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 (firstname.lastname@example.org). The Homble Olsby Advokatfirma website can be accessed at www.homble-olsby.no.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.