Skip to main content

Revenue issues new Tax and Duty Manual on Employment Status

This manual contains the guidelines outlined by The Supreme Court for determining employment status for taxation purposes following the Domino’s Pizza Judgment

Recap on the decision


The Supreme Court judgement outlined five questions that should be considered when determining the employment status of an individual:

  1. "Does the contract involve the exchange of wage or other remuneration for work?”.
  2. "If so, is the agreement one pursuant to which the worker is agreeing to provide their own services, and not those of a third party, to the employer?”. 
  3. "If so, does the employer exercise sufficient control over the putative employee to render the agreement one that is capable of being an employment agreement?”.
  4. "If these three requirements are met, the decision maker must then determine whether the terms of the contract between the employer and worker interpreted in the light of the admissible factual matrix, and having regard to the working arrangements between the parties as disclosed by the evidence, are consistent with a contract of employment, or with some other form of contract having regard, in particular, to whether the arrangements point to the putative employee working for themselves or for the putative employer.
  5. "Finally, it should be determined whether there is anything in the particular legislative regime under consideration that require the court to adjust or supplement any of the foregoing.”

Revenue guidelines – summary of key points

It is Revenue’s view that the five-step test set out in the Karshan judgment now provides a clear decision-making framework for businesses to determine the employment status of each worker for taxation purposes. The manual provides an analysis of each of the five questions to help taxpayers to understand the decision-making framework and provides specific commentary on how they believe the framework should apply to specific workers/industries, namely: construction workers, part-time, casual and seasonal workers, workers engaged in a domestic setting, couriers and other transport providers, workers in the media, public sector workers and platform operators. This is not an exhaustive list.

Helpfully, the manual also provides a number of practical examples of how the framework applies to various scenarios, which should assist taxpayers and advisors when analysing and concluding on the employment status of workers.

Interestingly, Revenue indicated that their expectation is that there will be an increase in the number of individuals that will be determined to be employees for tax purposes, once the five-step framework is applied to their facts and circumstances.

The manual also sets the expectation that employers should be able to provide evidence of the relevant analysis undertaken in applying the five-step framework when an individual is engaged, including, where appropriate, looking beyond the simple wording of the contract between the business and the individual and that the relationships should be reviewed on a regular basis to ensure that the application of the framework at that later point in time would not result in a different determination.

The manual also notes that the judgment solely relates to individuals and that Revenue’s view of the tax treatment of services supplied through a company has not changed on account of the judgment - Revenue do not seek to look through corporate structures, except in very limited circumstances specifically provided for in the Taxes Consolidation Act 1997.

The manual also includes a reminder that views reached by one government body are not binding on another government body. Revenue, the Department of Social Protection, and the Workplace Relations Commission can form their own views independently, which can mean that recourse to the courts for an overriding final answer might be necessary.

Deloitte’s view

While the comments and examples in the new manual are welcome, in that they set out Revenue’s thinking, the implications of the judgements for taxpayers are not necessarily positive.

Ultimately, the judgement has not really changed the rules, but it has set out an approach that should be taken.

It is clear that Revenue expect more people to be treated as employees under that approach. Also, Revenue expects taxpayer records to demonstrate that the five questions have been applied in any case where employee treatment is not operated. This will increase the compliance burden.

Unfortunately, a framework for consistency by Revenue, the Department of Social Protection and the Workplace Relations Commission on these matters is still absent. Legislation to address this should be considered as the environment remains uncertain for taxpayers.

Taxpayers should now take the opportunity to consider the impact of the decision on their businesses. Relevant contractual and services arrangements with individual service providers should be reviewed in light of the judgment and the new manual. They should also continue to ensure that any arrangements with contractors or other individual service providers are regularly reviewed to ensure that the correct tax treatment is applied. Appropriate documentation should also be maintained to support the positions taken.


Did you find this useful?

Thanks for your feedback

If you would like to help improve further, please complete a 3-minute survey