Understanding your employment status

What is employment status?

Your ‘employment status’ is either that:

  • You are an ‘employee’, or
  • You are ‘self-employed’.

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 (Pay As You Earn) system

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 refuse work offers
  • Can work for multiple clients
  • Pay tax through self-assessment

Why does my employment status matter?

Being an employee provides more security and protection than working for yourself. Below are some of the important implications of your employment status.

How employment status affects

As an employee

As self-employed

PRSI contributions: Different contributions are made, which impacts social welfare entitlements

You generally pay Class A PRSI, with your employer also making contributions.

This entitles you to a number of social welfare benefits, for example, unemployment and disability benefits.

You generally pay Class S PRSI.

This entitles you 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

 

You have extensive statutory rights like minimum wagework breaks and rest periodspaid holidays and legal redundancy rights.

 

Not entitled to as many statutory rights.

Public liability: Being responsible for any harm or damage caused to the public by your work.

Your employer's public liability insurance usually covers any accidents or damages.

You need to have your own public liability insurance to cover any accidents or damages.

 

How is employment status determined?

In most cases it is clear whether a worker is employed or self-employed. It is set out in their contract with the business.

If you are an employee you have a ‘contract of service’ (an employment contract).

If you are self-employed you have a ‘contract for services’ – sometimes called a contractor.

But sometimes the actual working relationship between a worker and business relationship is different in practice to what the contract says.

For example, a business might label a worker as a self-employed contractor when the relationship is actually employee and employer. This is called bogus or false self-employment.

Establishing employment status

There is no definition of employed or self-employed in Irish or EU law.

In cases where it is not clear, several factors determine your employment status. Different guidelines apply depending on the context.

  • For tax purposes a decision-making framework is used
  • For employment law and PRSI purposes a set of legal tests are used.

This means that you could be, for example, an employee for tax purposes and self-employed in respect of your employment rights and social welfare entitlements.

The decision-making framework for tax purposes

Questions Answer/ decision Explanation

       1.   Work and wage bargain

Is there an agreement covering the exchange of work for pay?

No – there is no contract

Yes – Go to question 2
First, we need to confirm if there is an agreement where work is exchanged for  pay.

       2.    Personal service

Is there an agreement to provide personal services with limited substitution?

No – the worker is  self-employed

Yes – Go to question 3
Asks if the worker is restricted from hiring  someone else (a "substitute”) to do the work or provide the service.

       3.   Control

Does the business “Control” the worker?

No – the worker is self-employed

Yes – Go to question 4
Control refers to the businesses ability, authority, or right to control what work should be done, and how, when and where it is done.

       4.  Factual Matrix

All the circumstances points to an employment  contract 

No – the worker is self-employed

Yes – Go to question 5
This step looks as all aspects of the work arrangement to decide if it resembles an employment contract.

      5.  Legislative context

Any law indicating this is not a contract of service

No – the worker is an employee

Yes – the worker is self-employed

Consider any laws that might affect the classification as part of the framework above, especially those  protecting particular employee rights.

You can find more details and some practical examples in the Revenue Guidelines for Determining Employment Status for Taxation Purposes (pdf).

Legal tests to decide employment status for other purposes

The Workplace Relations Commission decides your employment status when it adjudicates on employment rights complaints.

The Department of Social Protection (DSP) decides whether you are an employee or self-employed and what PRSI class you pay. Legal tests can help distinguish between an employee and being self-employed.

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).

How to query your employment status

If you think you are falsely classified as self-employed, contact the Scope section of DSP for a decision.

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 Guidelines for Determining Employment Status for Taxation Purposes (pdf).

Where to apply

Scope Section

Department of Social Protection

Áras Mhic Dhiarmada,
Store Street,
Dublin 1,
D01 WY03

Opening Hours: 9am-5pm
Tel: (01) 673 2585

Workplace Relations Commission - Information and Customer Service

O'Brien Road
Carlow
R93 E920

Opening Hours: Mon. to Fri. 9.30am to 1pm, 2pm to 5pm
Tel: (059) 917 8990
Locall: 0818 80 80 90

Office of the Revenue Commissioners

Customer Service Policy Unit

Ist Floor
Bishop's Square
Redmond Hill
Dublin 2
Ireland

Tel: +353 (0)1 424 4229
Fax: +353 (0)1 424 4396
Page edited: 30 May 2024