Regina Doherty (Meath East, Fine Gael) | Oireachtas source

I propose to take Questions Nos. 38 and 40 together.

Bogus self-employment arises where an employer wrongly treats a worker as an independent contractor in order to avoid tax and social insurance contributions. There are already robust arrangements in place for dealing with complaints of bogus self-employment. Social welfare inspectors inspect a wide range of businesses, as part of their ongoing compliance operations. Inspections are also undertaken jointly with other agencies, including the Revenue Commissioners and Workplace Relations Commission. Where evidence of non-compliance is detected, this will be pursued.

Officials also investigate specific cases referred to my Department's scope section. This section determines employment status and the correct class of pay-related social insurance, PRSI. Where misclassification of workers as self-employed is detected, the correct status and class is determined and social insurance arrears are collected as required under the law. Under the Social Welfare Consolidation Act 2005, there are specific offences in relation to employment contributions. On conviction, fines and-or imprisonment can ultimately be imposed.

Any worker who has concerns about his or her employment and-or PRSI status should contact my Department and the matter will be investigated. This can only happen with the co-operation of the worker.

Data from the recent CSO Quarterly National Household Survey record 312,000 individuals as self-employed in 2017, or 15% of total employment. This is consistent with the average levels of self-employment within the EU. There is no evidence of a significant change in the level of self-employment over the past 16 years, since we started collecting the data.

The classification of a worker for PRSI purposes can be complicated by the use of intermediary employment structures referred to by Deputy O'Dea. Revenue estimates that there are some 15,000 people employed using structures such as personal service companies and managed service companies. I consider these figures to be reliable and have no plans for additional studies of the numbers involved.

My Department has concerns that such mechanisms may be used to reduce the amount of PRSI and tax being paid, with a subsequent loss to the Exchequer and the Social Insurance Fund. A report on the issue, prepared by officials from my Department, the Department of Finance and the Revenue Commissioners and informed by a public consultation with a wide range of stakeholders, was published at the end of January following Cabinet approval.

The report finds that the available data does not indicate that self-employment is accounting for any significant increased share of the labour force and accordingly the perception of the level of disguised employment may be overstated. While the report indicates that intermediary arrangements can be abused to the detriment of workers and can distort the transparent and efficient operation of the labour market, it also notes that contract for service arrangements can provide flexibility - I take on board comments made previously that such flexibility exists usually is at the higher end of the scale - in many instances, for both businesses and workers where they are free to choose. It is not always the case that such flexibility exists.

The recommendations, of which there were three, are being examined in the context of the overall Social Insurance Fund. This report and the Actuarial Review of the Social Insurance Fund provide a timely and evidence-led opportunity to undertake a full review of our social insurance system and, as I hope to do later this year, to consult with stakeholders.

See this speech in context