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Revenue Issues New Guidance on Employment Status of Delivery Drivers

Dublin: In the wake of a significant Supreme Court ruling, the Irish government is re-evaluating the employment status of delivery workers. The Revenue has issued new guidance to assist in this process.

Supreme Court Ruling

The re-evaluation stems from an October 2023 Supreme Court decision, which determined that delivery drivers should be classified as employees rather than contractors. This landmark ruling specifically addressed a case involving delivery drivers working under Domino’s Pizza, contracted by Karshan Limited of the Midlands, during the years 2010–2011.

In response, the Revenue has published a Tax and Duty Manual outlining a five-step process to ascertain whether a worker is an employee or a self-employed entrepreneur. This manual incorporates various examples from Supreme Court judgements to clarify these determinations.

Businesses are reminded by the Revenue to:
– Deduct appropriate taxes from employee salaries.
– Accurately report these deductions through the payroll system.
– Self-review their workforce models in light of the Supreme Court decision.

Background of the Case

The dispute began when delivery drivers claimed they were employees, contrary to Karshan Limited’s assertion that they were independent contractors based on their contracts for service. This contention was previously upheld by a 2018 decision from the Tax Appeals Commissioner, which treated Domino’s delivery drivers as employees. Karshan Limited had appealed this decision, leading to the recent Supreme Court ruling.

This development emphasises the need for businesses to carefully evaluate their employment practices and ensure compliance with tax obligations as per the new guidelines. The manual aims to provide clarity and ensure correct tax treatment, mitigating potential legal and financial repercussions for businesses.

The government’s initiative highlights a shift towards more stringent scrutiny of employment classifications, promoting fair labour practices, and compliance with tax laws.

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