The status of employees and independent contractors has become a live issue in light of the recent Uber, Deliveroo, Hermes and Pimlico Plumbers decisions before the UK courts.
Ireland has been somewhat insulated from the impact of the Uber and related decisions due to the fact that the hybrid "worker" status, does not exist in this jurisdiction. In Ireland, we simply have two categories, employees and independent contractors. However, the indirect impact of these decisions has been an increasing focus on employee status.
The Department of Social Welfare launched a false self-employment campaign in May 2018. False self-employment arises when an individual appears to be an employee but is forced to provide their services under the guise of a self-employed contractor. The campaign is designed to deter employers from retaining employees on this basis. If the Department determines that an individual has been falsely self-employed they can require the employer to back pay social welfare contributions which could represent a significant retrospective liability for businesses.
This was further highlighted in June 2018 by an independent report into RTÉ’s freelance contracts which found inconsistencies in relation to certain roles where some individuals were hired as employees while others were engaged as contractors.
The Government campaign was followed by a series of large-scale inspections by social welfare inspectors in August 2018 to try to identify instances of false self-employment and other abuses of the PRSI system. The Department has indicated that it intends to scale up these type of inspections in 2019. This will continue to be a hot topic and it may take regulation to better clarify the core characteristics of an employer/employee relationship.
Employers should always fully consider the risk of de facto employee status and nature of work when engaging independent contractors. A determination that an independent contractor is in reality an employee can result in an employment claim against the business as well as a substantial tax bill.