What you and Revenue consider an employee may be different
Did you know that if you pay wages/salaries of over €8 per week to someone you’re obliged to register with Revenue as an employer? This may surprise many people. There are many aspects that need to be considered when defining employers and employees. In general, the terms employer and employee are self-explanatory, however when it comes to Revenue these terms need further definition as there are many different, and not well known, aspects that determine an employer and employee. And people may not know if they’re considered an employer or employee in Revenue’s eyes. Also many contractors may be considered employees by Revenue. So with this in mind we’ll look at Revenue’s criteria on whether an individual is an employee, in a future blog we’ll do the same but from the employer perspective.
Criteria on whether an individual is an employee
While all of the following factors may not apply, an individual would normally be an employee if he or she:
- Is under the control of another person who directs as to how, when and where the work is to be carried out.
- Supplies labour only.
- Receives a fixed hourly/weekly/monthly wage.
- Cannot subcontract the work. If the work can be subcontracted and paid on by the person subcontracting the work, the employer/employee relationship may simply be transferred on.
- Does not supply materials for the job.
- Does not provide equipment other than the small tools of the trade. The provision of tools or equipment might not have a significant bearing on coming to a conclusion that employment status may be appropriate having regard to all the circumstances of a particular case.
- Is not exposed to personal financial risk in carrying out the work.
- Does not assume any responsibility for investment and management in the business.
- Does not have the opportunity to profit from sound management in the scheduling of engagements or in the performance of tasks arising from the engagements.
- Works set hours or a given number of hours per week or month.
- Works for one person or for one business.
- Receives expense payments to cover subsistence and/or travel expenses.
- Is entitled to extra pay or time off for overtime.
Additional factors to be considered:
- An individual could have considerable freedom and independence in carrying out work and still remain an employee.
- An employee with specialist knowledge may not be directed as to how the work is carried out.
- An individual who is paid by commission, by share, or by piecework, or in some other atypical fashion may still be regarded as an employee.
- Some employees work for more than one employer at the same time. Some employees do not work on the employer’s premises.
- There are special PRSI rules for the employment of family members.
- Statements in contracts considered by the Supreme Court in the ‘Denny’ case, such as “You are deemed to be an independent contractor”, “It shall be your duty to pay and discharge such taxes and charges as may be payable out of such fees to the Revenue Commissioners or otherwise”, “It is agreed that the provisions of the Unfair Dismissals Act 1977 shall not apply etc”, “You will not be an employee of this company”, “You will be responsible for your own tax affairs” are not contractual terms and have little or no contractual validity. While they may express an opinion of the contracting parties, they are of minimal value in coming to a conclusion as to the work status of the person engaged.
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