Are Directors in scope to transfer in a transfer (TUPE) situation?

In a Transfer of Undertakings (TUPE) situation where a transfer applies, employees of the outgoing contractor (the transferor) who has lost a contract  to the new contractor (the transferee), may transfer to the transferee.


In this situation, the question arises as to who is in scope to transfer?


Who is in scope to transfer?

The legislation requires that where a transfer exists employees working under a contract of service are in scope to transfer.


Does a Director/Shareholder who is also an employee transfer?

Where does a Director of a company who is also a shareholder and who is also an employee of that company, who are the transferor, fit? Does he/she have the right to transfer in a TUPE situation?


Employment v self-employment status

While the Director and shareholder, who is also an employee, may have a contract of employment with the transferor, a range of factors need to be considered to determine if in fact that Director truly has a “contract of service” with the transferor i.e. if they can truly be regarded as an employee or if in fact in reality he/she is actually self-employed on a “contract for service”.


The Revenue Commissioners Code of Practice for Determining the Employment or
Self-Employment Status of Individuals should be examined in this context (


It contains 20 factors used to assess whether the individual is a de-facto employee under a contract of service, or whether he/she is a de-facto self-employed individual under a contract for service.


The existence of a contract of employment, or a contract of service, would not be sufficient to determine the status of the individual.


A whole host of factors such as whether the Director/shareholder/employee had risk in the business, or profited from the business, had controls and freedoms different to a normal employee, etc.


Criteria for self-employment

The criteria for Self-Employment include:


  • Owns his or her own business
  • Is exposed to financial risk by having to bear the cost of making good faulty or substandard work carried out under the contract.
  • Assumes responsibility for investment and management in the enterprise. Has the opportunity to profit from sound management in the scheduling and performance of engagements and tasks.
  • Has control over what is done, how it is done, when and where it is done and whether he or she does it personally.
  • Is free to hire other people, on his or her terms, to do the work which has been agreed to be undertaken.
  • Can provide the same services to more than one person or business at the same time. Provides the materials for the job.
  • Provides equipment and machinery necessary for the job, other than the small tools of the trade or equipment which in an overall context would not be an indicator of a person in business on their own account.
  • Has a fixed place of business where materials, equipment etc. can be stored. Costs and agrees a price for the job.
  • Provides his or her own insurance cover e.g. public liability cover, etc.
  • Controls the hours of work in fulfilling the job obligations.
  • The self-employed individual controls the method to be employed in carrying out the work.
  • PRSI Class


For more details please refer to the Code of Practice on the Revenue website (


Extent of shareholding is important

One little known piece of legislation which was introduced in 2013 by the Department of Social Protection in relation to Directors and shareholders becomes very pertinent in this case.


Arising from the introduction of new legislation in June 2013, any person with a 50% or greater shareholding in a company cannot be anything other than PRSI S Class and they are therefore automatically deemed to be self-employed.


Thus, it would appear that a Director, who is also an employee of a Transferor, who has a 50% or greater shareholding in the company, is not an employee, and may therefore not be entitled to transfer in a TUPE situation.


The SCOPE section make all determinations

The SCOPE section of the Department of Social Protection can be contacted to review the situation and will make all determinations in regards to the employment or self-employment status of individuals.


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