Media sector employers are among those being urged by legal experts to review how they use freelance workers after the Revenue Commissioners issued fresh guidelines last month on how they should be treated for tax purposes.
Revenue published the guidance on how the status of workers should be assessed in light of a landmark Supreme Court judgment in October, which found that drivers for Domino’s Pizza should be considered employees and not self-employed contractors.
The 58-page tax and duty manual should be regarded as a signal of intent that Revenue intends to step up interventions relating to the classification of workers across sectors, said Maura Connolly, head of employment law at the firm Addleshaw Goddard.
[ Revenue issues guidance on taxing of ‘gig economy’ workersOpens in new window ]
“Businesses should now review their arrangements. This is a special area of interest for Revenue and they will start going into workplaces and performing audits,” said Ms Connolly.
Technology, banking, marketing and media have all been identified as sectors that rely on the support of freelance workers to provide certain services, with any future case that involves a high-profile employer likely to provide impetus for employers to act.
“We don’t have any sense yet of any proactivity on the part of employers in reviewing their commercial arrangements. In our experience, there usually has to be a trigger,” Ms Connolly said.
This could involve contractors bringing cases to the Workplace Relations Commission claiming they have been misclassified as self-employed, a Revenue audit or an investigation by the Department of Social Protection into how employees are being treated for social welfare purposes.
[ Revenue warns businesses on employment rules following Domino’s Pizza rulingOpens in new window ]
Whether a worker is properly categorised as an employee is not a new issue, Ms Connolly noted, citing a 1990s case involving a supermarket food demonstrator contracted by a subsidiary of Kerry Foods.
However, the new dimension to the Domino’s case – which related to delivery drivers working 2010-2011 contracts with Karshan (Midlands) Ltd, trading as Domino’s Pizza – was that the Supreme Court ruling outlined a five-step test for the determination of employment status, paying specific attention to the degree to which an employer exercises control over the worker.
The media sector has been highlighted by Revenue as one where companies’ engagements with workers such as actors, presenters or journalists will “generally” meet the control test, indicating that these workers should be subject to PAYE either as an employee or through their personal-service company.
“Due to the skilled nature of the roles, it’s unlikely the workers will be told ‘how’ to undertake the work, but the level of residual control retained by the business will result in the control test being met. This is equally applicable to other workers in the sector such as camerapersons, sound engineers and producers,” the Revenue document states.
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Commissioned work will “generally result in the person being an employee of the media outlet in respect of the work”, it adds.
In relation to a journalist who writes for print or digital publications, Ms Connolly said key control questions included which party sets the rate, who is stating when it should be completed by and who determines the editorial style. If these are in the hands of the employer, it suggests they have engaged a part-time contributor. However, a person who sends articles to multiple publications on spec is likely to be genuinely self-employed.
At RTÉ, the widespread practice of “bogus self-employment” has prompted a review of 695 cases by the Scope section of the Department of Social Protection, which examines employment records to ensure that the correct class of PRSI is applied.
This investigation followed an earlier legal review by the firm Eversheds Sutherland that confirmed that workers for the broadcaster who should have been treated as direct employees were instead regarded as self-employed freelancers.
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