Are Locums a thing of the past ?

The new guidelines issued by the Revenue Commissioners include significant changes in determining if someone is an employee or a contractor. Here are the major changes in approach:

Key Changes in Employment Status Determination

Work/Wage Bargain:

• Old Approach: The existence of a work/wage bargain was often sufficient to suggest employment.
• New Approach: The contract must involve the exchange of wage or other remuneration for work. This is the initial question in the five-step framework.

Personal Service:

• Old Approach: The focus was primarily on whether the worker could provide their services personally.
• New Approach: The emphasis is on whether the worker is agreeing to provide their own services and not those of a third party. The right to substitute (sending someone else in their place) can still be consistent with employment if it is limited and controlled by the business.

Control:

• Old Approach: Control over the worker's tasks and methods was a key determinant.
• New Approach: The level of control exercised by the employer is scrutinized more deeply. The employer must exercise sufficient control to render the agreement one that is capable of being an employment agreement.

All Circumstances of the Employment:

• Old Approach: The contract terms and practical working arrangements were considered.
• New Approach: A comprehensive analysis of the contract terms, interpreted in light of the factual matrix, is required. This includes examining whether the worker is conducting the business of the employer or their own business.

Legislative Context:

• Old Approach: Often less emphasised.
• New Approach: The framework includes considering any specific legislative regime that might require adjustments to the interpretation of the employment status.

Practical Implications

• Increased Employee Classification: Many workers previously classified as self-employed may now be classified as employees, especially in sectors like retail, hospitality, construction, and transport.
• Review and Documentation: Businesses must urgently review arrangements with all workers using the five-step framework and document the analysis done to determine the employment status.
• Application to Various Sectors:The new framework is expected to significantly impact sectors with high numbers of self-employed workers, including construction, media, public sector, platform workers (e.g., gig economy), and more.

Sector-Specific Examples

• Construction: Unskilled labourers and single-entity skilled workers are likely to be classified as employees.
• Retail and Hospitality: Part-time and casual workers will more often be classified as employees.
• Media: Freelancers and commissioned workers will be scrutinised under the new framework to determine their status.

These changes reflect a more structured approach to employment status, ensuring compliance with the correct taxation and labour laws.

For further details and examples, refer to the attached document from the Revenue Commissioners Update rules from the Revenue Commissioners based on the outcome of the Domino's Pizza case 20th October 2023