Why this matters
The Karshan case introduced a significant shift in the legal interpretation of employment status and whether workers should be classified as an employee or a self-employed contractor.
Employers who genuinely relied on prior guidance or case law in effect before the Karshan ruling and thus in good faith treated employees as contractors should carefully consider availing of Revenue’s one-off settlement arrangement.
This would involve disclosing details of payments made to workers who historically have been treated as independent contractors and paying any 2024 and 2025 PAYE, USC and PRSI underpayments relating to those individuals.Â
If the disclosure is accepted by Revenue, employers will pay no penalties or interest and avoid what could otherwise be steep financial consequences if the status of the workers were successfully challenged by the Revenue in the future.
Where an employer meets the eligibility requirements but elects not to disclose on any employee misclassification, they lose out on the potential to save significant costs and risk Revenue audits or interventions, in which case overdue taxes, interest, and penalties would be imposed in full if any misclassifications are later uncovered.