Mutuality of Obligation Crucial In Irish Self Employment Test

IR35 PAYE email contractors are getting
IR35 PAYE email contractors are getting

Mutuality of Obligation Determination in Ireland

Mutuality of Obligation is absolutely crucial according to the Revenue in Ireland. If there is no Mutuality of Obligation then it is game over – the contractors is self employed.

Mutuality of Obligation is where there is an obligation for a contractor to do a certain amount of work regularly and for the client company to pay the contractor for doing that work.

If there is no obligation for the company to provide a regular stream of work for the contractors and there is no obligation to do all the work that is presented to him or her then the contractor is self employed.

It doesn’t matter of the contractor has failed every other self employment test. No Mutuality of Obligation between the two is all it takes.

Mutuality of Obligation in Practice

Of course, just saying in the contract that there is no Mutuality of Obligation in the contract is not enough. There must be no MoO in practice either.

According to a report done for Irish Accountancy firm Contracting Plus,
“Irish courts have consistently regarded mutuality of obligation as the most important factor,
to the extent that if it is found not to exist in an employment situation, no further investigation is
required. If, on the other hand, a mutual obligation to provide and undertake work is found to exist,
the other factors must then be assessed.”

So, if you fail that test it doesn’t necessarily mean that you are not self employed.

Creeping Mutuality of Obligation

Over time, as the contractor and the client get to know each other, creeping Mutuality of Obligation may become established even if it is not in the contract.

One unusual one is that a contractor may have separate periods of employment with a payer. During each episode of employment Mutuality of Obligation may exist – but there may not be an overarching mutuality.
So, there you have it. If there is no obligation on you to do work for the client and there is no obligation for him or her to pay you regularly for that work then there is no Mutuality of Obligation and you are a self employed contractor – in Ireland at least.

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