Employment Type

HR Administration Guide
Version
R2025.1.1
Employment Type

In the Employment Type tab, you can identify employees as pensioners or contractors.

Before You Begin: This topic is applicable only to US, UK, and AU employees.

By identifying an employee as a pensioner or contractor, you ensure that Dayforce applies the appropriate taxes and generates the proper year end tax forms for the employee. For example, Form 1099-R for pensioners, or Form 1099-MISC for employee contractors, or Form 1099-NEC for non-employee contractors for US employees.

Role feature access:  

  • Application Container > People > Employee Profile > Employment > Employment Settings > Employment Type
  • Payroll Setup > Payroll Setup > Allow Pension/Contractor Configuration

Records in the Employment Type tab might have the following fields, depending on your configuration:

  • Employment Type: Drop-down list with the following options:
    • Contractor
    • Employee
    • Pensioner (not available for AU employees)
  • Effective From: The start date for the employment type.
  • Effective To: The end date of the employment type.
  • Tax Payer Id: (US only) This field can be edited only when Contractor is selected in the Employment Type drop-down list. The Tax Payer Id field is for the Employer Identification Number (EIN) of the contractor.
  • ABN: (AU only) The Australian Business Number (ABN) of the contractor. This field can be edited only when Contractor is selected in the Employment Type drop-down list.
  • DBA Name: (US only) The doing business as name for the contractor, if applicable.
  • Trading Name: (AU only) The DBA (doing business as) name of the contractor, if applicable.
  • Gaming Profits Distributions: (US only) When selected, indicates that a contractor is receiving tribal gaming profits that are subject to federal income tax withholding and are reported in Box 4 of the Form 1099-MISC. This option is only appropriate for contractors who are members of a federally recognized tribe.
  • Contractor Tax Form Type: (US only) Used to set the employee level override property for the contractor tax form. If you don't select an entry, the default is Use Legal Entity: 
    • Use Legal Entity: Default setting.
    • 1099-NEC: Sets the option to use Form 1099-NEC.
    • 1099-M: Sets the option to use Form 1099-MISC.
  • Pensioner Tax Form Type: (US only) Used to set the type of pensioner tax form used for the employee. The options are: 
    • 1099-R: Sets the option to use Form 1099-R. If you save without making a selection, the field defaults to 1099-R.
    • 480.7C: Sets the option to use Formulario 480.7C / Form 480.7C (Informativo)—specifically for Puerto Rico.
    • Important: Dayforce doesn’t support generating form 480.7C and no year end tax forms are generated for this employee, which the application explains in a warning message that shows when you save the entry.
  • Pension Type: (UK only) This drop-down list is used to specify what pension scheme the employee belongs to:
    • Occupational Pensioner
    • Bereaved spouse / Civil Partner
    • Non Individual
  • This field is editable only when Pensioner is selected in the Employment Type drop-down list.
  • IR35: (UK only) Used to flag the employee as off-payroll working and subject to IR35 rules. When you commit payroll, Dayforce includes the employee in the FPS file submitted to HMRC.

(US Only) Contractor Employment Type and 1099-MISC and 1099-NEC Forms

Contractors can be either employee contractors or non-employee contractors, and the contractor type determines the tax form that the employee gets. An employee contractor usually has an SSN and gets a Form 1099-MISC. A non-employee contractor can have an ITIN or SSN, and gets a Form 1099-NEC.

When you select Contractor in the Employment Type drop-down list, the Tax Payer ID field becomes editable. You can add the contractor employee's Employer Identification Number (EIN) in this field. The EIN is a nine-digit number (format XX-XXXXXXX) that is assigned by the Internal Revenue Service to the contractor employee for tax reporting and tax form generation purposes.

If the employee only has one employment type entry as a Contractor, and the Tax Payer ID field has an EIN number, Dayforce populates the RECIPIENT'S TIN field in the Form 1099-NEC or Form 1099-MISC with the EIN rather than the SSN. If there is no EIN in the Tax Payer ID field, Dayforce populates the RECIPIENT'S TIN field with the employee's SSN. SSN masking on Form 1099-NEC is set using the same client property for setting SSN masking on Form 1099-MISC.

If the employee has more than one employment type, for example Employee and Contractor, Dayforce will populate the RECIPIENT'S identification number field in the Form 1099-MISC, but only if the payroll administrator has paid the employee contractor using the Contractor check template. Any regular earnings for the Employee employment type are reported on Form W-2.

The output of the Forms 1099-NEC and 1099-MISC, whether the EIN or SSN is populated, is also reflected in the 1099-M/1099-NEC Management Report and the Employer Copy of 1099-M/1099-NEC Report.

(US Only) Pensioner Employment Type and Form 1099-R and Form 908.7C

US employees with the pensioner employment type usually get Form 1099-R, but you can configure a pensioner in Puerto Rico to get Form 980.7C.

Important: Dayforce doesn’t support generating form 480.7C and no year end tax forms are generated for this employee, which the application explains in a warning message shown when you save the entry.

Terminology

  • DBA: Doing Business As
  • EIN: Employer Identification Number
  • ITIN: Individual Taxpayer Identification Number
  • SSN: Social Security Number
  • TIN: Taxpayer Identification Number (can be EIN, ITIN, or SSN)