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Contents for Issue March 2019

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Bogus Self-Employment

"Congress believes that the problem of bogus self-employment is a very significant problem and needs interventions at a number of levels"

A delegation from the Irish Congress of Trade Unions appeared before the Joint Oireachtas Committee on Bogus Self-Employment on January 31st, 2019. The delegation highlighted the fact that the practice of misclassifying workers as self-employed has been a problem in Ireland for a number of years. When a worker is misclassified there are very negative consequences for him or her, and a significant financial loss to the State. However, there are very significant benefits to the person who in normal circumstances would be his or her employer. This incentive has led a number of employers in a number of sectors of the economy seeking to misclassify workers.

Because their employer is not required to pay employers’ PRSI, they are not entitled to the full range of social welfare benefits. They are also denied access to the suite of employment rights which are available under Irish and European employment rights legislation.

Over the last year, two significant reports have been issued which have sought to identify the extent of the problem.

In January 2018 the Department of Employment Affairs and Social Protection and the Department of Finance published a joint report entitled: The Use of Intermediary-Type Structures and Self- Employed Arrangements: Implications for Social Insurance and Tax Revenues. The Revenue Commissioners were also involved in the preparation of the report. This report showed that, in the period between 2007 and 2017, there was an increase in the level of self-employment in seven of the fourteen major sectors of the economy which make up the CSO NACE series. The report also highlighted the very high rate of self-employment in the construction sector when compared with other sectors. The report also examined the potential loss to the Exchequer arising from the misclassification of workers as being self-employed.

The annual report of the Comptroller and Auditor General published in September 2018, also examined the issue of self-employment with a specific emphasis on PRSI contributions by the self-employed. As part of the report, the work of the Special Investigations Unit of the Department of Employment Affairs and Social Protection and the Joint Investigations Unit is highlighted. The report notes that in 2017 the Joint Investigations Unit initiated a campaign specifically focussed on the construction sector. As a result of this activity, €60.2 million was recovered by the Revenue Commissioners and nearly 500 subcontractors reclassified as employees.

The issue of bogus self-employment was recently discussed in the Oireachtas as part of the debate on Employment (Miscellaneous Provisions) Provisions Bill 2017. During the debate on Wednesday 19th December 2018, the Minister for Employment Affairs and Social Protection made the following comments: “The one thing I can safely say is that we are all in agreement regarding the fact that there are people in this country who are made bogusly self-employed through no fault or acquiescence on their part. I totally accept and appreciate that we have a difficulty in this country with people who are bogusly self-employed.

Congress believes that the problem of bogus self-employment is a very significant problem and needs interventions at a number of levels. The delegation outlined a number of control measures (see https://www.ictu.ie/download/pdf/bogus_self_employment_factsheet.pdf) to minimise the risk of and to detect the fraudulent misclassification of workers as self-employed.

 What is bogus self-employment? Rogue bosses deliberately misclassifying workers as self-employed subcontractors so as to dodge their social insurance and pension contributions, established pay rates, employment law and responsibilities. Bogus self-employment produces big winners and losers! There are big financial gains for employers fraudulently misclassifying workers. This is not a victimless crime. The costs are paid by these workers, good employers, the state and society. Workers forced into bogus self-employment are also denied the rights and protection directly employed workers are entitled to under employment law and collective agreements.