Understanding your employment status
Your employment status can significantly impact your rights, taxes, and social welfare benefits.
This page provides information to help you understand your employment status.
What is employment status?
‘Employment status’ is whether you are an ‘employee’ or are ‘self-employed’.
In most cases, it will be clear whether you are employed or self-employed. In some situations, it can be less clear. Being incorrectly classified as being self-employed or an independent contractor can have consequences for your tax, PRSI, social welfare and employment rights.
How is employment status determined?
There is no definition of employed or self-employed in employment law.
Your employment status depends on:
- What you do: the nature of your work
- How you do it: your work methods
- Agreements: Written or verbal agreements with the business that pays you
You are an employee if you have a ‘contract of service’ (an employment contract).
You are self-employed if you have a ‘contract for services’ – sometimes called a contractor.
Am I an employee?
You are usually an employee if:
- Your employer controls how, when and where you work
- Your contract says you must do the work yourself and you cannot pass it on to someone else
- Your contract sets out specific work hours and amounts
- You are paid a fixed wage
- You pay tax through the PAYE system
You can get more guidelines and criteria in the Code of Practice for Determining Employment Status 2021 (pdf).
You can read more about the different types of employees, including part-time, casual, seasonal, fixed-term, agency and young workers.
Am I self-employed?
You are typically self-employed if you:
- Own and control your business
- Bear the financial risk
- Can decide to do the work yourself, or hire someone else
- Can choose when and how you work and can turn down work offers
- Can work for multiple clients
- Pay tax through self-assessment
You can get more guidelines and criteria in the Code of Practice for Determining Employment Status 2021 (pdf). It sets out more guidelines and criteria to clarify whether a person is self-employed.
You can read more about the different types of self-employed people, including gig workers and people who own or control companies.
Why does my employment status matter?
Your employment status has several important implications.
How employment status affects
As an employee
PRSI contributions: Impacts social welfare benefits
Entitled to a number of social welfare benefits, for example, unemployment and disability benefits.
Entitled to a smaller range of social welfare benefits.
Tax treatment: Determines tax payment methods
You pay tax under the PAYE system.
You pay tax under self-assessment and file your returns using ROS.
Employment rights: Certain rights apply to employees only
Not entitled to as many statutory rights.
Who decides my employment status?
You (or the person you do work for) do not have the final say in your employment status. Even if there is a written agreement, it doesn’t alone determine your employment status.
This means that while a contract might describe you as self-employed, statutory bodies can decide that you are an employee.
Various bodies have a role in determining employment status:
- The Department of Social Protection (DSP) decides whether you are an employee or self-employed and what PRSI class you pay.
- Revenue decides your tax treatment.
- The Workplace Relations Commission decides your employment status when it adjudicates on employment rights complaints.
Legal tests to decide employment status
Legal tests can help distinguish between an employee and being self-employed.
|Legal tests for employment status||Description|
|Mutuality of obligations||Whether the employer must offer you work and if you have to accept it|
|Substitution||If you can send someone else to do the job|
|The enterprise test||Assessing ownership of the business|
|Integration||How you fit within the organisation|
|Control||Your control over the work, including how, where and when you work|
Detailed information on the legal tests is in Appendix 2 and 3 of the Code of Practice for Determining Employment Status 2021 (pdf).
What is bogus self-employment?
When employers wrongly classify a worker as self-employed, this is called bogus or false self-employment. This can happen even if you initially agreed to be self-employed.
It is wrong for your employer to call you ‘self-employed’ when you are an employee. Employers may do this to avoid giving you the employment rights you are entitled to.
How to query your employment status
If you suspect you are falsely self-employed, contact the Scope section of DSP for a determination.
DSP will investigate your work relationship.
You can get more information from DSP on the criteria the Department uses to decide on your employment status.
Revenue also has guidance on determining the employment status of an individual.