Employed or Self Employed?
Employed or self employed? Taxation status
Establishing the correct employment status of an individual has become a very topical issue recently. Groups of workers who have always classified themselves as self employed are increasingly finding that they are now being viewed, in the eyes of the Revenue Commissioners, as PAYE workers. In this article we look to answer the question of what determines whether you are self employed or in fact an employee. We talk specifically about locum workers in the health professions however the tests that need to be applied transfer across industries.
Over the last year or so the Revenue Commissioners have decided to focus their attention on the tax treatment of individuals described as ‘locums’ in the fields of medicine, healthcare and pharmacy. Locums in these industries have traditionally paid taxes as self employed persons however revenue have recently started issuing letters advising that locums should actually be treated as PAYE employees. In fact, every GP in the country recently received a letter to this effect and more ore recently the Revenue Commissioners have signalled they will be focusing this year on locum dental hygienists and dental technicians.
This has serious implications for employers engaging locums in terms of paying over PAYE and PRSI to revenue and of course for the locums themselves in terms of the tax they pay.
There is a great deal of uncertainty at the moment for both employers hiring locums, and for locums themselves. Here we discuss what has happened and how to proceed when it comes to the taxation status of locums in the health professions.
What is self employed?
At the route of this argument is the employment status of locums. So, the first thing the revenue commissioners will do is seek to determine whether a locum is employed or self employed for tax purposes. As an employer or employee we advise you do the same.
Unfortunately classifying yourself as an employee or self employed individual is not always straight forward. The primary consideration or test for the Revenue Commissioners is whether the locum performs their work ‘as a person in business on their own account’. They will seek to determine if as a locum you have economic independence of the person engaging your services.
There are some general circumstances which would generally indicate that you are self employed. These would include:
- You are paid per client seen rather than a set fee per week
- You are in charge of how you perform your work rather than under the direction of the dentist
- You have your own insurance and are liable for any claims by client
If you worked for more than one practice this would also help show that you have economic independence from the practice. You should also ensure you remain separate from the practice and in terms of staff benefits (e.g. health plan, reduced rates for services etc.).
It is important to note that the Revenue Commissioners are dealing with this issue on a case by case basis. If you are unsure that the right employment classification is in place in your situation and would like to discuss this further please contact us today.
