Damien English (Meath West, Fine Gael) | Oireachtas source

I thank Deputies Naughten, Ó Cathasaigh and the members of the Oireachtas Joint Committee on Social Protection, Community and Rural Development and the Islands for their work on this and for bringing forward this motion based on their report. I really appreciate the work they did in gathering material and information from the relevant stakeholders to produce this report. As was outlined, this report builds on the work carried out by the previous Dáil and the previous committee. It is great that work did not go to waste. I acknowledge that Deputy Joan Collins was also involved in this too. She was mentioned in her absence by her colleagues earlier. I compliment all those involved for their work in this space on my own behalf and on that of the Minister of State, Deputy Joe O'Brien, and the Minister for Social Protection, Deputy Humphreys. We look forward to working with them on this with the new group I will be chairing in this space.

I also want to thank the committee for the opportunity afforded to the Minister for Social Protection and her Department officials to engage with it during this work, as we were able to provide written input over a number of stages of the drafting process. Senior officials of the Department also had very valuable interactions with the previous committee during its programme of work. By way of further acknowledgement, I note that the Secretary General of the Department of Social Protection commended the report to members of the Committee of Public Accounts at his recent appearance before it.

I am very glad, therefore, to welcome this report and the opportunity to note its contents here today, in addition to having this discussion and debate. I again thank Deputy Denis Naughten and the Ceann Comhairle for facilitating that.

The committee's report deals with a very important issue, one that concerns me as Minister of State in the Departments of Enterprise, Trade and Employment and Social Protection. It is also very important to the Tánaiste, the Minister for Social Protection, Deputy Humphreys, the Minister of State at the Department of Rural and Community Development, Deputy Joe O'Brien, and our officials. It is something we have worked on over a long number of years. We believe that the deliberate misclassification of a worker as a self-employed contractor in a situation where they are actually working as an employee is wrong.

Ensuring a worker is correctly classified is very important. The classification of a worker as an employee can act as his or her passport to a collection of rights and employment protections, which are something we speak quite a lot about in this House. They are very important, certainly as we move out of Covid-19 and into a jobs-led recovery. We have to make sure that those protections are there and are honoured. These can come in the form of key protections under unfair dismissal, the rights to maternity, paternity and parental leave, or access to welfare benefits. I cannot stress enough how important these rights are, which many can take for granted. Misclassification of a worker's employment status undermines these rights and it can also deny the State valuable revenue from PRSI. As the total PRSI liability for self-employed workers is lower than it is for employees, there will always be those who try to present an employment relationship as self-employment. Accordingly, we are determined to continue with the progress we have made in tackling the issue of false self-employment where it occurs.

The committee's report contains 13 recommendations in this regard. Six of these have already been completed and four are under way. Some elements of this report cross departmental boundaries and will inform our future work. We would all agree that employers should not be permitted to avoid the PRSI liability involved in engaging workers on an employee basis by unilaterally declaring them to be self-employed contractors. However, I believe, and I want to state on the record, that the vast majority of our employers do not do that and do not wish to deprive their workers of their rights and protections. That is borne out by the fact that, while false self-employment does exist, there is no evidence to suggest it is rife in the vast majority of Irish workplaces or that it is a significantly growing phenomenon. Figures from the Central Statistics Office, CSO, show that the number of self-employed workers as a proportion of all workers in Ireland has remained largely stable for more than 20 years. That said, any instance of false self-employment is not tolerable and we want to deal with it. As a consequence, it is a matter that this Government takes very seriously and the reason we have embarked on so many initiatives to deal with it.

In this respect, a specialised team of social welfare inspectors, called the employment status investigation unit, was established in the Department of Social Protection and additional decision support resources were assigned to that unit. The same unit networks with inspector units throughout the Department of Social Protection, as well as the Workplace Relations Commission and Revenue, to ensure its work draws on existing resources to the maximum extent possible. This unit has been carrying out a programme of targeted investigations of employers and contractors. To date, it has reviewed more than 500 employers and their contractors across various sectors of the economy. Some 300 of these cases have been targeted for in-depth employment status investigations. To date, PRSI arrears of more than €600,000 have been assessed.

The committee recommended that a standard definition of "employee" and "worker" is developed and applied in legislation. Using a number of powers and functions under the Social Welfare Consolidation Act 2005, deciding officers in the Department of Social Protection can make determinations in relation to a person's employment status. In other words, they can decide whether a worker is or was an employee or self-employed. The law makes a distinction between contracts of service where an individual is employed and contracts for service where an individual is not employed. From that decision flows the appropriate categorisation for PRSI purposes, the most common being class A for an employee and class S for a self-employed person.

There is no set test in law for an employment relationship to exist. Self-employed people are usually identified by the fact that they are in business for themselves and provide a service to multiple clients. They are generally more independent workers than employees and they have far greater control over how and when to deliver a service. Deciding officers from the Department of Social Protection are guided by their own statutory powers and the case law that has evolved in the courts over many decades. It is worth noting that legislation is already in place that makes it illegal not to pay the correct class of PRSI, with associated sanctions and penalties.

This brings me to the recommendations regarding the code of practice on determining employment status. This guidance for departmental deciding officers, and in fact for anyone who wishes to understand the distinction between the different statuses of employment, has been revised. The Minister for Social Protection relaunched the code last summer following a review and overhaul conducted by an interdepartmental working group consisting of the Department of Social Protection, Revenue and the Workplace Relations Commission. This guidance does not create new law. It reflects the up-to-date position as it has emerged in the courts and in legislation. It sets out the key factors that have been found by the courts to determine whether a person is employed or self-employed. In this regard, the courts have found that the determination as to the appropriate insurability classification is a complex matter and must be arrived at by looking at what a person actually does, the way in which it is done and the terms and conditions under which the person is engaged, be they written, verbal or implied. Steps are under way to place this code on a statutory footing.

When arriving at a determination on the employment status of an individual, a deciding officer will typically have to weigh up a number of factors. Of particular importance are features in the relationship between the worker and the employer or contractor and whether this relationship carries the characteristics of employment. For example, the degree of control exercised over the worker by the other contracting party is quite significant, as is the control over when, how, and where the service is provided. Cases that involve decisions on employment status may arise from requests from employers, employees, employer representative groups, employee representative groups, the Department's own social welfare inspectors, departmental officials working in social welfare scheme areas, or the Revenue Commissioners. In every case, the decision is an individual one and may be appealed to the social welfare appeals office. I assure everyone in the House that no individual worker who seeks a decision from the Department of Social Protection's scope section is turned away. There are no group decisions, but only individual decisions. Each case turns on its own facts and the law is applied without fear or favour to those facts.

The committee's report also highlights the importance of data and statistics and I agree with this observation. From 1 January 2021, a new European regulation on social surveys, Regulation 2019/1700, became law. It affects a number of surveys, the most significant being the labour force survey, LFS. These changes will provide Departments with new statistical data on self-employed individuals. Although I understand that the new CSO data will not be available until later this year, it should assist in targeting our employment status investigations and inspections to ensure compliance into the future.

There are a number of recommendations contained in the report that we cannot commit to or agree to just yet. The most important of these is where the committee has suggested that greater documentary evidence should be provided by new businesses to prove they are in fact self-employed. According to the CSO, there are approximately 340,000 self-employed individuals in Ireland. In this regard, it is essential that we do not lose sight of the fact that legitimate self-employment is a key part of the labour market. In addition, we must continue to support genuine entrepreneurs to set up and succeed in their own businesses, particularly as they are key engines of job creation. Therefore, any proposal to increase documentary requirements would require careful consideration. It would have to be clear that the imposition of the additional bureaucratic burden would provide a tangible solution to the issue of false self-employment, but I am happy to work with Members on that. We discuss red tape for SMEs a lot in committees and across the Houses. I understand that the majority of people in the Houses are of the view that we should keep red tape for SMEs to a minimum in order to support them in their work. That is a concern I would have about this piece and this recommendation, but I am happy to tease it through and look at it further with Members.

I am very optimistic about a new working group, announced in December, which is being established by the Tánaiste to examine issues around false self-employment in Ireland. This group will have representation from the Departments of Enterprise, Trade and Employment and Social Protection, alongside Revenue, as well as participation from the Irish Congress of Trade Unions, IBEC, the Construction Industry Federation and Irish Small and Medium Employers. I will chair this new group and all options will be on the table to streamline and improve the processes involved in deciding employment status, including factors affecting specific sectors such as platform work, which is often referred to as gig work, rightly or wrongly, as Deputy Ó Cathasaigh said. It is something we will focus on a lot as it often comes across our desks. We are very much involved in discussions with our European colleagues regarding this issue and there will also be a focus on it in our work programme during the French presidency of the Council of the European Union. We are happy to engage more with this committee and Members on that.

This group that I will chair will build on the work conducted by the committee and examine the issues around false self-employment in Ireland. I want to be very clear that I will be very happy to work with Members on that. I will be happy to engage on behalf of my Department with any interested Deputies or colleagues across the different committees who want to work on it. I observe that the Minister of State, Deputy Joe O'Brien, will be involved in this work as well.

In conclusion, I once again thank the Chair and members of the Committee for their work on the production of the report, in addition to the members of previous committees. I have no doubt that its contents will be keenly considered by the new working group to be inaugurated in the coming weeks. I hope to be able to communicate regarding a start date for that very soon.

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