Why working with me as a contractor can benefit you

What you are actually buying

When a managing director tells me "we need a developer", they rarely need a developer. They need a checkout that stops losing orders, a shop that talks to the warehouse, or a product that ships before the trade show. The developer is the means. The question underneath is simpler and more useful: how do I buy senior capability for exactly as long as I need it, without taking on more than I can carry?

There are three ways to buy it. You hire someone. You hand it to an agency. Or you work with one senior person who does the work with their own hands and answers for it. I am the third option, and this article is the honest case for it, with the numbers.

Every employment figure below comes from an Irish primary source, Revenue, gov.ie, Citizens Information, the Irish Statute Book or the courts, and is referenced. Every number I had to assume is labelled as an assumption, so you can swap in your own. And I will tell you where the sums favour hiring, because they sometimes do, and a contractor who pretends otherwise is not one you want.

An example: I will use one invented business throughout. Lee Quay Furniture sells made to order furniture from a showroom in Cork and an online shop that does about €3.5 million a year with eight staff. The managing director, Sinéad, has a list of technical work for the coming year: a new checkout, a stock feed from the workshop, a proper B2B price list for trade customers, and a stack of smaller fixes. She is weighing a full time hire against a contractor. Nobody at Lee Quay is real.

What an employee costs beyond the salary

The salary is the number everybody knows. It is also the number that misleads, because employing someone in Ireland adds a set of statutory costs on top, and the costs that are not statutory are easy to forget.

Here is the list as it stands for 2026, each with its source.

Employer PRSI. On top of the salary, the employer pays Class A PRSI (Pay Related Social Insurance). Where the employee earns more than €552 a week, the employer rate is 11.40% of all of the pay, from the first euro, since 1 October 2026. It was 11.25% up to 30 September 2026, and the rate has been going up by small steps each October.¹ There is no equivalent of the UK's allowance that knocks a chunk off a small employer's bill, and no threshold below which the first slice of salary is free. The National Training Fund levy, 1% of reckonable earnings, sits inside that employer rate rather than being charged separately.²

Workplace pension. Since 1 January 2026 Ireland has automatic enrolment, called My Future Fund. An employee aged 23 to 60 who earns €20,000 or more and has no pension through the job is enrolled, and the employer must match the employee's contribution: 1.5% of gross pay in years one to three of the scheme, rising to 3% in year four, 4.5% in year seven and 6% from year ten, on earnings up to €80,000.³ Employers with their own scheme must meet a minimum standard instead. I use the 1.5% below, which is the rate for 2026.

Paid holiday. A full time worker is entitled to at least four working weeks of paid annual leave a year under the Organisation of Working Time Act 1997, which is 20 days on a five day week.⁴ On top of that there are 10 public holidays, and a full time employee is entitled to a paid day off, or a day in lieu, or an extra day's pay, for each of them.⁵ Unlike the UK, where the public holidays can sit inside the statutory leave, in Ireland they come on top. Thirty paid days in total. This is not a cash cost on top of the salary. It is paid time in which no work arrives, and it matters when you work out what an hour of actual work costs.

Sick pay. Statutory sick leave under the Sick Leave Act 2022 is five days a year, paid by the employer at 70% of normal pay up to €110 a day, once the employee has 13 weeks of service.⁶ The Act planned more days, but the entitlement stayed at five for 2026.⁷ Small in money, but again it is paid time with no work in it.

Employer's liability insurance. Unlike the UK, Ireland does not make it compulsory. The Minister for Finance told the Dáil in 2018 that employer and public liability insurance is not a compulsory requirement here, and in the same answer that businesses by and large would be unable to function without it.⁸ So in practice every employer carries it, and if you already employ people you already have it. One more hire adds little or nothing.

Then the costs that no statute sets but every employer pays: a laptop, software licences, a desk or a remote working allowance, and the cost of finding the person in the first place. Recruitment agencies charge a percentage of the first year's salary, and the percentage varies widely, so I treat it as an assumption you should replace with your own quote.

Put together, the total cost of an employee for a year is a sum of parts:

$$C = S + PRSI + P + K + R$$

Here $C$ is the total cost of employment for the year, $S$ the gross salary, $PRSI$ the employer PRSI, $P$ the employer pension contribution, $K$ the kit, tools and workspace, and $R$ the recruitment cost. The step that makes this sum useful is ordinary percentage arithmetic (Foundations: percentages). The on costs are the parts other than the salary, expressed as a share of the salary:

$$\text{on costs} = \frac{C - S}{S} \times 100$$

The result is the percentage change from $S$ to $C$, the same arithmetic as any other percentage change: Foundations: percentages.

Worked example: Lee Quay Furniture hires a developer

Sinéad decides to hire a senior Rails developer. The salary is €65,000. That is my assumption for a senior developer in Cork, and you should put in whatever the market quotes you.

Employer PRSI is 11.40% of the whole salary, because €65,000 a year is €1,250 a week, well above the €552 line:

$$PRSI = 65{,}000 \times 0.114 = 7{,}410$$

So $PRSI$, the employer PRSI on a salary $S$ of €65,000, is €7,410 a year.

The pension is 1.5% of gross pay. Lee Quay has no occupational scheme, and the developer, who is 35, has no pension through work, so the developer is enrolled in My Future Fund and the employer matches at 1.5%. The salary is under the €80,000 cap, so the whole of it counts:

$$P = 65{,}000 \times 0.015 = 975$$

So $P$, the employer pension contribution, is €975 a year. That is an assumption about Lee Quay's pension arrangements, and a common one for a business of eight.

Kit and tools: a laptop, monitors, software subscriptions, a share of the office. I assume €4,000 for the year. Recruitment: an agency finds the developer for a fee of 20% of the salary, which is €13,000. Both are assumptions.

The total for year one:

$$C = 65{,}000 + 7{,}410 + 975 + 4{,}000 + 13{,}000 = 90{,}385$$

So $C$ for year one is €90,385, of which $R$, the recruitment fee, is €13,000. In the second year there is no recruitment fee, so the running cost is €77,385.

The bars are the five parts of the first year cost, in euro. The salary dominates, as it should. The point of the chart is the other four bars together: €25,385 on top of a €65,000 salary, which is on costs of 39.1% in year one. Strip out recruitment and the running on costs are €12,385, or 19.1%. The two statutory items alone, PRSI and the pension, come to €8,385, or 12.9%.

I mention those three figures because an older version of this article said that employing someone adds somewhere between 30% and 50% to the salary. I could not trace that figure to a source, so it is gone. What you have instead is a range you can rebuild yourself: about 13% from the law alone, about 19% once the person has a desk and a laptop, and about 39% in the year you pay someone to find them. The statutory share is lower in Ireland than in the UK, mostly because the pension matching starts at 1.5% rather than 3%. It will not stay that low: by year ten of My Future Fund the employer side is 6%.

Why the contractor costs more per day and less per year

Here is the part of the argument most contractors skip, because it does not flatter them. Per day, I cost more than an employee. The saving is not in the rate. It is in buying only the days you need, and in the absence of everything in the list above.

To compare fairly you need the cost of a day in which work actually happens. An employee is paid for 260 weekdays a year, but 30 of them are annual leave and public holidays, and some are sickness. What is left are the productive days:

$$\text{cost per productive day} = \frac{C}{260 - H - D}$$

Here $C$ is the total cost of employment, $H$ the days of paid holiday including public holidays, and $D$ the days of sickness. It is a rate, a cost divided by the opportunities to do work, so the denominator matters as much as the numerator: Foundations: ratios and rates.

Worked example: the same year, bought by the day

Lee Quay's developer has 20 days of annual leave and 10 public holidays. I assume five days of sickness. Productive days:

$$260 - 30 - 5 = 225$$

That is the 260 weekdays less $H = 30$ days of holiday and $D = 5$ days of sickness.

Cost per productive day in year one, and in a steady year:

$$\frac{90{,}385}{225} = 401.71 \qquad \frac{77{,}385}{225} = 343.93$$

The first is $C$ for year one over the 225 productive days, €401.71 a day. The second is the steady year, €343.93 a day.

Now the contractor. Assume a senior day rate of €650. That is an assumption for the sum, not a quote, and my own pricing is on the pricing page. On a day, the contractor is €650 against €343.93. The employee is less expensive per day by a clear margin, and anyone who tells you otherwise has not done the division.

But Sinéad does not need 225 days of senior development. When I scope her list in the workshop, the checkout, the stock feed, the B2B price list and the fixes come to about 90 days of senior work spread across the year. That is an assumption too, and the one you should test hardest in your own case, because it decides everything.

Ninety days at €650 is €58,500. No employer PRSI, because I am not your employee. No pension matching, no holiday pay, no sick pay, no laptop, no recruitment fee. If I am ill, you do not pay for that day. If a month is quiet, you buy no days that month. The contractor also charges VAT at the standard 23%,⁹ which Lee Quay reclaims as a VAT registered business, so I leave it out of the comparison.

The year, side by side: €90,385 for the hire, €58,500 for the contractor. Not because the contractor is less expensive, but because Sinéad bought 90 days instead of paying for 260 and using 225.

There is a second cost the sum cannot show. On the days there is no senior work, Sinéad still has a senior developer to keep busy, and work expands to fill the person.

Where the two lines cross

If the contractor is more expensive per day and less expensive per year at 90 days, there must be a number of days where they are equal. There is, and it is the most useful number in this article.

$$d^* = \frac{C}{r}$$

Here $d^*$ is the break even number of days, $C$ the annual cost of the employee and $r$ the contractor's day rate. Below $d^*$ days of real work a year, the contractor costs less in total. Above it, the hire does. The division itself is the plain ratio explained in Foundations: ratios and rates.

For Lee Quay, with the steady state cost:

$$d^* = \frac{77{,}385}{650} = 119.1$$

That is $d^*$ with $C$ at €77,385 and $r$ at €650: about 119 days. And in the first year, with the recruitment fee inside $C$:

$$d^* = \frac{90{,}385}{650} = 139.1$$

Now $C$ is €90,385 and $d^*$ rises to about 139 days.

The horizontal axis is how many days of senior work your business needs in a year. The vertical axis is what that year costs. The contractor's line rises with every day you buy. The two employee lines are flat, because you pay the salary whether the work is there or not. The takeaway is the crossing point: at around 120 days of genuine senior work a year, the hire overtakes the contractor and you should hire. At 60 or 90 days, the hire is paying for more than 100 empty days.

The number to go and find is not my rate. It is your $d$, the honest count of days of senior work your plan actually contains. Most businesses of Lee Quay's size, in my experience, are nearer 60 than 160.

What it costs to end it

Flexibility has a price in both directions. Ending an employment contract in Ireland is governed by law, and the rules are reasonable, but they are rules, and they cost money and time at the exact moment you are trying to save both.

Notice. Under the Minimum Notice and Terms of Employment Act 1973, an employer must give at least one week's notice to someone with between 13 weeks and two years of service, two weeks between two and five years, four weeks between five and 10 years, six weeks between 10 and 15 years, and eight weeks after 15 years.¹⁰ Many contracts give more.

Redundancy pay. An employee with two or more years of service (104 weeks) who is made redundant is entitled to statutory redundancy pay: two weeks' pay for every year of service plus one additional week, with weekly pay capped at €600 for the calculation, even if the actual pay is higher.¹¹ The employer is not obliged to pay anything on top of that and the notice, but a good few do.

Unfair dismissal. After 12 months of service an employee can bring a claim under the Unfair Dismissals Acts 1977 to 2015 to the Workplace Relations Commission (WRC), and the compensation can run to two years' pay.¹² So letting someone go for a reason other than redundancy needs a fair reason and a fair process. The exact law is a solicitor's job, not mine. The point for this article is only that ending an employment is a process, and processes take weeks of a managing director's attention.

Ending a contract with me is the notice period in the contract, and the handover I describe further down. I usually agree two to four weeks, or the end of the current milestone, whichever is cleaner.

Worked example: parting ways after three years

Suppose Lee Quay hires the developer, and after three full years the big projects are done and the shop no longer needs a senior developer on the payroll. The developer is 38 by then and earns €65,000, which is €1,250 a week.

Statutory notice after three years is two weeks. Redundancy pay is two weeks per year plus one, so seven weeks, and since €1,250 is above the cap, each week counts as €600:

$$\text{redundancy} = 7 \times 600 = 4{,}200 \qquad \text{notice} = 2 \times 1{,}250 = 2{,}500$$

The redundancy is $7 \times 600$ because three years give $2 \times 3 + 1 = 7$ weeks, each capped at €600. The notice is $2 \times 1{,}250$ because notice is paid at the actual weekly pay.

That is €6,700 before any enhanced terms in the contract, plus the consultation, the paperwork and the weeks of Sinéad's time. The same ending with a contractor is a conversation, a notice period, a handover document and a last invoice.

Employment status, in plain English, and why it matters to you

Ireland has no IR35, the UK's off payroll rules, and no rule that moves the decision to the client once the client is a certain size. What it has instead is a question the Supreme Court answered in October 2023, and the question is the one that should worry a finance director: is this person really self employed, or an employee with a different label? A contractor who waves that away is a risk you are taking on.

The case was The Revenue Commissioners v Karshan (Midlands) Ltd, trading as Domino's Pizza, and it was about delivery drivers. The Supreme Court found they were employees, and in doing so set out a framework of five questions for deciding whether any contract is one of service (employment) or for service (self employment).¹³ Revenue has since rewritten its guidelines around those five questions,¹⁴ and the Department of Social Protection, Revenue and the WRC rewrote the Code of Practice on Determining Employment Status to match.¹⁵ The week the judgment landed, Revenue told every business that engages contractors to review the arrangement in its light, and said plainly that the judgment is not limited to delivery drivers.¹⁶

The five questions, in the court's order, are these. One: does the contract involve the exchange of wage or other remuneration for work? Two: is the worker agreeing to provide their own services, and not those of a third party? Three: does the business exercise sufficient control over the worker for the agreement to be capable of being an employment agreement? If any of those three is a no, there is no employment, full stop. If all three are a yes, question four asks whether, looking at the terms of the contract and how the work actually runs, the arrangement points to the person working for themselves or for the business. Question five asks whether the particular piece of legislation in play changes anything.¹⁴ The court also cleared away the old argument about mutuality of obligation, which had tied Irish and English courts in knots for years: it is no longer a separate gate, it is simply the first question, is work exchanged for pay.¹⁴

The label on the contract does not decide it, and neither does being registered for tax or VAT as self employed.¹⁵ The facts decide it, and the facts that matter are familiar from any honest engagement. Does the worker own a business, bear the cost of putting faulty work right, control how, when and where the work is done, provide their own equipment, work for more than one client at a time, and agree a price for the job? The Code lists these as the marks of self employment.¹⁵ A right to send a substitute matters too, and the more a business restricts that right, the more the arrangement looks like employment.¹⁴

Who decides is split three ways. Revenue decides for tax, the Scope section of the Department of Social Protection decides for PRSI, and the WRC decides when an employment right is claimed.¹⁷ Whoever decides, the test is the same five questions.

I work through my own limited company, on scoped deliverables, with my own kit, and I run several clients at once. I quote a price or a day budget for a job, I carry the cost of fixing my own mistakes, and the tests I ship are the proof. That is how I prefer to work anyway, and it happens to be what a genuine engagement looks like under Karshan. I am not your accountant, so get it looked at. But do not let the case law frighten you off the model. It is a test of whether the engagement is real, and a real one passes.

Worked example: does Lee Quay's engagement pass the five questions?

Walk the Lee Quay engagement through the framework. Question one: is work exchanged for pay? Yes, obviously, as it is in every contract for services ever signed. Question two: am I providing my own services personally? Mostly yes, though the contract gives me the right to send a suitably skilled substitute, and I run other clients at the same time. Question three: does Sinéad control the work? She controls the outcome, the checkout must stop losing orders by Easter, but not how, when or where I build it, and I bring my own kit. The first three filters are passed, so question four is where it is decided, and here the arrangement points firmly at a person working for themselves: own company, several clients, scoped deliverables with a price, own equipment, the cost of fixing faulty work carried by me, no obligation on either side beyond the current scope. Question five: nothing in the tax legislation shifts it. Sinéad asks me to set this reasoning out in a page, we both sign it, and she files it with the contract. If instead I sat at a desk in the showroom five days a week, worked only for Lee Quay, used her laptop and took instructions on what to do each morning, the answer would go the other way, and it should.

How an engagement with me runs

The model only works if the process behind it is clear, so here is how an engagement runs, from the first conversation to the last handover.

The diagram reads top to bottom. It starts with a free workshop, in which we map the problem, the outcome and what that outcome is worth to your business. Then I start the actual work, and the first two weeks are on me. Not a trial task, the real work, so that you judge me on how I handle your codebase and your people rather than on a slide. After two weeks you decide. If it is a no, we part well and you keep what I built. If it is a yes, the scope, the milestones, the day budget and the notice period go in writing, and we start properly.

Delivery is in the open. Everything lives in your repository, under your accounts, with tests on all of it, because I test everything I ship and because tests are the handover document that cannot go out of date. You see a working demo every week. Where the outcome is measurable in revenue, part of my fee can be tied to it, and I have written up how that works month by month.

Handover is not an event at the end. It is the state the work is in every Friday: documented, in your repository, under your credentials, with a short note on what comes next. When the engagement ends, planned or not, nothing is held hostage.

Worked example: Lee Quay, month by month

January: the workshop. Sinéad's list becomes four pieces of work with a value against each. The checkout alone is losing orders she can count. Late January: two weeks on me, in which the checkout's worst failure is fixed and shipped. February: Sinéad says yes. We agree 90 days across the year, a milestone per piece of work, two weeks' notice either way. February to April: the new checkout, demoed weekly, live by Easter. May and June: the stock feed from the workshop. September and October: the B2B price list for trade customers, which is the piece she had not expected to afford this year. The small fixes fill the gaps. In December she has had 88 days, four finished pieces of work, and a repository her next developer, if she ever hires one, can read on their first morning.

Five questions to ask any contractor, including me

The honest risks of the model are the ones the old version of this article listed defensively. They are better as questions. Ask them of anyone you are about to engage, and ask them of me.

What happens if you are ill or unavailable? The answer you want is that nothing lives in their head only: documentation, tests, the repository under your accounts, and a note of where things stand, so another competent engineer could pick it up on Monday. If the answer is "I am never ill", keep looking.

What happens if you disappear? Same answer, plus the contract: a notice period both ways, a handover clause, and your ownership of everything you have paid for, in writing. I would add that a contractor with a public reputation and a company on a public register has rather a lot to lose by vanishing. Mine is registered in England, and you can look it up before we start.

How will I know you are delivering? Milestones with acceptance criteria, a weekly demo, and the invoice tied to days actually worked or outcomes actually reached. You should never need to ask for a status report, because the status is the demo.

Who else are you working for? A contractor with other clients is not a problem, it is a sign of a genuine business, and it is one of the marks of self employment the Code of Practice lists. What you need is a committed day budget per month and a realistic one. Over committing is the real risk, and the only cure is a contractor who says no.

What if we grow and need someone full time? Then you hire, and the contractor helps you do it: writes the job description from the real codebase, sits in on the technical interview, and hands over to the person you choose. I have done exactly that, and it is a good ending, not a bad one. Fair play to the client who sees it coming. The maths above tells you when that day is: watch your count of days.

When you should hire instead

The arithmetic is not shy. If your business genuinely needs 140 or more days of the same senior skill every year, year after year, the hire costs less, and you get the quieter benefits of someone who is there every day: the institutional memory, the mentoring of juniors, the availability when something breaks at 4pm on a Friday. When a client of mine reaches that point I say so, because the alternative is an engagement that starts to look like employment, which is bad for them under Karshan and bad for me as a way to work.

The contractor model is right when the work is lumpy, when it needs a level of experience you cannot keep busy all year, when the thing you need is a result rather than a presence, and when your plan contains 60 or 90 days of that work rather than 200. For most businesses of Lee Quay's size, that describes nearly all of their technical work nearly all of the time.

The agency route is the third option, and I have kept it out of the sums on purpose, because it is a different article. In short: an agency sells you a team and a day rate per head, and the work is done by whoever on that team is free, with the senior person who sold it to you rarely the one writing the code. I have written about what outsourcing business critical development really costs and about how to choose an agency if you do go that way.

What you are buying from me is the thing the sums cannot show and the thing the diagram tries to: one senior person who scopes the work, writes the code, tests it, ships it, documents it, and is the same person on the phone when you have a question. I have written elsewhere about why that one person often beats a team, and about why I work this way at all. The short version is that accountability does not survive being shared.

Count your days. Then let us talk about the free workshop.

Sources

Footnotes

1. Department of Social Protection, PRSI Class A rates, gov.ie, 2026, https://www.gov.ie/en/department-of-social-protection/publications/prsi-class-a-rates/

2. Comptroller and Auditor General, Report on the Accounts of the Public Services 2022, chapter 19, National Training Fund, 2023, https://www.audit.gov.ie/media/t1ij24um/19-national-training-fund.pdf

3. Department of Social Protection, Auto enrolment retirement savings system for employers (My Future Fund), gov.ie, 2026, https://www.gov.ie/en/department-of-social-protection/publications/auto-enrolment-retirement-savings-system-for-employers/

4. Citizens Information, Annual leave, 2026, https://www.citizensinformation.ie/en/employment/employment-rights-and-conditions/leave-and-holidays/annual-leave-public-holidays/

5. Citizens Information, Public holidays, 2026, https://www.citizensinformation.ie/en/employment/employment-rights-and-conditions/leave-and-holidays/public-holidays/

6. Citizens Information, Sick leave and sick pay, 2025, https://www.citizensinformation.ie/en/employment/employment-rights-and-conditions/leave-and-holidays/sick-leave/

7. Department of Social Protection, Illness Benefit, Injury Benefit and Statutory Sick Leave in 2026, gov.ie, 2026, https://www.gov.ie/en/department-of-social-protection/publications/illness-benefit-injury-benefit-and-statutory-sick-leave-in-2025/

8. Houses of the Oireachtas, Dáil Éireann written answer 56, Insurance Coverage, Minister for Finance, 18 January 2018, https://www.oireachtas.ie/en/debates/question/2018-01-18/56/

9. Revenue, Current VAT rates, 2026, https://www.revenue.ie/en/vat/vat-rates/search-vat-rates/current-vat-rates.aspx

10. Irish Statute Book, Minimum Notice and Terms of Employment Act 1973, section 4, https://www.irishstatutebook.ie/eli/1973/act/4/section/4/enacted/en/html

11. Citizens Information, Redundancy payments, 2025, https://www.citizensinformation.ie/en/employment/unemployment-and-redundancy/redundancy/redundancy-payments/

12. Citizens Information, Unfair dismissal, 2025, https://www.citizensinformation.ie/en/employment/unemployment-and-redundancy/dismissal/unfair-dismissal/

13. Supreme Court of Ireland, The Revenue Commissioners v Karshan (Midlands) Ltd t/a Domino's Pizza [2023] IESC 24, judgment of Murray J, Courts Service, 20 October 2023, https://judgments.courts.ie/judgments/44242

14. Revenue, Guidelines for Determining Employment Status for Taxation Purposes, Tax and Duty Manual Part 05.01.30, 2026, https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-30.pdf

15. Department of Social Protection, Revenue and the Workplace Relations Commission, Code of Practice on Determining Employment Status, gov.ie, 2024, https://www.gov.ie/en/department-of-social-protection/publications/code-of-practice-on-determining-employment-status/

16. Revenue, Update following judgment delivered in The Revenue Commissioners v Karshan (Midlands) Ltd t/a Domino's Pizza, press release, 27 October 2023, https://www.revenue.ie/en/corporate/press-office/press-releases/2023/pr-102723-update-v-domino.aspx

17. Citizens Information, Understanding your employment status, 2025, https://www.citizensinformation.ie/en/employment/types-of-employment/understanding-your-employment-status/