Employed or self-employed?

The question of whether a person is employed or self-employed is a complex one. The question can be answered once you know who has control over the following issues: what is to be done, how is it to be done, who is to do it, who supplies the materials / equipment / machinery, is the person to do the job to show up for set hours and other factors.

If a person doing the hiring can decide what is to be done, who is to do it, supplies the materials and decides the hours and the person doing the job has to follow all these requirements then the engagement is probably employment.

If on the other hand a job is to be done, but the person hiring for the job doesn’t control exactly what is to be done, or how it is to be done, doesn’t supply the materials or equipment, doesn’t determine exactly who does the job, agrees a price up front for a particular piece of work, and has no part in deciding the hours that are to be worked then the situation is probably self-employment.

For the record these are Revenue’s own guidelines, although they are only guidelines:

While all of the following factors may not apply, an individual would normally be an employee if he or she:

Is under the control of another person who directs as to how, when and where the work is to be carried out.
Supplies labour only.
Receive a fixed hourly/weekly/monthly wage.
Cannot subcontract the work.
If the work can be subcontracted and paid on by the person subcontracting the work, the employer/employee relationship may simply be transferred on.
Does not supply materials for the job.
Does not provide equipment other than the small tools of the trade.
The provision of tools or equipment might not have a significant bearing on coming to a conclusion that employment status may be appropriate having regard to all the circumstances of a particular case.
Is not exposed to personal financial risk in carrying out the work.
Does not assume any responsibility for investment and management in the business.
Does not have the opportunity to profit from sound management in the scheduling of engagements or in the performance of tasks arising from the engagements.
Works set hours or a given number of hours per week or month.

Our recommendation

For contractors we recommend that they set up a limited company as the relationship is clearly that of two parties contracting to get a particular job done, and a limited company ( one of the contracting parties ) employing an individual ( the contractor ) to work for a salary. Any other set-up is more likely to be challenged by Revenue.