Code of Practice on Determining Employment Status:
The Department of Social Protection has published an updated Code of Practice on Determining Employment Status, providing clear guidelines o distinguishing between employees and self-employed individuals. The code is essential for employers, workers, and professionals in ensuring proper classification, as employment status impacts taxation, PRSI contributions, and employment rights. The code reflects current labour laws, market practices, and relevant case law to help prevent misclassification, which can affect workers’ entitlements and social insurance contributions.
Why Employment Status Matters:
Determining employment status correctly is critical as it influences legal rights, tax liabilities, and access to social benefits. Misclassification can result in lower contributions to Social Insurance Fund and prevent workers from receiving their due entitlements, such as paid leave, sick pay, and pension rights. The code stresses that employment status is based not just on contractual terms but also on the actual working relationship.
Key Assessment Criteria:
The code introduces a structured five-step framework to assess employment status, focusing on:
- Whether the work is performed in exchange for wages or other remuneration.
- Whether the individual is working for their own business or someone else’s.
- The level of integration of the worker into the employer’s business.
- The degree of control the employer has over how the work is carried out.
- Whether the individual bears financial risk in the work performed.
It also outlines typical characteristics of both employees and self-employed persons, considering factors such as control, integration, economic dependency, and exposure to financial risk.
Application of the Code:
The Code of Practice us intended to assist employers, employees, independent contractors, accountants, HR professionals, and legal advisors. It also serves as a reference for decision-makers within the Department of Social Protection, the Revenue Commissioners, the Workplace Relations Commission (WRC), their appeals bodies, and the courts when assessing employment disputes.
Where to Learn More:
For full details, including practical examples and legal references, visit the Department of Social Protection’s website or access the full Code of Practice at gov.ie