Author Archives: William Halpin


Revenue issued E Brief 129/22 last week, Code Of Practice to determine Employment Status of workers

It clearly sets out the various tests and criteria for determining the correct status.

It clearly sets out the criteria that establishes whether the relationship between an individual worker and the end user is a “ Contract of Service “( Employment) or a Contract for service (Self employment) arrangement

I do not intend to go through all the various sections but I think that Section 9.3.3 is really important and may be a real issue for many companies.

The E brief highlights 2 types of Companies

1. Personal Service Company ( PSC)

2. Managed Service Company (MSC)

Personal Service Company

Under this arrangement a contract for services is not explicitly agreed between the individual worker and the end user availing of these services, but is instead agreed between the end user and an intermediate company owned/directed by the worker.

Typically, a PSC company has a sole director who is the worker/contractor who owns most or all the shares of the company

Managed Service Company

This type company is a variation of the MSC. It involves setting up a company who may or may not be involved in delivering similar services to the same end user. The MSC is typically facilitated by a third party agent who organises the legal and administrative affairs of the company.

Generally the individual workers shareholdings are below 50% (Unlike PSC Companies).

Section 9.3.3

In many cases the owner/Director or Worker Shareholder in either a PSC or MSC is genuinely Self Employed.
However in some cases after reviewing the terms and conditions of the arrangement , a contract of Service will be understood to exist ( ie employment)
Also, in some cases of genuine self employment, a level of dependency can develop between the worker and end user over a period of time, so the relationship may evolve into an employer/employee relationship.

There is an element here of The DSP “ Breaching The Corporate Veil”. This is a apparent new departure for DSP.

For the moment Revenue have not ventured into this area, but it may be a precursor for future investigation by revenue.

Consequences of Change of status from Self employment to Employed

An end user, found by The Department of Social Protection will be required, for PRSI purposes , to treat the worker as a Direct Employee at the A1 rate, instead of the S1 rate.

When a determination has been made by DSP, the employer will be required to pay the relevant PRSI contributions for the employee for the full period in question and may be subject to a range of penalties under the Social Welfare Act 2005.

Potential PRSI Liabilities due to misclassification

In a case brought by Department of Social Protection against RTE it was determined that some workers were incorrectly classified as Self employed.
In reply to a Parliamentary question raised by Catherine Murphy TD, on 1 March 2022, the Minister for Social Protection stated “ There is no statutory limitation restricting the number of years The Department can assess a PRSI liability against an employer who has misclassified their worker”

The Statute of Limitations for Revenue matters is 4 years !

Hence, all “ End users” should carefully review their existing arrangements with workers and confirm that their status is correct


TAXRETURNSIRELAND.IE will help your business to grow by allowing you to concentrate on business development.

For any Queries relating Accounting or Taxation contact

The contents of this article are not intended to amount to advice and you should not rely on any of the contents of this article. Professional advice should be obtained before taking or refraining from taking any action as a result of the above contents. William Halpin & Co. disclaim all liability and responsibility arising from any reliance placed on any of the contents of this article.