The Code of Practice for Determining Employment or Self-employment Status of Individuals

The Code has its origins in the Employment Status Group (set up under the Programme for Prosperity and Fairness). This document sought to provide clarity as to whether, in relation to an engagement, an individual is employed or self-employed. The Employment Status Group was set up because “of a growing concern that there may be increasing numbers of individuals categorised as ‘self-employed’ when the ‘indicators’ may be that ‘employee’ status is more appropriate.”

The Code was recently updated in 2021 by a group comprising the Department of Social Protection, the Office of the Revenue Commissioners and the Workplace Relations Commission (WRC). The intention is that it will be continually updated to reflect future, relevant changes in the labour market, relevant legislation and caselaw.

The Code aims to be of benefit to employers, employees, independent contractors and legal, financial and HR professionals. It is also aimed at investigators, decision-makers and adjudicators in the Department of Social Protection, the Office of the Revenue Commissioners, the WRC, their respective appeals bodies, and the courts.

In most cases it will be clear whether a worker is employed or self-employed.

However, it may not always be clear, and this can lead to confusion in relation to their employment status. 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.

There are three statutory bodies in place that make determinations on the employment status of a person for the purpose of PRSI, tax and employment rights.

These bodies are:

  • Scope Section in the Department of Social Protection, which determines employment status with a view to deciding the appropriate class of PRSI for an individual,

  • The Office of the Revenue Commissioners, where employment status determines tax treatment,

  • The adjudication service of the WRC, which determines employment status as a preliminary issue when adjudicating on employment rights complaints.

Decisions of Scope Section or the WRC or Revenue are not binding on each other. Appeals from Scope Section are referred to the Social Welfare Appeals Office. Appeals from the WRC are referred to the Labour Court. Appeals from Revenue are referred to the Tax Appeals Commission

The key factors in making a decision on employment status:

Certain factors or ‘legal tests’ have to be considered when deciding if a worker is an employee or is self-employed. The five main factors in establishing the difference between a ‘contract of service’ and a ‘contract for services’ have evolved from the caselaw of the courts.

These five factors are:

Mutuality of obligation:

Mutuality of obligation means that, under the contract, the payer must provide a reasonable amount of suitable work to the worker, who in turn must perform all such work provided. Irish and UK courts have consistently regarded mutuality of obligation as the most important factor, to the extent that if it is found not to exist in an employment situation, no further investigation is required. If, on the other hand, a mutual obligation to provide and undertake work is found to exist, the other factors must then be assessed.


Control is the ability, authority, or right of a payer to exercise control over a worker concerning what work should be done, and how, when, and where it should be done.


Under a contract of service, an employee is employed as an integral part of the organisation.

Under a contract for services, a self-employed person is not generally integrated within the business.


This factor concerns the worker’s right to appoint someone else as a substitute for them if they are unable or unwilling to do all or part of the work. In other words, it concerns whether the worker can subcontract the work or hire assistants.

The Enterprise Test:

The enterprise test focuses on the worker’s exposure to financial risk through carrying out the work, and, conversely, their ability to make a profit through their own effort, creativity and/or entrepreneurial flair.

It is important to note that none of these factors is determinative on its own. It is necessary to take all of them into account and to weigh them up in a rounded way, when making a determination as to the correct employment status of a worker. Every case is examined on the basis of the facts that pertain to that case and determinations made accordingly.

This is a complicated area so please contact us if you need any help. 

Content accurate as at 28.8.2022