Minister publishes updated code on determining employment status

Employed or self-employed? Government to put new code on legal footing

The Government is to introduce legislation later this year to put on a statutory basis an updated code of practice on determining the employment status of an individual, the Minister for Social Protection Heather Humphreys has said. It aims is to make clear the criteria that classifies someone as an employee or as being self-employed.

The Minister on Wednesday published the update code of practice which, she said, “set out the law as has been developed in the courts through case law over many years”.

“I share the concern expressed by many commentators over the years that employees should be correctly classified for social insurance, taxation and employment rights purposes. We all want to ensure that workers’ rights and entitlements are protected and in particular that workers are not incorrectly, or falsely, classified as self-employed,” the Minister said.

The Department of Social Protection said the term "employment status" referred to whether a worker was classified as either an employee or as being self-employed. It said this classification had implications for the rate of pay related social insurance (PRSI) and tax that was owed. It said it also affected the level of social welfare and employment rights protections that were afforded a worker.


“Employment status can be a complex area, so the purpose of the code of practice is to set out the key characteristics that are used to inform decisions on employment status, taking into account current labour market practices and developments in legislation and case law. These developments include, for example, new forms of work such as platform work and the gig economy. It is intended to be a ‘living document’, which will continue to be updated to reflect relevant changes into the future.”


The updated code says it is important to ensure that workers are correctly classified in a way that matches the reality of the relationship between the worker and the business.

“The misclassification of a worker as being self-employed when their terms and conditions mean that they are, in reality, employees, is a matter of concern. Misclassification reduces contributions to the Social Insurance Fund and excludes workers from full PRSI and employment rights protections.

“Equally, the code acknowledges the existence and significant value to the economy of genuine self-employment. The code is not intended to bring genuinely independent contractors into the employee category.”

The updated code says “there is no single, clear legal definition of the terms ‘employed’ or ‘self-employed’ in Irish or EU law”.

“In order to determine a person’s employment status, both the written or oral contract and the reality behind the contract must be taken into consideration. Although the intention of the parties and any written agreement is given due consideration, they do not on their own determine the employment status.”

It adds that while a person’s contract might describe them as self-employed “courts and statutory bodies may still conclude that they are, in fact, an employee”.

The code says that among the typical characteristics of an employee are that the individual is under the control of another person who directs them as to how, when and where the work is to be carried out; that they supply labour only and receive a fixed hourly/weekly/monthly wage, and cannot subcontract the work. It further specifies that an employee does not supply materials for the job, does not provide equipment other than the small tools of the trade, is not exposed to personal financial risk in carrying out the work, and is taxed through the PAYE system.

The updated code says among the typical characteristics of self-employment are that the individual owns their business; is exposed to financial risk by having to bear the cost of making good faulty or substandard work carried out under the contract, assumes responsibility for the investment and management of the enterprise; has the opportunity to profit from sound management in the scheduling and performance of engagements and tasks; is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken; can provide the same services to more than one person or business at the same time; controls the hours of work in fulfilling the job obligations; is not obliged to take on specific work offered to them; and is registered for self-assessment tax returns or VAT.

The updated code was prepared by an interdepartmental group comprising officials of the Department of Social Protection, the Workplace Relations Commission and the Revenue.

Martin Wall

Martin Wall

Martin Wall is the former Washington Correspondent of The Irish Times. He was previously industry correspondent