Revised Code of Practice on Determining Employment Status Published

PUBLISHED: 9th December 2024

An updated Code of Practice on determining employment status has been published.

The Department of Social Protection, the Office of the Revenue Commissioners and the Workplace Relations Commission (WRC) all worked together to review and update the Code.

A revised version of the Code was required as a result of the Supreme Court decision in Revenue Commissioners v Karshan (Midlands) Ltd T/A Domino’s Pizza [2023] 24.

The Code is intended to be a ‘living document’ which will continue to be
updated to reflect future, relevant changes in the labour market,
relevant legislation and case law.

Some key points of the Code are outlined below.

Five-Step Framework

The Code set out a five-step framework to determine whether a worker is an employee.

1. Remuneration for Work.  Does the contract involve the exchange of a wage or other remuneration for work?
2. Personal Service.  Does the individual agree to provide the work personally, rather than through a third party?  The 'substitution test' is relevant here.
3. Control by Employer.  Does the employer exercise sufficient control over the worker, including how, where and when the work is done?
4. Complete Factual Matrix.  Decision-makers will consider the day-to-day realities of the work relationship, looking beyond the wording of the contract.  This includes factors like 'enterprise' (capacity to bear risk or realise profit) and 'integration' (level of involvement in the business).
5. Legislative Context.  Specific legislative regimes may affect the determination of status, such as differences between the Unfair Dismissals Act 1977 and Employment Equality Acts 1998 to 2015.

Additional Considerations

• Characteristics of Employees and Self-Employed.  The Code lists typical characteristics, such as exposure to financial risk, opportunity to profit and integration into the business.
• Special Circumstances.  Specific guidance is provided for company owners; agency workers; those whose working arrangements include Personal Service Companies or Managed Service Companies; and those working in the ‘gig economy’.  Workers in the gig economy can be either employees or self-employed and the
• five-step framework should be applied to each situation.

Implications and Compliance

• Tax and PRSI.  Correct classification affects tax treatment and PRSI contributions.  Misclassification can result in repayment of missed PRSI contributions and additional penalties.
• Employment Rights.  Employment status determines rights such as sick leave, maternity leave and protection from unfair dismissal.
• Criminal Sanctions.  Employers who knowingly misclassify employees as
• self-employed commit a criminal offence and may face penalties.

The Code aims to provide greater clarity and certainty and to protect the rights of workers by ensuring accurate classification and compliance with employment legislation.

If you would like further information on the implications of the revised Code, please do not hesitate to contact any member of our Employment team.

The Code of Practice on Determining Employment Status is available here.