Dáil debates

Thursday, 17 June 2021

Saincheisteanna Tráthúla - Topical Issue Debate

Construction Industry

7:15 pm

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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The issue I raise relates to the construction sector. I thank the Minister of State for being here. He will be aware of this because we have spoken of it. I understand the Tánaiste has met with the platform workers. That is a serious issue.

I will discuss the use of State money via our local authorities to support the practice of bogus self-employment. I understand that is not Government policy and do not suggest it is. However, it is happening in the construction sector at the moment in local authority projects. The State is supporting bogus self-employment because these practices are effectively being funded through the finances of the local authorities. We have contractors contracting business from local authorities. They have to look for value for money, and I do not suggest that is not important but it does not have to equate to undermining workers' rights. The practice of bogus self-employment does a number of things, chief among which is to undercut the sector employment order, SEO, rate. We have sectoral employment orders and I understand they are liable to challenge but they are the State saying that this is the minimum. I have payslips, some here and more that I can share with the Minister of State, which show people are not getting their pension, not paying the correct rate of PRSI and, more importantly, where the SEO rate is around €19.37 per hour, they get €10.50 or €10.55 per hour. These are semi-skilled and, in some cases, skilled, workers. There are no checks and balances that I can see in place by the local authorities on the practice of bogus self-employment and undermining the SEO rate. The contractor gets the contract and the money flows from the local authorities.

I want to be constructive, work with the Minister of State and ensure this is stopped. I doubt the Minister of State stands over this practice and I am sure he wants to stamp it out as well. How can we ensure local authorities respect the SEO rate and there are decent terms and conditions? Where the State spends money, it must ensure it uses its spending power to uphold workers' rights and the SEO rate and to deal with instances of bogus self-employment.

Unfortunately, contractors working for local authorities have been advising the chief executives of some of these local authorities of these practices and are not getting any follow-up. If this was being dealt with at local level, I would not be raising it. I raise it because I want to see the State take a greater hand in clamping down on bogus self-employment within the construction sector, ensuring SEO rates are upheld, proper rates of the job, pensions, etc.

There cannot be a hands-off approach to this. It cannot be the case that the local authorities sign the cheque and there is no follow-up on the terms and conditions. Essentially, these people are performing a function on behalf of the State. Where the State directly employs a nurse, carer, doctor or teacher, there is a rate for the job and that rate is respected. There is a pension and that is paid. That is not happening in the construction sector and I am conscious that, as the economy starts to reopen, these practices will become more and more the norm again. I have evidence and can share it with the Minister of State. Some mechanism needs to be in place to ensure the State is doing all it can to stamp out the practice of bogus self-employment. That is not just legislation but following up on where the State is spending money.

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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I thank the Deputy for raising this issue. She will have to forgive me because I only had notice she was going to raise bogus self-employment in the construction sector so I have no data or information on local authorities contracts. That was not mentioned in any clarification to us. I am happy to engage with her on that but I will have to speak more generally because that was all that was flagged to us by the Deputy.

I will speak mainly on behalf of the Department of Social Protection, which has most of the enforcement in this area along with the Workplace Relations Commission, WRC. The WRC monitors this and construction sites are a key part of its work as well. I would gladly take any evidence or data the Deputy has, discuss it with her and feed it into officials in the various Departments. Of course, we would follow this up and stamp this out because anywhere public money is spent we have to make sure the legislation is followed and that employees are respected and their conditions of employment through the various agreements are protected and honoured.

False or bogus self-employment arises where an employer wilfully or wrongfully treats a worker as an independent contractor in order to avoid tax and social insurance contributions and denies the worker access to other rights which attach to employment. Quantitative data from the labour force survey and elsewhere indicate that the prevalence of false level employment is lower than is perhaps perceived anecdotally. The self-employed made up about 14.1% of total employment in 2020. This is consistent with the average levels of self-employment within the EU and does not, of itself, point to a major problem here.

However, we know there are issues and they are dealt with whenever we have any information to track that and there is ongoing testing as well. It is fair to say there are some employers out there who are exploiting workers, many in lower paid and sometimes precarious jobs, and no level of worker exploitation is acceptable in this country. I could not be any clearer on that note on behalf of the Government and myself.

That is why Ireland has robust enforcement bodies and mechanisms in place for the determination of the employment status of individuals or groups. Where an issue arises in relation to the employment status of an individual, depending on the particular circumstances involved, cases are forwarded to the Department of Social Protection, the Revenue Commissioners or the WRC. All three have a role in any local authority contracts and any site belonging to anybody, regardless of whether it is public or private money.

The scope and employment status investigation units of the Department of Social Protection regularly carry out investigations jointly with the labour inspectorate of the Workplace Relations Commission. The Revenue Commissioners also have a role in identifying such cases and they carry out stand-alone investigations and those in conjunction with the Workplace Relations Commission. They also act on evidence or information that is reported.

The Workplace Relations Commission completed 250 inspections in the construction sector in 2019 and 150 in 2020. Inspections carried out by WRC inspectors operate on a compliance model. This means that an inspector will work with an employer to ensure that the employer fulfils all their statutory obligations and that any outstanding wages or entitlements are given to workers.

Officials within the scope section of the Department of Social Protection determine 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 or imprisonment can ultimately be imposed. Revenue also has a strong inspection focus on the construction sector. Importantly, the enforcement bodies work closely together carrying out on-site investigations and work to a national code agreed with the social partners. The code of practice for determining employment and self-employment status of individuals has just been updated by an interdepartmental working group consisting of the Department of Social Protection, the Revenue Commissioners and the WRC. It is currently with the social partners for final consideration before anticipated publication in the coming weeks. This revised code will outline the current legal tests used in the determination of employment status and, importantly, incorporates the up-to-date situation.

It is important that we do that, both for the protection of employees but also to make sure that there is fair pricing when it comes to tenders so that businesses that follow all their obligations do not lose out on contracts because somebody else does not. We are very strong on that point.

7:25 pm

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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That is exactly the issue. There are decent employers and they tell me they cannot get State contracts because they are being undercut by employers who - I am trying to think of a diplomatic word to describe them; the Minister of State probably knows the type of word I would use, but I will not use it here - are exploiting their workers via bogus self-employment and undermining the rate while they are doing work on behalf of the State. When the Minister of State says that some employers are undermining workers' rights, they are, but the State is an actor in this. Will he consider engaging with the local authorities to find out what practices or mechanisms, if any, are in place to ensure this is not happening? This is not in every local authority. My read of it is that in some cases the cheque is signed and so long as the work is done, there is very little oversight from the local authority. Local authorities should be proactively ensuring that the rate is respected, that workers are not in a bogus self-employment situation but are in fact contractors where there is an employment relationship that is honoured. That is not happening in every case. I know the Minister of State is not naive enough to think that it is. What I want to establish is whether there are practices in place and instructions coming from the Government to agencies, in this case specifically to local authorities.

I apologise that the reference to local authorities was missing from the original request for the Topical Issue debate. Is there a specific mechanism in place in local authorities to monitor the situation? I do not believe there is. Does the Minister of State agree with me that there should be one? Could he take steps to ensure that happens, so that at the very least when the State is spending money it is making sure that the money is being spent on decent work?

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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I would love to engage in more detail with the Deputy specifically on local authorities, but for whatever reason the reference was left out of the text as it appeared in the list of Topical Issue matters so I cannot address it. I will certainly gather any information she wants on that space as well. There are agencies with responsibility for this - principally, Revenue, the Department of Social Protection and the WRC, which have specific units to deal with the issue. They work with anybody who issues State contracts. Most importantly, they work on information, feedback and evidence or any suggestion of improper behaviour on a site. Any evidence or data the Deputy has, or if someone has come to her, can be fed into the system and addressed. I am familiar with the work of the bodies, which I have seen on many occasions. I have seen them in operation on sites. The agencies go in together as a team to deal with concerns and they follow up on issues. They cannot track every site or every contract, but they monitor a selection of sites. They most certainly act on information, so I urge the Deputy to bring forward any evidence she may have, and I will have it dealt with as well. In most cases, it is clear whether an individual is employed or self-employed. The Deputy is correct: I am not naive. We know what goes on, but to be fair, the majority of employers are sound and good employers and we must keep reaffirming that. While there will always be some that we are not happy with, we must recognise the majority are decent employers, who stepped up during Covid as well.

Where there is doubt regarding the employment status of an individual, the relevant Department and agencies will have regard to the code of practice for determining his or her status. A great deal of work is under way in this area and the revised code of practice on determining employment status will reflect recent case law. It will help us address other issues outside the construction sector, because there are other areas of concern that we want to deal with as well.

The matter was discussed recently at a meeting of the Labour Employer Economic Forum subgroup on employment and enterprise, which is chaired by the Tánaiste, with the participation of the Department of Social Protection, Revenue and the WRC. At that meeting, the Tánaiste requested that officials continue to explore fully all issues relating to the determination of employment status to better capture the realities of new and legitimate forms of work. As the Deputy will be aware, that is something in which he has a strong interest and he is determined to take any action that is required. That process has commenced and is ongoing.

At EU level, a second phase consultation of social partners on a possible action addressing the challenges relating to working conditions in platform work has been launched. The Government takes all exploitation of workers very seriously. There are robust enforcement bodies working together on the ground, with an agreed code of practice for dealing with complaints of bogus or false self-employment. Any worker, Deputy or colleague who has information or concerns about a person's employment and PRSI status should contact the Department of Social Protection, Revenue or the WRC and the matter will be investigated. I assure the Deputy that if she has any evidence to give me that I will make sure it is investigated.