Tuesday, 13 October 2020
Department of Employment Affairs and Social Protection
The deliberate misclassification of a worker as a self-employed contractor for PRSI purposes, in a situation where they are actually working as an employee, is wrong. My Department’s role is to ensure the correct class of PRSI is being returned for individuals, in order to protect their PRSI contribution record and scheme entitlements and to ensure the correct flow of funds into the Social Insurance Fund. Work is ongoing in my Department to tackle such misclassification across the economy.
Cases of misclassification of employment status are detected through employer inspections and investigations of queries by employers and workers. Cases are sent to the Department’s Scope Section for a decision. This section usually handles between 1300 and 1500 PRSI-related cases each year of which 5-7% relate to employment status.
It is important to point out that these cases do not always involve a deliberate or fraudulent misclassification of an employee as being self-employed. Sometimes it happens that both employer and employee are genuinely mistaken in their approach and are happy to correct the position once the Department’s officials make a determination.
Where misclassification of employees is detected, social insurance arrears are assessed by Social Welfare Inspectors and collected as required. Under the Social Welfare Consolidation Act 2005, there are specific offences in relation to employment contributions.
There are approximately 380 Social Welfare Inspectors appointed nationwide who carry out work across the various social welfare schemes and whose work can include employer inspections. More than 100 of these Inspectors are members of the Department’s Special Investigations Unit who work to detect social welfare fraud. Inspections are also undertaken jointly with other agencies including the Revenue Commissioners and the Workplace Relations Commission.
A number of Social Welfare Inspectors work in a dedicated unit – the Employment Status Investigation Unit (ESIU) – which focuses solely on targeting potential cases of false self-employment. Since it began its operations in Q4 2019, the ESIU has been carrying out investigations in a wide range of sectors of the economy. The Unit carries out both its own projects and works in liaison with other Inspectors and agencies nationwide.
In order to raise awareness among employers and workers, an inter-departmental working group has been working with the social partners to revise the Code of Practice for determining employment or self-employment. It is my intention to place the revised Code on a statutory footing. I also intend to bring forward new legislative proposals to combat the deliberate misclassification of employees, including:
- anti-victimisation measures to give workers recourse to the Workplace Relations Commission if they feel they have been victimised by their employer as a result of questioning their employment status, and
- the introduction of a new criminal offence of wilfully misclassifying a worker as being self-employed.
I hope this clarifies the matter for the Deputy.