The matter has recently been the subject of Revenue Guidance, where a practice note (eBrief) issued in January 2022 clarified some issues. I understand that, in practice, approximately 50% of operators with the Farm Relief Services (FRS) are classed under class A PRSI, ie employees, while the other 50% are classed under class S PRSI, ie self-employed.

Employment status has implications for:

  • Pay Related Social Insurance (PRSI) contributions and associated social welfare benefits.
  • Tax treatment.
  • Employment rights – many statutory employment rights are only available to employees, as opposed to those who are self-employed. If they are classed as employee’s, they get all the benefits associated with being an employee, such as holiday pay.

    • Guidance

    Revenue Guidance breaks down the type of operators into three distinct categories:

    1 Operators who provide labour only

    Under the old Revenue Guidance, it provided that these operators are regarded as employees and as such are within the PAYE system of tax deduction. However, Class S PRSI (typically applies to self-employed persons) applies to the income of these operators.

    The updated Revenue Guidance, which was issued in January 2022, now provides that for tax purposes, the operators are employees within the PAYE system of tax. It adds that when determining the applicable PRSI class, consideration must be given to the nature of the engagement and makes reference to the Code of Practice on Determining Employment Status. Essentially, this provides that there is no definition of employed or self-employed in Irish or EU law and it depends, to a large extent, on the real nature of the working relationship. Some traits that define an employee include:

  • Under the supervision of another person.
  • Materials and equipment are supplied for the job.
  • Work a set number of hours.
  • Get paid a weekly/monthly wage.

    • Some traits that define a self-employed person include:

  • Has control over what is done, how it is done, when and where it is done and whether he or she does it personally.
  • Is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken.
  • Can provide the same services to more than one person or business at the same time.
  • Provides the materials, equipment and machinery necessary for the job.
  • Is not obliged to take on specific work offered to them.

    • The PRSI class applied is subject to the individual operator’s right to seek a decision from the scope section of the Department of Social Protection regarding his or her insurability status. The Department of Social Protection may also investigate the class of PRSI applied to any individual worker. They may be contacted at Tel: +353 (0)1 673 2585 (9am-5pm) Email: scope@welfare.ie.

    2 Operators who provide equipment only

    They are entitled to payment for the hire of equipment gross (without deduction of PAYE/PRSI/USC).

    3 Operators who provide equipment in addition to labour

  • A. VAT-registered operators
  • Where the operator is genuinely a self-employed contractor, payment of the entire sum due will be made without deduction of PAYE/PRSI/USC deductions on production of an invoice. It must show the operators VAT number and the VAT due in respect of the transaction.
  • B. Non-VAT-registered operators
  • In these cases, the entire payment is subject to PAYE/PRSI/USC deductions. Operators should contact their local Revenue office to claim expenses in relation to equipment provided, which will be incorporated in the certificate of tax credits and standard rate cut off band.

    • As regards expenses, the Revenue Guidance provides that in the case of operators who provide labour only, it is Revenue’s view that they are employees and in the case of travel expenses they are only allowable where an operator is necessarily obliged to incur such expenses in the performance of his or her duties. Travel expenses to and from work are specifically excluded.

    Disclaimer: The information in this article is intended as a general guide only. While every care is taken to ensure accuracy of information contained in this article, Aisling Meehan, Agricultural Solicitors does not accept responsibility for errors or omissions howsoever arising. E-mail aisling@agrisolicitors.ie

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