A Contract of service or a contract for service, what's the difference?
Different consequences flow from each contract. The main outcomes affect taxation and an employers responsibilities.
A contract of service applies to an employee.
A contract for service is used where you wish to employ the services of an independent contractor.
A recent case which outlined the differences and how to assess them was Eamonn McCotter v Quinn Insurance Group UD 242/2011; RP290/2011
The main issues which the court examined were Control, Tax, PRSI and mutuality of oblgation, and the test regarding whether “a person is in business on their own account”
The claimant carried out work as a regional claims manager for the respondent.
He maintained that he was an employee the respondent bilieved that he was an independent contractor.
The Employment appeals tribunal looked at the level of control which the claimant exercised over his work, He could work for other clients as long as there was not conflict of interest. He submitted invoices for payment,. He was not entitled to sick leave, holidays,pension contributions, pay increases.
In relation to tax, he made his own returns and charged VAT.
The tribunal referred to other cases including Minister for Agriculture and Food v Barry [2008] IEHC 216; [2009] 1IR 215
The tribunal held that the relationship between the claimant and the respondent was that of a contract for services and that he was working as an independent contractor.
The main advice to follow in relation to this issue is that simply writing it into the contract of employment is not enough. The court will look at more factors.
Download the Revenue Code of Practice on Employment Status, here ;
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