The High Court recently clarified the distinction between employees and
independent contractors in a case involving a child welfare social worker
engaged by the municipality.
The difference between an employee and an independent contractor is
significant in relation to mandatory employment protection rights such as the
rules on working hours, overtime compensation, vacation pay, pension,
occupational injury insurance and protection against unfair dismissal.
The Working Environment Act defines an 'employee' as "anyone who
perform work in the service of another".
Traditionally, the courts have determined whether a person is an employee
or an independent contractor through a concrete evaluation, emphasising certain
features that typically characterise the employment relationship. The
preparatory works to the Working Environment Act specify the following
questions:
- Does the contract impose a personal work commitment?
- Can the principal instruct the contractor?
- Does the principal provide offices and work equipment?
- Is the principal responsible for the result?
- Is the contractor compensated by salary?
- Is there a steady relationship between the parties?
- Is there mainly one contractor?
This list is not exhaustive – all relevant circumstances must be assessed
in the individual case.
The High Court considered the distinction between employees and independent
contractors in two cases regarding social workers in 2013. In the first case –
involving a social worker who had been engaged to relieve the family of a child
with special needs – the court concluded that the social worker was employed by
the municipality. Among other things, it concluded, based on the facts, that:
- the engagement required a personal work commitment;
- the parents of the child, rather than the social worker, largely
controlled the work situation; and
- the work was mainly performed in the family's home.
In the second case the High Court found that a social worker engaged as a
foster mother through a standby emergency home arrangement was an independent
contractor. Although once again in this case the work commitment was personal
and the work was to a certain extent controlled by the municipality, the work
was performed in the social worker's own home and the overall purpose of the
engagement was to provide a separate home where the child was treated as a family
member. Especially given the latter factor, it would be unnatural to
characterise the engagement as an employment relationship.
In the latest case before the High Court, a social worker was engaged by
the municipality to support a child with special needs (the client) and his
family. The services were based on two different administrative decisions under
the Health and Care Services Act which aimed:
- to relieve
the family; and
- to provide the client with different social experiences and prepare him
for different life situations.
Under the administrative decisions, the municipality and the social worker
had entered into several contracts for a two-year period, all of which stated
that the social worker was an independent contractor. The social worker was
paid by the municipality.
According to the relevant contract, the work relating to relieving the
family was supposed to take place for two 24-hour periods per month. In
practice, once a month the social worker picked up the client from school on
Friday afternoon and spent the weekend with him, mainly at her own house.
The other contract, which related to socialisation, had a timeframe of 20
hours per month; the social worker's job description stated that she was
supposed to spend time with the client in her spare time. This work was mainly
performed after school on weekdays, adjusted to the client's needs and request.
The High Court began by pointing out that, as the Working Environment Act
is mandatory and may not be deviated from to the detriment of the employee, the
contracts' description of the engagement was irrelevant. The High Court then
conducted a concrete evaluation based on the criteria outlined above, focusing
on the personal work commitment, the municipality's instruction right, the
workplace and responsibility for the result.
The High Court found that the social worker's position with respect to both
functions was of a personal nature. She could not delegate the work to someone
else.
Regarding the municipality's right to instruct the contractor, the decisive
factor was whether the municipality had a legal right to do so, not whether
this right had actually been exercised. The High Court concluded that the
municipality could instruct the social worker, given that she was obliged to
follow instructions from her supervisor in the municipality.
Further, even though the social worker was largely free under the contract
to decide when and how to conduct the work, in reality she was bound by the
client's and his family's need for structure and predictability. The client did
not function well without fixed routines. In accordance with the High Court's
decision in the first 2013 case, it sufficed that the recipients of the
services issued instructions regarding the work situation.
These circumstances supported a finding that the engagement was an
employment relationship.
On the other hand, however, the work mainly took place in the social
worker's home; thus, the municipality did not provide offices or equipment. In
this respect the facts deviated from the situation in the first 2013 case, in
which the work was conducted in the client's home. The work situation was
closer to that in the second 2013 case, in which the foster mother had
performed the work in her own home. The court referred to this case, but
underlined that the purpose of the work in this latest case was to relieve the
client's family, not to provide a separate home for the client. The court also
stated that the social worker's use of her own home as her main work location
was a legal and legitimate condition for the engagement, and that this alone
could not exclude the existence of an employment relationship. When the social
worker was with the client at home, she was in fact at work – setting aside her
private affairs.
Regarding responsibility for the work result, the court stressed that this
was difficult to evaluate in relation to consecutive welfare work. However, the
municipality was obliged to provide the services and was therefore responsible
for the result.
After an overall assessment, the High Court concluded that social worker
was an employee of the municipality with respect to both of her roles in
relation to the client and his family.
One High Court judge dissented, on the grounds that the municipality's
instruction right extended only to its supervision and control pursuant to the
Health and Care Services Act, and that it had never interfered in the social
worker's work. That she could perform the work from home underlined her
independence in the engagement.
The High Court's ruling confirms the general criteria that must be
considered when evaluating the distinction between an employee and an
independent contractor. This distinction is subject to a concrete overall evaluation
in the individual case, including when it comes to different healthcare
services that may have several similarities. However, since in two cases the
High Court has found that social workers engaged to take care of a client in
order to relieve the client were employees, this may arguably constitute the
main rule going forward.
For further information on this topic please contact Ole Kristian Olsby at Homble Olsby
Advokatfirma AS by telephone (+47 23 89 75 70) or email (olsby@homble-olsby.no). The Homble Olsby
Advokatfirma website can be accessed at www.homble-olsby.no.
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