Catherine Murphy (Kildare North, Social Democrats)
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177. To ask the Minister for Finance if he will provide the definition applied by the Revenue Commissioners in the context of categorising persons as self-employed and or as contractors. [60384/22]

Catherine Murphy (Kildare North, Social Democrats)
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178. To ask the Minister for Finance if he will provide the definition applied by the Revenue Commissioners in the context of categorising persons as an employee. [60385/22]

Catherine Murphy (Kildare North, Social Democrats)
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179. To ask the Minister for Finance if he will clarify the hierarchy of adjudications in situations in which the Revenue Commissioners rule that a person is an employee following WRC cases in which a person has been determined to be self-employed (details supplied). [60386/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 177, 178 and 179 together.

I am advised by Revenue that a worker’s employment status is not a matter of choice; it depends on the terms and conditions of the job. Employment classification is a complex area and there is no single clear definition of the terms ‘employed’ or ‘self-employed’ in Irish or EU law. While it is usually clear whether an individual is employed or self-employed, it is not always obvious. However, case law has established tests to determine whether contracts are contracts for service (i.e. self-employed contractor) or contracts of service (i.e. employee). These tests need to be applied on a case by case basis to the fact pattern of each case.

For the purposes of collection and recovery of income tax under the PAYE system, section 983 of the Taxes Consolidation Act 1997 (TCA) includes a definition of employee as meaning “any person in receipt of emoluments”. No definition of self-employed or contractor exists in the TCA for the purpose of collection of income tax.   However, in the vast majority of circumstances, it will be self-evident whether income paid to an individual for work carried out on behalf of a person that has engaged him/her should be subject to deduction by that person as Schedule E (of the TCA) emoluments under the PAYE system as an employee or whether, the individual is responsible on his/her own account for the payment to Revenue of tax under Schedule D of the TCA on such income as a self-employed person.  If required to do so, Revenue will make a determination on an individual’s employment status in the context of his or her treatment for income tax purposes and in allocating the income earned to the appropriate Schedule of the TCA 1997, based on the application of tax law and practice and case law to the specific set of circumstances involved.

The Deputy will be aware that three separate agencies make determinations in respect of employment status. The Workplace Relations Commission (WRC) determines employment status when adjudicating on employment rights matters; Scope Section in the Department of Social Protection (DSP) determines employment status with a view to deciding the appropriate class of PRSI for an individual; and, as already outlined, Revenue makes determinations for income tax purposes.  Each agency has its own legislative framework and appeals process, and individuals may subsequently have recourse to the judicial system.

In July 2021, an interdepartmental working group comprising the DSP, Revenue and the WRC updated the Code of Practice on Determining Employment Status. The purpose of the revised Code is to provide an enhanced understanding of 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. The tests to be applied in determining employment status are explained in that document and those tests include mutuality of obligation, control, substitution, integration and the enterprise test.  The Code can be found at www.revenue.ie/en/self-assessment-and-self-employment/documents/code-of-practice-on-employment-status.pdf.

Revenue advises me that in most situations involving determinations of employment status there is commonality of approach across the three agencies and instances where determinations of employment status between Revenue and the WRC (and/or DSP) differ are rare.  There is open dialogue between the relevant bodies to discuss the respective views.  Where differences in approach occur, the decision of one organisation is not binding on the other, and as a consequence, a determination of employment status in one context may not be the same as in another context.

Regarding the specific case referred to in the Details Supplied, if the Deputy wishes to provide further information, I am advised that Revenue will review the facts and circumstances of the case to ensure that the tax treatment is appropriate as compared to the employment rights decision, bearing in mind that determinations made by the each of the three agencies in relation to employment status are done for different purposes and may result in divergent outcomes.