Member Article

By judgment of 6 January 2014, the Danish Eastern High Court found that a sales consultant did not have status as a salaried employee.

The case involved a woman who for a period of 2 months had acted as a sales consultant for a company. Thereafter, the company decided to end the cooperation. The sales consultant made a claim for salary, holiday allowance, mileage allowance and compensation for lack of employment contract. The question was whether the sales consultant had a status as a salaried employee.

Initially, the City Court found that a number of factors were to be included in the assessment of whether the sales consultant had status as a salaried employee, including the company's potential power to direct how the work should be done, the pay system, the potential withholding of tax at source and whether the company made a company car and a phone available to the sales consultant.

The City Court took into account that the parties had agreed that the sales consultant in November and December was to "start up gradually" and that she herself was to prepare a plan for client visits. Consequently, the City Court found that the sales consultant for the most part was free to dispose of her own time. Moreover, the sales consultant was paid on a commission basis and had to use her own car in connection with the work, and, furthermore, the company did not withhold tax at source from the sales consultant's commission. From an overall assessment, the City Court concluded that the sales consultant did not have status as a salaried employee. The fact that the company had made a phone available to the sales consultant could not lead to any other result. As such, the sales consultant was not entitled to holiday allowance or compensation for lack of employment contract. The sales consultant was only entitled to a commission fixed on a discretionary basis as well as compensation for petrol costs.

The judgment shows that when in doubt as to whether a person is considered a salaried employee, importance is, inter alia, attached to whether the company has power to direct how the work is done, whether the pay system is a fixed monthly amount or only based on commission, whether the company is obligated to withhold tax at source and whether a company car or phone has been made available to the person in question.