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Determining the Employment Status of an Individual

Determining the Employment Status of an Individual

There is a legal difference between a contract of employment (known as a ‘contract of service’) and a contract for service. A contract of employment applies to an employee-employer relationship. A contract for service applies in the case of an independent or self-employed contractor.

 A worker’s employment status is not a matter of choice. It depends on the terms and conditions of the job. Generally, it is clear whether an individual is employed or self-employed. If it is not obvious, the checklists below will help in deciding this.

 When looking at the criteria, you must consider the working conditions and the employment as a whole. The main question will always be whether they work ‘as a person in business’ or ‘on their own account’. This will help decide if the person is a free agent with economic independence from an employer.

While all of the following factors may not apply, an individual is normally your employee if:

☐  You control how, when and where the work is carried out

☐  They supply labour only

☐  You pay them a fixed hourly, weekly, or monthly wage

☐  They cannot sub-contract their work

☐  You supply the materials for the job

☐  You provide all equipment other than the small tools of the trade

☐  They are not exposed to personal financial risk in carrying out the work

☐  They do not assume any responsibility for investment and management in the business

☐  They cannot profit from the management, scheduling or performance of the work

☐  You set the work hours

☐  They carry out work for you or your business only

☐  You pay expenses to cover subsistence or travel

☐  They are entitled to extra pay or time off for overtime.

      ___  Total boxes ticked

While all of the following factors may not apply to the job, individuals are normally self-employed if they:

☐  Own their own business

☐  Are exposed to financial risk (for example they may have to bear the cost of redoing

faulty or substandard work carried out under the contract)

☐  Assume responsibility for investment and management in the business

☐  Can profit from the management, scheduling or performance of the work

☐  Have control over what, how, when and where the work is done and whether they do it

personally

☐  Are free to hire other people, on their terms, to do the work which has been agreed on

☐  Can provide the same services to more than one person or business at the same time

☐  Provide the materials for the job

☐  Provide equipment and machinery necessary for the job

☐  Have a fixed place of business where materials or equipment can be stored

☐  Cost and agree a price for the job

☐  Provide their own insurance cover (for example, public liability cover)

☐  Control the hours of work in fulfilling the job obligations.

___  Total boxes ticked                    

 

Print off this document and tick the boxes where applicable on page 2 and 3. Total up the number of ticked boxes at the end of both checklists.

If you tick more of the ‘employee’ boxes (page 2) than ‘self-employed (page 3), then they are employees. Please keep this on file for your records.

If you tick more of the ‘self-employees’ boxes (page 3) than ‘employee’ (page 2), then they are self-employed. Please keep this on file for your records.

 

If you are unsure as to whether a person is employed or self-employed, you should contact Revenue or contact us. Drop us an email at info@ebk.ie or ring the office 01-905 9436.