of work (for example, unpaid work for charitable purposes integrated into another’s organisational structure), it is disputed whether in the case of an unpaid contract only an agency contract or a mixed contract with elements of an agency contract and a contract of employment is to be assumed.151 The parties to a contract of employment are also subject to non-contractual legal relations. Notably, protected legal interests (Rechtsgüter), such as the personal and property rights of the other party, have to be respected. If, for instance, an employee is injured due to a lack of security measures taken by the employer, the latter breaches both the contractual duty of care (Fürsorgepflicht)152 and the personal rights of the employee.153 If, for example, the employee damages an engine in a factory, he or she breaches the contractual duty of diligence (Sorgfaltspflicht)154 as well as the property rights 148 

Federal Supreme Court of 26 March 1992—BGE 118 II 157. Supreme Court of 12 August 2005—4C.160/2005—BGE 131 III 566. cf also Federal Supreme Court of 18 November 2008—4A_375/2008. 150  Federal Supreme Court of 9 January 2004—4C.258/2003—BGE 130 III 213. See also Federal Supreme Court of 10 December 2001—4C.234/2001—BGE 128 III 129. 151  Arguing only for an agency contract: Rehbinder and Stöckli; Berner Kommentar (n 32) art 319, para 12; arguing for a mixed contract: Vischer and Müller, Der Arbeitsvertrag (n 75), 6; Streiff, von Kaenel, Rudolph (n 90) art 319, para 2. 152  Article 328 of the Code of Obligations. 153  See art 28 of the Swiss Civil Code. 154  Article 321a(1) and (2) of the Code of Obligations. 149  Federal

714  Wolfgang Portmann of the employer.155 Apart from preserving protected legal interests, the so-called (non-contractual) protective provisions (Schutznormen) also have to be complied with, for example, the provisions against unfair competition.156 When, for instance, the employee reveals a manufacturing or trade secret, he or she breaches not only the contractual duty of loyalty (Treuepflicht),157 but may also be responsible for committing unfair competition.158 If such actions cause financial loss, the injured party may claim both contractual and non-contractual compensation (Anspruchskonkurrenz).159 The amount of compensation which has to be paid is assessed differently in tort law and employment contract law.160 It is by all means possible that the parties to a contract of employment conclude an additional contract, for example, a fixed-term loan contract (Darlehensvertrag)161 where the employer grants the employee a fixedterm loan, or a lease contract (Mietvertrag)162 where the employer rents out an apartment to the employee. In such cases, it is important to ensure that the additional contracts do not predominantly benefit the interests of the employer. Otherwise, the so-called ‘truck prohibition’ (Truckverbot) is breached.163 For example, two independent contracts—a contract of employment and a lease contract—were held to exist in a case where, three years after commencing his employment, a cellar master and oenologist also rented an apartment above the wine cellars.164 Furthermore, according to the Federal Supreme Court, two independent contracts were also deemed to exist in a case where a professional cyclist and his team concluded both a contract of employment and a licence contract. Accordingly, the place of jurisdiction clause stipulated in the contract of employment did not apply to the licence contract.165 Finally, it is conceivable that the parties to a contract of employment who are married to each other also conclude a marital agreement (Ehevertrag).166 155 

See art 641 of the Swiss Civil Code. Unfair Competition Act (Bundesgesetz gegen den unlauteren Wettbewerb, SR 241). 157  Article 321a of the Code of Obligations. 158  See art 6 of the Unfair Competition Act (Bundesgesetz gegen den unlauteren ­Wettbewerb, SR 241). 159  AK Schnyder, W Portmann and M Müller-Chen, Ausservertragliches Haftpflichtrecht, 2nd edn (Zurich, Schulthess, 2013) notes 484 and 488. 160  Tort law: art 43–44 of the Code of Obligations; employment contract law: art 321e(2) of the Code of Obligations. 161  ibid art 312. 162  ibid art 253. 163  According to art 323b(3) of the Code of Obligations, any agreement whereby the salary must be used for the employer’s benefit is void. See also Staehelin (n 32) art 323b, para 17. 164  High Court of Neuchâtel of 30 October 2000—RJN (Recueil de jurisprudence neuchâteloise) 2000, 84. Contrary to the caretaker’s contract, in this case there was no mixed contract; see section VI above. 165  Federal Supreme Court of 15 April 2011—4A_84/2011. 166  cf arts 182–84 of the Swiss Civil Code. 156 

The Concept of ‘Employee’: The Position in Switzerland 715 VII.  LIMITS TO THE FREEDOM OF CONTRACT

The Code of Obligations guarantees the principle of freedom of contract in Article 19: The terms of a contract may be freely determined within the limits of the law.

However, the statutory definition of the contract of employment is binding and therefore cannot be modified by the parties. This basic principle is generally recognised by case law and legal literature.167 Hence, it is of no benefit if, for example, the parties label a contract as an agency contract, but which on the basis of an objective assessment qualifies as a contract of employment. However, in the case of doubt, the parties’ labelling of the contract may be considered an indicator.168 As stated above, the legal definition of a contract of employment is binding and cannot be modified by the parties. This applies equally in cases where a contract has been labelled by the parties as a contract of employment, but on the basis of an objective assessment qualifies as another type of service contract.169 Nevertheless, the parties have the option to include employment law provisions in their service contract. In this way, they convert statutory provisions into contractual provisions. They are only barred from doing so when the statutory regulation on the service contract contains conflicting mandatory provisions. For example, the parties cannot replace the mandatory right to revoke an agency contract at any time170 by employment law provisions granting protection against wrongful termination.171 VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners In rare cases, deviation from mandatory statutory provisions is at least exclusively allowed through collective agreements (tarifdispositives Recht).172 However, this does not apply with respect to the qualification of the contract. The statutory definition of a contract of employment is also binding for the parties to a collective agreement and therefore cannot be modified

167 Federal Supreme Court of 25 February 2004—4C.226/2003 (éléments constitutifs); Streiff, von Kaenel and Rudolph (n 90) art 319, para 25. 168  Portmann and Stöckli (n 5) para 14. 169  Federal Supreme Court of 8 June 2005—4C.39/2005—JAR 2006, 265. 170  See art 404(1) of the Code of Obligations. 171  cf ibid arts 336–36d. 172  Portmann and Stöckli (n 5) para 1148.

716  Wolfgang Portmann by them.173 Yet, in a special case, the Federal Supreme Court deviated from that principle by subjecting freelancers in media companies to a collective agreement.174 However, in fact, such journalists are merely ‘employee-like’ persons and are generally subject to the provisions of agency contract law. B.  Custom and Practice Deviations on the basis of custom and practice are not acknowledged in Switzerland. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions A contract of employment is deemed to have been concluded where the employer accepts the performance of work over a certain period in his or her service which in the circumstances could reasonably be expected only in exchange for a salary.175 This provision is primarily intended to relieve the employee from having to prove that he or she reached consensus with the employer. The employee is entitled to remuneration even if he or she cannot prove consensus on the conclusion of the contract of employment and, in particular, on the wages. The crucial condition is that under the circumstances, the work performed could only be expected against wages. In addition, an activity ‘in the service of the employer’ is required176 so that the main criteria which are decisive for a contract of employment (integration, subordination, work instructions and work control) are fulfilled.177 The presumption is non-rebuttable.178 According to the legal doctrine, this is called a ‘de facto employment relationship’ (faktisches Arbeitsverhältnis).179 Where an employee performs work in good faith for the employer under a contract which is subsequently found to be invalid, both parties must

173 

Streiff, von Kaenel and Rudolph (n 90) art 319, para 25. Supreme Court of 8 June 1993—JAR 1994, 272. According to the wording of the collective agreement, agents were also covered. The Federal Supreme Court approved this provision. However, this is problematic because the law restricts the possibility to conclude collective agreements to employment relationships; see arts 356 ff of the Code of Obligations. 175  Article 320(2) of the Code of Obligations. The same applies in Liechtenstein as provided by s 1173a art 2(2) of the Civil Code. 176  As presupposed in the definition of the contract of employment according to art 319(1) of the Code of Obligations. 177  See sections IV.A and IV.B above. 178  Federal Supreme Court of 6 October 1987—BGE 113 II 414 (présomption absolue). 179  Staehelin (n 32) art 320, para 7 with additional references. 174  Federal

The Concept of ‘Employee’: The Position in Switzerland 717 discharge their obligations under the employment relationship as if the contract had been valid until such time as one party terminates the relationship on grounds of the invalidity of the contract.180 Thus, if work performed is based on a contract of employment that is invalid because of defects as to content, form, capacity to act or lack of will, the relationship will be deemed a valid employment relationship by law. The specific condition is that the employee acts in good faith. Moreover, the main criteria that are decisive for a contract of employment (integration, subordination, work instructions and work control)181 must also be present in such cases. The presumption is non-rebuttable. Also this case is considered a ‘de facto employment relationship’ (faktisches Arbeitsverhältnis).182 The advantage of this solution is that an invalid but thus far executed employment relationship does not have to be rescinded according to the provisions on unjust enrichment.183 In social security law, persons are considered employees if they perform work in a dependent position and receive a salary as stated by the different social security laws (massgebender Lohn).184 The wording ‘als A ­ rbeitnehmer gelten’ indicates the presumption. B.  The Burden of Proof According to Article 8 of the Swiss Civil Code (Schweizerisches Zivilgesetzbuch),185 the burden of proving the existence of an alleged fact shall rest, in principle, on the person who derives rights from that fact. Hence, the employee has to prove the existence of a (valid) contract of employment if he or she intends to make a claim on its basis. In the above-mentioned situations with legal presumptions, the existence or the validity of the contract of employment is assumed.186 However, that does not affect the burden of proof since both presumptions are non-rebuttable. A specific provision on this matter exists in the Posted Workers Act (Entsendegesetz).187 Foreign service providers who declare that they are self-employed must prove this upon request by the control authorities in charge.188 Even though this provision regulating the burden of proof does 180  Article 320(3) of the Code of Obligations. Likewise in Liechtenstein: s 1173a art 2(3) of the Civil Code. 181  See sections IV.A and IV.B above. 182  Vischer and Müller (n 75), 98; Portmann and Rudolph (n 27) art 320, para 23. 183  See arts 62–67 of the Code of Obligations. 184  Article 10 of the Act on the General Part of Social Security Law (Bundesgesetz über den Allgemeinen Teil des Sozialversicherungsrechts, SR 830.1). 185  SR 210. 186  See section IX.A above. 187  SR 823.20. 188  Article 1a(1) of the Posted Workers Act. The notion of independent activity is based on Swiss law.

718  Wolfgang Portmann not directly affect the private law relationship between the employer and the employee, it may have considerable impact on it. If in a given case proof of self-employment fails, the cantonal authority can order that the work be interrupted and the person in question leave his or her place of work.189 X.  SPECIFIC PROCEDURES

There are no specific procedures to assess the existence of an employment relationship. As a general rule, in a lawsuit regarding employment lawrelated claims, the court will assess the existence of an employment relationship as a preliminary question (Vorfrage). The answer not only influences the applicable legal provisions of the substantive law, but also determines which court has jurisdiction (a labour court or an ordinary court), which is the reason why this fact is referred to as bearing a double relevance (doppelrelevante Tatsache). When considering jurisdiction in this case, the courts do not generally proceed to taking evidence, but rely on the f­actual allegations of the claimant.190 If these allegations imply a contract of employment, the labour court remains competent, even if after taking evidence it comes to the conclusion that there is no contract of employment. XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons Service providers who are not subordinated or integrated into another’s organisational structure can qualify as so-called ‘employee-like’ persons (arbeitnehmerähnliche Personen) if, from an economic point of view, they are markedly dependent on their contract party.191 This may, for instance, apply to franchisees or freelancers in media companies. In such cases, jurisprudence partly applies protective provisions from employment law.192 This gives rise to a specific judge-made category of workers between real self-employed persons and employees. The corresponding contracts are qualified as ‘mixed contracts’ (gemischte Verträge), containing elements of a service contract and a contract of employment.193 The courts decide which protective provisions from employment law are to be applied in any given case. For instance, in the case of a franchise contract, the Federal Supreme 189 

ibid art 1b(2). Federal Supreme Court of 22 November 2010—4A_461/2010—BGE 137 III 32. 191 RA Müller, Arbeitnehmerähnliche Personen, Mitteilungen des Instituts für Schweizerisches Arbeitsrecht (ArbR) 2000 21 ff; Vischer and Müller (n 75) 37–38. 192  eg, Federal Supreme Court of 26 March 1992—BGE 118 II 157. 193  See section VI above. 190 

The Concept of ‘Employee’: The Position in Switzerland 719 Court applied certain employment law provisions which granted protection against the wrongful termination of the contract.194 B.  Equality and Anti-discrimination Law Pursuant to Article 8 of the Swiss Constitution, every person is equal before the law. No person may be discriminated against, in particular on grounds of origin, race, gender, age, language, social position, way of life, religious, ideological or political convictions, or because of a physical, mental or psychological disability. Men and women have equal rights. The law shall ensure their equality, both in law and in practice, particularly in the family, in education and in the workplace. Men and women have the right to equal pay for work of equal value. The law shall provide for the elimination of inequalities that affect persons with disabilities. A general Act on Non-discrimination does not exist in Switzerland. However, there is the Gender Equality Act (Gleichstellungsgesetz),195 which has the aim of furthering true equality between women and men.196 It applies to employment relationships under private law as well as to all employment relationships under public law in the Confederation, cantons and communes.197 Furthermore, there is also the Disability Discrimination Act (Behindertengleichstellungsgesetz),198 which applies to employment relationships under public law in the Confederation, but not with regard to employment relationships under private law.199 Where there is no special legislation, discrimination in the field of employment relationships is to be assessed according to the general (contractual and non-contractual) protection of personal rights.200

194  Federal Supreme Court of 26 March 1992—BGE 118 II 157. A franchisee was using the beauty salon of a franchisor. According to the contract, the franchisor was entitled to modify the annual user fee of one per cent calculated from turnover. When the franchisor raised the fee to seven per cent two years later, the franchisee objected. As a result, the franchisor terminated the contract. The court concluded that the termination was wrongful and awarded the franchisee compensation according to art 336a of the Code of Obligations. The application of protective provisions from employment law was declined in Federal Supreme Court of 18 June 2003—K 141/01, of 6 March 2000—4C.331/1999 and of 9 February 2009—4A_553/2008. 195  SR 151.1; in Liechtenstein: LR 105.1. 196  Article 1 of the Gender Equality Act. 197  ibid art 2. 198  SR 151.3; in Liechtenstein: LR 105.2. 199  Article 3(g) of the Disability Discrimination Act. 200  Contractual: art 328 of the Code of Obligations; non-contractual: art 28 of the Swiss Civil Code.

720 

35 The Concept of ‘Employee’: The Position in Turkey KADRIYE BAKIRCI

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

I

N TURKEY, LABOUR law covers the relationship between the employer and employees who work under a civil law employment contract (individual labour law), as well as the relationship between labour unions and employers or employers’ unions (collective labour law).1 Traditionally, labour law has been an area that has not been directly classified either under public or private law. An employment relationship involves private law elements (employment contract), while restrictions to it fall within public law provisions. Interestingly, according to the current higher education legislation in Turkey, labour law is considered part of private law. Such an approach derives from the fact that an employment relationship is established on the basis of a private law contract and, consequently, the private law element is present in one way or another. However, as different statutes prescribe different minimum requirements for the parties to the employment relationship and as the parties may not agree to conditions that are less favourable than those minimum requirements, labour law has a special status within private law. In Turkey, individual labour law is mainly regulated by the Turkish ­Constitution and by four different statutes,2 namely the Employment Act (hereinafter EA),3 the Maritime Employment Act (hereinafter MEA),4 the

1 

See section III.A below. For the scope of these Acts, see section III.A below. 3  Act No 4857, Official Journal, 10 June 2003, No 25134. 4  Act No 854, Official Journal, 29 April 1967, No 12586. 2 

722  Kadriye Bakirci Press Employment Act (hereinafter PEA)5 and the Obligations Act (hereinafter OA).6 Collective labour law, in turn, is mainly regulated by the Turkish ­Constitution and the Trade Unions and Collective Agreement Act (hereinafter TUCAA).7 Another source of Turkish labour law is international conventions. According to Article 90 of the Turkish Constitution: [W]here a conflict between ratified international treaties in the area of fundamental rights and freedoms and domestic law exists, the international treaties shall prevail.

Therefore, the International Labour Organization (ILO), the United Nations (UN) and the Council of Europe (COE) Conventions, which have been ­ratified by Turkey, have the force of law and are binding upon legislative, executive and judicial bodies, administrative authorities, and other institutions and individuals (Article 11 of the Turkish Constitution).8 The employment contract is defined in the EA and the OA.9 The MEA and the PEA do not provide a definition of ‘employment contract’. The EA states that: [T]he employment contract is an agreement under which a natural person undertakes to carry out work for and in conditions of dependency on another party in exchange for the payment of a wage.10

According to the OA, in turn: [T]he employment contract is an agreement under which an employee undertakes to carry out work for and in conditions of dependency on an employer for a definite or indefinite period in exchange for the payment of a wage based on the amount of time he/she works or the amount of work he/she performs. Contracts whereby the employee is obliged to regularly perform part-time work are likewise considered to be employment contracts.11

Under the EA, all part-time contracts that cover either regular or irregular work are considered to be employment contracts. The OA requires parttime work to be performed regularly in order for the contract to be considered an employment contract within the scope of the OA.

5 

Act No 5953, Official Journal, 20 June 1952, No 8140. Act No 6098, Official Journal, 04 February 2011, No 27836. 7  Act No 6356, Official Journal, 07 November 2012, No 28460; see section XI.B below. 8  K Bakirci, ‘Gender Equality in Employment in Turkish Legislation with Comparisons to EU and International Law’ (2010–2011) 15(1–2) Journal of Workplace Rights 3–25. 9 The Social Insurance and Universal Health Insurance Act refers to the definition of employment contract in the EA and the OA (art 3, para 11) (Act No 5510, Official Journal, 16 June 2006, No 26200). 10  EA, art 8. 11  OA, art 393. 6 

The Concept of ‘Employee’: The Position in Turkey 723 However, under both Acts, an employment contract has three common elements: performance of work (as the main purpose of the contract) by an employee; payment of a wage (in money) by the employer or a third person; and personal/legal dependence of the employee on the employer.12 While the wage element distinguishes the employment contract from voluntary work, legal/personal dependence on or subordination to the employer distinguishes the employee from the independent (self-employed) worker.13 Unless otherwise set forth in the EA, an employment contract is not subject to a special form.14 However, a written form is required for employment contracts with terms for one year and longer,15 part-time employment contracts concerning on-call work (cagri uzerine calisma),16 employ­ment contracts comprising team contracts (takim sozlesmesi)17 and employment contracts for children and youth (employees between 14 and 18 years old).18 Under the MEA19 and the PEA,20 maritime and media contracts must be concluded in writing. The OA, in turn, states that ‘the validity of a contract is not subject to compliance with any particular form unless a particular form is prescribed by law’ (Article 12). Presently, no specific form for employment contracts is stipulated in the OA. Therefore, it suffices for the parties to agree on a contract orally. This position is reflected in the case law, under which a written form is not a condition of validity for employment contracts.21 Therefore, a contract of employment that is not drawn up in written form is considered to have been concluded if the employee commences working with the k ­ nowledge or instructions of the employer or the employer’s representative.22 Pursuant to Article 8 of the EA: In cases where no written contract has been made, the employer is obliged to provide the employee with a written document within two months at the latest, informing him/her of the general and special conditions of work, the daily or 12  See, eg, Court of Cassation, 9th Division, 2004/13370, 3 June 2004 (2004/1550); Court of Cassation, 9th Division, 2009/21771, 2010/15108 (31 May 2010). 13  See, eg, Court of Cassation, 9th Division, 2010/7939, 2012/15559 (3 May 2012); Court of Cassation, 9th Division, 2010/51284, 2013/9060 (18 March 2013). 14  EA, art 8. 15  ibid art 8. 16  ibid art 14. 17  ibid art 16; a team contract is a contract concluded with the employer by an employee representing a team composed of several employees and who has the capacity of team leader. A team contract of employment is considered to have been concluded between each employee and the employer upon the commencement of work by each employee named in the team contract. 18  Regulation Concerning the Employment of Child and Young Employees, art 12, para (c), Official Journal, 6 April 2004, No 25425. 19  MEA, art 5. 20  PEA, art 4. 21  See, eg, Court of Cassation, General Council Decision, 1986/9-555, 1986/251 (19 March 1986). 22  See, eg, Court of Cassation, 9th Division, 2001/1338, 2001/1978 (8 February 2001).

724  Kadriye Bakirci weekly working time, basic wage and any wage supplement, time intervals for payment of wages, the duration of the contract if it is a fixed-term contract, and the conditions concerning the termination of contract. These requirements shall not apply, however, in the case of fixed-term contracts whose duration does not exceed one month. If the employment contract has expired before the lapse of two months, this information must be communicated to the employee in written form at the latest on the expiration date.

In a similar vein, OA requires home workers to be informed ‘before each work assignment is given to the home worker’ about the applicable conditions and specifications to the extent that these are not already covered by the general terms and conditions of employment, the equipment to be procured by the home worker and the amounts to be reimbursed for such equipment, as well as the wage.23 The purpose of these provisions is to provide employees with improved protection, to avoid uncertainty and insecurity about the legal nature and terms of the employment relationship, and to create greater transparency. As a general rule, all civil law contracts are void if their terms are immoral, violate personal rights, are contrary to mandatory legal norms and/or public order, or if the contract involves work that is impossible to carry out.24 However, where the contravention pertains only to certain terms of the contract, those terms alone will become void unless there is cause to assume that the contract would not have been concluded without them. Under civil law, invalidity, in principle, takes effect retroactively and it may be invoked by any person/party to the contract or dealt with directly by the judge. However, due to the protective nature of labour law resulting from the inherent power imparity, the invalid employment contract is not considered void retroactively. Accordingly: [I]f there is an employment contract that is declared to be invalid after the performance of work, it has all the effects and consequences of a valid employment contract until its termination.25

This means that these contracts are legally void not from inception, but rather ex nunc. B.  Employment Relationship: Basic Definition Under Article 2, paragraph 1 of the EA, ‘the relationship established between the employee and the employer is called the employment r­elationship’. 23  OA, art 462. Notably: ‘If information regarding the wage and the amounts to be reimbursed for equipment procured by the home worker is not given in writing before the work is allocated, the customary terms and conditions of employment are applicable.’ 24  ibid art 27. 25  ibid art 394.

The Concept of ‘Employee’: The Position in Turkey 725 Notably, the EA uses the terms ‘employment contract’ and ‘employment relationship’ interchangeably. However, the concept of ‘employment relationship’ is somewhat broader than that of ‘employment contract’, since various employee rights (severance pay, paid annual leave etc) are calculated on the basis of the date on which the employee actually commenced working rather than the date of the formal conclusion of his or her contract. As a rule, contracts evolve on the basis of an offer and acceptance thereof.26 However, an employment relationship is deemed to have also been entered into when an employee has already started working without concluding an employment contract (a de facto employment relationship).27 II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition The term ‘employee’ is defined in the EA and the TUCAA.28 The EA states that ‘a natural person who works under an employment contract is called an employee’.29 The TUCAA, in turn, refers to the definition of ‘employee’ under the EA and includes broad categories of workers (self-employed persons) in the definition of ‘employee’ in relation to the right to organise.30 Under the TUCAA, apart from employees working under an employment contract, natural persons working under a publishing contract (yayin sozlesmesi),31 a transportation/carriage contract (tasima sozlesmesi),32 a contract for ­services (eser sozlesmesi),33 a commission contract (komisyon sozlesmesi)34 or natural persons independently working under an ordinary partnership contract (adi ortaklık sozlesmesi)35 are also considered employees in r­ elation 26 

ibid art 1. See, eg, Court of Cassation, 9th Division, 2001/1338, 2001/1978 (8 February 2001). 28 On the other hand, the Social Insurance and Universal Health Insurance Act defines ‘insurance holders’. Under the Act, the insurance holder is an individual for whom a premium should be paid or who should pay a premium in terms of short and/or long-term insurance branches (art 3, para 6). 29  EA, art 2. 30  TUCAA, art 2. 31  A publishing contract is a contract under which an author or his or her successor undertakes to leave the work to the publisher and the publisher undertakes to print and publish it (OA, art 487). 32 Under a transportation/carriage contract, a carrier (a person) undertakes to transport goods in return for payment (freight charge). 33  A contract for services is a contract under which the contractor undertakes to carry out work and the customer undertakes to pay him or her for that work (OA, art 470). 34  A buying or selling commission agent is a person who, in return for a commission fee, buys or sells securities or chattels in his or her own name, but for the account of another (the principal) (OA, art 532). 35  An ordinary partnership agreement is a contract in which two or more persons agree to combine their efforts and resources to achieve a common goal (OA, art 620). 27 

726  Kadriye Bakirci to the right to organise. However, such categories of workers do not enjoy the right to collective bargaining and the right to strike.36 B.  Employer: Basic Definition Under the EA: [A]ny natural person or corporation (public or private) or agencies and organisations that do not have independent corporate status but employ employees are considered employers.37

For example, ministries and certain public agencies are considered employers if they employ employees even though they may not have independent corporate status. An employer is a person who has the right to require the fulfilment of an obligation to perform a certain type and amount of work and to issue instructions regarding the administration of the establishment. However, these two categories of rights may emanate from different persons. While the former belongs to the owner of the establishment, the latter may be wielded by the person who actually manages the establishment. The person who actually manages the establishment can be a real person empowered to engage in legal procedures. In cases in which the owner is deprived of the right to carry out legal procedures or where it is a corporate body, the right to expect work to be performed and the right to issue commands may be combined in the same person. In such instances, both entities are to be regarded as employers. In a corporate form of company, the corporate body is the employer because it employs employees. However, real persons who are members of the board of directors of the corporation are to be considered employers as well, since the right to manage such an enterprise has been vested in that board.38 The TUCAA refers to the definition of ‘employer’ provided under the EA. III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees The principal law governing the employer–employee relationship in Turkey is the EA. However, the EA’s coverage is not of a general scope. It only applies to certain employees. Article 4 of the EA describes certain situations as employment 36 

See section XI below. EA, art 2. 38  See, eg, Court of Cassation, 9th Division, 2009/12235, 2009/33415 (3 December 2009). 37 

The Concept of ‘Employee’: The Position in Turkey 727 relationships, either under general or specific conditions, and specifies certain types of work that are excluded from its scope. The EA covers establishments and their employees, employers and employer representatives with the exception of those cited in Article 4 of the EA. These exceptions are: sea and air transport activities; establishments or enterprises carrying out agricultural and forestry work and employing fewer than 50 (or including 50) employees; any construction work related to agriculture which falls within the scope of family economy; works and handicrafts performed without the participation of external persons and that are carried out at home by members of the family and relatives up to the third degree; domestic work; apprentices; professional athletes; persons undergoing rehabilitation; establishments employing three persons and falling within the definition provided in Article 2 of the Act on Tradesmen and Craftsmen (No 507). The MEA covers the employment relationship between seafarers and their employers. The PEA covers the employment relationship between journalists and their employers. Professional athletes are considered employees under Turkish law. They are covered by special regulations. Employees who are not covered by the EA, the MEA, the PEA and other special regulations are covered by Chapter 6 of the OA, which governs individual employment contracts.39 Article 5 of the Civil Code40 provides that the general provisions of the Civil Code and the OA apply mutatis mutandis to all private law relationships. Therefore, the general clauses of the Civil Code such as provisions on good faith, integrity, burden of proof and personal rights are applicable to employees. Also, the general contractual principles of the OA apply to areas not regulated by the EA, the MEA, the PEA or any other special provisions. These general provisions need to be interpreted in the light of the purpose of employment legislation. The EA, the MEA and the PEA provide more protection (for example, in relation to job security) to employees than the OA. However, there are exceptions to the general provisions of the EA. For example, employees in high managerial positions are excluded from the job security provisions of the EA. Article 18 of the EA provides that the Act’s job security provisions shall not be applicable to the employer’s ­representative and his or her assistants who are authorised to manage the entire enterprise as well as the employer’s representative managing the entire establishment, but who is also authorised to recruit and to terminate employment contracts.

39  40 

OA, arts 393–447. Act No 4721, Official Journal, 8 December 2001, No 24607.

728  Kadriye Bakirci Apprentices and trainees have the status of students41 under Turkish law and are covered by a special Act—the Apprenticeship and Vocational ­Training Act (hereinafter AVTA).42 As a result of the changes in the labour market in the last few decades, new forms of employment relationships have developed and grey areas between self-employed persons and employees in a dependent employment relationship have emerged. To fight the phenomenon of disguised employment and to grant effective protection to employee-like persons, the Turkish OA has created two specific employment contracts oscillating between subordinate work and self-employment. These relate to home workers and travelling salespersons, both of who work outside the traditional framework of an employment relationship, yet nonetheless require protection. In such cases, the status of employee-like persons does not depend on the existence of a legal relationship of subordination. Article 469 of the OA provides that: [I]n cases where there is no provision on the travelling salesperson’s contract or the home worker’s employment contract, the general provisions of the employment contract (Arts 393–447) is applied to the case.

Home working is regulated in the OA.43 Under a home worker employment contract, the home worker performs work for the employer in return for remuneration. As a general rule, such work is to be carried out by the individual or with members of his or her family and in his or her home or elsewhere, as determined by the employee.44 Under a travelling salesperson’s contract, the travelling salesperson undertakes to negotiate or conclude all manner of transactions on behalf of the owner of a trading, manufacturing or other type of commercial company outside the employer’s business premises in exchange for payment of a wage.45 The employment relationship is established on the basis of a written contract.46 Travelling salespersons are bound by their employer’s ­instructions.47 Any agreement whereby the travelling salesperson is made liable for the receipt of the client’s payments or any other performance of 41 

See section XI below. Act No 3308, Official Journal, 19 June 1986, No 19139; see section XI below. 43  OA, arts 461–69. 44  OA, art 461; art 463 provides that ‘the home worker must commence the work s/he has accepted in due time, finish it by the agreed deadline and deliver the results to the employer. If the work is flawed and the fault lies with the home worker, s/he is obliged to rectify it at his/her own expense to the extent that the defects can be removed’. 45  OA, art 448. 46  The contract stipulates, in particular, the duration and termination of the employment relationship; the travelling salesperson’s authority; the remuneration and reimbursement of expenses; the applicable law and the forum, where one of the parties is a resident abroad (OA, art 449). In the absence of a written contract, the issues specified in the previous paragraph are determined by statutory provision and customary working conditions (OA, art 449). 47  ibid art 450. 42 

The Concept of ‘Employee’: The Position in Turkey 729 the client’s liabilities is void. Where the travelling salesperson concludes transactions with private individuals, he or she may, by means of a written agreement, assume liability for a given transaction for at most one-quarter of the losses incurred by the employer as a result of the non-performance of the client’s obligations, on condition that an appropriate del credere commission is agreed. In the case of insurance policies, the travelling insurance broker may, by means of a written agreement, assume liability for at most one-half of the recovery costs where a single payment premium or premium instalments are not paid and he or she seeks their recovery by way of legal action or compulsory execution.48 Turkey has not yet introduced specific legislation on temporary work agencies; however, draft legislation regulating temporary agency work is currently under way. No distinction is made between blue-collar and white-collar employees under Turkish law. B.  The Establishment of a Specific Category of ‘Workers’ In Turkey, there are two main types of working status: dependent workers (bagimli calisanlar) and independent workers (self-employed—bagimsiz calisanlar).49 The term ‘workers’ is a general term covering both dependent and independent workers. Among the dependent workers, one can distinguish three types of workers (calisanlar): employees working under a civil law employment contract and working either in the private sector or the public sector (isciler); permanent civil servants working in the public sector (memurlar); and public officials with an administrative employment contract working in the public sector (sozlesmeli personel). Permanent civil servants and public officials with an administrative employment contract are governed by special legislative provisions and are covered by the administrative law (public law).50 As mentioned above,51 the EA is the principal law governing employees. Employees who are not covered by the EA and other special regulations 48 

ibid art 451. OA stipulates various categories of self-employed workers (see nn 37–41) and civil law contracts within the terms of the OA apply to these groups. They do not fall within the scope of Turkey’s labour law system. However, the mere fact that an activity is normally or typically performed by self-employed persons does not lead to the underlying legal relationship automatically being qualified as a civil law contract. Such qualification instead depends on the assessment of the facts of a particular case. For example, a lawyer or doctor, depending on the circumstances, may equally be regarded as being employed or self-employed (see, eg, Court of Cassation, 9th Division, 2010/7939, 2012/15559 (3 May 2012); Court of Cassation, 9th ­Division, 2010/51284, 2013/9060 (18 March 2013); Court of Cassation, 9th Division, 2004/1550, 2004/13370 (3 June 2004); Court of Cassation, 9th Division, 2004/31580, 2005/432 (10 January 2005). 50  Therefore, they are outside the scope of this chapter. 51  See section III.A above. 49  The

730  Kadriye Bakirci (the MEA, the PEA etc)52 are covered by Chapter 6 of the OA, which governs individual employment contracts. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration The main legal criteria used in Turkey to determine whether work is being performed under an employment contract (dependent employment) is personal/legal dependency or subordination to the employer, or work done under the direction, authority, supervision or control of the employer, or under the latter’s orders or instructions.53 Subordination is understood as a personal, subjective element, allowing the establishment of the worker’s legal status in the employment relationship and thus the distinction between the employment contract and other forms of work.54 Personal/legal subordination is usually accompanied by economic dependence55 of the employee, whose survival depends on the remuneration of his or her work. Being under the employer’s control and direction has a strong impact on the determination of the existence of an employment relationship. This is attributable to the fact that employers enjoy supervisory powers and control over their employees and are entitled to give ‘general directives and specific instructions regarding the performance of the work and the conduct of employees in the workplace’, which employees must follow in accordance with their duty of obedience.56 However, the power to give direction is not limitless. General directives and specific instructions that are contrary to the mandatory legal norms, immoral or contrary to public order, violate personal rights or involve work that is impossible to carry out are void.57 The right vested in the employer to direct, supervise and inflict discipli­ ­ nary sanctions is called the employer’s managerial prerogative.58 52 ibid.

53  See, eg, Court of Cassation, 9th Division, 2004/1550, 2004/13370 (3 June 2004); Court of Cassation, General Council Decision, 2004/10-736, 2005/25 (2 February 2005); Court of Cassation, 9th Division, 2010/7939, 2012/15559 (3 May 2012); Court of Cassation, 9th Division, 2011/50648, 2014/775 (21 January 2014). 54  See, eg, Court of Cassation, 9th Division, 2009/21771, 2010/15108 (31 May 2010). 55  See, eg, Court of Cassation, 9th Division, 2010/7939, 2012/15559 (3 May 2012). 56  Article 399 of the OA provides that ‘the employer is entitled to issue general directives and specific instructions regarding the performance of the work and the conduct of employees in the workplace. The employee must comply in good faith with the employer’s general directives and specific instructions’. 57  ibid art 27. 58  See eg, Court of Cassation, 10th Division, 1973/5183, 1973/315 (14 December 1973).

The Concept of ‘Employee’: The Position in Turkey 731 The mere ­possession (rather than actual exercise by the employer) of this right is sufficient. Thus, subordination can be purely potential, but the employer’s potential to control the performance of work is essential to establish ­personal/legal subordination.59 On the other hand, an integration test (ie, integration of the employee in the employer’s organisation) is used by the Turkish courts as a subsidiary criterion.60 B. Indicators Ongoing changes in the labour market muddle the clear, precise criteria that determine the existence of an employment relationship. As a result, apart from the employer’s managerial prerogative, legislation and case law have developed a series of indicators for the existence of subordinate employment. The OA provides various indicators of subordinate employment: (i)

In principle, the work must be carried out personally by the worker in the case of subordinate employment, ‘unless otherwise required by the contract or the circumstances’.61 (ii) The worker shall use machinery, tools, technical equipment, facilities and vehicles provided by the employer. Article 395 of the OA provides that ‘the employee is obliged to use the machinery, tools, technical equipment, facilities and vehicles belonging to the employer, and is obliged to treat the material given to him/her for the performance of the work with due care’. (iii) The subordinate employee is subject to obligations related to the work itself rather than the final result, and provides the employer with the work rather than the result.62 (iv) The form of payment—a wage tends to be fixed and paid at regular intervals for subordinate employees, whereas it is variable and depends on the results achieved and the deadlines laid down for the completion of work in the case of self-employed persons. Article 406 of the OA provides that ‘unless otherwise provided by custom, the wage of the employee shall be paid at the end of each month. However, shorter

59  See, eg, Court of Cassation, General Council Decision, 2004/10-736, 2005/25 (2 F ­ ebruary 2005); Court of Cassation, 9th Division, 2005/1550, 2004/13370 (3 June 2004) (a Turkish worker who worked abroad (in France) for a publishing company based in Turkey was considered an employee); Court of Cassation, 9th Division, 2004/1550, 2004/13370 (3 June 2004); Court of Cassation, 9th Division, 2010/7939, 2012/15559 (3 May 2012); Court of Cassation, 9th Division, 2011/50648, 2014/775 (21 January 2014). 60  See, eg, Court of Cassation, 9th Division, 2008/10530, 2010/4617 (22 February 2010). 61  OA, art 395. 62  See, eg, Court of Cassation, 9th Division, 2010/7939, 2012/15559 (3 May 2012).

732  Kadriye Bakirci payment terms may be agreed in the employment contract or in a ­collective agreement’. (v) The worker is prevented from performing paid work for someone else in the case of subordinate employment and specific work that is ‘in competition with his/her employer’.63 (vi) The provisions of the OA hold that home workers64 and self-employed workers (working under a contract for services)65 bear the financial risk. These provisions form the basis of deeming/considering an employee—e contrario—a person who does not bear such financial risk and who carries out his or her work at the employer’s cost and liability. Other indicators of subordination provided by the case law include the fact that the premises where the work is carried out were made available by the employer, that work is performed during working hours that are determined by the employer and that the materials, equipment, and tools belong to the enterprise.66 C.  The Relevance of ‘Economic Dependence’ In labour law, the concepts of total independence or complete subordination do not exist. The strict dividing line between total independence and ­invoking/inducing labour law protection is very difficult to determine. Emerging new forms of work organisation have led to the emergence of a new category of economically dependent work (ie, telework), which represents a form of work that falls within a grey zone between dependent work and self-employment.67 As a result of changes in the nature of work, a person may have a wide margin of autonomy in the performance of work in some employment relationships. There are situations in which the main factors that characterise an employment relationship are not apparent. A person may be recruited and work outside the employer’s premises, without fixed working hours or days of work, with special payment arrangements and full autonomy in terms of how to organise his or her work. He or she might have been recruited and may work via the internet and be paid through a bank, but uses equipment supplied by the enterprise and follows

63 

OA, art 396. ibid art 463; see section III.B above. 65  OA, art 474. 66  See, eg, Court of Cassation, General Council Decision, 2004/10-736, 2005/25 (2 F ­ ebruary 2005); Court of Cassation, 9th Division, 2004/1550, 2004/13370 (3 June 2004); Court of ­Cassation, 9th Division, 2010/7939, 2012/15559 (3 May 2012); Court of Cassation, 9th Division, 2011/50648, 2014/775 (21 January 2014). 67  See section III.B above. 64 

The Concept of ‘Employee’: The Position in Turkey 733 the employer’s instructions. In such cases, there is genuine doubt regarding the existence of an employment relationship and features of subordination thus become extremely important.68 In Turkey, the OA acknowledges the existence of an intermediate category between employees and self-employed persons, and grants protection to home workers and travelling salespersons.69 However, ‘economic dependence’ alone cannot be used as a criterion to define an employment relationship as ‘subordinate’: subordination implies economic dependence, but the reverse is not always the case. Therefore, in Turkish law, ‘economic dependence’ is neither regarded as essential nor as sufficient on its own to ­determine employee status.70 V.  THE PRINCIPLE OF PRIMACY OF FACTS

According to the principle of primacy of facts, in the event of a dispute over the definition of the employment relationship, the contract is analysed by an independent in-depth court assessment, which looks at the actual substance of the relationship. The court bases its decision on the facts, irrespective of how the parties construe or describe the given contractual relationship.71 The ‘primacy of facts’ is a general principle of Turkish contractual law. Pursuant to Article 19 of the OA: [W]hen assessing the form and terms of a contract, the true and common intention of the parties must be ascertained without dwelling on any vague expressions or designations they may have used either in error or by way of disguising the true nature of the agreement.72 VI.  QUALIFICATION IN FULL

There are no legal provisions on hybrid contracts in Turkey. The solution suggested by the case law includes the following: if a hybrid contract predominantly resembles an employment contract, the rules ­governing employment contracts should govern the entire hybrid contract. If this is not the case, each part of a hybrid contract should be governed by the rules governing the type of contract from which the part was taken.73 68 

See, eg, Court of Cassation, 9th Division, 2004/1550, 2004/13370 (3 June 2004). See section III.A above. 70  See, eg, Court of Cassation, 9th Division, 2010/7939, 2012/15559 (3 May 2012). 71  See section X below. 72  See, eg, Court of Cassation, General Council, 2004/10-736, 2005/25 (2 February 2005); Court of Cassation, 9th Division, 2005/36137,2005/39139 (12 December 2005); Court of Cassation, 9th Division, 2005/18823, 2005/24470 (11 July 2005); Court of Cassation, 9th Division, Court of Cassation, 9th Division, 2005/1550, 2004/13370 (3 June 2004); Court of Cassation, 9th Division, 2010/30244, 2010/24328 (20 September 2010). 73  See, eg, Court of Cassation, 9th Division, 2008/10530, 2010/4617 (22 February 2010). 69 

734  Kadriye Bakirci Article 4 of the EA provides that ‘any construction work related to agriculture which falls within the scope of a family economy’ and ‘works and handicrafts which are performed without the participation of external persons and carried out at home by members of the family and relatives up to the 3rd degree (included)’ are outside the scope of the EA. Such types of work performed by close family members have not been considered by the Turkish courts as working under a contract, but as based on a family (moral) obligation.74 For instance, this is the case when a woman who helps her husband work as a doorman under an employment contract.75 Therefore, family members—especially women—are not able to benefit from protective rules like other employees. Also, the Social Security and Universal Health Insurance Act76 does not deem an employer’s unpaid spouse and the relatives up to the third degree as insurance holders, who live together and work in the business carried out in the same residence, even though they assist the employee in the performance of his or her duties.77 However, a family worker may claim the true employment status of the work relationship, and may be deemed an employee under the OA, provided that the generally applicable prerequisites are fulfilled. The OA explicitly regulates the brokerage relationship between the employee and the employer. Article 404 of the OA stipulates that a broker who secures business for the employer is entitled to pro rata payment for the business actually obtained. Records of the business obtained and payments due are to be provided by the employer and, if necessary, provided to the court if it requests to see them. VII.  LIMITS TO THE FREEDOM OF CONTRACT

Freedom of contract is guaranteed in Turkey by the Constitution. A ­ ccording to Article 48 of the Constitution, everyone has the freedom to work and conclude contracts in the field of his or her choice. In labour relations, freedom of contract implies the freedom to conclude, formulate and terminate employment contracts.78

74  See, eg, Court of Cassation, 9th Division, 2002/2990, 2002/11313 (3 July 2002); Court of Cassation, 21st Division, 2005/1799, 2005/7500 (14 July 2005); Court of Cassation ­General Council, 2007/10-753, 2007/730 (17 October 2007). 75  See, eg, Court of Cassation, 21st Division, 2005/1799, 2005/7500 (14 July 2005); Court of Cassation General Council, 2007/10-753, 2007/730 (17 October 2007). 76  See n 9. 77  Article 6. 78  Another element of freedom of contract is the free form of contract. See section I.A above.

The Concept of ‘Employee’: The Position in Turkey 735 The freedom of contract principle is compatible with the economic l­iberalism of the past century and until the first Employment Act of 1937,79 it was applied in the area of labour in Turkey as well. However, it is not possible to speak of absolute freedom of contract in the context of employment contracts. It is the result of developments throughout history that the parties to an employment relationship are not equal. The employer usually has more economic advantages/power in the conclusion of an employment contract. To balance the unequal status of the parties to an employment contract, there is more legislative interference in the terms of an employment contract than in any other contract. The Turkish Constitution, the Criminal Act80 and employment legislation impose a number of restrictions on freedom of contract in order to protect the employee as the weaker party to the employment relationship. The presumption that the parties negotiating the conditions of an employment contract are equal is far removed from reality with respect to the individual employee, and the freedom to determine the conditions of an employment contract is at times nothing but the freedom to dictate terms. Therefore, the freedom to formulate the contents of a contract of employment is restricted in Turkish labour law. Numerous obligatory norms that are unilateral exist in employment relationships and it can therefore be concluded that no options exist for the employer and the employee to agree on individual working conditions. Employment legislation provides minimum requirements and the parties to an employment contract cannot agree to less favourable conditions. Arrangements may be agreed to that are more favourable to the employee, but not, in any case, inferior to the requirements prescribed by law.81 The most drastic way to disguise an employment relationship is to give it the appearance of a different legal nature, whether civil, commercial, cooperative, family-related or other, which often resembles that of selfemployment. In Turkish law, as already mentioned, the nature of the employment contract is determined on the basis of facts, taking all factors and circumstances on how the work is performed, regardless of how the parties name or describe the contract. The practical interpretation of the employment relationship is decisive for its legal classification. The courts are not bound by the parties’ description of the relationship. Article 394 of the OA provides that: [I]f a person performs work in a particular period that would only be performed in exchange for a wage and if that work is accepted by the employer, it is deemed that an individual employment contract has been concluded between them. 79 

Act No 3008, Official Journal, 15 June 1937, No 3330. Act No 5237, Official Journal, 12 October 2004, No 25611. 81  See, eg, Court of Cassation, 9th Division, 2000/5313, 2000/5198 (12 April 2000). 80 

736  Kadriye Bakirci Another way to disguise the employment relationship is through the form in which it is established; this is the case, for example, for contracts concluded for a fixed term or for a specific task, but which are then repeatedly renewed with or without interruptions.82 Article 11 of the EA provides that: [I]n cases where the employment relationship is not dependent upon a definite period, the contract is considered to have been concluded for an indefinite period. An employment contract for a definite period may not be concluded more than once, except when there is an essential reason that necessitates repeated (chain) contracts. Otherwise, the employment contract is deemed to have been concluded for an indefinite period from the very beginning. Chain employment contracts (zincirleme is sozlesmeleri) made for essential reasons maintain their status as contracts made for a definite period.83

The freedom to conclude a contract is restricted by the prohibition or obligation to conclude a contract under labour law. Article 50 of the Turkish Constitution provides that ‘no one shall be required to perform work unsuited to his/her age, sex and capacity’. Under labour law, it is prohibited to conclude a contract of employment with persons who do not have the legal capacity84 to perform work and who are under a certain age (younger than 14 years of age).85 Nor is it permitted to employ women86 or minors between the ages of 14 and 1887 in certain types of jobs,88 or foreigners who do not have a work permit.89 Restrictions to concluding an employment contract may also be present when a person is prohibited from working in certain areas on account of doctors’ orders.90 As mentioned above, the OA states that if an employment contract is declared invalid but the work has been performed, it is deemed to be a valid employment contract until its termination.91 According to Turkish employment law, the notion of ‘employee’ is a mandatory concept. Therefore, any agreement to disguise and waive employee status is null and void.92 An employee may assert his or her ‘true’ employment status before the courts, even if he or she agreed to the false labelling of the work relationship. 82 

Court of Cassation, 9th Division, 2004/34025, 2005/23929 (6 July 2005). See, eg, Court of Cassation, 9th Division, 2005/12170, 2005/15792 (5 May 2005); Court of Cassation, 9th Division, 2005/308, 2005/30969 (22 September 2005). 84  Civil Code, art 13 (Act No 4721), Official Journal, 8 December 2001, No 24607. 85  EA, art 71. 86  ibid art 72; Bakirci (n 8). 87  EA, arts 71–73. 88  K Bakirci, ‘Child Labour and Legislation in Turkey’ (2002) 10(1) International Journal of Children’s Rights 55–72. 89 Act on Work Permits of Foreigners (No 4817), Official Journal, 06 March 2003, No 25040 90 Occupational Health and Safety Act (No 6331), Official Journal, 30 June 2012, No 28339. 91  OA, art 394; see section I.A above. 92  OA, art 27; see section I.A above. 83 

The Concept of ‘Employee’: The Position in Turkey 737 Article 117 of the Criminal Act provides: Any person who violates the freedom of work and labour by using violence or threats or performs an act contrary to the law will be sentenced to imprisonment between six months to two years and must pay a punitive fine to the victim. Any person who employs helpless, homeless and dependent person(s) without payment or with a lower wage than the standards or forces him/her to work and live in inhumane conditions will be sentenced to imprisonment from six months to three years or will have to pay a punitive fine. The same punishment will also be imposed on a person who provides or transfers a person from one place to another to have him/her live and work under the above-mentioned conditions. Any person who unlawfully increases or decreases wages, or forces employees to work under conditions less favourable than those agreed in the contract, or causes the suspension, termination or re-start of the work, will be sentenced to imprisonment between six months to three years.

Disguised employment relationships may also involve masking the identity of the employer, when the person designated as the employer is a sub-contractor with the intention of excluding the real employer from any involvement in the employment relationship and, above all, from any responsibility towards the employees.93 The EA contains important measures designed to prevent fraud in contractor (main employer) and sub-contractor (sub-employer) relationships.94 The EA includes certain restrictions imposed on the use of sub-contracted labour.95 First, establishing a contractor–sub-contractor relationship necessitates the presence of operational requirements and technological expertise that cannot be met by the contractor’s establishment itself.96 Second, contractor–sub-contractor relationships shall be applicable only when the sub-contractor undertakes ‘auxiliary tasks’ or ‘in a sector of the main activity’ by assigning his or her employees exclusively to the contractor’s establishment in question. The main work cannot be divided and assigned to sub-contractors unless this is necessary for technical reasons.97 Third, no contractor–sub-contractor relationship may be established between the employer and his or her ex-employee (any person previously employed in that establishment). Lastly, the rights of employees of the contractor cannot be restricted through the employment of the sub-contractor. Otherwise and in general, it is considered that the relationship between the contractor and sub-contractor is bogus and the sub-­contractor’s employees are deemed to be employees of the contractor.98 93 

See section V above. EA, art 2, paras 6, 7. 95 ibid. 96  See, eg, Court of Cassation, 9th Division, 2005/36137, 2005/39139 (12 December 2005). 97  See, eg, ibid; Court of Cassation, 9th Division, 2005/18823, 2005/24470 (11 July 2005); Court of Cassation, 9th Division, 2010/30244, 2010/24328 (20 September 2010). 98 See, eg, Court of Cassation, 9th Division, 2005/36137, 2005/39139 (12 December 2005); Court of Cassation, 9th Division, 2005/18823, 2005/24470 (11 July 2005); Court of ­Cassation, 9th Division, 2010/30244, 2010/24328 (20 September 2010). 94 

738  Kadriye Bakirci VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners Under the Turkish Constitution, all workers are entitled to the right to organise in trade unions.99 The right to collective bargaining and to strike is only guaranteed to employees’ trade unions.100 Under the TUCAA, trade unions are only authorised to conclude collective agreements and initiate strikes on behalf of the employees who work under an employment contract. In Turkish law, the notion of ‘employee’ is a mandatory concept and the legal framework of collective bargaining is restricted in its scope of application to employees; thus, it cannot include a third category of workers. Therefore, trade unions have no autonomy to deviate from the concept of ‘employee’ in collective agreements. B.  Custom and Practice Article 1 of the Turkish Civil Code provides that: [T]he law must be applied in all cases that come within the letter or the spirit of any of its provisions. Where no written provision is applicable, the judge shall decide according to customary law and, in default thereof, according to the rules which he/she would lay down if he/she himself/herself had to act as legislator. Herein he/she must be guided by legal doctrine and case law.

Although custom has not disappeared entirely from the Turkish labour scene, the role of custom in Turkish law in general, and in labour law in particular, has diminished due to the increasing role of legislation. In Turkey, a person can only be considered an ‘employee’ according to labour legislation. Neither custom nor practice is relevant for determining whether an employment relationship or an employment contract exists. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions In order to detect and remedy violations resulting from disguised employment relationships, two main methods can be used: the principle of primacy

99 

100 

Turkish Constitution, art 51. ibid arts 53, 54.

The Concept of ‘Employee’: The Position in Turkey 739 of facts, accompanied sometimes by legal presumptions meant to shift the burden of proof and enable the legal possibility of labour courts or labour inspection services of reclassifying ‘bogus self-employment’ as an employment relationship. Interestingly, such presumptions can be found in different branches of Turkish law. In Turkey, in the event of a dispute on the existence of an employment relationship between the worker and the employer, it shall be presumed that an employment relationship exists if certain indicators are present. According to Article 394 of the OA, if a person performs work in a particular period that would only be performed in exchange for a wage and if that work is accepted by the employer, it is deemed that an individual employment contract was concluded between them. Therefore, in the case of disputes relating to the existence of an employment relationship between a worker and an employer, the relationship is presumed to represent an employment relationship if all of the following indicators are present: (i) the work is performed for a continuous/particular period; (ii) the work is performed in exchange for a wage; (iii) the work is accepted by the beneficiary. Under Turkish law, the findings of labour inspectors on the legal relationship between the employer and the person working for him or her are a rebuttable presumption. It is valid until it is otherwise rebutted by fact and law.101 Some constitutional presumptions exist as well. According to Article 18 of the Turkish Constitution: [W]ork required of an individual while serving a prison sentence or under detention, services required from citizens during a state of emergency, and physical or intellectual work necessitated by the requirements of the country as a civic obligation do not come under the description of labour, provided that the form and conditions of such labour are prescribed by law.

Therefore, a prisoner or a citizen who is under a civic obligation during a state of emergency is not an employee, since he or she is employed by the state by virtue of the law rather than under a contract. The same applies to soldiers who are serving their compulsory military service and as such are not considered employees, because military service is a national obligation of every Turkish citizen under Article 72 of the Turkish Constitution. ­Military service is not performed under a contract. Finally, the Turkish courts also presume that work undertaken by a spouse to help her husband102 and voluntary work (not for a wage) is not performed under an employment contract.103

101 

EA, art 92; Civil Code, art 7. See, eg, Court of Cassation, 21st Division, 2005/1799, 2005/7500 (14 July 2005); Court of Cassation General Council, 2007/10-753, 2007/730 (17 October 2007). 103  Compare Court of Cassation, General Council, 2004/10-736, 2005/25 (2 February 2005). 102 

740  Kadriye Bakirci B.  The Burden of Proof In principle, employment law requires a civil standard of proof pursuant to which: [I]n the absence of a special provision to the contrary, each party is bound to prove the existence of the facts on which s/he bases his/her right.104

Therefore, under Turkish law, whoever initiates the legal action has, in principle, the initial burden of proof, which of course may still shift from one party to another in the course of a trial. In practice, an employee who claims that an employment relationship exists must establish that certain elements existed (eg, that work was performed for the beneficiary); the beneficiary of the work then bears the burden of proving that no employment relationship existed. However, if there were doubts that the evidence met the balance of probabilities threshold, the judge would have to rule in favour of the employee.105 Notably, under Turkish law, the employment relationship may be proven by any means permitted under law (such as testimony by witnesses in court, written materials or material objects offered as proof of the existence of an alleged fact).106 Article 7 of the Civil Code provides that: [E]ntries made in public registries and official deeds (duly authenticated documents) are sufficient evidence of the facts which they state. The proof of inaccuracy of these is not required to be in any special form, unless otherwise provided for by law.

X.  SPECIFIC PROCEDURES

Under Turkish law, labour and social security inspectors of the Ministry of Labour and Social Security have authority to investigate the true nature of the employment relationship, either on their own initiative or following a complaint by an individual.107 Under the EA, employers and sub-contractors are under the obligation to notify the Regional Directorate of the Ministry of Labour and Social Security about the establishment, taking over, changing the activity and closing of any business and the number of employees employed within one month.108 104 

Civil Code, art 6. eg, Court of Cassation, 9th Division, 2007/9789, 2008/2664 (27 February 2008); Court of Cassation, 9th Division, 2010/13187, 2012/19136 (31 May 2012). 106  See, eg, Court of Cassation, 9th Division, 2003/2530, 2003/2516 (27 February 2003); Court of Cassation, 9th Division, 2000/3009, 2000/6913 (11 May 2000). 107 EA, arts 91–97; Social Security Institution Act (No 5502), Official Journal, 20 May 2006, No 26173. 108  EA, art 3. 105  See,

The Concept of ‘Employee’: The Position in Turkey 741 Employers, employees and all other persons involved in the work are obliged to respond when called upon by labour inspectors, to provide testimony and information, submit necessary evidence and documents, and provide them with all the necessary facilities during such inspection and control.109 Employers are prohibited from directly or indirectly influencing the employees who are questioned by labour inspectors.110 Employees are prohibited from misrepresenting the enterprise and the employer.111 Minutes drawn up by the labour inspectors in charge of monitoring, control and inspection of work life are valid until proven otherwise.112 The labour inspectors’ official findings may have far-reaching consequences,113 such as the payment of wages in arrears and/or of various allowances.114 Where appropriate, the official findings of the labour inspectors may represent the basis of judicial proceedings, administrative penalties and criminal prosecution.115 There is no general provision providing for administrative sanctions against an employer who is found to have intentionally falsely labelled a worker’s legal status. However, those employers or employer’s representatives who fail to comply with the obligation to notify the Regional D ­ irectorate about the establishment of the business,116 who fail to provide the employees with the documents set forth in Article 8 and who did not conclude a written contract for on-call work may face administrative fines.117 Those employers or employer’s representatives who do not comply with the provisions of the EA on inspection and control of labour life may face administrative fines.118 The decisions of the Regional Directorate may be reviewed by the ­administrative courts.119 The Social Security and Universal Health Insurance Act120 sets a ­deadline for employers to declare the existence of an employment contract (for the purposes of social security entitlements). Social security inspectors have authority

109 

ibid art 92. ibid art 96. 111 ibid. 112  ibid art 92. 113 See, eg, Court of Cassation, 9th Division, 2009/25493, 2011/43619 (16 November 2011). 114  See, eg, Court of Cassation, 9th Division, 2007/41196, 2009/10913 (16 April 2009); Court of Cassation, 9th Division, 2011/54775, 2014/4059 (11 February 2014). 115  Criminal Act, arts 277, 283. 116  EA, art 98. 117  ibid art 99. 118  ibid art 107. 119  EA, art 108. 120  See n 9. 110 

742  Kadriye Bakirci to investigate whether an employer has complied with this obligation and to determine the true nature of the employment relationship in relation to social security matters. The employer is liable for non-compliance with social security duties. If the person concerned can be categorised as an employee, the employer is obliged to pay social security contributions for the employee retrospectively. The Act also imposes considerable administrative penalties for failing to comply with the legislation through hidden employment arrangements.121 Decisions on administrative fines may be reviewed by the Social Security Institution and administrative courts.122 Employers, insurance holders, workplace owners and other individuals who obstruct the social security inspectors in their work may face administrative fines and criminal penalties.123 In Turkey, labour disputes—collective or individual—can only be lodged before the labour courts, and only the labour courts have authority to settle such disputes. Therefore, the labour courts and civil courts are obliged to determine whether an employment contract/relationship exists in order to find out whether settling the dispute lies within the scope of their competence.124 The judgments of the labour courts and civil courts can be reviewed by the different divisions of the Court of Cassation. The investigation of the true nature of the employment relationship may also take place in the criminal courts when legislation contains criminal sanctions on infringements.125 XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons Under Turkish law, some rights of employees who work under an employment contract are extended to self-employed persons126 and students such as apprentices and trainees.127

121 

EA, art 102.

122 ibid. 123 ibid.

124 Labour Courts Act (No 5521), Official Journal, 4 February 1950, No 7424; Civil ­ rocedure Act (No 6100), Official Journal, 4 February 2011, No 27836. See, eg, Court of P Cassation, 9th Division, 2008/876, 2009/20602 (13 July 2009); Court of Cassation, 22nd Division, 2013/19399, 2014/1630 (7 February 2014). 125 For instance, under the Criminal Act, the employer is liable for any occupational accidents and diseases arising from faulty management (arts 85, 89). 126  See section II.A above. 127 ibid.

The Concept of ‘Employee’: The Position in Turkey 743 The TUCAA extends the right to organise in trade unions to certain c­ ategories of self-employed persons128 mentioned above.129 However, most categories of self-employed persons do not have the right to collective ­bargaining or the right to strike. Apprentices are covered by the AVTA.130 Apprenticeship is based on the apprenticeship contract and apprentices are considered to hold the status of students. They are not included in the total number of workers at a workplace.131 However, the OA provisions on employment contracts are (by way of analogy) applicable to apprentices. Article 393 of the OA provides that: The effect of the individual employment contract is applied to apprenticeship contracts by analogy.

The AVTA also stipulates that Article 73 of the EA should be taken into consideration in the performance by apprentices of practical training at workplaces.132 Article 73 of the EA prohibits minors (below the age of 18) from working night shifts in industry.  The Occupational Health and Safety Act (hereinafter OHSA)133 includes activities of dependent workers in the public and private sectors with some exceptions.134 Although apprentices and trainees who start an internship at an establishment are considered students under the AVTA, apprentices and trainees are covered by the OHSA.135 The AVTA provides that: [I]n the course of training provided to apprentices, the employer shall be held responsible for any occupational accidents and diseases arising from faulty management.136

In principle, the Social Security and Universal Health Insurance Act covers all workers, regardless of whether they are dependent employees, employeelike persons (home workers and salespersons) or self-employed. Although apprentices and trainees are considered students, the AVTA stipulates that occupational disease, work accidents and health care insurance provisions of the Social Security and Universal Health Insurance Act shall be applied to apprentices and trainees.137 Therefore, certain short-term social insurance

128 

EA, art 3. See section II.A above. 130  See section III.A above and n 42. 131  AVTA, art 11. 132  ibid art 12. 133  See n 90. 134 The armed forces, police and intelligence services, the intervention activities of emergency and disaster workers, and domestic workers are excluded from the scope of the OHSA (art 2). 135  OHSA, art 2. 136  AVTA, art 25. 137 ibid. 129 

744  Kadriye Bakirci categories of the Social Security and Universal Health Insurance Act cover apprentices and trainees.138 B.  Equality and Anti-discrimination Law The Turkish Constitution prohibits all forms of discrimination based on language, race, colour, sex, political opinion, philosophical belief, religion and sect, or any similar grounds.139 It specifically prescribes for the equal treatment of men and women and positive action.140 However, the principle of anti-discrimination in employment is expressly recognised only in the EA for those employees who are covered by the EA. Article 5 of the EA provides that: [N]o discrimination based on language, race, sex, political thought, philosophical belief, religion, sect and similar grounds can be made in the employment relationship. Except for biological reasons or reasons related to the nature of the work, the employer cannot treat an employee differently, either directly or indirectly, in the conclusion, conditions, execution/implementation and termination of the employment contract due to sex or pregnancy. A lower wage cannot be allocated for equal or equivalent work on the grounds of sex. Implementation of special protective ­provisions due to an employee’s sex does not justify the application of a lower wage.

These provisions do not fully comply with the requirements of the UN, ILO and COE Conventions ratified by Turkey and also do not comply with EU standards.141 A prohibition of discrimination based on language, race, colour, political opinion, philosophical belief, religion and sect, or any similar grounds covers only discrimination during an employment relationship. It excludes ­discrimination in the application for work procedure or the conclusion and termination of a contract.142 On the other hand, prohibition of discrimination based on sex does not include discrimination in the area of applying for a job.143 Articles 5, 12 and 13 of the EA provide that: [U]nless there are justifiable reasons for differential treatment, the employer may not discriminate between part-time and full-time employees and employees ­working for a definite or indefinite period. 138 

ibid art 5. Turkish Constitution, art 10. 140 ibid. 141  Bakirci (n 8). 142  ibid 8–12. 143 K Bakirci, ‘Protection of Women Employees before and after Childbirth in Turkish Employment Law’ (2006) 22(4) International Journal of Comparative Labour Law and Industrial Relations 615–33. 139 

The Concept of ‘Employee’: The Position in Turkey 745 The burden of proof in relation to the rights recognised in Article 5 has been eased. If the employee shows a strong likelihood (presumption) of such violation, the burden of proof that the alleged violation was not materialised shall rest on the employer.144 Article 18 of the EA prohibits termination of the employment contract due to trade union participation, race, colour, sex, marital status, family obligations, pregnancy, birth, religion, political opinion and similar grounds. This prohibition only covers employees who have an employment contract of indefinite duration and who have a minimum seniority of six months in an establishment with 30 or more employees. It does not apply to the employer’s representative and his or her assistants who are authorised to manage the entire enterprise, and the employer’s representative, who manages the entire establishment and who is also authorised to recruit and dismiss employees.145 The burden of proof is different in this case. According to Article 20 of the EA: [T]he employer is obliged to prove that the termination is based on a lawful reason. If the employee claims that the termination is based on a reason different from the one stated by the employer, the employee is obliged to prove his/her claim.146

Employees who are not covered by the scope of the EA, namely employeelike persons and self-employed workers, are completely unprotected in Turkey in terms of equal treatment. However, it should be noted that the Turkish Constitution prohibits discrimination against anyone. The ILO, UN and COE Conventions—which have been ratified by Turkey— have the force of law and are binding upon the legislature, the executive, the judiciary, the administrative authorities, and other institutions and individuals.147

144 

Bakirci (n 8) 17–18. ibid 15–18. 146 ibid. 147  Turkish Constitution, arts 90, 11; see section I.A above. 145 

746 

36 The Concept of ‘Employee’: The Position in the UK BENJAMIN JONES AND JEREMIAS PRASSL

I.  THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

A. The Contract of Employment: Basic Definition, Formal Requirements and the Effects of Invalidity of the Contract

I

N THE UK,1 the definition of the contract of employment is—like much of the law surrounding the contract of employment—marked by somewhat of a paradox. On the one hand, the notion of ‘contract of employment’ is explicitly defined in the leading statutes regulating both individual and collective employment or labour law.2 On the other hand, any discussion of the definition of ‘contract of employment’ will in reality consist ‘of a detailed examination of the common law of the contract of employment— an area where, despite the marginal impact of many statutory provisions, the legal ground rules are still the judge-made ones’.3 This is not least due to the structure of the key definitional provision in statute law, viz the Employment Rights Act 1996 (hereinafter ERA 1996). Section 230 is of such pivotal importance to this chapter that it deserves to be set out in full:4 1 Whilst there are generally considerable differences between the different legal systems found within the UK, large parts of employment or labour law are an important exception to this rule, insofar as they apply across Great Britain. See A Bradley and K Ewing, Constitutional and Administrative Law, 15th edn (Harlow, Pearson, 2011) 40; Trade Union and Labour Relations (Consolidation) Act 1992 (hereinafter TULRCA), s 301(1). For the present purposes, the two terms will therefore be used interchangeably. 2 Though note that these terms are used interchangeably in the UK and should not be confused with the distinction between employment law relating to the individual sphere and labour law relating to the collective sphere, as is the practice in the US. 3  M Freedland, The Contract of Employment (Oxford, Clarendon Press, 1976) 1. 4 Though cf special extensions in s 230(6). As regards the parallel provisions for collective matters, s 295 of the TULRCA provides that: ‘(1) In this Act—“contract of employment” means a contract of service or of apprenticeship, “employee” means an individual who has

748  Benjamin Jones and Jeremias Prassl Section 230: Employees, Workers etc. (1) In this Act ‘employee’ means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment. (2) In this Act ‘contract of employment’ means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing. (3) In this Act ‘worker’ (except in the phrases ‘shop worker’ and ‘betting worker’) means an individual who has entered into or works under (or, where the employment has ceased, worked under)— (a) a contract of employment, or (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual; and any reference to a worker’s contract shall be construed accordingly. (1) In this Act ‘employer’, in relation to an employee or a worker, means the person by whom the employee or worker is (or, where the employment has ceased, was) employed. (2) In this Act ‘employment’— (a) in relation to an employee, means (except for the purposes of section 171) employment under a contract of employment, and (b) in relation to a worker, means employment under his contract; and ‘employed’ shall be construed accordingly.

As will have become apparent from even the briefest reading of these provisions, the statutory definition of ‘contract of employment’ is therefore of little value in the classification of any given relationship. The actual determination of an individual’s legal position will take place in a rather circular line of enquiry, where two analytically distinct questions become intertwined: that as to the existence and definition of a contract of service; and that as to the definition of its parties.5 On the one hand, both the employee and the employer could be seen as parties to a contract of service. On the

entered into or works under (or, where the employment has ceased, worked under) a contract of employment, and “employer”, in relation to an employee, means the person by whom the employee is (or, where the employment has ceased, was) employed.’ Note again extensions in s 295(2) and cf s 235 of the TULRCA 1992. 5  For a further exploration of this ‘contract conundrum’, see J Prassl, The Concept of the Employer (Oxford, Oxford University Press, 2015) 24–25.

The Concept of ‘Employee’: The Position in the UK 749 other hand, a contract of service can only come into existence if both parties to it show the necessary features of employer and employee. It is that (circular), well-entrenched process of reasoning6 which places the contract of employment at the core of legal analyses of the employment relationship.7 Discussion must therefore turn to common law in order to elaborate on the criteria to be used in assessing whether any given contract is a contract of service or employment. Before doing so, it should be noted that there are no formality requirements as such in section 230 of the ERA 1996. Indeed, sub-section (2) explicitly specifies that the contract can be ‘express or implied, and (if it is express) … oral or in writing’. That said, section 1 of the ERA 1996 stipulates that employees are entitled to a statement of written terms, which must contain a series of details specified in the legislation.8 As similar rights are not available to workers, section 1 and its predecessor provisions have regularly been used for test cases establishing the employment status of particular groups of workers.9 In the case of a contract’s invalidity in English law, ‘work done under an illegal contract may (no less than money paid or property transferred) give rise to a restitutionary claim, that is, to one for a reasonable remuneration on a quantum meruit basis’.10 The impact of the doctrine of illegality on the validity of the contract of employment has been the subject of much recent discussion,11 following the Supreme Court’s decision in Hounga v Allen.12 Whilst that decision was strictly speaking focused on the question of tort law, ‘given that the law on illegality in the law of obligations rests upon a common foundation, we should expect the ruling in Hounga to have some ramifications for the treatment of contractual claims too’.13 However, for the time being, a wide range of questions await further judicial clarification.

6  Indeed, so deeply that it quickly engulfs statutory innovation, whether in the form of the broader ‘worker’ concepts in s 230(3) of the ERA 1996 or the Equality Act 2010. See Byrne Bros Ltd v Baird [2002] ICR 667 (EAT), Redrow Homes Ltd v Wright [2004] EWCA Civ 469, [2004] 3 All ER 98 and Jivraj v Hashwani [2011] UKSC 40, respectively, as well as the relevant sections later in this chapter. 7  Freedland (n 3) 4. See also O Kahn-Freund, ‘Chapter II: Legal Framework’ in A Flanders and H Clegg (eds), The System of Industrial Relations in Great Britain (Oxford, Oxford University Press, 1954). 8  Section 1(3) and (4); note that certain elements may be phased in by the employer. 9  Such as the orchestra musicians in Addison v London Philharmonic Orchestra [1981] ICR 261 (EAT). 10  E Peel, Treitel’s Law of Contract, 13th edn (London, Sweet & Maxwell, 2011) 555. 11 See A Bogg, ‘Illegality, Public Policy, and the Contract of Employment’ in A Bogg, D Cabrelli, H Collins, N Contouris, A Davies, S Deakin, M Freedland and J Prassl (eds), The Contract of Employment at Work (Oxford, Oxford University Press, 2016). 12  Hounga v Allen [2014] UKSC 47. 13  A Bogg and S Green, ‘Rights are Not Just for the Virtuous: What Hounga Means for the Illegality Defence in the Discrimination Torts’ (2015) 44 ILJ 101, 4B.

750  Benjamin Jones and Jeremias Prassl B.  Employment Relationship: Basic Definition Finding any ‘basic’ definition of the employment relationship in common law, which would exceed the statutory provisions already set out in the previous sub-section, can be difficult. As Denning LJ noted in Stevenson Jordan: ‘It is almost impossible to give a precise definition … It is often easy to recognise a contract of [employment] when you see it, but difficult to say wherein the difference lies.’14 This is echoed in the suggestion by Somervell LJ in Cassidy that the essential question might often be no more than: ‘Was his contract a contract of [employment] within the meaning which an ordinary person would give to the words?’15 A clearer set of guidelines can be derived from the decision of McKenna J in Ready Mixed Concrete, who suggested that: A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service.16

However, even that statement belies the fact that over the years, employment status has come to be determined through the application of a series of common law tests including control, enterprise integration, business reality and mutuality of obligation. Each of these tests will be explored in greater detail in section IV.A below. II.  EMPLOYEE AND EMPLOYER

A.  Employee: Basic Definition In the UK, the status of ‘employee’, as distinct from the broader category of ‘worker’ discussed below, flows from the legal relationship under a contract of employment. This is reflected in the most important practical framing of the ‘employee’ signifier for employment law purposes, its statutory definition under the ERA 1996. Under the interpretation section of the ERA 1996 set out at the beginning of this chapter, ‘employee’ is defined as ‘an individual who has entered into or works under a contract of employment’.

14 

Stevenson, Jordan and Harrison Ltd v MacDonald and Evans [1952] 1 TLR 101, 111. Cassidy v Ministry of Health [1951] 2 KB 343, 352. 16  Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497. 15 

The Concept of ‘Employee’: The Position in the UK 751 Whilst clearly of narrower scope than the category of ‘worker’, which has become the gateway to a smaller sub-section of the most basic protections for those in work, the ERA 1996 definition is critical for determining entitlement to the primary protections for individuals at work (such as the cause of action of unfair dismissal). However, it is important to note that whilst the ERA 1996 definition is the most important, the definitions section of one statute cannot be used as an aid to the construction of a term where it is used in other statutes. As such, whilst the above definition is the key definition with which employment lawyers are concerned, it must not be mistaken for an umbrella definition.17 Outside of the statutory domain, the use of the term ‘employee’ is less precise. Whilst the relationship between the employer and the employee is rooted in the common law of contract, the term ‘employee’ is not closely defined. Instead, in a common law context, ‘employee’ is used primarily as a rough modernisation of the traditional, and outmoded, term ‘servant’. In this use ‘employee’ is an imperfect translation and whilst ‘servant’ was well specified in case law, ‘employee’ is used with varying specificity and is typically treated as being somewhat broader than ‘servant’.18 As such, a singular definition has proved elusive and given the emergence of differing rules to deal with a range of borderline cases where particular kinds of service carry different regulatory needs (such as apprenticeships, parliamentary and Crown staff, and various forms of office holder), there has also been divergence between different areas of the law depending on differing regulatory objectives. As such, whilst the ERA 1996 definition is the key rule for the most frequently used worker protections, differing definitions arise in other fields such as the law of tort and, most conspicuously, in the field of taxation. As such, where employment is in dispute, a detailed factual consideration of the details and circumstances of a contract for service remains a regular feature of hearings in the English courts and employment tribunals. B.  Employer: Basic Definition The traditional locus of judicial attention has been on questions regarding the status of the employee rather than the employer. As such, whilst similar difficulties arise in relation to defining ‘employer’ in English law, as they do in defining ‘employee’, the development of jurisprudential definition of the former term has lagged behind that of the latter. 17 

Tyne and Clyde Warehouses Ltd v Hamerton [1978] ICR 661. Percy v Church of Scotland Board of National Mission [2006] IRLR 195, [2006] ICR 134, per Lady Hale at [141]; and subsequent approval in O’Brien v Ministry of Justice [2013] IRLR 315 [40]. 18 See

752  Benjamin Jones and Jeremias Prassl As with ‘employee’, the signifier ‘employer’ is established in use, but not in detail in common law. However, while ‘employee’ is an inexact modern analogue of ‘servant’, ‘employer’ bears an even looser relationship with ‘master’. ‘Employer’ is defined principally through its relationship with the employee, through the law of contract (albeit with roots long pre-dating the idea of a contract of employment). In statutory guise, the definition of the ‘employer’ is no richer. Under the ERA 1996, the employer is defined purely by their relationship to the individual employee or worker. As seen above, section 230(4) merely provides that for any given employee or worker, for the purposes of the ERA, the ‘employer’ is ‘the person by whom the employee or worker is (or, where the employment has ceased, was) employed’.19 The steady rise of novel forms of working relationships, particularly in the wake of the global financial crisis, are drawing increasing academic scrutiny of the narrow, unitary understanding of the employer that has been developed both in common law and in statute.20 However, for the time being, the multi-faceted nature of employment relationships (with increasingly frequent division between the contracting employer and the party exerting controlling authority) has yet to be reflected in a full exploration of the modern notion of the employer by the judiciary or the legislature.21 One of the present authors has argued that such situations could best be encompassed by a more openly functional concept of ‘employer’, defined as ‘the entity, or combination of entities, playing a decisive role in the exercise of relational employing functions, and regulated or controlled as such in each particular domain of employment law’.22 III.  SUB-TYPES OF EMPLOYEES AND WORKERS

A.  The Establishment of Sub-types of Employees The UK’s labour market historically knew of a wide range of different categories of working individuals, each label or category bringing with it a particular set of regulatory consequences. Today, however, terms such as ‘servants’, ‘labourers’ or ‘artisans’ no longer connote any particular professional status or legal regulatory regime.23 The different categories 19 

ERA 1996, s 230(4). See J Prassl, ‘The Notion of the Employer’ (2013) LQR 380; and J Prassl, The Concept of the Employer (Oxford, Oxford University Press, 2015). 21  Prassl (2013) (n 20) 382. 22  Prassl (2015) (n 20) 6. 23 For details, see S Deakin and F Wilkinson, The Law of the Labour Market: Industrialization, Employment, and Legal Evolution (Oxford, Oxford University Press, 2005) 44 ff (‘Pre-capitalist Forms of the Contract of Service’). 20 

The Concept of ‘Employee’: The Position in the UK 753 fell by the wayside not least as a result of the process of unification and contractualisation of the employment relationship, processes associated with ‘the gradual spread of social legislation in the fields of workmen’s compensation, social insurance, and employment protection. The terms “contract of employment” and “employee” came into general use as a description of wage-dependent labour only as a result of this process’.24 Whilst the workforce continues to be made up of many different kinds of personal work relationships (indeed, it is ever-increasingly fragmenting, as evidenced most recently by discussions surrounding so-called zero-hours contract work), the question as to legal classification continues to hinge on employee status, as well as the more recently introduced notion of ‘worker’, as discussed immediately below. That said, it should be noted that there are certain limited contextual modifications as regards the scope of individual provisions. This does not necessarily operate via the enumeration of individual sub-types, but rather is specific to particular legislation, which may modify (or entirely disapply) a particular regulatory regime to certain categories of workers, listed as ‘Special Classes of Person’ or even explicit ‘Exclusions’. In the context of the National Minimum Wage Act 1998, for example, the former group includes certain kinds of agency and home workers,25 members of the armed forces26 and the staff of the Houses of Parliament;27 whereas the latter comprises, inter alia, share fishermen,28 voluntary workers29 and prisoners.30 Public office holders such as those in religious employment continue to pose difficult and heavily fact-dependent questions surrounding not necessarily the qualification of an employee as such, but rather the (legal) nature of the religious institution (given the role of the Church of England as the established Church).31 B.  The Establishment of a Specific Category of ‘Workers’ In addition to the concept of ‘employee’, English law has increasingly provided a number of secondary gateways into (a smaller set of) basic employment

24 

ibid 15. Sections 34 and 35, respectively. 26  National Minimum Wage Act 1998, s 37. 27  ibid ss 38 and 39 for House of Lords and House of Commons staff, respectively. 28  ibid s 44. 29 ibid. 30  ibid s 45. 31  For a full discussion of the many twists and turns of the recent case law in this area, see M Freedland and J Prassl, ‘Chapter 39: Employment’ in H Beale (ed), Chitty on Contracts, 32nd edn (London, Sweet & Maxwell, 2015) para [39-028]. 25 

754  Benjamin Jones and Jeremias Prassl rights,32 including notably the worker concept in the sense of section 230(3) of the ERA, which was introduced to broaden the scope of basic labour standards.33 The leading dicta on the interpretation of this status can be found in Byrne Bros v Baird,34 a decision made in the context of the Working Time Regulations 1998.35 Recorder Underhill QC suggested that the difference between the statuses of ‘employee’ and ‘worker’ was to be understood as one of degree, not kind: Drawing the distinction in any particular case will involve all or most of the same considerations as arise in drawing the distinction between a contract of service and a contract for services—but with the boundary pushed further in the putative worker’s favour … Cases which failed to reach the mark necessary to qualify for protection as employees might nevertheless do so as workers.36

As a result of this extension, even those not found to be working under a contract of employment will frequently be able to have recourse to at least the set of rights protected under a worker’s contract.37 However, at the same time, given the finding as to a difference in degree rather than kind between the ‘employee’ and ‘worker’ concepts, the effect of including workers may not necessarily result in very expansive employment law coverage. IV.  SUBORDINATION: CRITERIA AND INDICATORS/ ECONOMIC DEPENDENCE

A.  Criteria: Work Instructions, Work Control and Integration Within the unitary, bilateral framework of the employment contract outlined in the first section of this chapter, the contract of employment in English law is typified by a range of qualities including subordination, ­business integration and mutuality of obligation.

32 For an extended discussion of employment status in English law, see Jeremias Prassl, ‘Employee Shareholder “Status”: Dismantling the Contract of Employment’ (2013) 42 ILJ 307, 326 ff, on which parts of the present discussion draw. 33 Workers are there defined as those ‘working (a) under a contract of employment or (b) any other contract … whereby the individual undertakes to do or perform personally any or work or services for another party to the contract’. 34  Byrne (n 6). This case was approved in its basic approach by the Court of Appeal in Redrow Homes (n 6), though with some reservations as regards the overall purposiveness of the approach to be taken (at [21]). 35  Working Time Regulations 1998, SI 1998/1833. The worker definition can be found in reg 2(1). 36  Byrne (n 6) 17. 37  Including, notably, the Working Time Regulations 1998, SI 1998/1833 and the National Minimum Wage Act 1998; National Minimum Wage Act 1998 s 54(3) or the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) ss 145A, 145B and 146 (as amended).

The Concept of ‘Employee’: The Position in the UK 755 Unsurprisingly, and straightforwardly, the greater the degree of control or superintendence, the greater the likelihood that the worker will be deemed an employee; there is no fixed extent to which control is required as it exists only within a broader matrix of relevant factors. The origins of the control test lie in the relationship between the master in the exclusive exercise of the control right over his or her servant.38 Unpacking the idea of control the courts have variously looked at factors such as the extent of actual control over the substance of work done, the method of control, transfer of control, the extent of integration into the employing organisation, the powers of appointment, suspension and dismissal, and the existence and form of payment of wages, salaries and other benefits. In attempting to assess these various factors, the courts have struggled to develop a clear methodology for distinguishing employment from selfemployment. In Market Investigations Ltd v Minister of Social Security,39 Cooke J stated that the key question at common law was taken to be whether or not a worker was performing services as a person in business on his or her own account and that in trying to resolve where this was the case: No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor.

This approach was endorsed in the Privy Council decision of Lee Ting Sang,40 with Lord Griffiths noting in the lead judgment that ‘despite a plethora of authorities the courts have not been able to devise a single test that will conclusively point to the distinction in all cases’. In the face of such difficulties, the importance of the control test has declined.41 With the emergence and inclusion in protective statutory regimes of professional jobs, the courts began to come across more and more situations where control was exercised by several parties. At first, the law’s reaction to the ascent of such multilateral scenarios was a somewhat awkward search for the party exercising the highest level, or ‘most control’, over the individual. This approach is evident in cases such as Littlejohn, where Lord Guthrie’s enquiry focussed on the fact that the shipbuilder’s control over the boy was more indirect and remote than that exercised by the riveters.42 38  Yewens v Noakes (1880–81) LR 6 QBD 530 (CA); Sadler v Henlock 119 ER 209, (1855) 4 El&Bl 570. 39  Market Investigations Ltd v Minister of Social Security [1969] 2 QB 173, 184–85. 40  Lee Ting Sang v Chung Chi-Keung [1990] 2 WLR 1173, [1990] 2 AC 374, 382. 41  Ready Mixed Concrete (n 16); Construction Industry Training Board v Labour Force Ltd [1970] 3 All ER 220; Warner Holidays Ltd v Secretary of State for Social Services [1983] ICR 440. 42  Littlejohn v John Brown & Co Ltd 1909 SC 169 (CS) 147.

756  Benjamin Jones and Jeremias Prassl Similarly, in Ready Mixed Concrete, MacKenna J suggested that ‘all … aspects of control must be considered in deciding whether the right exists in a sufficient degree to make one party the master and the other his servant’.43 Moving further away from the traditional distinction between authority to direct merely what work is done versus directing how work is done,44 a model that cannot cope with the modern ‘atypical’, today the courts adopt a compound approach to defining the contract of employment combining tests of control, organisation45 and considering whether an individual is ‘in business on his or her own account’46 or, alternatively, ‘whose business is it’.47 In relation to organisations, the employee is typically considered to be a functional unit that is well integrated within an organisation’s structures. By contrast, where a function is peripheral or secondary, is performed by an individual engaged purely for the purpose of conducting that task, or is contracted only on a temporary or casual basis, the individual is more likely to be considered a worker, agent or contractor.48 The negative phrasing of this test yields the question: ‘Is the person who has engaged himself or herself to perform these services performing them as a person in business of his or her own account?’49 This question has been employed extensively as one of the most indicative criteria,50 but it has now usurped the question of control and the modern approach fuses considerations of both control and organisational integration. As Denning LJ (as he then was) put it, ‘the test of being a servant does not rest nowadays on submission to orders. It depends on whether the person is part and parcel of the organization’.51 This can be illustrated on the facts of Stevenson Jordan v MacDonald. MacDonald claimed the copyright to a book published by a former employee. The first of its five parts consisted of a series of lectures given to the public during the author’s employment with the claimants. The Court of Appeal, applying a business integration test, found that the lectures had not been given under a contract of service, drawing a stark contrast between ‘a man … employed as part of the business, and his work … done as an integral part of the business’ and one working ‘under a contract for services where his work, although done for the business, is not integrated into it but is only accessory to it’.52 However, in contrast to the 43 

Ready Mixed Concrete (n 16) 515F–G. R v Walker (1858) 27 LJMC 207. 45  Stevenson, Jordan and Harrison Ltd (n 14) 111. 46  Nethermere (St Neots) Ltd v Gardner [1984] ICR 612, 619. 47  Lane v Shire Roofing Company (Oxford) Ltd [1995] IRLR 593. 48  Stevenson, Jordan and Harrison Ltd (n 14) 111; Bank voor Handel en Scheepvaart NV v Slatford [1953] 1 QB 248, 295; Roe v Minister of Health [1954] 2 QB 66, 90. 49  Market Investigations Ltd v Minister of Social Security [1969] 2 QB 173, 187. 50  M Freedland, ‘Employment’ in Beale (n 31) vol 2 [39.16] 51  Bank voor Handel en Scheepvaart NV v Slatford (No 2) [1953] 1 QB 248 (CA), 290. 52  Stevenson, Jordan and Harrison Ltd (n 14) 111. 44 

The Concept of ‘Employee’: The Position in the UK 757 control test, it never saw a second lease of life and remains of comparably little significance. In the US, an enquiry into the economic reality of the relationship between the parties overtook the control test early on. In US v Silk,53 the Supreme Court emphatically rejected a reliance on ‘technical concepts’, holding instead that the category of ‘“employees” included workers who were such as a matter of economic reality’.54 The courts’ focus on economic factors in this test is construed very widely, from the provision of tools, other working materials and general investment in a project to the bearing of overall market risk. If none or few of these factors fall upon the individual whose status is to be determined, he or she will in all likelihood be considered an employee. The first case directly to import the US Supreme Court’s language into English law was Market Investigations Ltd v Minister of Social Security, affirming the Secretary of State’s finding that a part-time interviewer had been employed under a contract of service. Having discussed Silk and other authorities, Cooke J formulated the test as follows: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’55 Alongside control, organisation and business reality, finally, another factor deemed essential by the English courts and tribunals is ‘mutuality of obligation’. This mutuality requires that both parties to a contract must carry some obligation to act, otherwise there will usually not be a contract of employment.56 This obligation is typically one of personal performance, with the ability to delegate or sub-contract work being a powerful indicator that a contract lacks mutuality and that the individual is not an employee (unless the individual is justifiably unable to complete his or her obligations, eg, due to illness).57 Indeed, as Deakin and Morris have argued, mutuality of obligation may well be understood as a ‘fresh emphasis on a form of personal control’.58 In Nethermere v Gardiner, Dillon LJ summarised earlier case law and held: [T]hat there is one sine qua non which can firmly be identified as an essential of the existence of a contract of service and that is that there must be mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer. If such mutuality is not present, then either there 53 

US v Silk [1947] 331 US 704. ibid 713. 55  Market Investigations Ltd v Minister of Social Security [1969] 2 QB 173 (HC), 184G–H. 56  Egginton v Reader [1936] 1 All ER 7; Chadwick v Pioneer Private Telephone Co Ltd [1941] 1 All ER 522; Pauley v Kenaldo Ltd [1953] 1 WLR 187, 191; WHPT Association v Social Services Secretary [1981] ICR 737, 750H–751C. 57  Macfarlane v Glasgow City Council [2001] IRLR 7. 58  S Deakin and G Morris, Labour Law, 6th edn (Oxford, Hart Publishing, 2012) 164. 54 

758  Benjamin Jones and Jeremias Prassl is no contract at all or whatever contract there is must be a contract for services or something else, but not a contract of service.59

On the facts of that case, a group of home workers was held to have been employed under contracts of service.60 More generally, however, the requirement of mutuality of obligation has become a significant hurdle in establishing such a relationship. In O’Kelly,61 function waiters at the Grosvenor House Hotel employed under a roster system as ‘regular casuals’ claimed for unfair dismissal due to their trade union membership and activities. Despite evidence that they had worked ‘virtually every week … [for] up to as much as 57’ hours,62 the Court of Appeal found that there was ‘no overall or umbrella contract’ of employment63 and furthermore suggested that even each individual wage/ work bargain could not be a contract of service. In Carmichael, ‘casual as required’ tour guides in a power station attempted to assert their right to particulars of employment.64 Whilst the Court of Appeal had found them to be employees, the House of Lords upheld the industrial tribunal’s finding that the claimants’ ‘case “founder[ed] on the rock of absence of mutuality”’.65 However, upon closer inspection, this concept, whilst continuing to be problematic, has more recently been seen in much less aggressive use than may be presumed from an initial reading of these leading cases. Lord Hoffmann in Carmichael, for example, warned that ‘in a case in which the terms of the contract are based upon conduct and conversations as well as letters’, the courts should not ignore evidence of the reality of what happened between the parties.66 Indeed, even O’Kelly itself could be characterised as a misinterpretation of the earlier decision in Nethermere,67 driven primarily by jurisdictional questions about the reviewability of the industrial tribunal’s findings.68

59 

Nethermere (St Neots) Ltd (n 46) 632F–G. See similarly the case of the home worker assembling shoes in Airfix Footwear Ltd v Cope [1978] ICR 1210, where a multi-year course of dealing between the parties led to a similar conclusion. 61  O’Kelly v Trusthouse Forte plc [1984] QB 90. 62  ibid 101B. 63  ibid 124H. 64  Carmichael v National Power plc [1999] UKHL 47, [1999] 1 WLR 2042. The right to particulars of employment at that time was set out in s 1(1) of the Employment Protection (Consolidation) Act 1978 and is in all material aspects identical to the ERA 1996. 65  ibid 2045 (per L Irvine LC; who, as Alexander Irvine QC, had proudly appeared for the employer in O’Kelly). 66  ibid 2050G 67  Where ‘evidence of the absence of any strict legal obligation to offer or carry out homeworking was countered by an evaluation of the practice of the parties which had evolved over a period of time’. See P Leighton, ‘Employment Status and the “Casual Worker”’ (1984) 13 ILJ 62, 65. 68  See H Collins, ‘Employment Rights of Casual Workers’ (2000) 29 ILJ 73, 75. 60 

The Concept of ‘Employee’: The Position in the UK 759 Therefore, it is unsurprising that in the more recent decision in Cotswold Developments v Williams, Langstaff J (as he then was) expressed his concern that tribunals may: [H]ave misunderstood something further which characterises the application of ‘mutuality of obligation’ in the sense of the wage/work bargain. That is that it does not deprive an overriding contract of such mutual obligations that the employee has the right to refuse work. Nor does it do so where the employer may exercise a choice to withhold work. The focus must be upon whether or not there is some obligation upon an individual to work, and some obligation upon the other party to provide or pay for it.69

That said, the mutuality of obligation test continues to pose real problems, in particular for vulnerable workers. In Quashie v Stringfellows,70 a lap dancer was held not to be an employee of the defendant nightclub as a result of the dancing arrangement, in which the economic risk was firmly with the worker. Whilst her relationship was contractual, a lack of mutuality of obligation meant that the contract could not be one of service.71 Einat Albin has convincingly criticised the Court of Appeal’s approach, noting that: Even though the court viewed the clubs as having control over Ms Quashie and an obligation to provide her with future work, the method of payment determined by management led the Court to conclude that they were not obliged to pay wages, and thus that the contractual obligations among the parties did not constitute a contract of employment—a clear misunderstanding of ‘the true essence of the relationship’.72

In concluding this sub-section, it is worth noting that whilst the status of a contract is a pure question of law, and whether or not a contract is a contract of employment can only be determined by drawing a reasonable inference based on the legal interpretation of the contract,73 recognition of the paramount importance of the facts behind the contract has led the question of the existence of an employment contract to increasingly be seen as a matter for consideration only at first instance. It must also be noted that express provision that a contract is, or is not, a contract of employment cannot conclusively determine whether or not it is such a contract.74

69 

Cotswolds Developments Construction Ltd v Williams UKEAT/0457/05DM [55]. Quashie v Stringfellows Restaurants Ltd [2013] IRLR 99. 71  ibid [45] ff. 72  E Albin, ‘The Case of Quashie: Between the Legalisation of Sex Work and the Precariousness of Personal Service Work’ (2013) 42 ILJ 180, 191. 73  Morren v Swinton and Pendlebury BC [1965] 1 WLR 576, 583. 74  Ibid 581; and Short v JW Henderson Ltd (1946) 62 TLR 427. 70 

760  Benjamin Jones and Jeremias Prassl B. Indicators As the express terms of a contract are not conclusive, a range of indicators have been identified in the case law as indicators to be taken into account when determining whether or not a contract of employment exists.75 The most commonly observed of these are the extent of the employer’s control over the worker,76 the degree of the worker’s interest in and exposure to the employer’s profit or loss,77 the degree of integration of the worker into the employer’s organisation,78 the extent to which the worker carries on his or her own business, whether the worker uses the employer’s materials and equipment or whether he or she owns or supplies his or her own,79 the tax arrangements of the worker, trade practice and structure, and the view of the parties as to the nature of the relationship. One of the present authors has recently suggested that on the basis of these factors, a series of ‘employer functions’ can be derived in order to identify the counterparty to the employment relationship.80 These five functions of the employer are as follows: (i)

Inception and termination of the contract of employment: this category includes all powers of the employer over the very existence of its relationship with the employee. (ii) Receiving labour and its fruits: duties owed by the employee to the employer, specifically to provide his or her labour and the results thereof, as well as rights incidental to it. (iii) Providing work and pay: the employer’s obligations towards its employees. (iv) Managing the enterprise-internal market: coordination through control over all factors of production. (v) Managing the enterprise-external market: undertaking economic activity in return for potential profit, whilst also being exposed to any losses that may result from the enterprise.81 75 

Addison v London Philharmonic Ltd [1981] ICR 261, 271. Including notably over the termination of the relationship: Narich Pty v Commissioner of Payroll Tax [1984] ICR 286 (EAT). 77  Hall (Inspector of Taxes) v Lorimer [1994] 1 WLR 209 (CA). 78  Lord Denning’s ‘part and parcel’ test: see Bank voor Handel en Scheepvaart NV (n 51) 290. 79 For a traditional statement, see, eg, Montreal v Montreal Locomotive Works [1947] 1 DLR 161 (PC). 80  For a full overview of the case law in which these factors are discussed, see, eg, Prassl (n 5) 26–31. Other accounts of employer functions can be found in S Deakin, ‘The Evolution of the Contract of Employment, 1900 to 1950: The Influence of the Welfare State’ in N Whiteside and R Salais (eds), Governance, Industry and Labour Markets in Britain and France: The Modernising State in the Mid-Twentieth Century (London, Routledge, 1998) 83; and M Freedland, The Personal Employment Contract (Oxford, Oxford University Press, 2003) 40. 81  For an extended account, see Prassl (n 5) 32–36. 76 

The Concept of ‘Employee’: The Position in the UK 761 C.  The Relevance of ‘Economic Dependence’ As has been seen in the discussion throughout the previous sections, whilst economic dependence is not a free-standing criterion as such in English law, the notion nonetheless feeds strongly into the common law tests set out there. V.  THE PRINCIPLE OF PRIMACY OF FACTS

In English law, an express provision that a contract is, or is not, a contract of employment cannot conclusively determine whether or not it is such a contract.82 This principle was developed in the leading case of AutoClenz Ltd v Belcher to tackle anti-mutuality clauses inserted by an employer in an attempt to mask the true nature of the relationship under a contract of employment.83 Giving judgment in the Court of Appeal in AutoClenz, Smith LJ sought to incorporate the commercial concept of ‘sham’ and thus ruled that the proper test to be applied by the tribunal was to consider whether the alleged sham clause or clauses were a proper reflection of the true intent of the parties. The fact that the clause had not been activated was not sufficient to demonstrate this, so the tribunal would need to undertake a deeper analysis of the facts to determine the parties’ intent. The Supreme Court, whilst upholding the Court of Appeal’s decision, considered that the strictures of the ‘sham’ rule were not appropriate here due to the inequality of bargaining power between the individual and the employer, and the likelihood that the employer had drafted the terms of any contract. As the deceived party was a party to the contract rather than a third party, ‘sham’ was not appropriate. Instead, Lord Clarke suggested that the proper question to be asked was thus: ‘What is the true agreement between the parties?’84 In determining this, he advised tribunals to adopt a holistic approach, considering the written contract as only one source of evidence as to the nature of the relationship between the parties. He also endorsed the judgment of Aikens LJ, who had noted that ‘the court or tribunal must be realistic and worldly wise’ when investigating allegations that the written contract did not correspond to the actual terms agreed between the parties.85 As Bogg has noted in commenting on the Supreme Court’s decision: ‘Where there is other relevant evidence that the “real agreement” differed from the signed contract, for

82  Morren v Swinton and Pendlebury BC [1965] 1 WLR 576, 581; and Short v JW Henderson Ltd (1946) 62 TLR 427. 83  AutoClenz Ltd v Belcher [2011] UKSC 41. 84  ibid [34]. 85  ibid [35].

762  Benjamin Jones and Jeremias Prassl example the subsequent conduct of the parties, the court will evaluate that evidence and determine what was agreed.’86 A valuable illustration of the application of this principle in relation to an alleged ‘zero-hours’ contract is Pulse Healthcare v Carewatch Care Service Ltd. In Pulse Healthcare, the Employment Appeal Tribunal was required to determine the status of workers’ under a self-proclaimed ‘zero-hours contract agreement’ for the purposes of a Transfer of Undertakings Protection of Employment (TUPE) dispute. Whilst the contract contained a mechanism for individuals to object to rostered hours, the Tribunal found that the characterisation of the agreement as a zero-hours agreement did not reflect the true agreement of the parties.87 Instead, the Tribunal considered that, either from the outset or during the course of the agreement, a mutual obligation had come into existence that obliged the employer to provide work and the employee to undertake the work that was provided. As such, the stability of and permanent character of this relationship overwhelmed the superficial terms of the agreement. VI.  QUALIFICATION IN FULL

Once a contract has been determined to be a contract of employment, no part of it may be qualified as a different sort of contract. However, there is no principle of English law which would forbid parties to enter into other agreements, such as those for the provision of accommodation or subsistence, though statutory regulation may have a significant impact in this area, notably as regards payment of minimum wages.88 A recent illustration of such side-agreements could be the issuance of shares under section 205A of the ERA 1996 in consideration of the worker’s consent to be employed under the Employee Shareholder status, as discussed in section VII below. The contractual relationship of employment may frequently give rise to other, non-contractual relationships, notably as regards vicarious liability, where the employer may be held responsible for the employee’s torts committed in the course of employment.89 Academic commentators have sometimes raised the question as to whether the definition of ‘employee’ and ‘employer’ should differ across areas such

86 

A Bogg, ‘Sham Self-Employment in the Supreme Court’ (2012) 41 ILJ 328, 333. Pulse Healthcare v Carewatch Care Service Ltd [2012] UKEAT 0123/12/BA [35]. 88  See, eg, the provisions surrounding the volunteer exemption in s 44 of the National Minimum Wage Act 1998. 89  See famously P Atiyah, Vicarious Liability in the Law of Torts (London, Butterworths, 1967); and for a full account, see Clerk & Lindsell on Torts, 21st edn (London, Sweet & Maxwell, 2014) c 6. 87 

The Concept of ‘Employee’: The Position in the UK 763 as tax, tort, vicarious liability and ‘employment law proper’.90 The current approach appears to be one where the approach in taxation is different, whereas the law of vicarious liability seems to be reasonably in line with employment law—even though the law of vicarious liability may sometimes be at the forefront of developing the state of play. In JGE,91 for example, a victim who had been sexually abused by a priest whilst in a religious care home brought an action for tortious compensation. As the alleged abuser was no longer alive, the preliminary question arose as to whether the Diocese of Portsmouth (the Trustees of the Diocesan Trust being sued for that purpose)92 could be held vicariously liable. After an extensive review of the authorities,93 Ward LJ unambiguously found that there was no contract of service between the bishop and the priest. In order to determine whether the present facts constituted a ‘relationship akin to employment’ for the purposes of vicarious liability, His Lordship extensively analysed how close the tortfeasor’s relationship with the bishop was to one of contractual employment and, indeed, the ‘relationship with [the] bishop [was therefore] close enough and so akin to employer/employee as to make it just and fair to impose vicarious liability’.94 VII.  LIMITS TO THE FREEDOM OF CONTRACT

As has already been noted, English law generally does not permit parties to label their relationships in any legally determinative way. As Lord Templeman famously noted, albeit in the context of land law: ‘The manufacture of a five-pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.’95 Translated into the present context, this means that parties cannot generally choose any particular label for their contract. Should an employer attempt to achieve a similar outcome through the insertion of terms designed to be inconsistent with employee status, he or she will furthermore be subject to scrutiny under the principles developed by the Supreme Court in Autoclenz, as discussed in section V above. 90  See, eg, E McKendrick, ‘Vicarious Liability and Independent Contractors: A Re-examination’ (1990) 53 MLR 770. 91  JGE v Portsmouth Roman Catholic Diocesan Trust [2012] EWCA Civ 938, [2012] IRLR 846. 92  As the Roman Catholic Church in England has no legal personality as such, the judgment was framed in terms of the relationship between the clergyman and his bishop: ibid [18]. 93 Including President of the Methodist Conference v Parfitt [1984] QB 368 (CA); and Percy v Church of Scotland Board of National Mission [2005] UKHL 73, [2006] AC 28. 94  JGE v Portsmouth Roman Catholic Diocesan Trust (n 91) [81]. 95  Street v Mountford [1985] AC 809 (HL). See S Bright, H Glover and J Prassl, ‘Tenancy Agreements’ in E Simpson and M Stewart (eds), Sham Transactions (Oxford, Oxford University Press, 2013) 105 ff.

764  Benjamin Jones and Jeremias Prassl Furthermore, employment contracts are, at least at first sight, subject to strict statutory provisions designed to eliminate any attempts at contracting out. Section 203(1) of the ERA 1996, for example, provides that: [A]ny provision in an agreement (whether a contract of employment or not) is void in so far as it purports— (a) to exclude or limit the operation of any provision of this Act, or (b) to preclude a person from bringing any proceedings under this Act before an employment tribunal.

However, a significant exception to this general ban on contracting out can now be found in section 205A of the Employment Rights Act 1996.96 Introduced by section 31 of the Growth and Infrastructure Act 2013, this provision sets out the features of a so-called ‘Employee Shareholder Status’.97 Individuals who agree to become employee shareholders are to receive shares in their employing company (or its parent undertaking) with a value of no less than £2,000.98 In return for the issue of these (capital gains tax-exempt) shares, employees no longer have recourse to the following employment rights:99 (i)

the right not to be unfairly dismissed (this is referred to as ‘ordinary’ unfair dismissal under section 94 of the ERA 1996, as employees remain protected against automatically unfair dismissals100 and termination in contravention of the Equality Act 2010);101 (ii) the right to statutory redundancy pay;102 (iii) the right to request flexible working;103 (iv) the right to request to undertake study or training;104 (v) employee shareholders are furthermore subject to longer notice periods before returning from maternity, paternity or adoption leave (up from six or eight weeks’ notice to 16 weeks).105

96 An extensive set of guidance notes has been published online at www.gov.uk/ employee-shareholders. 97  For a comprehensive discussion of the new status, see J Prassl, ‘Employee-Shareholder ‘Status’ (2013) ILJ 307. 98 ERA 1996, s 205A(1)(a) and (b). The Secretary of State may by order increase this amount: ibid s 205A(11). 99  ibid s 205A(2)(a)–(d). Note the exception in s 205A(8). 100  Such as being a trade unionist (ERA 1996, s 103) or whistleblowing (ERA 1996, s 103A). 101  ibid s 205A (9)(a) and (b). 102  ibid s 135. 103  ibid s 80F. 104  ibid s 63D. 105  Maternity and Parental Leave etc Regulations 1999, SI 1999/3312, reg 11; Paternity and Adoption Leave Regulations 2002, SI 2002/2788, reg 25; Additional Paternity Leave Regulations 2010, SI 2010/1055, reg 30.

The Concept of ‘Employee’: The Position in the UK 765 These substantive reforms are accompanied by a series of procedural safeguards introduced as a result of several rounds of ‘Parliamentary Ping-Pong’ in the spring of 2013. Section 205A decrees that prospective employee shareholders need to be issued with a detailed statement of particulars,106 including the terms on which shares will be issued, as well as a list of rights denied. Following receipt of this statement, the worker is entitled to independent advice (at the employer’s expense);107 the offer can only validly be accepted following such advice and after a seven-day cooling-off period.108 Crucially, however, once these conditions have been met, the agreement becomes irrevocable: it remains valid even if the shares are sold. As the official guidance notes: ‘Your employment status can only change if you and your employer both agree to change it.’109 Another potential way of avoiding the characterisation of employment relationships as a contract of employment was to cast them as partnerships or limited liability partnerships.110 However, the traditional assumption that partnership and employment status are mutually exclusive categories111 has now come under scrutiny in the Supreme Court’s decision in Bates van Winkelhof v Clyde & Co LLP.112 There, Baroness Hale opined, albeit strictly obiter, that as: There are some contracts which a partner may make with the members of the partnership, such as lending them money or granting them a lease or a tenancy … why should it be legally impossible to be employed, under either type of contract, by the partnership?

Lord Carnwath, on the other hand, was quick to dismiss these arguments; in particular, as the leading case of Ellis v Joseph Ellis & Co was said not just to turn on capacity to contract,113 but also the intra-partnership relation of ‘co-adventurers and not employees’.114 In the case of limited liability partnerships,115 the position is mirrored by statute, which provides that: A member of a limited liability partnership shall not be regarded for any purpose as employed by the limited liability partnership unless, if he and the other members were partners in a partnership, he would be regarded for that purpose as employed by the partnership.116 106 

ERA 1996, s 205A(1)(c). ibid s 205A(6)(a). 108  ibid s 205A(6)(b). 109 Department of Business Innovation and Skills, ‘Guidance: Employee Shareholders’ (2013, updated 2014), available at www.gov.uk/employee-shareholders. 110  J Prassl, ‘Members, Partners, Employees, Workers? Partnership Law and Employment Status Revisited. Clyde & Co LLP v Bates van Winkelhof’ (2014) 43 ILJ 495. 111  Derived from s 1 of the Partnership Act 1890. 112  Bates van Winkelhof v Clyde & Co LLP [2014] UKSC 32, [2014] 1 WLR 2047 [29]. 113  Ellis v Joseph Ellis & Co [1905] 1 KB 324 (CA). 114  Bates van Winkelhof (n 112) [59]. 115  ‘Bodies corporate’ under s 1 of the Limited Liabilities Partnership Act 2000. 116  Limited Liabilities Partnership Act 2000, s 4(4). 107 

766  Benjamin Jones and Jeremias Prassl VIII.  COLLECTIVE BARGAINING, ESTABLISHED CUSTOM AND PRACTICE

A.  Social Partners The social partners can neither fix nor further substantiate the notions of ‘employee’, ‘contract of employment’ and ‘employment relationship’. B.  Custom and Practice Custom and practice are also not acknowledged to the same extent. IX.  LEGAL PRESUMPTIONS AND THE SHIFTING OF THE BURDEN OF PROOF

A. Presumptions There are no general presumptions beyond those raised by the presence of the indicators identified in section IV.B above. In certain specific, situations involving a blurring of the lines between management of the firm and employment within it, a discrete set of further presumptions have been identified. In cases considering the employment status of majority shareholders, where a party has paid an employee’s income tax and national insurance contributions, there is a prima facie presumption that he or she is also entitled to an employee’s rights,117 though it does not reverse the burden of proof on the employee detailed below.118 The individual conducting themselves according to the contract’s terms as to working hours and leave will also create a presumption, albeit a weaker one. The absence of a written contract creates a strong presumption against the presence of an agreement. The presence of conduct beyond or inconsistent with the contract creates a strong presumption against employment. For cases involving directors, there is also a presumption in favour of there being a contract of employment where the director is required to work for the company full-time in return for a salary119 (though not for directors’ fees).120

117 

Clark v Clark Construction Initiatives Ltd [2008] IRLR 364, EAT [98]. Clark v Clark Construction Initiatives Ltd [2008] EWCA Civ 1446. 119  Trussed Steel Concrete Co Ltd v Green [1946] Ch 115, per Cohen J; Folami v Nigerline (UK) Ltd [1978] ICR 277. 120  Albert J Parsons & Sons Ltd v Parsons [1979] IRLR 117, [1979] ICR 271. 118 

The Concept of ‘Employee’: The Position in the UK 767 B.  The Burden of Proof The general civil burden of proof applies before the employment tribunals. Namely, it is for the party who alleges a proposition to prove that proposition on the balance of probabilities. As such, the burden is on the individual seeking in his or her claim to rely on a contract as an employment contract to show that the contract is indeed an employment contract. Conversely, if a firm makes a claim that seeks to rely on a contract not being a contract of employment, it will be for the firm to demonstrate this fact. The burden for implying any term in a contract will rest on the party seeking to imply it. Similarly, in cases considering the employment status of majority shareholders, the onus is on the party denying the contract to show that no such contract exists.121 The only slight qualification to the above-mentioned general principle is when the multiple test for establishing employment under Ready Mixed Concrete is applied, as discussed in section IV.A above. Where the case is marginal under that test, the burden of proving that a contract was not one of employment will not be satisfied and employment will be the default finding.122 X.  SPECIFIC PROCEDURES

There is no specific procedure for the determination of employment status before the courts or employment tribunals without proceedings within which that status is a matter in issue. That said, where the status is contested in proceedings before the employment tribunal, the question of employment status will typically be determined at a preliminary hearing convened only to determine such preliminary issues without engaging the full costs of a trial. Such a preliminary judgment can be appealed to the Employment Appeal Tribunal and, where appropriate, to the Court of Appeal and the Supreme Court. Appeal on a point of law relating to the determination of employment status can also lead to dedicated satellite litigation on the topic of construction of the employment agreement (as seen, for example, in Pulse Healthcare123 above). However, it would not be inaccurate to characterise these proceedings as free-standing. A truly free-standing set of proceedings can be issued to seek determination of the proper construction of an employment agreement, as with any form of contract, under the Part 8 alternative procedure for claims.124 121 

Clark (n 117) [98]. I Smith (ed), Harvey on Industrial Relations and Employment Law (London, LexisNexis, 2014) Issue 242 Division A1 [41]. 123  Pulse Healthcare (n 87) 124  Ministry of Justice, Civil Procedure Rules (80th update) Part 8. 122 See

768  Benjamin Jones and Jeremias Prassl XI.  THE EXTENSION OF RIGHTS

A.  ‘Employee-Like’ Persons In addition to employees, two of the key categories now recognised by statute are those of the worker (see section III.B above) and employee shareholder (see section VII). The following table, adapted from official government consultation on the problems and regulatory options surrounding ‘zerohours’ employment contracts, sets out in detail the extension of rights to each of those groups.125 Employee

Employee Shareholder

Worker

Minimum wage

X

X

X

Protection from unlawful deductions from wages

X

X

X

Paid annual leave

X

X

X

Maternity, paternity, adoption leave and pay

X

X

Part-time status (no less favourable treatment)

X

X

Fixed-term status (no less favourable treatment)

X

X

Rest breaks

X

X

X

Right to request flexible working

X

Right to request time to train (if over 250 employees)

X

Protection from discrimination

X

X

X

Self-employed

X

X (Continued)

125 Department of Business Innovation and Skills, ‘Zero Hours Employment Contracts’ (December 2013) www.gov.uk/government/uploads/system/uploads/attachment_data/file/2676 34/bis-13-1275-zero-hours-employment-contracts-FINAL.pdf.

The Concept of ‘Employee’: The Position in the UK 769 Employee

Employee Shareholder

Minimum notice periods

X

X

Collective redundancy consultation

X

X

Statutory redundancy pay

X

Protection from unfair dismissal (after two years of employment)

X

Protection from unfair dismissal (automatically unfair reasons)

X

X

Transfer of Undertakings Protection of Employment (TUPE)

X

X

Worker

Self-employed

B. Equality and Anti-discrimination Law The provisions of the Equality Act 2010, which bring together the entire edifice of the UK and EU anti-discrimination law in a single statute, are extended to so-called contract workers by section 41 of the Act, which stipulates that: (1) ‘A principal must not discriminate against a contract worker’, where ‘(5) A “principal” is a person who makes work available for an individual who is—(a) employed by another person, and (b) supplied by that other person in furtherance of a contract to which the principal is a party (whether or not that other person is a party to it)’. Contract workers, pursuant to section 41(7), are ‘individual[s] supplied to a principal in furtherance of a contract such as is mentioned in subsection (5) (b)’.

770 

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Czech Republic Hůrka, P et al, Labour Code and Related Provisions of the Civil Code with Detailed Commentary as of 1 January 2014 (Olomouc, ANAG Publishing, 2014). Hůrka, P, Novák, O and Vrajík, M, Current Labour Law Case Law with Detailed Commentary (Olomouc, ANAG Publishing, 2012). Hůrka, P and Randlová, N, Labour Code Commentary (Prague, Wolters Kluwer ČR, 2011).

Denmark Hasselbalch, O, Den Danske Arbejdsret, vol 1 (Aarhus, BSS, 2009).

Estonia Haljasmäe, R, ‘Majanduslikult sõltuva töötegija õiguslik kaitse’ (2007) 4 Juridica 274. ——, ‘Töötajale ettenähtud tagatiste laiendamine majanduslikult sõltuvale töötegijale’ (2009) 4 Juridica 217. Käärats, E et al, Töölepingu seadus. Selgitused töölepingu seaduse juurde (Tallinn, Juura, 2013). Leppik, M and Lillsaar, M, ‘Ettevõtte üleminek maksuõiguses. Kohtupraktikaanalüüs’ (Tartu, Riigikohus, 2013). Pärnits, K, ‘The Role of Collective Agreements in the Regulation of Work Conditions in View of the Effects of Estonian Labour Law Reform’ (2012) 19 Juridica International 88. ——, Kolletkiivlepingu roll ja regulatsioon nüüdiaegsetes töösuhetes (Tartu, Tartu Ülikool, 2015).

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Latvia Torgāns, K (ed), Commentaries to the Civil Procedure Law, 3rd edn (Rīga, Tiesu Namu AĜentūra, 2006).

Luxembourg Castegnaro, G, ‘Gérant ou salarié: sous quelles conditions ?’ Legiwork ID 16304.

The Netherlands De Gaay Fortman, WF, ‘De onderneming in het arbeidsrecht’, PhD dissertation, Free University Amsterdam, 1936. De Wit, MAC, Het goed werkgeverschap als intermediair van normen in het arbeidsrecht, Monografieën Sociaal Recht no 14 (Deventer, Kluwer, 1999). De Wolff, DJB, Goedwerknemerschap, Monografieën Sociaal recht no 44 (Deventer, Kluwer, 2007). Heerma van Voss, GJJ, Goed werkgeverschap als bron van vernieuwing van het arbeidsrecht, Reeks Vereniging voor arbeidsrecht no 29, 2nd edn (Deventer, Kluwer, 1999).

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Poland Faulkner, N, Glogier-Osińska, B and Sikora, J, A Collection of Labour Law Acts and Ordinances. Prawo pracy—zbiór ustaw i rozporządzeń (Warsaw, CH Beck, 2013). Florczak, I and Muszyńska, B, ‘Selected Differences between Civil Law and Employment Law Contracts Related to Work on the Grounds of the Polish Legislation’ in I Florczak and Z Góral (eds), Developments in Labour Law from a Comparative Perspective (Łódź, Wydawnictwo Uniwersytetu Lodzkiego, 2015). Giedrewicz-Niewińska, A, Wybór jako podstawa nawiązania stosunku pracy w samorządzie terytorialnym (Warsaw, Wolters Kluwer, 2008). Góral, Z, ‘Zasada uprzywilejowania pracownika’ in KW Baran (ed), Zarys systemu prawa pracy. Tom I. Część ogólna prawa pracy (Warsaw, Wolters Kluwer, 2010). ——, O kodeksowym katalogu zasad indywidualnego prawa pracy (Warsaw, Wolters Kluwer, 2011). Hajn, Z, ‘The Right of Association in Trade Unions: The Right of Employees, or the Right of Working People?’ in J Stelina and Ł Pisarczyk (eds), Studia Iuridica vol 60. Collective Labour Law (Warsaw, Wydawnictwo Uniwersytetu Warszawskiego, 2015). Jamroży, A (ed), The Labour Code. Kodeks pracy. Bilingual edition, 2nd edn (Warsaw, CH Beck, 2014).

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Portugal Monteiro Fernandes, A, Direito do trabalho, 17th edn (Coimbra, Almedina, 2014). Ramalho, P and do Rosário, M, Da autonomia dogmática do Direito do trabalho (Coimbra, Almedina, 2001). Romano Martinez, P, Direito do trabalho, 7th edn (Coimbra, Almedina, 2015).

Romania Beligrădeanu, S, ‘Natura juridică a contractului individual de îmbarcare’ (2003) 5 Dreptul 28. ——, ‘Principalele aspecte teoretice şi practice rezultate din cuprinsul legii nr. 40/2011 pentru modificarea şi completarea Legii nr. 53/2003—Codul muncii, II’ (2011) 7 Dreptul 30. ——, ‘Inadmisibilitatea încheierii contractelor individuale de muncă în nume propriu de către dezmembrămintele fără personalitate juridică ale societăţilor comerciale’ (2009) 7 Dreptul 133. Boilă, L, ‘Comentariu la art 1373’ in F Baias et al, Noul Cod civil. Comentariu pe articole (Bucharest, CH Beck, 2012). Dimitriu, R, ‘Reflecţii privind nulitatea contractului individual de muncă’ (2013) 4 Dreptul 163. Lipcanu, E, ‘Unele reflecţii asupra reglementării răspunderii comitenţilor pentru prepuşi în noul Cod civil român’ (2010) 10 Dreptul 33.

Bibliography 783 Nicolae, M, ‘Nulitatea parţială şi clauzele considerate nescrise în lumina noului Cod civil. Aspecte de drept material şi drept tranzitoriu’ (2012) 11 Dreptul 11. Ştefănescu, IT, ‘Contractul individual de muncă al zilierilor’ (2014) 4 Revista română de dreptul muncii 15. ——, Dicţionar de drept al muncii (Bucharest, Universul Juridic, 2014). ——, Tratat teoretic şi practic de drept al muncii (Bucharest, Universul Juridic, 2014). Ţiclea, A, Tratat de dreptul muncii, 8th edn (Bucharest, Universul Juridic, 2014). Tinca, O, ‘Contractul individual de muncă la domiciliu’ (2003) 8 Dreptul 35. ——, ‘Consideraţii referitoare la contractul de muncă si raportul de muncă in dreptul Uniunii Europene’ (2013) 10 Dreptul 115.

Russia Еремина, СН, ‘Спорные вопросы формирования правового статуса руководителя: трудовое или гражданское законодательство?’ (2011) 17 Юрист 30. Khavayaskhov, A, ‘Afillirovannye litsa v trudovom prave’ (2015) 4 Kadrovik. Trudovoye pravo dlya kadrovika 8. Kurennoy, A (ed), Trudovoye pravo Rossii, 3rd edn (Moscow, Prospect, 2016). Lyutov, NL and Gerasimova, ES, Mezhdumarodnye trudovye standarty i rossiyskoye trudovoye zakonodatel’stvo, 2nd edn (Moscow, Tsentr sotsial’no-trudovykh prav, 2015). Огородов, Д В, ‘Служебные объекты интеллектуальной собственности и смешанные договоры, заключаемые с работниками (соотношение гражданского и трудового права)’ (2006) 11 Коллегия 18–22. Saurin, S, ‘Problemyi zaschityi prav rabotnikov, zanyatyih v neformalnom sektore’ (2014) 4 Trudovoe pravo v Rossii i za rubezhom 48. Shevchenko, OA, ‘Legal Doctrine of Regulation of Work in Professional Sport and Ways to Realize it in Russia’, Doctoral thesis, 2014.

Serbia Baltić, A and Despotović, M, Foundation of Labour Law in Yugoslavia and the Main Issue in Work-Related Sociology (Belgrade, Savremena administracija, 1971). Jovanović, P, Radno pravo (Novi Sad, Pravni fakultet u Novom Sadu, 2012). ——, Labour Law (Novi Sad, Faculty of Law in Novi Sad, 2015). Pešić, R and Brajić, V, Labour Law (Senta, Društvo ekonomista Senta, 1979). Šunderić, B, Labour Relationship (Theory, Norms and Practice) (Belgrade, Kultura, 1990). Tintić, N, ‘Labour and Social Law’ (1972) People’s Journal 335.

Slovenia Belopavlovič, N et al, Zakon o delovnih razmerjih s komentarjem (Ljubljana, GV Založba, 2008). Debelak, M, ‘Sodna praksa v sporih o obstoju delovnega razmerja med delavci in delodajalci’ (2008) 2/3 Delavci in delodajalci 450. Končar, P, ‘Neue gesetzliche Regelung individueller Arbeitsvehältnisse in Slowenien stärkt die normativen Befugnisse des Arbeitsgebers’ in A Höland, C Hohmann-Dennhardt, M Schmidt and A Seifert (eds), Arbeitnehmermitwirkung in einer sich globalisierenden Arbeitwelt (Liber Amicorum Manfred Weiss, BWV, 2005).

784  Bibliography Košir, B and Naglič, A, ‘Odgovornost katoliške Cerkve za dejanja duhovnikov’ (2010) 70 Bogoslovni vestnik 3. Robnik, I, ‘Odločbe Vrhovnega sodišča RS’ (2008) VIII(1) Delavci in delodajalci 65. Senčur Peček, D, ‘Komu zagotavljati delovnopravno varstvo’ (2007) XXXIII(6–7) Podjetje in delo 223. ——, ‘Samozaposleni, ekonomsko odvisne osebe in obstoj delovnega razmerja’ (2014) XIV(2–3) Delavci in delodajalci 201. Tičar, L, ‘Delovnopravno varstvo ekonomsko odvisnih oseb- novost ZDR-1’ (2013) XII(2–3) Delavci in delodajalci 151. ——, Nove oblike dela (Ljubljana, Pravna fakulteta, Manet, 2012).

Spain Martín Valverde, A, Rodríguez-Sañudo Gutiérrez, F and García Murcia, J, Derecho del Trabajo, 24th edn (Madrid, Tecnos, 2015).

Sweden Adlercreutz, A, Arbetstagarbegreppet (Stockholm, Norstedts förlag, 1964). Adlercreutz, A and Johann Mulder, B, Svensk arbetsrätt, 14 edn (Stockholm, Norstedts Juridik, 2013). Berg, A, Bemanningsarbete, flexibilitet och likabehandling. En studie av svensk rätt och kollektivavtalsreglering med komparativa inslag (Lund, Juristförlaget, 2008). Eklund, R, Sigeman, T and Carlson, L, Swedish Labour and Employment Law: Cases and Materials (Uppsala, Iustus Förlag, 2008). Engblom, S, Self-Employed and the Personal Scope of Labour Law (Florence, European University Institute, 2003). Fransson, S and Stüber, E, Diskrimineringslagen. En kommentar (Stockholm, Norstedts Juridik, 2010). Holke, D and Olauson, E, Medbestämmandelagen—med kommentar, 6th edn (Lund, Studentlitteratur, 2014). Inghammar, A, Funktionshindrad—med rätt till arbete (Lund, Juristförlaget i Lund, 2007). ——, ‘The Employment Contract Revisited: Undocumented Migrant Workers and the Intersection between International Standards, Immigration Policy and Employment Law’ (2010) 12(2) European Journal of Migration and Law 193. Källström, K, ‘Employment Agreements and Contract Work in the Nordic Countries’ in P Wahlgren (ed), Stability and Change in Nordic Labour Law: Scandinavian Studies in Law (Mölnlycke, Elanders, 2002). ——, ‘Employment and Contract Work’ (1999) 21 Comparative Labor Law and Policy Journal 157. Källström, K and Malmberg, J, Anställningsförhållandet: Inledning till den individuella arbetsrätten, 3rd edn (Uppsala, Iustus Förlag, 2013). Lunning, L and Toijer, G, Anställningsskyddslagen: En lagkommentar, 10th edn (Stockholm, Norstedts Juridik, 2010). Nordh, R, ‘Bevisbörda och beviskrav i tvistemål’ (2012) Svensk Juristtidning 781.

Bibliography 785 Rönnmar, M, ‘The Personal Scope of Labour Law and the Notion of Employee in Sweden’ (JILPT Comparative Labor Law Seminar, 2004, Tokyo). Sigeman, T, ‘Anmälan av Olof Bergqvist och Lars Lunning: Medbestämmandelagen’ (1987) Svensk Juristtidning 609. Westregård, A, ‘Self-Employment versus Traditional Employment—An Analysis from the Perspectives of the Labour Market and the Individual’ (Conference Paper, Labour Law Research Network Conference, Amsterdam, 2015).

Switzerland Aubert, G, in L Thévenoz et al (eds), Commentaire romand—Code des obligations I, 2nd edn (Basel, Helbing Lichtenhahn, 2012). Futterknecht, JM, ‘Job Sharing’, thesis, University of Berne, 1985. Hüber, G, Der fachlich weisungsfreie Arbeitnehmer (Zurich, Juris, 1975). Hutterli, C, Der leitende Angestellte im Arbeitsrecht, 3rd edn (Berne, Stämpfli, 1984). Müller, RA, Arbeitnehmerähnliche Personen, Mitteilungen des Instituts für Schweizerisches Arbeitsrecht (ArbR) 2000. Portmann, W, ‘Die Informationspflicht des Arbeitgebers gemäss Art 330b OR—Ein neues Instrument gegen Lohn- und Sozialdumping’ (2007) Zeitschrift für Arbeitsrecht und Arbeitslosenversicherung (ARV) 1. Portmann, W and Rudolph, R, in H Honsell et al (eds), Basler Kommentar— Obligationenrecht I, 6th edn (Basel, Helbing Lichtenhahn, 2015). Portmann, W and Stöckli, JF, Schweizerisches Arbeitsrecht, 3rd edn (Zurich, Dike, 2013). Rehbinder, M and Stöckli, JF, in H Hausheer et al (eds), Berner Kommentar, vol VI/2/2/1 (Berne, Stämpfli, 2010). Schnyder, AK, Portmann, W and Müller-Chen, M, Ausservertragliches Haftpflichtrecht, 2nd edn (Zurich, Schulthess, 2013). Schwabe, F, ‘Arbeitnehmerähnliche Personen—Erscheinungsformen und Rechtsprobleme’, thesis, University of Zurich, 1983. Staatssekretariat für Wirtschaft SECO, Direktion für Arbeit, Arbeitsbedingungen (ed), Wegleitung zum Arbeitsgesetz, 6th edn (Berne, Loseblattsammlung, 2011). Staehelin, A, in P Gauch et al (eds), Zürcher Kommentar, vol V/2c, 4th edn (Zurich, Schulthess, 2006). Streiff, U, von Kaenel, A and Rudolph, R, Arbeitsvertrag—Praxiskommentar, 7th edn (Zurich, Schulthess, 2012). Thévenoz, L et al (eds), Commentaire romand—Code des obligations I, 2nd edn (Basel, Helbing Lichtenhahn, 2012) Vischer, F and Müller, RM, Der Arbeitsvertrag, 4th edn (Basel, Helbing Lichtenhahn, 2014).

Turkey Bakirci, K, ‘Child Labour and Legislation in Turkey’ (2002) 10(1) International Journal of Children’s Rights 55. ——, ‘Protection of Women Employees before and after Childbirth in Turkish Employment Law’ (2006) 22(4) International Journal of Comparative Labour Law and Industrial Relations 615.

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Index accountants, 50, 231, 318, 345, 373, 428, 536 additional contracts, l–li, 15–16, 37, 144, 269, 285, 344–45, 367–68, 401, 471, 519, 539, 572, 613, 654, 711, 714 agency workers, see temporary agency workers agricultural workers, 7, 21, 38, 41, 71, 95, 134, 138, 195, 281, 335, 357, 395, 409, 416, 495, 566, 586, 704, 727, 734 annual leave, xxxi, xxxiii, xlvi, lxiii, 13, 21, 46, 59, 61, 93, 147, 158, 221, 230–31, 248, 267, 274, 280, 284, 295, 381, 423–24, 527, 551, 570, 611, 668, 674, 725, 768 annulment of employment contracts, 222–23, 242, 276, 291, 312, 438, 644 anti-discrimination and equality law, lxiv–lxv Austria, 21 Belgium, 43 Bulgaria, 57–58 Croatia, 82–83 Cyprus, lxv, 111 Czech Republic, 131–32 Denmark, lxv, 147–48 Estonia, lxv, 168–69 Finland, 195–96 France, 216–18 Germany, lxv, 274 Greece, lxv, 288 Hungary, 307–08 Iceland, 326–27 Ireland, 348–49 Italy, 374–75 Latvia, 389–90 Lithuania, 404 Luxembourg, 433 Malta, 457–48 Montenegro, 475 Netherlands, 503 Norway, 523–24 Poland, 542 Portugal, lxiv, 556 Republic of Macedonia, 248–49 restatement text, xxi Romania, lxv, 576 Russia, 597–98 Serbia, lxv, 618 Slovakia, 638–39

Slovenia, 656 Spain, 674–75 Sweden, 694–96 Switzerland, 719 Turkey, 744–45 UK, lxv, 769 appointed representatives, 26, 139, 182, 444, 485, 487, 514, 529, 531, 532, 539 apprentices and trainees: Austria, 8 Belgium, 33 Croatia, 70 Cyprus, 90, 91, 97–98 Denmark, 138–39 Estonia, 158 France, 199 Germany, 254 Greece, 280 Iceland, 317 Ireland, 329, 337, 348–49 Italy, 360–61 Lithuania, 398 Luxembourg, 414–15, 433 Malta, 457 Netherlands, 478, 496 Norway, 513 Romania, 558, 561, 564 Russia, 593 Switzerland, 698, 701, 703 Turkey, 728, 742–44 UK, 748, 751 arbitration, 33, 137, 143, 145, 259–60, 287–88, 358, 498, 512, 597 artists, see media and entertainment sector attorneys, 120, 121–22, 318 Austria, 1–21 see also under individual topics Belgium, 23–43 see also under individual topics belief, xl–xli, lxv, 58, 132, 196, 218, 274, 288, 383–85, 389, 404, 542, 639, 744 see also religious discrimination benefits, xxx, 99, 151, 209, 285, 312, 315, 320, 346, 410, 445, 527, 540, 663, 698, 755 disability benefits, 502, 570 maternity benefits, 63 occupational injury benefits, 314, 325, 658

788  Index paternity benefits, 63 pension benefits, 363, 510, 602 sickness and accident benefits, 314, 486, 502, 510 unemployment benefits, 27, 70, 175, 190, 199, 323–24, 325, 502, 671 blue-collar and white-collar workers, xxxviii–xxxix Austria, 6–7 Belgium, 31–32 Croatia, 73 Denmark, 138 France, 201–02 Germany, 258 Greece, 279 Italy, 357–58 Latvia, 385 Norway, 513 Poland, 534–35 Republic of Macedonia, xxxviii, 228 Serbia, 606 Slovakia, 633 Slovenia, 647 Spain, 663 Switzerland, 706 Turkey, 729 board and lodging, 344–45, 515, 613 boards of directors/executives: Bulgaria, 51 Croatia, 67–68, 77–79 Cyprus, 108 Denmark, 139 Estonia, 162 Hungary, 298 Italy, 374 Latvia, 381, 383–84, 386 Lithuania, 398 Luxembourg, 410, 413, 427 Netherlands, 486–87 Norway, 512 Republic of Macedonia, 229, 241 Romania, 563–64 Russia, 583, 586 Serbia, 606–07 Spain, 663 Sweden, 683 Switzerland, 713 Turkey, 726 breach of contract, 214–15, 551 see also validity of contracts Bulgaria, 45–58 see also under individual topics burden of proof: Austria, 18–19 Belgium, 41 Bulgaria, 56 Croatia, 80–81 Cyprus, 110

Czech Republic, 130 Denmark, 146 Estonia, lix, 167 Finland, 192–93 France, 214 Germany, lix, 272 Greece, 287 Hungary, 305 Iceland, 324–25 Ireland, 346 Italy, 370 Latvia, 388 Lithuania, 403 Luxembourg, 431–32 Malta, 456–57 Montenegro, 472–73 Netherlands, 500 Norway, 522 Poland Portugal Republic of Macedonia, 244 Romania Russia, 595–96 Serbia, 616 Slovakia, 638 Slovenia, 655 Spain, 672 Sweden, 692 Switzerland, 717–18 Turkey, lix, 740 UK, 767 business transfers, see transfers of undertakings care-givers: war veterans, of, 68–69 casual workers, xxxii, xli, 179, 339, 560, 565–66, 705, 709 children, see minors church service workers, xl–xli Austria, 8 Germany, 260 Iceland, 318 Ireland, 336, 337 Latvia, 383, 384–85 Montenegro, 466 Netherlands, 488 Republic of Macedonia, 232 Serbia, 607–08 Slovakia, 630 Slovenia, 649 civil servants: Austria, xl, 3 Belgium, 26, 28–29, 30, 32, 42, 43 Croatia, 65–66, 75–76 Cyprus, 96, 98 Czech Republic, 120, 122 Denmark, 140

Index 789 Estonia, 159 Finland, 181, 182 France, xl, 202–03 Germany, xl Greece, 281 Hungary, 294, 307–08 Ireland, 330, 333, 336 Italy, 363–64 Latvia, 381–82, 383 Lithuania, 397 Luxembourg, 413 Montenegro, 465–66, 467 Netherlands, 485, 487–88, 503 Norway, 514 Poland, 530 Republic of Macedonia, 228–29 Romania, 560 Serbia, 599, 603, 604, 605 Slovakia, 624, 633 Slovenia, 647 Spain, 663–64 Turkey, 729 see also Crown employees collective bargaining, liii–liv Austria, liv, 17–18 Belgium, liii, liv, 26–27, 38 Bulgaria, liv, 55–56 Croatia, liv, 79 custom and practice, liv, 18, 38, 56, 109, 146, 166, 191–92, 212, 243, 271, 287, 304, 324, 346, 369, 388, 402, 430, 453–54, 472, 498, 521, 540, 553, 595, 615, 637, 671, 691–92, 716, 738, 766 Cyprus, 108–09 Czech Republic, liv, 130 Denmark, liv, 133, 145–46 Estonia, liv, 165–66 Finland, 191–92 France, liv, 211–12 Germany, liv, 271 Greece, liv, 286–87 Hungary, liv, 304 Iceland, 323–24 Ireland, liv, 346 Italy, liv, 368–69 Latvia, liv, 388 Lithuania, 402 Luxembourg, liv, 428–30 Malta, 453–54 Montenegro, liv, 471–72 Netherlands, liv, 498 Norway, liv, 521 Poland, liv, 539–40 Portugal, liv, 553 Republic of Macedonia, liv, 243 restatement text, xxiii Romania, 574 Russia, liv, 594–95

Serbia, liv, 614–15 Slovakia, liv, 637 Slovenia, 654 social partners, 17–18, 38, 55, 108–09, 145, 165–66, 191, 211–12, 243, 271, 286, 304, 323–24, 346, 368–69, 388, 402, 428–30, 453, 471–72, 498, 521, 539, 553, 594, 614–15, 637, 671, 691, 715–16, 738, 766 Spain, liv, 671 Sweden, liii, 690–91 Switzerland, liv, 715–16 Turkey, liv, 738 UK, liv, 766 commencement of contracts, 3, 56, 57, 59–60, 86, 114–15, 117, 151, 200, 227, 300, 310, 331, 372, 378, 452, 463, 467–69, 470–71, 472, 473–74, 497, 505–06, 527, 559, 578, 581, 621, 623–24, 634, 637, 643, 698 commercial travellers, lviii, 32–33, 38, 511, 698, 701–02, 703, 708 contractors, lii, lxiii–lxiv, 14, 20, 43, 51, 86, 100, 106, 124, 131, 198, 204–05, 210, 233, 236, 337–38, 428, 451, 455, 502, 541, 585, 594, 685–86, 687, 694, 707, 737, 740 contracts for work and services: Switzerland, 710, 712 contracts for services, lxi, 1, 13, 67, 74–75, 77–79, 100–02, 143–45, 149–50, 159, 167, 168, 188, 214, 233, 235–36, 247–48, 330, 338–40, 344, 354, 383–84, 401, 493, 498, 501, 549, 550–52, 560, 567, 572–73, 603, 608, 612–13, 642, 646, 648, 662, 669, 732, 754, 756–57, 758 contracts of employment compared, 251–52, 309–10, 482 contracts of employment: Austria, xxvii, 1–3 Belgium, 23–26 Bulgaria, xxvi, 45–47 Croatia, 59–61 Cyprus, xxvi, 85–88 Czech Republic, xxvi, 113–16 Denmark, xxvi, 133–35 Estonia, 149–54 Finland, 171–74 France, xxvi, 197–200 Germany, xxvi–xxvii, 251–53 Greece, xxvi, xxvii, 275–77 Hungary, xxvi, 289–92 Iceland, xxvi, 309–12 Ireland, xxvi, 329–32 Italy, xxvi, 351–52 judge-made definitions, xxvi–xxvii Latvia, 377–79 Lithuania, 391–95

790  Index Luxembourg, xxvi, xxvii, 405–06 Malta, 435–38 Montenegro, xxvi, 459–61 Netherlands, xxvi, 477–84 Norway, xxvi, 506–07 Poland, 525–29 Portugal, xxv, 543–45 Republic of Macedonia, xxvi, 219–23 restatement text, xxi Romania, xxv, 557–60 Russia, xxvi, 577–80 Serbia, xxvi, 599–602 Slovakia, xxvi, 619–22 Slovenia, xxvi, 641–44 Spain, 657–58 statutory definitions, xxv–xxvi Sweden, xxvii, 677–79 Switzerland, xxv, 697–99 Turkey, xxv, 721–24 UK, xxvi, 747–49 cooperative workers, 5, 50, 51, 95, 120–21, 294–95, 371, 409, 525, 529–30, 539, 565, 566, 586, 647, 674, 735 Criteria of subordination, see under subordination Croatia, 59–83 see also under individual topics custom and practice: collective bargaining, liv Cyprus, lvi, 109 Estonia, 166 Finland, 191–92 Iceland, 324 Lithuania, lvi, 402 Malta, 453–54 restatement text, xxiii Sweden, lvi, 691–92 Turkey, 738 Cyprus, 85–111 see also under individual topics Czech Republic, 113–32 see also under individual topics dare-facere contracts, xxix, 292 Denmark, 133–48 see also under individual topics direct discrimination, 58, 69, 132, 327, 475, 523 see also anti-discrimination and equality law disabled workers, 71, 137, 277, 416, 502, 662, 683 disability discrimination, 83, 111, 132, 196, 218, 274, 288, 389, 404, 458, 503, 524, 542, 618, 639, 675, 719 discrimination: direct discrimination, 58, 69, 132, 327, 475, 523

see also anti-discrimination and equality law; disability discrimination; indirect discrimination; racial discrimination; sexual discrimination dismissal, 67–68, 99, 105, 111, 140, 148, 181, 259, 281, 303, 333, 335, 347, 361, 380, 473, 487, 530–31, 547, 582, 583–84, 606, 751, 755, 764 compensation, 512 constructive dismissal, 107 economic reasons, for, 357 notice, 248, 358, 360, 523 partial dismissals, 494–95 pregnant women, 69, 137, 415 religious belief and, 383–85, 488 severance pay, xxxi, xl, 21, 67, 78, 117, 121, 209, 248, 277, 292, 298, 306, 487, 580, 633, 658, 673, 725 sickness and, 415 summary dismissal, 6 trade union membership, 758 trainees, 254 unemployment insurance, 211 see also termination dispute resolution, 80–81, 280–81, 288, 337, 392, 472–73, 498 see also arbitration; mediation domestic workers: Cyprus, 96 Denmark, 138 Greece, 280 Italy, 360 Luxembourg, 416 Netherlands, 487 Republic of Macedonia, 229 Russia, 584 Spain, 661 Sweden, 683, 684 duration of contracts, 12, 46, 150, 162, 179, 220, 225, 235, 237, 241–42, 316, 356, 365, 378, 414, 463–64, 472, 505–06, 518, 566, 568, 590, 615, 648, 658, 662, 666, 687, 724 annual leave, 59, 86, 151 apprenticeship contracts, 361 fixed-term contracts, 86, 178, 199, 216, 311–12, 114, 311, 326 indefinite duration, 60, 67, 68, 80, 81, 114, 239, 289, 311, 404, 436, 474, 544, 629, 643, 698, 745 probation periods, 664 requirements for written contract, 506 work abroad, 25 ‘economic dependence’, xlvii–xlviii Austria, 14 Belgium, 36 Bulgaria, xlviii, 53

Index 791 Cyprus, 104 Czech Republic, xlviii, 126 Denmark, 142–43 Finland, xlviii, 187 France, xlviii, 207 Germany, 268 Greece, 284–85 Hungary, 301 Ireland, 342–44 Italy, xlviii, 366 Latvia, 387 Luxembourg, 425–26 Malta, xlviii, 449–50 Netherlands, 492 Norway, 518–19 Poland, 538 Portugal, 551–52 Restatement text, xx Russia, 591 Serbia, 611–12 Slovakia, 636 Slovenia, 652–53 Spain, 667–68 Sweden, 687 Switzerland, 711 Turkey, 732–33 UK, 761 elected representatives, 47, 139, 241, 394, 514 employee defined, xxxii–xxxiv Austria, xxxiv, 4–5 Belgium, xxxii, 29–30 Bulgaria, xxxiv, 49 Croatia, xxxiii, 63–64 Cyprus, xxxii, xxxiii, xxxiv, 85, 90–92 Czech Republic, xxxii, 118–19 Denmark, xxxiv, 135–36 Estonia, xxxiv Finland, xxxiv, 176–77 France, 201 Germany, xxxiv, 256–58 Greece, xxxiv, 278 Hungary, xxxii, 296 Iceland, xxxiv, 313–15 Ireland, xxxii, 333 Italy, xxxii, 353–54 Latvia, xxxii–xxxiii, xxxiv, 380–82 Lithuania, xxxii, 396 Luxembourg, 407–11 Malta, xxxiii, 440–42 Montenegro, xxxii, 464–65 Netherlands, xxxiv, 485–86 Norway, xxxii, 509–10 Poland, xxxii, xxxiii, xxxiv, 532–33 Portugal, xxxiv, 546 Republic of Macedonia, xxxiii, 225–27 restatement text, xxi Romania, xxxii, xxxiv, 561–62

Russia, xxxii, 581–82 Serbia, 605 Slovakia, xxxii, 626 Slovenia, 645–46 Spain, xxxiv, 659–61 Sweden, xxxiv, 680–81 Switzerland, xxxiv, 701–02 Turkey, xxxii, 725–26 UK, xxxii, 750–51 see also sub-types of employees employee-like persons, lxi–lxiv Austria, lxii, 20–21 Belgium, lxiii, 28–29, 42–43 Bulgaria, lxiii, 57 Croatia, lxiii, 82 Cyprus, lxiii Czech Republic, lxiii, 131 Denmark, lxiii, 147 Estonia, 168 Finland, lxiii, 194–95 France, lxiii, 215 Germany, lxii, 273–74 Greece, lxiii, 288 Hungary, lxiv, 306–07 Iceland, lxiii, 326 Ireland, lxiii, 348 Italy, lxiv, 371–74 Latvia, lxiii, 389 Lithuania, lxiii, 403 Luxembourg, lxiii, 432–33 Malta, lxiii, 457 Montenegro, lxiii, 474 Netherlands, 501–03 Norway, lxiii, 523 Poland, 541 Portugal, lxiii, 556 Republic of Macedonia, lxiii, 245–48 Romania, lxiii, 575–76 Russia, lxiii, 597 Serbia, lxiii, 617–18 Slovakia, lxiii, 638 Slovenia, lxiv, 655–56 Spain, lxii, 673–74 Sweden, lxiii, 694 Switzerland, lxii, 718–19 Turkey, lxiv, 742–44 UK, 768–69 employer defined, xxxiv–xxxvii Austria, xxxvi, xxxvii, 5–6 Belgium, xxxv, 30–31 Bulgaria, xxxiv, 50 Croatia, xxxiv, 64–65 Cyprus, 92–94 Czech Republic, xxxiv, 119 Denmark, xxxvi, 136–38 Estonia, xxxvi, 155–56 Finland, xxxvi, 177–78 France, 201

792  Index Germany, xxxvi, 257–58 Greece, xxxvi, 278–79 Hungary, xxxv, 296–97 Iceland, xxxvi, 315 Ireland, xxxv, 333–35 Italy, xxxvii, 354–57 Latvia, xxxv, 382–83 Lithuania, xxxv, 396–97 Luxembourg, xxxvi, 411–12 Malta, xxxv, 442–43 Montenegro, xxxv, 465 Netherlands, xxxvi, 486 Norway, xxxv, 510–11 Poland, xxxv, 533–34 Portugal, xxxvi, 546–47 Republic of Macedonia, xxxiv, 227–28 restatement text, xxi Romania, xxxv, 562–63 Russia, xxxv, 582 Serbia, xxxv, 605–06 Slovakia, xxxv, 626–27 Slovenia, xxxv, 646–47 Spain, 661 Sweden, xxxv, xxxvi, 681 Switzerland, xxxvi, 702–03 Turkey, xxxv, 726 UK, xxxv, 751–52 ‘employment relationship’: assessment of the relationship, xliv–xlv Austria, xxxii, 3–4 Belgium, xxx, 23–24, 26–29 Bulgaria, xxxii, 47–49 Croatia, xxxi, 61–62 Cyprus, xxxii, 88–90 Czech Republic, xxxi, 113, 116–18 Denmark, 134–35 Estonia, xxxii, 153–54 Finland, 174–76 France, 200–01 Germany, 253–56 Greece, xxxii, 277–78 Hungary, xxx, 292–96 Iceland, xxxii, 313 indicators, xlv–xlvii Ireland, xxxii, 333 Italy, xxxii, 352–53 Latvia, xxxii, 379–80 Lithuania, xxxii, 395–96 Luxembourg, xxxii, 407 Malta, xxxii, 438–40 Montenegro, xxx, 462–64 Netherlands, xxxii, 484 Norway, xxxii, 507–09 Poland, xxx, 529–31 Portugal, xxxii, 545 Republic of Macedonia, xxxi, 223–25 restatement text, xix Romania, xxxii, 560–61

Russia, xxx, 580–81 Serbia, xxxi, xxxii, 602–04 Slovakia, xxxii, xxxii, 622–25 Slovenia, xxxi, 644–45 Spain, 658–59 Sweden, 679 Switzerland, xxxii, 699–700 Turkey, 724–25 UK, 750 statutory definition, xxx–xxxii equal opportunities, see anti-discrimination and equality law equality law, see anti-discrimination and equality law Estonia, 149–69 see also under individual topics ethnic discrimination, lxv, 132, 195–96, 274, 288, 326–27, 389, 404, 524, 542, 639 see also anti-discrimination and equality law; racial discrimination executives, see boards of directors/executives extension of rights: Austria, lxii, lxiv, 20–21 Belgium, lxiii, 42–43 Bulgaria, lxiii, 57–58 Croatia, lxiii, 82–83 Cyprus, lxiii, lxiv, 111 Czech Republic, lxiii, 131–32 Denmark, lxiii, lxiv, 147–48 Estonia, lxiv, 168–69 Finland, lxiii, 194–96 France, lxiii, 215–18 Germany, lxii, lxiv, 273–74 Greece, lxiii, lxiv, 288 Hungary, lxiv, 306–08 Iceland, lxiii, 326–27 Ireland, lxiii, 348–49 Italy, lxiv, 371–75 Latvia, lxiii, 389–90 Lithuania, lxiii, 403–04 Luxembourg, lxiii, 432–33 Malta, lxiii, 457–48 Montenegro, lxiii, 474–75 Netherlands, lxiii, 501–03 Norway, lxiii, 523–24 Poland, 541–42 Portugal, lxiii, lxiv, 556 Republic of Macedonia, lxiii, 245–49 restatement text, xxiii Romania, lxiii, lxiv, 575–76 Russia, lxiii, 597–98 Serbia, lxiii, lxiv, 617–18 Slovakia, lxiii, 638–39 Slovenia, lxiv, 655–56 Spain, lxii–lxiii, 673–75 Sweden, lxiii, 693–96

Index 793 Switzerland, lxii, 718–19 Turkey, lxiv, 742–45 UK, lxiv, 768–69 false labelling of contracts, 16–17, 143, 273, 452, 552, 612–13, 736 family members: employment of, 3, 35, 72, 108, 137, 180, 266, 354, 508, 611, 647, 683, 704, 709, 728, 734, 735 fines, see penalties Finland, 171–96 see also under individual topics fixed term contracts, 25, 152, 179, 189, 199, 216, 311–12, 394, 433, 451, 460–61, 473–74, 514, 563, 565–66, 612, 616, 643, 653, 659, 677, 724 foreigners: employment of, 24, 474, 616, 643, 658, 736 formal requirements of contracts of employment, xxvii–xxviii restatement text, xix see also contracts of employment; written contracts France, 197–218 see also under individual topics freedom of contract, li–liii Austria, 16–17 Belgium, liii, 37 Bulgaria, liii, 54–55 contract of employment as a mandatory concept, li–lii Croatia, 62, 78–79 Cyprus, 106–08 Czech Republic, 129–30 Denmark, 144–45 Estonia, 164–65 Finland, liii, 189–90 France, liii, 210 freedom to enter into an employment relationship, lii–liii Germany, 255, 270–71 Greece, lii, 286 Hungary, 302–03 Iceland, 322–23 Ireland, 345 Italy, liii, 368 Latvia, 387–88 Lithuania, 401–02 Luxembourg, 428 Malta, lii, 451–53 Montenegro, 471 Netherlands, liii, 496–98 Norway, 520–21 Poland, 539 Portugal, 553 Republic of Macedonia, lii, 241–43

restatement text, xxii–xxiii Romania, 573 Russia, liii, 593–94 Serbia, liii, 613–14 Slovakia, liii, 637 Slovenia, 654 Spain, 670–71 Sweden, lii, 689–90 Switzerland, 715 Turkey, 734–37 UK, lii, 763–65 freelance workers, 139–40, 144–146, 150, 241, 245–48, 466, 507–08, 509, 513, 515–18, 520–21, 560, 566, 568, 573, 691, 710, 716, 718 see also contractors general overview: additional contracts, l–li non-contractual legal relationships and, li anti-discrimination law, lxiv–lxv collective agreements, liii–liv comprehensive qualification, l–li contracts of employment: additional contracts, l–li hybrid contracts, l–li innominate contracts, l mixed contracts, l–li formal requirements, xxvii–xxviii judgement definitions, xxvi–xxvii statutory definitions, xxv–xxvi custom and practice, liv ‘economic dependence’, xlvii–xlviii ‘employee’: blue collar/white collar workers, xxxviii–xxxix Church service employees, xl–xli distinct groups, xxxvii–xli managerial employees, xxxix public sector employees, xl statutory definition, xxxii–xxxiv ‘worker’ distinguished, xli ‘employer’: statutory definition, xxxiv–xxxvii ‘employment relationship’: assessment of the relationship, xliv–xlv indicators, xlv–xlvii statutory definition, xxx–xxxii equality law, lxiv–lxv extension of rights: ‘employee-like persons’, lxi–lxiv freedom of contract, limits, li–lii freedom to enter into an employment relationship, lii–liii legal presumptions regarding existence of contracts of employment, liv–lv burden of proof, lix

794  Index general presumptions, lv–lvii specific presumptions, lvii–lix primacy of facts principle, xlix–l specific procedures, lix–lxi subordination, xli assessment of the relationship, xliv–xlv autonomous subordination, xliii control, xliii integration, xliii–xliv legal dependency, xliii personal dependency, xlii–xliii relevance and meaning, xlii–xliv restatement text, xix validity of contracts: admissible rescission, xxix good faith and, xxix–xxx legally flawed contracts, xxviii restatement text, xix restitutionary claims for illegal contracts, xxix–xxx specific rules, xxix–xxx void contracts, xxix voidable contracts, xxix Germany, 251–74 see also under individual topics Greece, 275–88 see also under individual topics health and safety, see workplace health and safety health professionals, 318, 418, 630–31 homeworkers: Austria, 20–21 Croatia, 66 Czech Republic, 122–23 Denmark, 139 Finland, 179 Greece, 280 Hungary, 297–98 Ireland, 335–36 Italy, 359–60 Luxembourg, 413–14 Norway, 512–13 Republic of Macedonia, 229 Romania, 564 Slovakia, 629–30 Slovenia, 647 Switzerland, 703–04 Turkey, 728 Hungary, 289–308 see also under individual topics hybrid contracts, l–li, 188, 519, 733 Iceland, 309–27 see under individual topics independent contractors, see contractors indicators of subordination, see under subordination

indirect discrimination, 58, 132, 327, 523 see also anti-discrimination and equality law innominate contracts, l, 124, 128, 701, 712 inspections, lx, 130–31, 294, 370–71, 474, 522, 567–68, 575, 616–17, 738–39, 741, 758 investigations, 19, 96–98, 101, 105, 143, 403, 742 Ireland, 328–49 see also under individual topics Italy, 351–75 see also under individual topics job-sharing, 294, 705, 708 journalists, see media and entertainment sector judge-made definitions: contract of employment, xxvi–xxvii Latvia, 377–90 see also under individual topics legal presumptions regarding existence of contracts of employment, liv–lv Austria, liv, 18 Belgium, lviii, 38–41 Bulgaria, 56 Croatia, lvi, 79–80 Cyprus, liv, 109–10 Czech Republic, liv, 130 Denmark, liv, 146 Estonia, lvi, 166 Finland, liv, 192 France, lix, 212–13 general presumptions, lv–lvii Germany, 271–72 Greece, lvi, lviii, 287 Hungary, liv, 304 Iceland, liv, 324 Ireland, liv, 346 Italy, lviii, 369 Latvia, 388 Lithuania, lv, 402–03 Luxembourg, lvii, 430–31 Malta, lv, 454–56 Montenegro, lv, 472 Netherlands, lvi, 499–500 Norway, lv, 521 Poland, lv, 540 Portugal, lv, 553–54 Republic of Macedonia, liv, 242, 244 restatement text, xxiii Romania, 754–75 Russia, lvii, 595 Serbia, 615–16 Slovakia, lv, 638 Slovenia, lvii, 654–55 Spain, lvi, 671–72

Index 795 specific presumptions, lvii–lix Sweden, 692 Switzerland, lvii, 716–17 Turkey, lvii, 738–39 UK, lv, 766 Lithuania, 391–404 see also under individual topics Luxembourg, 405–433 see also under individual topics Malta, 435–58 see also under individual topics managerial employees, xxxix Austria, 7 Belgium, 32 Czech Republic, 117 Germany, 258–59 Greece, 279–80 Iceland, 317 Italy, 358–59 Luxembourg, 413 Republic of Macedonia, 229–31 Poland, 535–36 Slovakia, 627–28 Slovenia, 648 Spain, 661 Switzerland, 705 Turkey, 727–28 working time, xxxix mandatory elements of employment contracts, 301, 303, 304, 323, 600 basic salary, 60, 221, 290 bonuses, 60 date of commencement, 59, 220 duration of contract, 59, 220 duration of paid leave, 59, 221 duration of work day, 60 homeworkers: specific clauses, 66 identities of parties, 59, 220 intervals of payment, 60 length of notice periods, 60 place of work, 59 residence, 59, 220 title, nature and category of work, 59, 220, 290 working hours, 60, 160, 220–21, 707, 708 written document, 220, 459, 558 maritime workers, see seafarers media and entertainment sector: Croatia 66–67 Denmark, 139–40 Estonia, 158 Germany, 259–60, 261 Greece, 281 Hungary, 299 Iceland, 318

Montenegro, 466 Norway, 514 Republic of Macedonia, 231–32 Serbia, 607 Slovenia, 648 Spain, 662–63 Turkey, 727 mediation, 288, 522–23 military service, lxv, 111, 586, 739 minimum wage, xxxiii, 12–13, 21, 137–38, 215, 298, 306–07, 312, 321, 332, 360, 362, 381, 411, 415, 445, 541, 573, 625, 680, 762, 768 minors, 121, 173, 184, 393, 396, 402, 460, 484, 495, 528–29, 532, 535, 581–82, 626, 656, 658, 723, 736, 743 mixed contracts, l–li, lxii, 128, 387, 538, 701, 711, 712–13, 718 Montenegro, 460–75 see also under individual topics mutuality of obligation, lxiii, 99, 135, 161, 242, 293, 338–40, 383, 479, 526, 572, 593, 613, 750, 754, 757–59, 762 Netherlands, 477–503 see also under individual topics night work, 72, 105, 125, 279–80, 585, 625, 630, 743 non-competition clauses, xlvi, li, 25, 32–33, 35, 113–14, 152, 164, 214–15, 301–02, 401, 483, 512, 527, 539, 551, 572, 643, 705, 709, 714 non-contractual legal relationships, li, 15, 37, 78, 106, 144, 209, 270, 302, 322, 368, 401, 451, 520, 613, 670, 713–14, 762 notice periods, 46, 67, 189, 209, 258, 270, 306, 311, 314, 360, 424, 452–53, 518, 523, 710 difference between blue and white collar workers, 6, 32, 279 duration, xl, xlvii, 60, 298, 335, 358, 379, 563, 583, 653, 769 right to, 248 salaries for notice periods, 194, 358, 529, 684 termination without notice, xxx, 57, 402, 453, 497, 528–29, 531 trainees, 254, 361 written requirement, 114, 332 Norway, 505–24 see also under individual topics on-call work, 294, 479, 499, 706, 708, 723, 741 oral agreements, see verbal contracts outworkers, see homeworkers

796  Index overtime, xxxix, xlvi, 122, 125, 128, 162, 209, 279–80, 332, 341, 358–59, 413, 512, 536, 539, 541, 585, 630–31, 684–85, 705, 709 part-time contracts, xxviii, 24, 69, 92, 176, 179, 191, 199, 216–17, 229, 276, 302, 352, 428, 457, 464, 474, 496, 524, 542, 544, 546, 551, 558, 563, 705, 722–23, 744, 757, 768 penalties, 127, 130–31, 151, 470, 670, 741–42, 363 breach of equality law, 217–18, 576 breach of work obligation, 470, 473–74, 478, 506 disciplinary sanctions, xlii, 52, 97, 203, 204–05, 206–07, 218, 221, 318, 352–53, 355, 364, 370, 442–43, 463, 469, 490, 529, 530, 563, 569, 579 failing to conclude a contract prior to commencement of work, 473–74, 601 false labelling, 16, 741 illegal employment of a person, 392–93, 403, 515, 737 provision of signed copy to employee, 221 provision of written contract, 528, 601, 620 ‘shadow employment’, 209 temporary work agencies, 27 pension contributions and pension insurance, xlvii, 68, 69, 71, 83, 187, 225, 247, 332, 415, 466, 474, 506, 510, 618, 625, 648 supplementary private schemes, 578 pension rights, 140, 363, 510, 602, 655–56 pensioners, 241, 246, 656 performance of work, xlii, 34, 54, 75, 116, 123, 125, 129, 149, 232–33, 235, 624–25, 652 personal dependency, see subordination petroleum sector, 513 Poland, 525–42 see also under individual topics Portugal, 543–56 see also under individual topics posted employees, xxxviii, 98, 514–15, 647, 703, 704, 717 primacy of facts, xlix–l Austria, 14–15 Belgium, 36 Bulgaria, 53 Croatia, 77 Cyprus, 104–06 Czech Republic, 126–27 Denmark, 143–44 Estonia, 163–64 Finland, 188

France, 208–09 Germany, 268–69 Greece, 285 Hungary, 301 Iceland, 321 Ireland, 344 Italy, 366–67 Latvia, 387 Lithuania, 400 Luxembourg, 426–27 Malta, 450 Montenegro, 470–71 Netherlands, 493–94 Norway, 519 Poland, 538 Portugal, 552 Republic of Macedonia, 238–40, 242 restatement text, xxii Romania, 572 Russia, 591 Serbia, 612–13 Slovakia, 636 Slovenia, 653 Spain, 668–69 Sweden, 688 Switzerland, 711–12 Turkey, 733 UK, 761–62 prisoners, xxxviii, 661, 739, 753 probation periods, xlvii, 67, 114, 152, 217, 230, 361, 393, 483, 528, 563, 620–21, 628, 664, 710 professional athletes, xxxviii Austria, 8 Belgium, 24, 32–33 Croatia, 72 Cyprus, 95 Czech Republic, 120, 130 Estonia, 158 Germany, 260 Greece, 280–81, 288 Hungary, 298 Italy, 361–63 Latvia, 383 Lithuania, 398 Luxembourg, 411, 431 Montenegro, 466 Netherlands, 502 Norway, 514 Poland, 535 Portugal, 548 Republic of Macedonia, 231 Romania, 565 Russia, 583, 584, 592–93 Serbia, 607 Slovakia, 632–33 Spain, 662–63 Turkey, 727

Index 797 public sector employees, xxxiv, xl Austria, 7 Belgium, 32 Croatia, 66, 75–76 Cyprus, 90, 96–99 Czech Republic, 117 Denmark, 140 Finland, 177, 181–82 France, 203 Greece, 281, 288 Iceland, 315–16 Italy, 363–64 Lithuania, 398 Luxembourg, 413 Malta, 443–45 Netherlands, 487–88 Norway, 509 Poland, 529–30 Republic of Macedonia, 225, 228, 239–40 Romania, 565 Serbia, 602–03, 606 Slovakia, 633 Spain, 663 Sweden, 682 Switzerland, 700, 702, 703 Turkey, 729 see also civil servants qualification in full, l–li Austria, 15–16 Belgium, 37 Bulgaria, 53–54 Croatia, 77–78 Cyprus, 106 Czech Republic, 127–29 Denmark, 144 Estonia, 164 Finland, 188–89 France, 199, 209–10 Germany, 263, 269–70 Greece, 285–86 Hungary, 301–02 Iceland, 321–22 Ireland, 344–45 Italy, 367–68 Latvia, 387 Lithuania, 400–01 Luxembourg, 427–28 Malta, 450–51 Montenegro, 471 Netherlands, 494–96 Norway, 519–20 Poland, 538–39 Portugal, 552–53 Republic of Macedonia, 240–41 restatement text, xxii Romania, 572–73

Russia, 592–93 Serbia, 613 Slovakia, 636–37 Slovenia, 653–54 Spain, 669–70 Sweden, 688–89 Switzerland, 712–14 Turkey, 733–34 UK, 762–63 racial discrimination, lxv, 195, 218, 274, 288, 404, 639, 675 records, maintenance of, 125, 228, 335–36, 616–17, 734 redundancy, 89, 121–22, 279, 339, 452–53, 764, 769 see also termination of contracts religious communities, 232, 607–08, 630 religious discrimination, lxv, 57–58, 72, 132, 148, 196, 218, 274, 288, 326, 383–85, 404, 458, 488, 524, 542, 598, 639, 674–75, 719, 744–45 remuneration: basic salary, 60, 462, 470 bonuses, 21, 60, 209, 397, 423, 439, 479, 520, 578, 611 calculation, xxxi, 151, 216, 332, 469, 488, 568, 613, 725 redundancy payments, 279, 453 deductions from wages, 360, 768 overtime, xxxix, xlvi, 122, 209, 280, 341, 358–59, 413, 512, 541, 585, 630, 684–85, 705, 709 restatement text, xix see also minimum wage representation of workers, lxii, 5, 8, 18, 20, 166, 254, 571, 664 Republic of Macedonia, 219–49 see also under individual topics Romania, 557–76 see also under individual topics Russia, 577–98 see also under individual topics salaries, see minimum wage; remuneration sanctions, see penalties seafarers: Belgium, 24, 33 Croatia, 65 Denmark, 134, 138 Estonia, 158 Iceland, 316–17 Ireland, 336 Luxembourg, 416 Montenegro, 466 Netherlands, 487, 489–90 Poland, 535 Romania, 565

798  Index Spain, 663 Switzerland, 704 Turkey, 727 seasonal workers, 71, 229, 392–94, 583 secondary jobs, 395, 583 Serbia, 599–618 see also under individual topics service contract, see contracts for services severance pay, xxxi, xl, 21, 67, 78, 117, 121, 209, 248, 277, 292, 298, 306, 487, 580, 633, 658, 673, 725 sexual discrimination, lxv, 58, 132, 196, 218, 249, 274, 288, 327, 389, 404, 457–58, 524, 542, 630, 675 shareholders, lii, 93, 95, 108, 110, 139, 156, 487, 519–20, 663, 762, 764–65, 766, 767, 768–69 short-term contracts, 162, 393–94, 537–38, 583 signatures, xxviii, xxxvii, 102, 137, 224, 242, 409, 460, 462, 500, 578–79, 600–01, 613, 641, 657, 761–62 Slovakia, 619–39 see also under individual topics Slovenia, 641–56 see also under individual topics Spain, 657–75 see also under individual topics social partners: collective bargaining: Austria, 17–18 Belgium, 38 Bulgaria, 55 Cyprus, 108–09 Denmark, 145 Estonia, 165–66 Finland, 191 France, 211–12 Germany, 271 Greece, 286 Hungary, 304 Iceland, 323–24 Ireland, 346 Italy, 368–69 Latvia, 388 Lithuania, 402 Luxembourg, 428–30 Malta, 453 Montenegro, 471–72 Netherlands, 498 Norway, 521 Poland, 539 Portugal, 553 restatement text, xxi Russia, 594 Serbia, 614–15 Slovakia, 637 Spain, 671

Sweden, 691 Switzerland, 715–16 Turkey, 738 UK, 766 specific procedures for determining employment status, lix–lxi Austria: investigations, 19 labour law cases, 19 social security cases, 19 tax law cases, 19 Belgium, 42 Bulgaria, 56–57 unilateral termination of contracts, 57 Croatia: health insurance, 81–82 pregnancy, 81–82 social security rights, 81–82 Cyprus, 110–11 Czech Republic: inspection procedures, 130–31 social security cases, 131 tax law cases, 131 Denmark, 146–47 registration of self-employed, 146 Estonia, 167 investigations, 167–68 tax authorities, 167–68 Finland, 193–94 France, 214–15 Germany, 272–73 Greece: arbitration courts, 287–88 financial disputes of professional athletes, 288 intervention of social security organisations, 288 intervention of tax law administration, 288 mediation procedures, 288 Hungary: competencies of authorities, 305 verification of legal status of ‘employee’, 305 Iceland: powers of investigation, 325–26 social security authorities, 325–26 tax authorities, 325 Ireland, 346–48 Italy: certification of labour contracts, 370–71 inspection powers, 370 Latvia administrative procedures, 389 right to inspect workplaces, 389 Lithuania, 403 Luxembourg, 432 Malta, 457

Index 799 Montenegro: corrective measures, 473 fines, 473–74 preventive measures, 473 prohibition of employer activities, 473–74 repressive measures, 473 Netherlands, 500–01 Norway, 522–23 Poland: labour dispute procedures, 540 Portugal: special judicial procedures, 554–55 Republic of Macedonia, 244 restatement text, xxiii Romania, 575 Russia: new procedures, 596–97 Serbia: inspections, 616–17 Slovakia, 638 Slovenia, 655 Spain, 672–73 Sweden: collective negotiations, 693 monitoring by trade unions, 693 Switzerland, 718 Turkey: court procedures, 741–42 investigations, 740–41 liability for non-compliance, 742 sanctions, 741 UK, 767 Part 8 Procedures, 767 preliminary hearings and judgments, 767 statutory definitions, see contract of employment; employee; employer; employment relationship students, xxviii, lviii, 8, 24, 29, 32, 38, 43, 70, 117, 295, 317, 415, 464, 475, 478, 482, 513, 561, 616–618, 624–25, 652, 656, 663, 728, 742–43 see also apprentices and trainees status of employee, xix see also under subordination sub-types of employees/workers: Austria: blue-collar and white-collar workers, 6–7 church service workers, 8 homeworkers, 20–21 managerial employees, 7 public service workers, 7 special groups, 7–8 teleworkers, 8, 21 Belgium: blue-collar and white-collar workers, 31–32

homeworkers, 32 managerial employees, 32 public sector employees, 32 special groups, 32–33 teleworkers, 32 Bulgaria, 50–51 Croatia: agricultural workers, 71 apprentices, 70 blue-collar and white-collar workers, 73 boards of directors, 67–68 carers of war veterans, 68–69 civil servants, 65–66 employees of close relatives, 72 homeworkers, 66 journalists, 67 professional athletes, 72 public sector employees, 66 religion, 72–73 retired persons, 69 seasonal workers, 71 students, 70 temporary agency workers, 70–71 theatre artists, 66–67 Cyprus, 95 female migrant domestic workers, 96 public sector employees, 96–97 trainees, 97–98 ‘workers’, 98–99 Czech Republic, 120–22 homeworkers, 122–23 principle of direct applicability and delegation, 120 principle of subsidiarity, 120 teleworkers, 122–23 Denmark: agricultural workers, 138 appointed representatives, 139 blue-collar and white-collar workers, 138 Crown servants, 140 domestic workers, 138 elected representatives, 139 employment legislation, 133–34 executives, 139 homeworkers, 139 media and entertainment sector, 139–40 public sector employees, 140 teleworkers, 139 training schemes, 138–39 Estonia: artists, 158 athletes, 158 civil service, 159 economically dependent workers, 158–59 journalists, 158 seafarers, 158

800  Index teleworkers, 156–58 temporary agency workers, 156–58 trainees, 158 Finland: distance employees, 179 fixed term employees, 178 homeworkers, 179 illegal termination of contracts, 183 ‘moving’ worker, 179 part-time employees, 179 public sector workers, 181 temporary workers, 179 working hours, 179–80 young employees, 183–84 France, 201 blue-collar and white-collar workers (non-cadres and cadres), 201–02 civil service, 202–03 personal representatives, 202 working hours, 202 Germany: artists, 259–60, 261 blue-collar and white-collar workers, 258 church service workers, 260 commercial employees, 259 managerial employees, 258–59 professional athletes, 260 Greece: agricultural workers, 281 apprentices, 280 blue-collar and white-collar workers, 279 domestic workers, 280 homeworkers, 280 managerial employees, 279–80 maritime employees, 281 media and entertainment sector, 281 professional athletes, 280–81 public sector employees, 281 teleworkers, 280 Hungary: employees of close relatives, 298 executive employees, 298 media and entertainment sector, 299 outworkers/homeworkers, 297–98 professional athletes, 298 teleworkers, 297 Iceland: accountants, 318 attorneys, 318 clergy, 318 health professionals, 318 journalists, 318 managerial employees, 317 public sector employees, 315–16 seafarers, 316–17 trainees, 317

Ireland: clergymen, 336 laypeople employed by church, 337 manual workers distinguished, 335 outworkers, 335–36 seafarers, 336 Italy: apprentices, 360–61 blue-collar and white-collar workers, 357–58 civil servants, 363–64 domestic workers, 360 homeworkers, 359–60 managerial employees, 358–59 professional athletes, 361–63 Latvia: blue-collar and white-collar workers, 385 boards of directors, 383–84 church service employees, 383, 384–85 Lithuania, 397 executives, 398 professional athletes, 398 public sector workers, 398 trainees, 398 Luxembourg: agricultural workers, 416 apprentices, 414–15 disabled persons, 416 domestic workers, 416 employees and workers, 412–13 executives, 413 homeworkers, 413–14 hotels and restaurants, 416 managerial employees, 413 public sector workers, 413 reinsertion resident and commuting workers, 416 seafarers, 416 students, 415 teleworkers, 413–14 temporary agency workers, 414 Malta: recruitment methods, 443–44 public sector and private sector employees, 443–46 Montenegro, 465 artists, 466 church service workers, 466 civil servants, 465–66 professional athletes, 466 seafarers, 466 Netherlands, 486 board members, 486–87 church service workers, 488 civil servants and public sector workers, 487–88

Index 801 commercial representatives, 488 domestic workers, 487 private school (denominational) employees, 488 seafarers, 489–90 temporary agency workers, 488–89 Norway: appointed representatives, 514 apprentices, 513 au-pairs, 515 blue-collar and white-collar workers, 513 chief executive officers, 512 elected representatives, 514 freelancers, 515 homeworkers, 512–13 media and entertainment sector, 514 petroleum sector, 513 posted employees, 514–15 professional athletes, 514 work performed at sea, 513 Poland: blue-collar and white-collar workers, 534–35 managerial employees, 535–36 managers of establishments, 536 minors, 535 seafarers, 535 teleworkers, 535 temporary agency workers, 535 Portugal, 547 general legal regime, 547–48 special regimes, 548 Republic of Macedonia, xxxviii accountants, 231 artists, 231–32 blue-collar and white-collar workers, 228 civil servants, 229 domestic workers, 229 homeworkers, 229 journalists, 231 managerial workers, 229–31 part-time workers, 229 professional athletes, 231 public sector workers, 228 religious officers, 232 seasonal workers, 229 restatement text, xxi Romania, 563 apprentices, 564 casual workers, 565–66 cooperative workers, 566 executives, 563–64 homeworkers, 564 lawyers, 566 professional athletes, 565 public sector workers, 565

seafarers, 565 temporary agency workers, 564 Russia, 583 company directors, 583 domestic workers, 584 other categories, 585–86 professional athletes, 584 teleworkers, 584 women and employees with family responsibilities, 584–85 Serbia: artists, 607 blue-collar and white-collar workers, 606 church service workers, 607–08 executives, 606–07 Slovakia, 627 blue-collar and white-collar workers, 633 clerical workers, 630 employees in transport, 632 employees with reduced working time, 629 fixed-term workers, 628–29 healthcare workers, 630–31 homeworkers, 629–30 managerial employees, 627–28 professional athletes, 632–33 public sector employees, 633 teachers, 631 teleworkers, 629–30 temporary agency workers, 632 Slovenia: artists, 648 blue-collar and white-collar workers, 647 church service workers, 649 civil servants, 647 cooperative workers, 647 homeworkers, 647 journalists, 648 managerial employees, 648 persons employed by family, 647 posted workers, 647 teleworkers, 647 temporary agency workers, 647 Spain: artists, 662–63 blue-collar and white-collar workers, 663 board members, 663 civil servants, 664 convicts/prisoners, 661 domestic workers, 661 employees in military establishments, 663 professional athletes, 662–63 public sector workers, 663

802  Index seafarers, 663 senior management, 661 shareholders, 663 teachers in religious establishments, 663 trade operations on behalf of one or more entrepreneurs, 662 transport sector, 663 Sweden: blue-collar and white-collar workers, 682 domestic workers, 683, 684 managerial workers, 683 persons employed by family, 683 Switzerland, 703 apprentices, 703 blue-collar and white-collar workers, 706 casual workers, 705 commercial travellers, 703 fixed-term workers, 705 health and safety issues, 704 homeworkers, 703–04 job-sharers, 705 managerial workers, 705 members of a ship’s crew, 704 on call workers, 706 part-time workers, 705 posted workers, 704 temporary agency workers, 704 trainees, 97–98, 317 Turkey, 726–27 apprentices, 728 blue-collar and white-collar workers, 729 commercial travellers, 728 homeworkers, 728 journalists, 727 managerial workers, 727–28 private law relationships, 727 professional athletes, 727 seafarers, 727 self-employment, 728 UK, 752–53 subordination, xli Austria, 1, 4, 9–11 economic dependence, 14 independent contractors, 14 indicators of subordination, 11–14 Belgium, 34–35 economic dependence, 36 indicators of subordination, 35 self-employed persons distinguished, 33–34 Bulgaria, 51–52 economic dependence, 53 indicators of subordination, 53 obligations in an employment relationship, 52

Croatia: contracts for services and employment contracts distinguished, 74–75 economic dependence, 77 freedom of contract, 62 indicators of subordination, 76 performance, 61, 75 remuneration, 62 Cyprus, 99–101 economic dependence, 104 indicators of subordination, 101–03 Czech Republic, 123–24 economic dependence, 126 indicators of subordination, 124–26 Denmark, 140 economic dependence, 142–53 indicators of subordination, 140–42 Estonia, 159 economic dependence, 163 indicators of subordination, 161–62 level of dependence, 159–60 Finland, 185–86 economic dependence, 187 indicators of subordination, 187 France, 198–99, 204–05 economic dependence, 207 indicators of subordination, 206–07 Germany, 256–57 determination of subordination, 262–63 economic dependence, 268 indicators of subordination, 264–68 level of dependence, 261 power to direct, 261–64 Greece, 281–83 economic dependence, 284–85 indicators of subordination, 283–84 Hungary: economic dependence, 301 employees’ obligations, 299–300 indicators of subordination, 300–01 integration of employee, 299 work control, 299 work instruction, 299 Iceland: indicators of subordination, 320–21 judicial determination, 318–19 Ireland: Code of Practice, 340–41 economic dependence, 342–44 indicators of subordination, 340–42 integration test, 338 mutuality of obligation, 338–40 self-employment, 341–42 Italy: economic dependence, 366 eterodirezione, 364–65 indicators of subordination, 365

Index 803 Latvia, 385–86 economic dependence, 387 indicators of subordination, 386–87 Lithuania, 398–99 economic dependence, 399–400 indicators of subordination, 399 Luxembourg, 416–17 control over work, 417 definition of subordination, 417 economic dependence, 425–26 indicators of subordination, 419–25 integration, 417–18 judicial confusion, 418–19 Malta, 447–48 economic dependence, 449–50 indicators of subordination, 449 integration, 448–49 Montenegro, 467–68 economic dependence, 470 indicators of subordination, 469–70 integration, 468 temporary agency workers, 468–69 Netherlands, 479–81, 490–91 economic dependence, 492 indicators of subordination, 491–92 Norway, 516–17 economic dependence, 518–19 indicators of subordination, 517–18 Poland, 526, 536–37 economic dependence, 538 indicators of subordination, 537–38 Portugal, 548–49 economic dependence, 551–52 indicators of subordination, 549–51 Republic of Macedonia: economic dependence, 238 indicators of subordination, 234–38 participation in an organised work process, 234 performance of work, 233 restatement text, xx Romania, 567–69 economic dependence, 571–72 indicators of subordination, 570–71 Russia, 587–89 economic dependence, 591 indicators of subordination, 589–91 Serbia, 608–11 economic dependence, 611–12 indicators of subordination, 611 Slovakia, 634–35 economic dependence, 636 indicators of subordination, 635–36 Slovenia, 649–50 economic dependence, 652–53 indicators of subordination, 650–52

Spain, 664–66 economic dependence, 667–68 indicators of subordination, 666–67 Sweden, 685 economic dependence, 687 indicators of subordination, 685–87 Switzerland, 706–07 economic dependence, 711 indicators of subordination, 708–11 Turkey, 730–31 economic dependence, 732–33 indicators of subordination, 731–32 UK, 754–59 economic dependence, 761 indicators of subordination, 760 Work control, xx Work instructions, xx Sweden, 677–696 see also under individual topics Switzerland, 697–719 see also under individual topics teachers, 50, 66, 138, 418, 530, 631, 663 teleworkers: Austria, 8, 21 Czech Republic, 122–23 Denmark, 139 Estonia, 156–58 Greece, 280 Hungary, 297 Luxembourg, 413–14 Poland, 535 Russia, 584 Slovakia, 629–30 Slovenia, 647 workplace health and safety, 8 temporary agency workers: Belgium, 27 Croatia, 70–71 Cyprus, 90 Czech Republic, 118 Denmark, 135 discrimination, 524 Estonia, 156–58 Finland, 176, 179 Germany, 254–55 Hungary, 295 Ireland, 334 Italy, 353 Latvia, 379 Luxembourg, 414 Malta, 439 Montenegro, 468–69 Poland, 535 Republic of Macedonia, 224–25 Romania, 564 Slovakia, 632

804  Index Slovenia, 647 Spain, 659 Switzerland, 700, 704 termination of employment, xxxiii, lxiii, 8, 33, 56, 60, 69–70, 99, 118, 122, 138, 230, 241–42, 259, 280, 290, 295–96, 363, 400, 471, 473–75, 507, 531, 541, 547–48, 594, 652, 662, 736, 764 apprenticeships, 25, 414–15 burden of proof, 110 constructive dismissal, 107 directors, 67, 68 discrimination, 327, 524, 542, 555, 618, 653, 744–45 domestic workers, 360 fixed-term contracts, 311–12, 394, 659 good and sufficient cause, 454 illegal termination, 183, 193–94 inadequate notice, 114, 494, 497, 518, 523, 670 managerial workers, 358 non-competition clauses, 572, 580 notice periods, 46, 270, 314, 379, 400, 529, 563 partial terminations, 495 pregnancy, 83 severance pay/compensation, 121, 209, 216, 548, 584 unfair termination, 244 voluntary termination, 424 without notice, 114, 453–54 wrongful termination, 713, 715, 719 theatre artists, see media and entertainment sector trade unions, lii, liii–liv, 6, 38, 55, 62, 109, 115, 143, 145, 165–66, 284–85, 306, 339, 354–55, 369, 533–34, 553, 563, 594, 689, 691, 693, 738, 743 membership, lxiv, 83, 565, 566 discrimination due to, 196, 218, 375, 523, 542, 745, 758 sports, 362 see also works councils trainees, see apprentices and trainees transfers of undertakings: Austria, 3 Belgium, 26–27 Croatia, 62 Cyprus, 89 Czech Republic, 117 Denmark, 135 Estonia, 153–54 Finland, 175 Hungary, 296 Iceland, 313 Latvia, 379 Malta, 439–40 Norway, 509

Republic of Macedonia, 224 Russia, 581 Slovakia, 622 Switzerland, 700 transport sector, lix, 28, 40, 95, 201, 213, 385–86, 563, 564, 583, 632, 663, 685, 704, 727 Turkey, 721–45 see also under individual topics UK, 747–69 see also under individual topics validity of contracts: admissible rescission, xxix, 3, 26, 253, 406 avoidance of concluding contracts, 291–92 good faith and, xxix–xxx, 47, 57, 151, 496, 538, 716–17 legally flawed contracts, xxviii, 134, 644 nullity, xxix, xxx, 2, 25, 114, 221–22, 252, 276, 352, 437, 461, 507, 558–60, 567, 572, 643, 699 restitutionary claims for illegal contracts, xxix–xxx specific rules, xxix–xxx void and voidable contracts, xxix, xxx, 2–3, 25, 60, 87, 252–53, 276, 312, 483–84, 545, 601, 644, 699 verbal contracts, 2, 24, 86–87, 101, 115, 134, 171, 185–86, 252, 275, 310, 329, 337, 331, 378, 406, 435–36, 441, 443, 446, 451, 482, 507, 528, 543–44, 558–59, 566, 600, 620, 657, 659, 678, 686, 698, 723, 748, 749 wages, see minimum wage; remuneration war veterans, 277 carers of, 64, 68–69 white-collar workers, see blue-collar and white-collar workers working hours: Austria, 8, 9–11, 19 Belgium, 30, 34, 35 Bulgaria, 50, 53, 54 Croatia, 66, 69, 71–72, 74–75, 76 Cyprus, 101, 107 Czech Republic, xxxi, 114, 117, 123, 125–26, 129 Denmark, 138, 143 Estonia, 151, 157–58, 160 Finland, xlvii, 179–81, 187, 191–92 France, xxxix, 202, 204–05, 206, 209, 215 Germany, 262–63 Greece, 280, 282 Hungary, 293

Index 805 Iceland, 314, 320, 322 Ireland, 335 Italy, 358, 359 Latvia, 378–79, 385 Lithuania, 394, 398, 400 Luxembourg, 413, 419–20 Malta, lv, 447, 448–49 Montenegro, 462–64 Netherlands, 477–79, 480, 484, 490, 494, 499–500 Norway, 506, 513, 515, 518 Poland, xlii, 527, 535–36, 537 Republic of Macedonia, 221, 224, 231, 233–24, 236, 248 Romania, 564, 573 Russia, 578, 582, 584, 590, 597 Serbia, 610–11 Slovakia, 621, 623–25, 629–31, 632, 634–35 Slovenia, 650, 656 Spain, 662, 665, 666, 669, 674 Sweden, 689 Switzerland, xlvi, 701, 707, 708 Turkey, 724, 732

UK, 766 see also night work; on-call work; overtime workplace health and safety, lxiii, 5, 19, 43, 52, 62, 65, 70, 71, 123, 149, 160, 168, 227, 347, 354, 355, 370, 378–79, 380, 382, 403, 535, 605, 608, 617–18, 691, 701 fixed-term contracts, 629 homeworking, 359, 704 minors, 535 seafarers, 316–17 teleworkers, 8 vocational training, 576 works councils, 5–6, 17–18, 21, 32, 62, 254, 291, 305, 486 written contracts, xxvii–xxviii, lvii, 14–15, 25, 36, 46, 59–60, 86–87, 134, 151, 171–72, 199, 310–11, 331, 378, 392, 406, 430, 435–36, 459–60, 500, 505–07, 528, 566, 620, 657–58, 678, 686, 698, 700, 723–24, 729, 741, 749, 761, 766 young employees, see minors

806