Compliantly Engage Contractors in Ireland
Our workforce compliance guide to Ireland covers everything you need to compliantly hire, onboard, manage and pay independent contractors in Ireland.
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Our workforce compliance guide to Ireland covers everything you need to compliantly hire, onboard, manage and pay independent contractors in Ireland.
Worksuite offers a whole range of professional services and compliance tools, making it easy to compliantly engage independent contractors in Ireland.
We work with the best legal partners in Ireland to create contract templates that are compliant with local laws to protect you and your contractors from fines and penalties.
Our bespoke onboarding workflows and screening questioners will help you determine the worker status in compliance with Irish law, based on which you can decide to engage a worker as a contractor or full-time worker—all without needing to set up your business entity.
Any business hiring in Ireland should understand the important legal distinction between who classifies as an independent contractor and who can be hired as an employee. Fines or penalties may be issued to businesses who are hiring contractors under the guise of employment.
In Ireland, merely describing an individual as an independent contractor has no legal significance. Instead, various factors are taken into account to determine the true legal status of the individual. Therefore, understanding the distinctions between employees and independent contractors is critical to compliantly engaging workers in Ireland. Instances of ‘false self-employment,’ as defined under The Competition (Amendment) Act 2017, may lead to the worker losing both employment rights and social welfare benefits.
It is important to work with a partner like Worksuite to ensure that you have an engagement framework that properly classifies freelancers able to work as independent contractors. Alternatively, Worksuite can automatically alert you when freelance talent must be engaged directly as employees, or contractors on payroll.
General employment law in Ireland comes from a combination of several different pieces of legislation, including:
Independent contractors are not protected by general employment laws in the same way employees are. However, the Companies Act 2014 and the General Data Protection Regulation do still apply.
Hiring practices generally involve the employer preparing a job description, advertising the role (e.g., online), conducting job interviews and other candidate tests, and then making an offer to the candidate. Employers must ensure the worker has the legal right to work in Ireland. They must also secure a copy of the new employee’s latest P45 certificate, agree upon a salary, and register their employment with the Revenue
Independent contractors in Ireland must formally agree upon a contract for service with their client(s). This specifies the work the contractor will complete and the agreed fee the contractor will receive.
Most employees do not need to file a tax return. However, there are some circumstances in which this is necessary. An employee in Ireland must complete an income tax return (form 12S or Income Tax Form 11) if they wish to:
Employees can also use their myAccount service to inform the Revenue when they have ceased an existing job or started a new job.
Independent contractors must either complete an income tax return or, if they trade as a company, a corporation tax return, including filing a CT1 Form and a 46G Form (Company).
Employers must withhold and report both tax and PRSI payments. All deductions should be reported to the Office of the Revenue Commissioners.
Payments to an independent contractor are usually made without any tax deductions. Independent contractors in Ireland are not covered by the PAYE system.
Employees in Ireland pay directly from their gross pay income tax, pay-related social insurance (PRSI) and, if they earn more than €13,000 per year, a universal social charge (USC). In some cases, the employer as well as the employee pays PRSI contributions.
Independent contractors in Ireland can set up and operate their activity through a limited company. This involves filing Form A1 with the Companies Registration Office
Employees are paid on an hourly, weekly, or monthly basis
Independent contractors in Ireland typically submit an invoice on a monthly basis.
Employees in Ireland are entitled to maternity leave, paternity leave, adoptive leave, parental leave, parent’s leave, carer’s leave, equality in the workplace, whistleblowing protection, redundancy payments, protection from unfair dismissal, sick pay, public holidays, and a national minimum wage.
Independent contractors in Ireland have few statutory rights. Their work can be terminated in adherence with the terms of their contract for service.
All employee benefits are paid by the employer. Employers do not have to make mandatory pension contributions, but Ireland is in the process of moving towards auto-enrolment.
Some employees also benefit from income tax credits and reliefs.
Independent contractors in Ireland are not entitled to the benefits typically given to employees. A contractor’s clients do not make PRSI, pension or health insurance contributions on the contractor’s behalf. Contractors are also not entitled to maternity, paternity, or sick pay
General employment law in Ireland comes from a combination of several different pieces of legislation, including:
Hiring practices generally involve the employer preparing a job description, advertising the role (e.g., online), conducting job interviews and other candidate tests, and then making an offer to the candidate. Employers must ensure the worker has the legal right to work in Ireland. They must also secure a copy of the new employee’s latest P45 certificate, agree upon a salary, and register their employment with the Revenue
Most employees do not need to file a tax return. However, there are some circumstances in which this is necessary. An employee in Ireland must complete an income tax return (form 12S or Income Tax Form 11) if they wish to:
Employees can also use their myAccount service to inform the Revenue when they have ceased an existing job or started a new job.
Employers must withhold and report both tax and PRSI payments. All deductions should be reported to the Office of the Revenue Commissioners.
Employees in Ireland pay directly from their gross pay income tax, pay-related social insurance (PRSI) and, if they earn more than €13,000 per year, a universal social charge (USC). In some cases, the employer as well as the employee pays PRSI contributions.
Employees are paid on an hourly, weekly, or monthly basis
Employees in Ireland are entitled to maternity leave, paternity leave, adoptive leave, parental leave, parent’s leave, carer’s leave, equality in the workplace, whistleblowing protection, redundancy payments, protection from unfair dismissal, sick pay, public holidays, and a national minimum wage.
All employee benefits are paid by the employer. Employers do not have to make mandatory pension contributions, but Ireland is in the process of moving towards auto-enrolment.
Some employees also benefit from income tax credits and reliefs.
Independent contractors are not protected by general employment laws in the same way employees are. However, the Companies Act 2014 and the General Data Protection Regulation do still apply.
Independent contractors in Ireland must formally agree upon a contract for service with their client(s). This specifies the work the contractor will complete and the agreed fee the contractor will receive.
Independent contractors must either complete an income tax return or, if they trade as a company, a corporation tax return, including filing a CT1 Form and a 46G Form (Company).
Payments to an independent contractor are usually made without any tax deductions. Independent contractors in Ireland are not covered by the PAYE system.
Independent contractors in Ireland can set up and operate their activity through a limited company. This involves filing Form A1 with the Companies Registration Office
Independent contractors in Ireland typically submit an invoice on a monthly basis.
Independent contractors in Ireland have few statutory rights. Their work can be terminated in adherence with the terms of their contract for service.
Independent contractors in Ireland are not entitled to the benefits typically given to employees. A contractor’s clients do not make PRSI, pension or health insurance contributions on the contractor’s behalf. Contractors are also not entitled to maternity, paternity, or sick pay
In Ireland, five main factors are considered when determining if a worker is an employee or an independent contractor. These were outlined in a 2021 Code of Practice developed by The Office of the Revenue Commissioners and the Department of Social, Community and Family Affairs. They are:
Independent contractors in Ireland work under one of two main categories: a self-employed freelancer (either through a limited company or as a sole trader – see section 4.1), or through a third-party umbrella company (either PAYE or Director – see section 4.2).
There are two primary engagement models for working with independent contractors in Ireland:
Companies hiring independent contractors in Ireland should avoid making payments directly through their payroll system. The contract for service should stipulate agreed fees, payment methods and payment dates.
Independent contractors hired via direct engagement are not paid as part of an Irish company’s payroll. Their fees are paid without any deductions at source for tax or other benefits.
Independent contractors in Ireland pay class S of PRSI at a rate of 4%. Contractors earning more than €100,000 per year are obliged to pay a universal social charge surcharge of 3%. Contractors are not eligible for a range of benefits, including invalidity benefit and illness benefit.
Independent contractors hired through an umbrella company may be liable for extra PRSI payments at a rate of 10.95%. In return, they are able to enjoy state benefits.