Louise O'Reilly (Dublin Fingal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

30. To ask the Minister for Finance the steps his Department is taking to uncover, address and reduce bogus self-employment from a taxation and Revenue Commissioners perspective, especially in State-funded agencies or in areas in which public moneys are spent; and if he will make a statement on the matter. [7298/22]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

“Bogus self-employment” is the description commonly given to a scenario where an individual engaged to do a job is wrongly classified as being self-employed by an employer who seeks to avoid employment related obligations. From a tax perspective, this relates to income tax, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) (including Employer’s PRSI) collected through the PAYE system. The implication for the individuals is that they do not have the benefit of certain employment related entitlements such as rates of pay, holiday pay, sick pay and certain social welfare benefits.

It must be borne in mind that a worker’s employment status is not a matter of choice; it depends on the terms and conditions of the job. While it is usually clear whether an individual is employed through a ‘contract of service’ or self-employed through a “contract for service”, it is not always obvious. The question of employment versus self-employment status arises in three different areas: tax where it is determined by Revenue, Social Welfare where it is determined by the Department of Social Protection, and employment rights where the Workplace Relations Commission (WRC) makes the determination.

A revised Code of Practice on Determining Employment Status was published by the Minister for Social Protection in July 2021. The purpose of the Code is to provide an enhanced understanding of employment status, taking into account current labour market practices and developments in legislation and case law. These developments include, for example, new forms of work such as platform work and the gig economy. It is a ‘living document’, which will continue to be updated to reflect relevant changes into the future.

During the four years 2018 – 2021, Revenue staff, either on a standalone or joint-agency basis, visited 3,786 construction sites interviewing 14,968 contractors, sub-contractors, and employees at their site to make them aware of their compliance and other statutory obligations. As a result of these activities, 864 individuals were registered as new employees for PAYE and an additional 360 sub-contractors were reclassified as employees. In addition to construction site visits, Revenue staff carried out a further 8,232 visits across a range of businesses in connection with normal shadow economy activity or compliance activity relating to Covid-19 support schemes.

Revenue applies a data-driven, risk-based approach to compliance interventions, utilising the information provided by all principal contractors on relevant contracts and payments to subcontractors to refine their risk focus. This applies to both private and publicly funded projects.

In addition to its compliance activity, Revenue provides customer service support to public bodies, assisting those bodies with voluntary compliance, so that the public bodies can be satisfied that they apply the correct treatment under the Code of Practice on Determining Employment Status.

Lastly, Revenue officials regularly meet with counterparts in the Department of Enterprise, Trade and Employment, the Department of Social Protection and the WRC to discuss matters of mutual interest relating to employment/self-employment and recent focus has been on consideration of improvements that could be made in dealing with bogus self-employment.

The Deputy may also wish to note that the EU Commission has recently published a draft Directive that is aimed at providing significant new rights to "platform workers" across all Member States.