Tony Killeen (Clare, Fianna Fail)

I share the Deputy's concern that individuals, whose status based on the application of the standard criteria may be more appropriate to that of an employee, may seek to register as self-employed in order to abdicate and avoid their rights and obligations under employment rights legislation. There are also, of course, tax and PRSI implications but these are matters for the Revenue Commissioners and the Department of Social and Family Affairs respectively.

Irish employment rights law makes a distinction between a contract of service, which applies to an employer-employee relationship, and a contract for service that applies in the case of an independent subcontractor. In effect, employment rights legislation does not apply to independent subcontractors with the exception of the Safety, Health and Welfare at Work Act 2005 and the Equality Act 1998. In most cases it will be clear whether an individual is employed or self-employed. However, the individual's employment status may not be clear in all cases.

Where there is doubt in relation to the employment status of an individual the relevant Departments and agencies will have regard to the code of practice for determining the employment or self-employment status of individuals. This code was drawn up and agreed in 2001 by the Revenue Commissioners, the Department of Social and Family Affairs, the Department of Enterprise, Trade and Employment, the Irish Congress of Trade Unions and the Irish Business and Employers Federation. A number of criteria are set out in the code for determining whether an individual is an employee or self-employed. These include whether the person is under the control or direction of another, owns his or her own business, supplies labour only, receives a fixed wage, is exposed to financial risk, assumes responsibility for investment and management, supplies materials for the job, can subcontract the work, works set hours or a given number of hours per week, month etc.

The criteria set out in the code are applied by this Department in making a determination in cases where an individual claims he or she is self-employed rather than an employee and, therefore, not responsible for complying with certain employment rights legislation. In the case of difficulties in deciding on the appropriate status of an individual or group, the Revenue Commissioners or the scope section of the Department of Social and Family Affairs may, following consideration of all the relevant facts, issue a written decision as to the status in a particular case. Such a decision is generally accepted by other Departments and agencies provided all relevant facts were given at the time, the correct legal principles have been applied and the circumstances remain the same. However, consensus on employment status may not be possible in all cases given the differences between the legislation across the employment rights, taxation and social welfare areas and the differing responsibilities and focuses of the enforcement agencies.

A major package of measures has been agreed by the parties to Towards 2016, the new social partnership agreement, to provide for enhanced public confidence in the system of compliance. This new compliance model seeks, among other matters, to maximise the effectiveness of the substantially increased compliance effort. New legislation will be published next year to provide for enhanced employment rights measures including the establishment of the office of director for employment rights compliance. The application of employment rights legislation to employees and the self-employed will be examined in the context of drawing up that legislation. The proposed legislation will also empower the labour inspectorate to join with the Department of Social and Family Affairs and the Revenue Commissioners to work together in joint investigation units. Such units will have a particular focus on the employment status of workers.

Finally, I note the Office of the Revenue Commissioners, as part of its recently launched construction industry project, will be reviewing the tax status of contractors and, in particular, whether individuals currently designated as self-employed should be regarded as employees and subject to PAYE and PRSI. I welcome this initiative.

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