AD 2025 No. 29 – Who is the employer?

Two taxi drivers were employed by a company and had worked a significant amount of overtime. According to the company, the overtime work had been performed for a staffing agency engaged by the employer, and therefore the staffing agency was the employer in relation to the overtime work. The Labour Court found that the company had not been able to prove that the staffing agency was the employer for the work in question. The case also concerned whether the company had breached the applicable collective bargaining agreement by failing to pay certain overtime and holiday compensation to the taxi drivers. The Court also addressed a statute of limitations issue.

The case concerned two employees of Company X who had worked a significant amount of overtime and claimed overtime and holiday compensation from Company X for these hours. It was undisputed that the taxi drivers were formally employed by Company X, but according to Company X, the drivers had performed the relevant overtime shifts as employees of the staffing agency (which was Company X’s subcontractor), and not as employees of Company X.

The first issue the Labour Court had to address was whether the right to bring the claim was statute-barred. According to Company X, the union had been aware of the general manner in which Company X handled overtime since a local negotiation, and that claims became statute-barred on a rolling basis four months after they arose. The union denied that it had gained such general knowledge of the overtime arrangements at the local negotiation as Company X claimed and argued that the limitation period should be calculated from the time the union became aware that collectively agreed overtime compensation had not been paid at each respective pay date.

The Labour Court held that the limitation period began from the time the union had actual knowledge of the specific claim, and therefore the claim was not statute-barred (see AD 2004 No. 8 and AD 2018 No. 7).

The Labour Court then proceeded to determine whether the taxi drivers, in addition to their employments with Company X, were also employed by the staffing agency. The Court stated that a fundamental requirement for an employment relationship is the existence of an agreement between the employer and the employee. According to the Court, such an agreement arises “as a rule when the parties, in writing or orally, expressly agree on it. However, an employment agreement can also arise, even without an express agreement, if the parties act as if a binding agreement exists, so-called implied conduct.”

In this case, there was no evidence to support that an expressed employment agreement had been entered into with the staffing agency. The Labour Court therefore had to assess whether there were circumstances indicating that an employment relationship existed between the taxi drivers and the staffing agency. It was noted that the taxi drivers had received some salary from the staffing agency. Nevertheless, the Labour Court concluded that the taxi drivers had not been employed by the staffing agency, meaning that the relevant shifts were deemed to have been performed within the scope of their employment with Company X. The Labour Court’s conclusion was based, among other things, on the following:

• The disputed shifts were performed within the scope of Company X’s business;
• Company X had informed the taxi drivers that Company X and the staffing agency were the same company/business;
• During the period when the taxi drivers received salary from the staffing agency, Company X and the staffing agency, during had the same address and the same ownership structure; and
• the taxi drivers had the same employee number on their payslips from both Company X and the staffing agency.

Against this background, the Labour Court had to determine whether the taxi drivers were entitled to overtime compensation in accordance with the collective bargaining agreement (and whether the work constituted overtime that was ordered or subsequently approved). Based on, among other things, payslips, Company X’s systems, emails, and shift reports, the Labour Court found that it was proven that the taxi drivers’ extra shifts constituted overtime. The Court also found that it was shown that the overtime work had been ordered or subsequently approved by Company X, as supervisors from Company X assigned shifts to the drivers or approved their requests for shifts through an internal system.

In summary, the Labour Court found that Company X was required to pay overtime and holiday compensation to the taxi drivers. Company X was also liable to pay general damages to the taxi drivers and the trade union party to the collective bargaining agreement.

Read the full judgment here.

Setterwalls’ comments

This case serves as a reminder that the Labour Court is rarely impressed by “creative arrangements.” Even though the Court does not use terms such as “circumvention of legislation,” it is in our view clear that this was the direction of the Court’s reasoning. The model applied by Company X effectively meant that employees who in fact worked overtime would not receive overtime compensation, as the overtime work was to be considered performed for another employer (where the work would not be classified as overtime). The Labour Court takes all factual circumstances into account in its assessment. The mere fact that the staffing agency (i.e., a company other than the main employer) had paid some salary to the employees was not sufficient for the staffing agency to be considered the employer.