Dáil debates

Tuesday, 13 November 2018

Saincheisteanna Tráthúla - Topical Issue Debate

Employment Rights

6:35 am

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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The continued use of bogus self-employment throughout Ireland means that workers are not defined as employees and they are not protected by some key employment legislation. As a result, they are entitled to fewer benefits such as sick pay, overtime, increments, pension contributions, maternity leave and holiday pay.

Department officials attended a meeting of the Joint Committee on Employment Affairs and Social Protection last week to discuss the issue of bogus self-employment. I was dismayed to learn the Department does not keep any records on bogus self-employment, despite carrying out inspections to supposedly identify it. Despite keeping no records of cases of bogus self-employment, the Department believes from some reports it cites that the issue of bogus self-employment is not significant or prevalent in the State. That is in stark contrast to the Irish Congress of Trade Unions, for example, which has estimated that over an eight-year period the State may have missed out on €640 million in unpaid PRSI due to bogus self-employment in the construction industry alone.

The newly-formed Connect trade union, which represents 40,000 craft workers, has estimated the practice is costing the State €300 million a year. Bogus self-employment is prevalent not only in the construction industry but in other sectors.

The Eversheds Sutherland report highlights significant difficulties and inconsistencies in employment practices at RTÉ. The Unite union has highlighted the problem faced by workers in the English language teaching sector. I understand there may be some employees - or they are not employees in the correct sense, - in this establishment who are suffering from bogus self-employment practice. The Minister needs to investigate that and come back to us on it.

With the increase in the prevalence of fast food, delivery services are becoming a major issue in this regard. Does the Minister have any intention of introducing measures to combat this problem, which is costing the State significantly in lost tax revenue and leaving thousands of workers vulnerable in their employment?

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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The practice of bogus self-employment and employers forcing workers on to self-employed contracts when they should be employees is, unfortunately, on the increase. According to the Connect trade union, which organises more than 40,000 tradespeople, it is now rampant in the construction industry. We also see it in the media and film industries, particularly in RTÉ, and in many other sectors.

The Irish Congress of Trade Unions calculates that the loss to the Exchequer is approximately €80 million per year and amounts to €680 million since 2007. With all this in mind, it is baffling that the Department of Employment Affairs and Social Protection keeps no records in cases of bogus self-employment, despite carrying out inspections to apparently identify the problem. The Department cites that in 2017 it carried out 2,698 employer reviews with savings of €2.27 million recorded, which we welcome, but it could not tell the joint committee the number of these reviews which resulted in bogus-self employment being identified. We have a bizarre situation where inspections are being carried out, yet no data are being kept on the level of bogus self-employment found. That begs the question as to why the Department would even bother carrying out the inspections in the first place. Despite keeping no records of bogus self-employment, the Department believes in some reports it cites that bogus self-employment is not significant or prevalent. This shows a very lax attitude on behalf of the Department to the issue of bogus self-employment and no real intention of tackling it. While on the one hand the Department is happy to put pressure on ordinary citizens to recoup money where it makes a mistake and an overpayment is made, and the Government was happy to roll out a campaign on so-called welfare cheats which itself turned out to be bogus, it does not show the same urgency when it comes to employers using this practice.

The Government has said time and again that this is not an issue, yet it is not collecting the data to demonstrate how serious an issue this is. That is a failing on behalf of the Government and I want to know how that will be rectified.

6:45 am

Photo of Catherine ByrneCatherine Byrne (Dublin South Central, Fine Gael)
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I am taking this matter on behalf of the Minister for Employment Affairs and Social Protection.

False self-employment is consistently brought up by Deputies as a prevalent issue. If any Deputy is aware of any particular cases, the Minister strongly urges them to bring these to attention of the Department of Employment Affairs and Social Protection to ensure they can be investigated.

The Department’s scope section makes in excess of 1,000 employment status determinations each year covering a range of issues including directors of companies, family employments, partnerships and public sector employments. The number of cases involving a direct conflict of employment or self-employment status is relatively small. In 2017, the scope section made 138 decisions resulting in a class A employment decision. Of these, 35 could be described as disputed employment/self-employment cases. In the current year, the section has made 113 decisions resulting in a class A employment decision of which 27 could be described as disputed employment/self-employment cases.

Following a scope section decision, the employer will be liable for class A PRSI for the full period of employment. This can be a significant penalty for a business. Most employers co-operate fully with the Department’s inspectors in insuring compliance following a scope decision. Where they fail to comply, additional measures, including prosecution, can be brought to bear. Cases referred to the Department’s central prosecution service, CPS, for consideration of prosecution are examined using the principles established by the Director of Public Prosecutions, DPP.

Employer-specific social welfare offences have been considered by the courts as being of a technical nature in that they relate to a failure to keep and maintain prescribed records and remit PRSI. If, during the proceedings, the employer remits the PRSI or provides the records that were requested, the case is commonly withdrawn or struck out. The Department will generally only pursue a case where the employer refuses to comply.

The Department carried out a media campaign on false self-employment in May 2018 to ensure better public awareness of the important service the Department provides in determining employment status, as well as to help develop a better understanding of the scale and nature of false self-employment. The scope section received 50 calls and 30 emails during the campaign from individuals who had become aware of the service directly as a result of the advertisement campaign. Up to 15 scope section investigations were created as a direct result of the media campaign.

Given the relatively low number of formal requests for determinations, there may be some reluctance by individuals to seek a scope section determination due to concerns over how an employer will react. This suggests that the most appropriate way to address the issue will be through inspection. Anti-victimisation measures may be required to provide assurance to workers that they cannot be victimised if they raise legitimate concerns regarding their employment status.

Although the response was low, the response to the campaign will inform the inspection work of the Department, Revenue and the WRC, including in sectors other than construction. The Department has intensified its employer inspection activity since the campaign. A separate series of investigations took place in the west focused on the construction sector. Two further projects with a particular emphasis on identifying false self-employment are planned for the Dublin north and mid-west divisions.

It is difficult to identify hard data on false self-employment without individuals coming forward for investigation and decision. While there are some cases of false self-employment in particular sectors, this has not translated into any increase in overall levels of self-employment as might be expected if there was a growing problem. The self-employed continue to make up just over 15% of total employment. This is in line with the average rate of self-employment in the EU and has not increased in the past 16 years.

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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I thank the Minister of State for the response. However, the Minister for Employment Affairs and Social Protection has not grasped the scale of the problem with bogus self-employment. We all meet people in our constituency offices who believed they were on different contracts but found out that they were not employees but self-employed. This, in turn, caused problems when they retired or needed to access social services.

Will the Minister of State forward our concerns to the Minister? Will the Minister introduce legislation to outlaw this practice? If not, why not? It has been done in other jurisdictions. For example, in Australia, the Fair Work Act 2009 protects genuine employees from sham independent contracting arrangements and outlines an employer’s obligations in establishing an employment relationship. In addition, the Prohibition of Bogus Self-Employment Bill 2018 has been introduced in this House.

As a result of the evidence provided to the Joint Committee on Employment Affairs and Social Protection last week, will the Minister make the necessary changes to ensure inspection records are kept in order that evidence can be gathered to establish how widespread the practice is? Bogus self-employment needs to be addressed immediately to ensure workers have their full employment rights and the State does not lose out on millions of euro in lost revenue and PRSI. The Minister needs to act on this issue.

Photo of Catherine ByrneCatherine Byrne (Dublin South Central, Fine Gael)
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There is a commitment in the programme for the Government to address the increase in casualisation of workers and to strengthen employment regulations. The Employment (Miscellaneous Provisions) Bill 2017 is currently going through the Oireachtas and it addresses several workers’ rights issues, including prohibiting zero-hour contracts in most circumstances and requiring the terms of employment to be produced by an employer within five days, a new minimum payment for employees called in to work but sent home again without work, a new right for employees whose contract of employment does not reflect the reality of the hours they habitually work, and for employees to be entitled to be placed in a band of hours that better reflect the hours they have worked over a reference period, as well as strong anti-penalisation provisions for employees.

The Minister welcomes the broad support for the Bill, which aims to improve the security and predictability of working hours for employees on insecure contracts and those working variable hours. It particularly focuses on low-paid or vulnerable workers.

I am aware of people attending my constituency office with these issues. I go directly to the Department about these cases. I urge the Deputies to bring these matters to attention of the Department of Employment Affairs and Social Protection, as well as writing to the Minister about them.