Independent Contractors & Employment Guidelines in Ireland
As in many other jurisdictions, in Ireland too, there are specific regulations that determine the correct classification of employees and what can fall under the remit of independent contracting.
Contract length
There's no maximum duration of contracts with independent contractors.
Fixed-term contract
The maximum duration that someone can be employed on successive fixed-term contracts is four years. After that, the contract is deemed of indefinite duration unless the employer can justify otherwise.
In general, people on fixed-term contracts have the same rights as employees. They qualify for a redundancy payment if continuously contracting for two years, and they are also covered under unfair dismissal if they have one year of continuous service. A fixed-term worker cannot be treated less favourably than a permanent employee.
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Employee vs Contractor
An employee works under a contract of service while an independent contractor supplies their labour or services under a contract for services. Employees have the full range of employment statutory rights, whereas an independent contractor does not.
What makes someone an employee
The factors that a court will take into consideration in distinguishing an independent contractor from an employee will include the following:
• The parties\' bargaining power and whether the written contractual terms accurately reflect the reality of the relationship
• The mutuality of obligation (i.e., the employer must provide work, and the employee must perform duties)
• The ability or inability to use substitutes
• The degree of control over the worker as to how, when and where work is to be carried ou.
While all of the following factors may not apply, an individual would normally be an employee if they:
• Supply labour only
• Receive fixed hourly, weekly or monthly wage
• Cannot subcontract the work
• Don't supply materials for the job
• Don't provide equipment other than the small tools of the trade
• Aren\'t exposed to personal financial risk in carrying out the work
• Don't assume any responsibility for investment and management in the business
• Cannot profit from management, scheduling or performance of the work
• Work set hours or a given number of hours per week or month
• Work for one person or one business
• Receive expense payments to cover travel expenses
• Are entitled to extra pay or time off for overtime
• Cannot set their work hours
Penalties for employee misclassification in Ireland
False self-employment is an employment relationship which creates the appearance that a person is self-employed when, in reality, they are a direct employee of a business. When such misclassification is identified, the employee will be awarded statutory rights, such as protection against unfair dismissal, minimum wage, rest breaks and holiday leave, while the employer will be liable for unpaid taxes, interest and penalties. Tax non-compliance could also impact an employer’s eligibility to employ individuals who are subject to employment permits. Fines for employing a worker without the correct permits can be up to €250,000 or 10 years of jail time.
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