Understanding your employment status
What is my employment status?
‘Employment status’ means whether you are an ‘employee’ or are ‘self-employed’.
In most cases it will be clear whether you are employed or self-employed. However, it may not always be obvious, and you may be classed incorrectly as being self-employed or an independent contractor. This has tax and PRSI implications and can affect your social welfare and employment rights.
There is no definition of employed or self-employed in employment law. The decision on your employment status is reached by looking at:
- What you do
- How you do it
- Written or verbal agreements between you and the business that pays you
You are an employee if you are categorised as being engaged on the basis of a ‘contract of service’ (an employment contract). See ‘Am I an employee?’ below.
You are a self-employed if you are engaged on a ‘contract for services’ – sometimes called a contractor. You normally own your own business and are contracted to provide services over a certain period of time for a fee. See ‘Am I self-employed?’ below.
Am I an employee?
- Your employer controls how, when and where your work is done
- Your contract says you have to do the work yourself and you cannot pass it onto someone else
- Your contract sets out specific hours and amounts of work
- You are paid a fixed wage
- You pay tax though the PAYE system
The Code of practice for determining employment status 2021 (pdf) sets out more guidelines and criteria to clarify whether a person is an employee.
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 would normally be self-employed if you :
- Own the business and have control in how the business is run
- Are responsible for bearing the financial risk
- Can choose whether to do the work yourself, or hire someone else to do it
- Can choose when and how you will work and you can turn down work when offered
- Can work for multiple people or businesses at the same time
- Pay tax through self-assessment
The Code of practice for determining employment status 2021 (pdf) 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?
Employment status has implications for:
- Pay Related Social Insurance (PRSI) contributions and associated social welfare benefits: an employee is entitled to a number of social welfare benefits, such as unemployment and disability benefits. A self- employed person is entitled to a smaller range of supports.
- Tax treatment: you will be treated very differently depending on whether you are employed or self-employed. If you are an employee, you are usually taxed under the PAYE system. If you are self- employed you pay tax under self-assessment and file your returns using ROS.
- Employment rights: many statutory employment rights applies to employees only and not to self-employed people, for example the right to minimum wage, work breaks and rest periods, paid holidays and legal redundancy rights.
Who decides my employment status?
You (or the person you do work for) do not make the final decision about whether you are an employee or self-employed. Although any written agreement is given due consideration, it does not on its own determine your employment status. This means that while a contract might describe you as self-employed, statutory bodies can decide that you are, in fact, an employee.
The following bodies have a role in determining employment status:
The Department of Social Protection will make a decision about whether you are an employee or self-employed and what appropriate PRSI class should apply.
Revenue will make a decision about whether you are an employee or self-employed for the purposes of deciding what tax treatment applies to you.
The Workplace Relations Commission can decide your employment status in cases where it is adjudicating on employment rights complaints.
Legal tests to decide employment status
A decision about your employment status is made by applying standard tests based on the real nature of your working relationship.
There are five legal tests used to establish the difference between an employee (contract of service) and being self-employed (contract for services). These tests are:
|Mutuality of obligations||Whether an employer is required to offer you work and whether you are expected to do accept it|
|Substitution||Whether you can send someone else can to do the job|
|The enterprise test||Whether you are in business on your own account and can profit or suffer financial loss from your work|
|Integration||Whether you are an integral part of the organisation, for example how does the worker fit within the organisational structure|
|Control||Whether you control the work, including how, where and when the work is done|
You can read more detail on the legal tests and their application in Appendix 2 and 3 of the Code of practice for determining employment status 2021 (pdf).
What is bogus self-employment?
Where an employer deliberately misclassifies a worker as self-employed, this is called bogus or false self-employment. This can happen even when you have agreed to work as a self-employed person.
It is wrong for your employer to call you ‘self-employed’ when you’re actually an employee. Employers sometimes do this to take away their employees’ employment rights.
How to query your employment status
If your employment is wrongly classed as self-employment, it affects your employment rights and the social welfare payments you are entitled to.
If you think you might be falsely self-employed, contact the Scope section – see 'Where to apply for a determination on your work status' below. They will investigate the work relationship you have with the company and make a determination on your employment status.
You can get more information from DSP on false self-employment and the criteria the Department uses to make a determination on your employment status.
Revenue also has guidance on determining
the employment status of an individual.