Employee and Self-Employed Determination - Damalion - Independent consulting firm.

In today’s ever-changing workplace, many companies utilize various non-traditional work arrangements for its staff, such as fixed term, part-time, and permanent employment contracts. There are also employers looking to engage in the services of self-employed contractors or those who provide services on a contractual basis.

Determining the Right Terms of EmploymentIt is imperative for employers to get it right when entering a service contract or contract for services, as failure to designate the right individual can result in exposure to tax and other employment-related benefits which may not be afforded to such employees, including holiday entitlements, rest breaks, protection from unfair dismissal, and social welfare benefits.

No matter the designation an employer has indicated on the contract, the courts will always look behind the label and evaluate the true nature of a relationship. Employment designations are extremely important as only employees are entitled to the benefits under employment legislations and rights, and therefore has the right of action before the Workplace Relations Commission.

To determine whether an individual is employed or self-employed, the job in its entirety should be carefully evaluated. While all factors may not apply, an individual may be considered an employee if he or she is:

  • Under the control of another personal who directs as to how, when, and where the work should be executed.
  • Exclusively performs worker supply labour.
  • Receives a fixed hourly/weekly/monthly wage.
  • Can subcontract the work or substitute another in their place.

Other Key Considerations

When considering when an individual is self-employed, here are some factors that are to be taken into consideration:

  • Does the individual own his or her own business?
  • Is the individual exposed to any financial risk?
  • Does the worker have complete control on how work is performed?
  • Provides the same set of services to other people or businesses?
  • Supplies their own insurance coverage and responsible for their own tax returns?

It is critical to obtain legal counsel when choosing whether to enter an agreement with a self-employed contractor or an employee. Failure to do so may be very expensive to your company in the long run. The information provided above is a brief description when determining whether an individual is an employee or self-employed. To schedule an employee or self-employed consultation, contact our Damalion experts today.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.