Contractor Agreement Ireland: What to Include (2026)
Last updated October 2026. General information only, not legal advice.
Irish businesses regularly engage consultants, freelancers and other independent contractors instead of hiring employees. A written contractor agreement records the deal: what is being delivered, what is paid, who owns the work and how the arrangement ends. What it cannot do is decide, on its own, whether the person is self-employed. Since the Supreme Court’s 2023 decision in the Domino’s Pizza case, that question is answered by a five-question test that looks at how the relationship works in practice. This guide explains the test and what a contractor agreement should contain in 2026.
Why employment status matters
If a worker is really an employee, the business must operate PAYE and deduct income tax, USC and PRSI through payroll. Employees also have rights that self-employed people do not, including working time protections, paid holidays, family leave and protection against unfair dismissal. A business that treats an employee as a contractor can face arrears of tax and PRSI, with interest, and employment rights claims.
The difference shows in PRSI. From 1 October 2026 an employer pays Class A employer PRSI of 11.40% on weekly earnings over 552 euro, on top of the employee’s own 4.35%. A self-employed person pays Class S at 4.35%, with no employer contribution. For a fuller comparison of the two statuses, see our guide to freelancer versus employee in Ireland.
The Karshan five-question test
In The Revenue Commissioners v Karshan (Midlands) Ltd t/a Domino’s Pizza [2023] IESC 24, decided on 20 October 2023, the Supreme Court set out five questions. As summarised in Revenue’s guidelines, they are:
- Does the contract involve the exchange of a wage or other remuneration for work?
- If so, is the worker agreeing to provide their own services, and not those of a third party, to the business?
- If so, does the business exercise sufficient control over the worker for the agreement to be capable of being an employment contract?
- If those three are met, are the terms of the contract, read in light of the facts and the actual working arrangements, consistent with employment or with some other kind of contract, having regard in particular to whether the worker is working for themselves or for the business?
- Is there anything in the particular legislation involved that requires the answer to be adjusted?
The first three questions are a filter. If the answer to any of them is no, there cannot be a contract of employment. If all three are yes, the fourth question decides the matter on the whole picture.
The label is not decisive
Revenue’s guidelines are direct about this: employment status “is not a matter of choice”. Written terms may not be the sole determining factor, and a statement that the person is a self-employed contractor responsible for their own tax will carry little weight if the day-to-day reality is different. Descriptions that do not match what actually happens may be disregarded.
So a contractor agreement should describe the real arrangement. Factors that point towards genuine self-employment include a real right to send a substitute or hire help, freedom over how, when and where the work is done, the chance to profit from doing the work efficiently, and providing your own tools and equipment. No single factor is decisive.
Who decides status?
Three bodies can each decide the question for their own purposes: Revenue for tax, the Scope Section of the Department of Social Protection for PRSI, and the WRC for employment rights. A decision by one is not binding on the other two. All three use the joint Code of Practice on Determining Employment Status, which was revised in November 2024 to reflect Karshan.
Revenue ran a disclosure opportunity for employers who had misclassified workers in 2024 and 2025, which closed on 30 January 2026. Revenue said at the time that where liabilities come to light later, tax, interest and penalties would be applied in full.
What a contractor agreement should include
- The services. A clear description of the project or deliverables, with milestones or a term.
- Fees and invoicing. A fee for the work, how and when invoices are raised, VAT, and who bears expenses.
- How the work is done. If it is true, that the contractor decides the method, hours and place of work and may work for other clients.
- Substitution. Whether the contractor may send a suitably qualified substitute or use their own staff.
- Equipment and insurance. That the contractor provides their own equipment and holds their own insurance.
- Tax. That the contractor is responsible for their own tax and PRSI. This clause is standard but, as Revenue notes, it does not settle status.
- Intellectual property. See below.
- Confidentiality and data protection.
- Termination. Notice periods and what happens to work in progress.
Intellectual property: the clause businesses most often miss
Under section 23 of the Copyright and Related Rights Act 2000, the author of a work is the first owner of the copyright, unless the work is made by an employee in the course of employment, in which case the employer is the first owner. A contractor is not an employee, so the contractor owns the copyright in what they create unless it is assigned. Under section 120 of the Act an assignment is not effective unless it is in writing and signed by or on behalf of the person assigning. A business that pays a contractor for software, designs or content and wants to own it needs a written assignment in the agreement. Our guide to IP protection for Irish businesses explains more.
Contractors who work through their own company
Many contractors invoice through a limited company. Revenue’s guidelines say it does not look through corporate structures except in very limited circumstances. The WRC and the Department of Social Protection are not bound by that approach, so a company in the middle does not remove the status question. A new EU Platform Work Directive, which introduces a presumption of employment for platform work, is also due to be transposed into Irish law, so this area is still developing.
Using a template
Where the engagement is a real business-to-business arrangement, a structured template helps make sure the key terms are covered. Our Consultant or Contractor Agreement is a self-complete document. A template cannot turn an employee into a contractor: if the person works set hours under your direction, cannot send a substitute and works only for you, review the arrangement first.
If you are unsure about a worker’s status, or you have received a query from Revenue, the Department of Social Protection or the WRC, speak to a solicitor or tax adviser. You can search the Law Society’s Find a Solicitor directory.
Frequently asked questions
What should a contractor agreement include in Ireland?
It should describe the services, fees and invoicing, how the work is carried out, any right to substitute, equipment and insurance, tax responsibility, ownership of intellectual property, confidentiality and termination. The terms should match how the arrangement works in practice.
Does a contractor agreement make someone self-employed?
No. Revenue’s guidelines state that employment status is not a matter of choice and that a contract label carries little weight if the reality is different. Status is decided using the five-question test from the Supreme Court’s Karshan decision.
What is the Karshan test for employment status?
It is a five-question framework set by the Supreme Court in October 2023. The first three questions ask about payment for work, personal service and control. If all are met, the decision-maker looks at the contract and the actual working arrangements as a whole, and then at any specific requirements of the legislation involved.
Who owns the work a contractor creates in Ireland?
Under the Copyright and Related Rights Act 2000 the contractor is the first owner of copyright in work they create. The business only becomes the owner if the copyright is assigned in writing and signed by or on behalf of the contractor.
Who decides whether a worker is an employee or a contractor?
Revenue decides for tax, the Scope Section of the Department of Social Protection decides for PRSI, and the WRC decides for employment rights. Each decision is independent and is not binding on the other two bodies.
Sources: Revenue guidelines for determining employment status (TDM Part 05-01-30); Code of Practice on Determining Employment Status; Copyright and Related Rights Act 2000, section 23; gov.ie: PRSI Class A rates; Revenue: disclosure opportunity press release.
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