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Employee vs Self-Employed Status – Supreme Court Clarification
The question of whether an individual is an “employee” or “self-employed” has long created uncertainty in Irish tax legislation. This uncertainty stems from the lack of statutory definition in Irish tax law for what constitutes an employment relationship. As a result, interpretations have often relied on principles established through employment law litigation. It is well established that an employment relationship can be created based on the nature of the working arrangement and the obligations of the parties – regardless of how the relationship is described in a contract.
For HR and mobility managers, correctly identifying the nature of a working relationship is critical. Employers are responsible for operating payroll taxes and social security contributions in Ireland, and misclassification can lead to significant financial exposure during revenue audits.
A recent Irish Supreme Court decision involving Domino’s Pizza has clarified the distinction between employees and self-employed contractors in Ireland. The case focused on whether Domino’s Pizza delivery drivers were operating under a “contract for service” (as independent contractors) or a “contract of service” (as employees), and ultimately, which party bore responsibility for operating Irish payroll taxes.
The case progressed through the Tax Appeal Commission and the Irish High Court before being decided by the Supreme Court – the highest judicial authority in Ireland. The Court ruled that the delivery drivers were employees, placing the obligation on Domino’s Pizza to apply Irish payroll taxes to their earnings.
To guide future determinations, the Supreme Court introduced a structured five-question test for determining employment status:
1. Does the contract involve an exchange of wage or remuneration for work?
2. Is the worker agreeing to provide their own services (not those of a third party)?
3. Does the employer exercise sufficient control over the worker to establish an employment relationship?
4. If the above conditions are met, does the overall relationship and contract support a contract of employment?
5. Is there any legislation that would modify or override the outcome of the above analysis?
The Supreme Court’s decision confirms that individuals may be classified as employees based on the substance of the working relationship, even where a written contract describes them as independent contractors. For HR and mobility managers, this reinforces the need to regularly review all contractor engagements through the lens of the Court’s five-step test.
It is expected that there will be a renewed focus on employment status during future Revenue audits and interventions. Employers should now proactively reassess any contractor relationships that could reflect an employment relationship. If the criteria suggest the individual is acting as an employee, the company may be required to operate payroll and fulfil tax obligations accordingly.
It is also important to note that Ireland does not have an equivalent to the UK’s IR35 regime, which specifically addresses contractors engaged via intermediaries. In Ireland, contractor status depends on whether the service is provided by an individual directly or through a corporate entity. HR and global mobility teams should ensure these distinctions are factored into onboarding and classification procedures.
Pension Auto-enrolment
Pension auto-enrolment is a major policy aimed at reducing the pension savings gap by ensuring broader access to retirement benefits for employees in Ireland. Originally scheduled to begin in October 2025, the start date has now been deferred to 1 January 2026, aligning with the beginning of the 2026 tax year.
It is important that employers prepare themselves for the introduction of pension auto-enrolment. The introduction will have wide-ranging implications – from employment law and payroll reporting to budgeting and employee communications.
Employers should assess how the new rules will affect their workforce, especially for mobile employees or those on assignment in Ireland and begin developing an implementation plan.
Although the deadline extension provides additional time, businesses are strongly advised to engage early to ensure a smooth transition—for both the company and its employees.
Taxation of Non-domiciled Individuals
With significant changes recently introduced in the UK concerning the taxation of non-UK domiciled individuals, it is worth highlighting that Ireland continues to offer a favorable tax regime for non-domiciled individuals through the remittance basis of taxation.
Under this regime, individuals who are tax resident but non-domiciled in Ireland are subject to Irish taxation on:
- Irish source income and gains,
- Employment income related to Irish duties, and
- Foreign income and gains only to the extent that the foreign income and gains are remitted to Ireland.
For HR and mobility managers overseeing inbound assignments, this offers a valuable planning opportunity. Understanding and applying the remittance basis can significantly impact the tax position of mobile employees and may influence assignment structures and compensation planning.
Split Year Relief – Updated Practice for 2025
Split Year Relief applies to individuals who arrive in or depart from Ireland mid-tax year and covers employment income earned while resident in the State. When applicable, it ensures that only income related to Irish duties during the period of Irish tax residence is subject to Irish income tax in the year of arrival in and departure.
Previously, employees needed to notify Revenue in the year of the move to claim this relief. However, from 1 January 2025, this process has been simplified. Following the Finance Act 2024, employees can now claim Split Year Relief directly through their end-of-year tax return, reducing administrative burdens and improving clarity.
For HR and mobility teams managing international moves, this change streamlines compliance and makes it easier to support relocating employees. Employers should ensure that internal processes are updated accordingly and that impacted employees are informed of the new approach.
Disclaimer
While every effort has been made to ensure the accuracy of information within this publication is correct at the time of going to print, RBK do not accept any responsibility for any errors, omissions or misinformation whatsoever in this publication and shall have no liability whatsoever. The information contained in this publication is not intended to be advice on any particular matter. No reader should act on the basis of any matter contained in this publication without appropriate professional advice.
Published 10 JUNE 2025
Author: RBK Business Advisors
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