In the times that we live in more people are taking the opportunity to establish their own business whether it be due to redundancy or just wanting to take the plunge and become self employed. When you land your all-important first contract it's vital that the conditions of the contract distinguish you from being self-employed rather than that of an employee. The category that a worker falls into depends on what they actually do, the way they do it and the terms and conditions under which they are engaged, whether written, verbal or implied.

The following sets out how to distinguish an employee from self-employed.


Being an employee


He/she is an employee if some or all of the following apply:


· Is under the control of another person who directs as to how, when and where the work is to be carried out
· Works set hours or a given number of hours per week or month
· Does not supply materials for the job
· Does not provide equipment other than the small tools of the trade
· Is not exposed to personal financial risk in carrying out the work
· Receives a fixed hourly/weekly/monthly wage
· Is entitled to extra pay or time off for overtime
· Is entitled to sick pay
· Receives expense payments to cover subsistence and/or travel expenses
· Supplies labour only
· Cannot subcontract the work
· Does not assume any responsibility for investment and management in the business
· Does not have the opportunity to profit from sound management in the scheduling of engagements or in the performance of tasks arising from the engagements
· Will normally be covered under the employer's public liability insurance
· Works for one person or for one business


He/she is self-employed if some or all of the following apply:


· Has control over what is done, how it is done, when and where it is done and whether he or she does it personally
· Controls the hours of work in fulfilling the obligations of the contract
· Provides the materials for the job
· Provides equipment and machinery necessary for the job, other than the small tools of the trade
· Is exposed to financial risk, by having to bear the cost of making good faulty or substandard work carried out under the contract
· Costs and agrees a price for the job
· Receives an agreed contract payment(s) without entitlement to pay for overtime, holidays, country money, travel and subsistence or other expense payments
· Is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken
· Assumes responsibility for investment and management in the enterprise
· Has the opportunity to profit from sound management in the scheduling and performance of engagements and tasks
· Provides his or her own insurance cover as appropriate e.g. public liability insurance, etc in order to insure against public and work accident compensation
· Owns his or her own business
· Can provide the same services to more than one person or business at the same time


If you are thinking of starting a business and would like some further advice please contact Tracey Glacken, Glacken Accountants, Registered Auditors & Accountants, 41 Pearse Street, Ballina, Co. Mayo. Tel: 096 73880 or email This email address is being protected from spambots. You need JavaScript enabled to view it.

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