Am I self-employed or an employee?

Usually it is obvious who is an employee and who is not. However, sometimes it is not absolutely clear. For example, a business anxious to avoid employment legislation, tax and social insurance may insist that all people working for the firm are self-employed rather than employees. In other words, the person you are doing work for insists that you are not his/her employee but that you are a self-employed person asked to do a particular piece of work.

Why is my employment status important?

Your employment status, that is, whether you are employed or self-employed has a number of implications for you. The majority of employment protection legislation in Ireland applies to employees only and the tax and social insurance system treats you very differently depending on whether you are employed or self-employed.

In some cases people who considered themselves self-employed have been found to be employees by the Scope Section of the Department of Social Protection or by the Revenue Commissioners. This means that they are entitled to all the protections given to employees (such as redundancy). Self-employed people are not entitled to these protections.

What’s the definition of ‘self-employed’?

In in employment law there is no definition of ‘employed’ or ‘self-employed’. Employers can engage people on either contracts of service or contracts for services. In general only people engaged under a contract of service are employees which means that they are protected by the full range of employment legislation.

An independent contractor or self-employed person will have a contract for services – which means that they perform a service in return for payment. You should note that statements in contracts such as 'You are deemed to be an independent contractor' or 'You are not an employee of this company' are not contractual terms. This means that they are not relevant when deciding whether a person is self-employed or an employee.

The distinction between the 2 types of contract is sometimes unclear. The decision on your employment status is reached by looking at what you do, how you do it and the terms and conditions under you were engaged. The important point is that you (or the person you work for) do not make the final decision. Instead, the Revenue Commissioners or the Scope Section of the Department of Social Protection or perhaps a court or tribunal will make that decision.

So it could be that you are legally considered an employee, even though you have agreed with another person that you will work for him or her as a self-employed person.

How can I work out my employment status?

If you are unsure about your employment status (whether you are employed or self-employed) you can consider the following questions to clarify your position.

You are probably self-employed if you:

• Run your own business and take responsibility for its success or failure
• Have several customers at the same time
• Can decide how, when and where you do your work
• Are free to hire other people to do the work for you or help you at your own expense
• Provide the main items of equipment to do your work

You are probably employed if you:

• Have to do the work yourself and are supplied with the materials and equipment to do the work
• Are under the control of one person at a time who directs how, when and where you do your work
• Have to work a set amount of hours and are paid a regular amount according to the hours you work
• Get paid for working overtime and for sick leave and holidays
• Have PAYE and PRSI deducted directly from your payment

The Code of Practice for Determining Employment or Self-Employment Status of Individuals (pdf) describes the differences between employment and self-employment in detail.

It is possible to be employed and self-employed at the same time, perhaps by working for an employer during the day and running your own business in the evenings.

How can I get confirmation of my status?

If you want to confirm whether you are employed or self-employed you can contact your local Revenue Office or the Scope Section of the Department of Social Protection. They will consider the facts and provide a written decision about your status. In general a decision by one Department will be accepted by another. However this is not always the case so you should get a decision from both if there is any doubt.