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The Department’s false self-employment campaign - May 2018
The Department of Employment Affairs and Social Protection is running a public information campaign to raise awareness about false self-employment in Ireland.

The Department wants to ensure that workers and employers are aware that we can provide a determination on an individual’s employment status. This means the Department can decide whether a person is actually an employee or self-employed - where this is in question.

A brief overview of false self-employment is provided here, with information on how it can affect you, and how the Department can help as well as links to other useful services.

What is false self-employment?
False self-employment is an employment relationship which creates the appearance that a person is self-employed when, in reality, they are a direct employee of a business or corporate structure.

What is PRSI?
Most employers and employees (over 16 and under 66) make Pay Related Social Insurance (PRSI) contributions into the Social Insurance Fund. This money is then used to fund social protection payments.

Most people who are employed and self-employed pay the same individual rate of PRSI, which is 4 percent of your income. For employees, however, the employer makes an additional PRSI contribution of up to 10.85 percent. If you are classed as self-employed there is no employer PRSI contribution because you work for yourself.

A wide range of benefits are available from the Department to people who pay PRSI. Your entitlement to these benefits depends on:

  • The PRSI class you pay, and
  • Satisfying the conditions of the social welfare scheme.

Therefore, it is important that you know which class of PRSI you pay and that it is correct for the work you do.

There are 11 different PRSI classes. Most private sector employees and certain public servants pay Class A PRSI. If you are self-employed, you pay Class S PRSI.

What are the consequences of false self-employment?
Correctly classifying your work as either employment or self-employment is important, because it impacts on the benefits and social welfare payments to which you are entitled.

For example, if you are classed as self-employed you may not be eligible for Jobseekers Benefit (though you may be able to apply for Jobseekers Allowance) or you may not be entitled to holiday pay.

It also impacts on your entitlements under employment rights legislation including, for example, entitlement to statutory minimum pay rates, receiving a payslip, rest breaks, public holiday and annual leave entitlements and protection against unfair dismissal.

If I believe this is my situation, what should I do?
If you believe you may be falsely self-employed, you can contact the Department’s Scope Section (contact details below) which has the legal authority to make determinations on your employment status under the Social Welfare Consolidation Act 2005 (as amended).

What if I am an employer?
Employers can also contact the Department to seek a determination.

What are the criteria used to determine employment status*?
The terms “employed” and “self-employed” are not defined in law, however, guidance has been provided by the courts. To make a determination, the Department looks at the reality of the work and work relationship between you and the company you work for/with. What the parties call their relationship is not what matters; it is the reality of the work relationship that matters.

The list below provides criteria which the Department uses to make a determination on your employment status. This list is for guidance purposes only. You do not have to meet all of these criteria to be determined as employed or self-employed. See further information on the criteria used here.

A person who is employed:

  • Is under the control of another person (employer);
  • Receives fixed hourly/weekly/monthly wages;
  • Supplies labour only;
  • Cannot subcontract the work;
  • Has ‘mutuality of obligation’, that is where the employer is obliged to offer work and the employee is obliged to perform work;
  • Does not supply equipment/materials for the job;
  • Is entitled to sick pay/holiday pay;
  • Is provided with insurance cover by their employer;
  • Works a set number of hours per week;
  • Has their tax deducted from their wages under PAYE.

A person who is self-employed:

  • Owns their own business;
  • Is exposed to financial risk;
  • Can subcontract the work;
  • Has no ‘mutuality of obligation’ and is not obliged to take on specific work;
  • Supplies the necessary equipment for the job;
  • Costs and agrees a price for the job;
  • Is not entitled to paid leave;
  • Provides their own insurance cover;
  • Controls their own hours in fulfilling a job;
  • Is registered for Self-Assessment tax and is required to file their own tax returns.

What happens when I ask for a determination?
Cases are referred to a Social Welfare Inspector to investigate the person’s employment status. The Department’s Scope Section makes a determination having regard to the inspector’s report and *the complete range of indicators summarised in the Code of Practice for Determining Employment or Self-Employment Status of Individuals. Getting a determination generally takes a number of weeks.

See full details on getting a determination on your employment status here

Contact the Scope Section
Department of Employment Affairs and Social Protection
Gandon House
Amiens Street
Dublin 1
D01 A361
Tel: (+353) 1 673 2585 (9am-5pm)
Email: scope@welfare.ie

For further detailed information on the work of the Department’s Scope Section, please visit: www.welfare.ie/Scope

What is the role of the Workplace Relations Commission (WRC)?
The Workplace Relations Commission provides information on industrial relations rights and obligations under Irish employment and equality legislation. 

Notwithstanding what your contract states, if you think you are an employee and you have a complaint about how you are being treated in relation to employment rights or equality matters, you may bring it to the attention of the Workplace Relations Commission.

Please visit: http://www.workplacerelations.ie/en/Complaints_Disputes/Refer_a_Dispute_Make_a_Complaint/.

Other Useful Links

For more information about PRSI, please visit: www.welfare.ie/PRSI

If you are self-employed and require further information on PRSI, please visit: http://www.welfare.ie/en/Pages/Self-Employed-Contributions.aspx.

Information for self-employed individuals in relation to self-assessment is available on Revenue’s website; https://www.revenue.ie/en/self-assessment-and-self-employment/index.aspx

Last modified:01/05/2018