It was only one line in Revenue’s end-of-year headline results, with no easily digestible number to make an engaging headline, but there’s a deadline looming at the end of this month which could be of critical importance to employers around the State.
Companies that have not addressed any bogus self-employment by January 30th will face dramatically escalated action and penalties.
Contract and “gig” employment in Ireland has expanded significantly in recent years, as companies look to contain labour costs, with people being hired as contractors, consultants or on a freelance basis. It has been facilitated by a human resource (HR) industry focus on finding loopholes in labour and employment protection law.
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It’s also an area where Revenue scrutiny has intensified in recent years.
Back in October 2023, the Supreme Court found in favour of Revenue against a Domino’s Pizza franchisee on the issue. It said delivery drivers for the takeaway business should be treated as employees and not contractors, largely on the basis of the control the Domino’s franchise had over the work of the drivers, who were essentially carrying on the business of the franchisee rather than their own.
While the specific case involved pizza delivery drivers, the implications have the potential to affect companies across the business spectrum.
Revenue has, since that ruling, given employers two years’ grace to “regularise bona-fide misclassification of employees … without penalty or interest”. But anyone looking to do so must contact Revenue by January 30th of this year.
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Of course, that will bring with it unwelcome Revenue PAYE bills, but at least it avoids more intense Revenue scrutiny.
“Revenue has been very clear that this settlement opportunity is time-limited,” said Michelle Dunne, employment tax director at Grant Thornton Ireland. “Once the January 30th deadline passes, employers who have not regularised their position may face a significantly higher tax exposure, including interest, penalties and the risk of formal audit.”
Any company that has hired contractors, consultants or other “off-payroll” workers over the two years since the law was clarified by that Supreme Court decision needs to examine, if they have not already done so, whether, given the nature of their employment, they should have been classified as employees.
With many businesses only now returning to normal operations after the extended festive break, the clock is ticking loudly.