Dáil debates

Tuesday, 28 February 2017

5:40 pm

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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44. To ask the Minister for Finance when the results of the consultation process concerning the impact of bogus self-employment arrangements will be published; and if he will make a statement on the matter. [9983/17]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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211. To ask the Minister for Finance when the results of the consultation process concerning the impact of bogus self-employment arrangements will be published; and if he will make a statement on the matter. [9951/17]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I wish to raise the issue of bogus self-employment. Although employment rates continue to fall and there are very significant numbers of people at work, I am particularly concerned that rather than having many people employed in traditional employment, with the protections and rights this entails regarding income, access to trade unions and access to labour protection through legislation, there is a significant number of people on very low pay in bogus self-employment. The social welfare entitlements, including pension entitlements, of those in these circumstances will be very much diminished if they seek to exercise social protection rights or to exercise pension rights when they retire. I have raised this with the Minister before. There was a consultation on which he and I agreed quite some time ago. What has happened in terms of that process?

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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When the Deputy was Tánaiste and Minister for Social Protection, she and I, as Minister for Finance, launched a consultation process on the use of intermediary-type employment structures and self-employment arrangements, in addition to their impact on tax and PRSI. She will recall also that the consultation invited submissions from interested parties on possible measures to address the loss to the Exchequer that may arise under two sets of arrangements. The first of these is where an individual, who would otherwise be an employee, establishes a company to provide his or her services. The second is where an individual, who is dependent on and under the control of a single employer in the same manner as an employee, is classified as a self-employed individual.

Some 23 submissions were received and a report is being prepared. Indeed, we discussed the report and the wider issue of bogus self-employment generally during our Finance Bill debates in the Dáil late last year. I understand that the report on the consultation process is being been finalised by a working group of officials but it has not yet reached me or my colleague, the current Minister for Social Protection. As soon as it does, we will consider its contents, and then I expect we will publish it. I am not in a position to give the Deputy an exact date for publication but I am informed by officials that the drafting and editing process is now almost complete. After that, a meeting of the working group will take place, after which I expect to receive the report.

It is important to emphasise the nature of the report that is being produced; it is a report on the consultation process. This, however, was not a consultation process into the impact of bogus self-employment arrangements. Specifically, it was a consultation process on the use of intermediary-type employment structures and self-employment arrangements, and their impact on tax and PRSI. The issues are related, but not identical. The report will reflect the views of those individuals and organisations that responded and the analysis of these responses by the working group.

5:50 pm

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The Minister will recall - he may have the information in his briefing papers - that when we agreed to establish this, ICTU, SIPTU and various other trade unions had identified potential losses of more than €80 million to the Exchequer per annum in taxation, PRSI and other payments. That is not an inconsiderable amount of money.

Critically, people in bogus self-employment find themselves without the ordinary protections of labour law which ensure that their employment is properly regulated, they are at least paid the minimum wage and, as per the legislation that we introduced while in government, there are structured agreements in certain sectors between employers and the workers' trade union representatives.

Photo of Pat GallagherPat Gallagher (Donegal, Fianna Fail)
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Deputy, please.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I welcome the idea that there will be a publication at some stage and I urge the Minister to publish it, given that it is important to many people.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I do not want to confuse the issue of the tax and PRSI position of people who are genuinely self-employed. This matter relates to people who are not genuinely self-employed and are using the device for tax reduction purposes. The use of intermediary-type structures is becoming more prevalent as a means of providing labour, and legitimately so. From a tax and PRSI perspective, one of the consequences of these types of arrangements is that, rather than the end user applying the PAYE system in respect of the worker, that function becomes the responsibility of the worker. In addition to these formal intermediary-type structures, there are increasing instances of workers being classified as self-employed even though they might not possess the characteristics of entrepreneurship and risk-taking that are often perceived as features of self-employment.

The work is almost complete and will be submitted shortly to the working group. I will publish the report as soon as I have a clean copy and have put it through the Government.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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When one speaks with, for example, young men in the construction industry, it is difficult to persuade them that working in fully ensured employment is as attractive as being established in an easily constructed self-employment wherein they pay minimal contributions but have no protection if they fall ill or have an accident. When they reach the end of their working lives, their pension entitlements may be significantly reduced. Since they are not employees, they lack fundamental protections.

Many workers in the IT and insurance sectors and so on are being offered a self-employment structure. We are moving away from the model in which people are at work. Instead of being genuine business owners involved in entrepreneurship, as the Minister described it, they are employees who have few options other than to accept the type of self-employment that is on offer, and often to their long-term detriment. This is a problem across a range of industries.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I acknowledge that Deputy Burton, as the former Tánaiste, was the joint sponsor of this consultation process. It is a good piece of work and I look forward to the report being available and debating it in the House. The construction and development industry, where these practices are prevalent, crashed during the recession and is emerging as a different industry, with contractors and developers only having a couple of key people and building by way of subcontractors with different skill sets. Quite a lot of the construction sector is becoming a manufacturing industry, where modular units are manufactured offsite and brought onsite to be put in place by subcontractors.

There has been a movement anyway towards increasing numbers of persons who are genuinely self-employed in the building industry. We must take that into account in our discussions. My objective is to root out tax evasion by persons falsely describing and constructing themselves as self-employed when they are actually employees.