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Employment Versus Self Employment - Tax Tips on How to Save You Money

25 November 2020 By Michael O'Mahony

The classification between employment versus self-employment has for many years been a contentious issue between the Revenue Commissioners and Employers. 


In a professional career spanning 30 years I have worked with SME clients across several industries, working with them to ensure they engage workers on correct terms, thus saving them a substantial amount in potential unexpected taxation.


The focus of the Revenue Commissioners has always been on reclassification of workers as employees where they have been engaged as self-employed by their 'employer'. This is where the potential for facing a much higher level of taxes lies. Engaging your workers correctly and knowing the difference between how the employed and self- employed are handled for tax purposes is vital.


The criteria used in determining employed or self-employed status generally fall into the following categories:


The autonomy of the worker - does the worker have responsibility for deciding how and when they carry out the tasks to hand or are they guided by another person within the  hirer organisation?


The duration of the engagement - the longer the duration of the engagement for the same hirer might indicate an employment engagement.


Supply of equipment - Are the equipment or materials necessary to complete the tasks of the worker supplied by the worker or the hirer?


Financial Risk -Is there financial risk on the worker engaged, do they receive a fixed amount for successful completion of a task or is the compensation fixed on an hourly, daily, weekly or monthly rate irrespective of what the worker produces in that time?


Does the worker do similar work for other businesses?


Can the worker set their own hours for completing the task at hand?


Can the worker provide a subcontracted individual to replace them to carry out the tasks at hand?


Some of these criteria were tested in a relatively recent case heard in December 2019 in  'The Dominos Pizza Case'. 


Certain workers who were engaged as delivery personnel were hired by the business as independent self- employed workers under contract, most of the terms of which indicated a self-employment  status. 


The most interesting concept that came out of this case with much weight and emphasis being placed thereon by the HIgh Court was the concept of ' mutual obligation' and this case looked at whether this existed in this situation i.e was there an obligation for the business to offer work and on the worker to accept it?


It was decided that where there is no 'mutual obligation' then a 'contract of service' does not exist (a common term used to describe an employment rather than self employment contract) and it would therefore not be considered to be a worker engaged on a employment contract.


If you would like to discuss this blogpost in more detail and for your own businesses circumstances then contact me at




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