Lawyers at A&L Goodbody say that they have seen a significant increase in the number of queries about ‘employer of record’ arrangements.

An employer of record helps companies who want to employ individuals in countries where they have no legal presence.

The employer of record employs the individual on behalf of the company and formally assumes the role and responsibilities of an employer.

The employer of record then, in turn, assigns the employee to work for the other company, its client, in exchange for a fee.

'Attractive offering’

In a note on the firm’s website, the A&L Goodbody lawyers note that, while such arrangements have become commonplace in recent years, Irish employment law does not expressly recognise the concept, adding that “it remains to be seen how these arrangements will be characterised by the courts”.

A&L Goodbody describes employer-of-record arrangements as “an attractive offering” for companies that do not have a physical or legal presence in Ireland and are seeking to expand their workforce into the Irish market.

Rather than establishing an Irish legal entity or branch, and as an alternative to having the non-Irish legal entity hire the individual directly and register as an employer in Ireland, companies can engage the services of an employer of record to employ Irish-based employees on their behalf.

As the employer, the employer of record is responsible for ensuring compliance with all applicable Irish legislation – including, but not limited to, employment, social security, and tax laws.

“This is particularly enticing for a company that may be new to the Irish market and unfamiliar with local requirements,” the A&L Goodbody lawyers say.

Employment agencies

They add, however, that such arrangements have yet to be tested in the Irish courts.

The lawyers point out that, if the Irish courts were to classify employers of record as employment agencies, several rights and obligations would automatically flow from such a classification – including a requirement to obtain a licence.

They add that the employees in question would, in turn, be categorised as agency workers, and be entitled to the statutory protections afforded by the Protection of Employees (Temporary Agency Work) Act 2012.

A&L Goodbody also urges client companies to consider the tax implications of such arrangements, as any activities carried out by an employee in Ireland “could give rise to a taxable permanent establishment of the client in Ireland”.

The firm says that employers of record should assess whether their services could constitute those of an employment agency. It also urges parties to assess who will be responsible for day-to-day employment issues, such as annual leave, managerial reporting, and performance.