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Tuesday, 30 Mar 2021

Bogus Self-Employment: Discussion

Apologies have been received from Deputies Nessa Hourigan and Sean Sherlock.

I welcome everyone to our online meeting. Due to the current situation regarding Covid-19, only the clerk, support staff and I are in the committee room. Members of the committee are attending remotely from within the precincts of Leinster House. This is due to the constitutional requirement that in order to participate in public meetings, members must be physically present within the confines of the place where the Parliament has chosen to sit. I ask that committee members confirm their location before contributing in order to ensure that they are adhering to this constitutional requirement.

Today we engage on the topic of bogus self-employment with Mr. Martin McMahon, who appeared before the Joint Committee on Social Protection of the previous Dáil to discuss this matter. We requested submissions from the Revenue Commissioners, the Department of Social Protection and the Irish Congress of Trade Unions, ICTU, in advance of this meeting. I welcome Mr. McMahon. When we begin to engage, I will ask members and the witness to mute their microphones when not contributing in order to ensure that we do not pick up any background noise or feedback. As usual, I remind those in attendance to ensure that their mobile phones are in silent mode or switched off.

Before we begin, I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. As they are within the precincts of Leinster House, they are protected by absolute privilege in respect of the presentation they make to the committee. This means they have an absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse that privilege and it is my duty as Chairman to ensure that this privilege is not abused. If, therefore, their statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction. In that regard, I have reviewed the opening statement and note that there are some instances where there are references to unlawful acts on the part of the State. I would assume that, in making such references, Mr. McMahon was in fact referring to a misinterpretation of the law by the various parties rather than deliberately stating that they were unlawful acts. Allegations of deliberate illegal activity are not in order and not to be permitted during the course of the engagement. It is on that basis that we will proceed.

Members are reminded of the provisions within Standing Order 218 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister, or of the objectives of such policies. They are also reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

We are operating on the basis of limited time because of Covid-19. We are tied to two hours so, as detailed in the invitation, Mr. McMahon has five minutes to make an opening statement. We welcome that he sent in a concise one to the committee. I will give him a reminder of the time after four minutes. He is very welcome and I ask him to proceed with his statement.

Could I raise a point of clarification?

Go ahead.

As a new member of the committee, I ask for the Chairman's assistance. Normally, when we have witnesses before us they are from agencies of the State and we question them in a fairly robust way to try to expose things we believe need to be exposed. Mr. McMahon is here before us not in that capacity and, as a result, I imagine that our questioning will not be in that same vein. Unfortunately, we have rebuttals from a number of State bodies and two member organisations which have different views. We are in the uncomfortable situation whereby we almost have to present the rebuttal that has been put before us and I am not sure any of us want to be in the business of putting forward the case of State agencies. That is for them to do. Will the Chairman clarify if a number of those agencies will be before the committee or is this the only opportunity we will have to discuss this matter? I am uncomfortable with having that rebuttal in writing but not having people here to allow me question them.

I thank the Deputy. I will answer the last question first. It is entirely in the hands of the Committee of Public Accounts to decide if it wants to call some of those agencies to appear before it. On the first question, we ask the Deputy to use his discretion. He is entitled to put the points made by Revenue, the Department of Social Protection and ICTU to Mr. McMahon but I ask him to do it in a respectful and constructive way. It is a matter of treating the witnesses with respect, as is normal. The Deputy is entitled to ask those questions and is welcome to do so. With regard to whether this is the only opportunity to discuss the issue, I am entirely in the hands of the committee on that one. If the Committee of Public Accounts decides to bring in some of those bodies, which I hope we will do, that is entirely in our hands. Is the Deputy okay with that?

I suggest that we do not treat the witness as normal, particularly as we are usually quite robust with our witnesses. Mr. McMahon is raising genuine concerns and he is presenting his view on the matter we are here to discuss. It is up to us to then question the agencies on it. I do not believe us questioning Mr. McMahon in a robust way is the way to deal with a whistleblower or somebody who is trying to raise those issues.

That is okay. I thank the Deputy for that. Deputy Munster.

I had indicated to ask questions after the opening statements, etc.

Okay. I ask Mr. McMahon to proceed.

Mr. Martin McMahon

It is my opinion that thousands of workers are and have been misclassified as selfemployed by the State. Employment status must always be decided on the applicable law and the individual circumstances of each case. Despite agreement from the Revenue Commissioners that each case must be taken on its own facts in accordance with case law, the Revenue Commissioners have openly admitted to the Committee of Public Accounts that this is not what happens in practice. This contradiction between what case law demands and the State's misclassification, which in my opinion is contrary to existing law, was perfectly highlighted by the Revenue Commissioners in its reply, which states: "Revenue’s position is that each case is individual and needs to be considered on its own merits." Yet, what Revenue has told the committee it has been doing for more than 30 years is that "In the interest of uniformity Revenue decided to treat those couriers as selfemployed."

In my opinion, the State is granting illegal state aid, in the form of a PRSI exemption, to selected employers based on a misinterpretation of the law. It is a tax break which puts compliant employers at a distinct economic disadvantage and denies employees all their rights as employees. The mechanisms used by the Department of Social Protection and Revenue are unlawful test cases. That a number of these group-class test cases exist was confirmed in writing by the social welfare appeals office on 9 January 2019 when it wrote: "On occasion over the years the approach of having 'test cases' has been taken or considered by the Social Welfare Appeals Office."

That test cases are unlawful was acknowledged by the Minister for Employment Affairs and Social Protection on 25 March 2019 in an article in The Irish Times, which stated:

The Minister is also looking at changing legislation to permit deciding officers to make determinations on the employment status of groups or classes of workers.

That test cases are unlawful was further confirmed in a letter dated 9 May 2019 from the Secretary General of the Department of Employment Affairs and Social Protection to the Committee of Public Accounts, which stated:

There is no legislative provision which provides for appeals officers to make decisions on the employment status of groups or classes of workers who are engaged or operate on the same terms and conditions.

In September 2000, the Chairman of the Committee of Public Accounts wrote to the Secretary General of the Department of Social, Community and Family Affairs and requested to know why all couriers were classified as selfemployed by default by the Department. In his reply, the Secretary General stated:

A number of representative 'test cases' were selected in 1993/94 for detailed investigation and formal insurability decision under social welfare legislation. This process resulted in a decision by an Appeals Officer of the Social Welfare Appeals Office on 12 June 1995 who decided that a courier was selfemployed. The Appeals Officer's decision established the criteria in relation to the employment status of couriers that has, since then, been generally accepted throughout the industry and also by the Office of the Revenue Commissioners for tax purposes

The Department, in accepting the unlawful precedential test cases, which are specifically precluded by case law but that were created by the social welfare appeals office, and in using those precedential test cases to classify thousands of workers as selfemployed by default, is the biggest creators of bogus selfemployed workers in the State. Both the current Minister for Social Protection and the former Minister for Employment Affairs and Social Protection have stated on record that the use of test cases was replaced by a code of practice that issued from an employment status group in 2000. Former Minister, now Senator Doherty, in a reply to a parliamentary question, stated:

The Chief Appeals Officer has advised me that the discussion in relation to the use of 'test cases' before the Joint Committee on Employment Affairs and Social Protection on 5th December 2019 related to a particular set of circumstances dating back to the early 1990s where a number of cases involving a number of employers in a particular sector were selected as so called 'Test Cases'. This approach was a precursor to the subsequent development on a tripartite basis of the Code of Practice for Determining Employment or SelfEmployment.

As proven in the reply from the Revenue Commissioners to the Committee of Public Accounts, the use of test cases never stopped. The true factual position is that the decision from the employment status group, ESG, as recorded by the Communications Workers' Union, which was present in the ESG, was that it was the view of IBEC, the Department of Finance and Revenue that the status quo should prevail. The status quo was that where a worker had a disagreement over his or her employment status, he or she can take a case to the High Court. It does not matter what case a worker makes to the scope section, the defined policy of the State is to overturn any scope section decision that threatens test cases, regardless of evidence and case law, and to force the worker to go to the High Court to challenge his or her employment status. At the same time, wealthy industrialists can classify workers as selfemployed, en masse, in private hearings, in free secret courts such as the social welfare appeals office or over lunch in the Burlington Hotel, as happened with couriers. This is the code of practice that IBEC took back to its clients. This is the code of practice Revenue enforces on workers to this day. It is also the code of practice that the social welfare representative at the ESG took personally to the social welfare appeals office.

The status quo is the use of test cases continues to this day. ICTU has calculated the loss of PRSI and taxes to the State from the construction industry alone at approximately €240 million per year. Extrapolating from this figure across all sectors results in an annual loss to the Exchequer in excess of €1 billion every year.

Each member will have six minutes. We will try to move as efficiently as we can. I ask members to obey when they are told their time is up and cease asking questions. We want to get everyone in. I will take members as they indicate.

I thank Mr. McMahon for coming before the committee today. The first thing I want to ask relates to test cases. Mr. McMahon's submissions to committees over the years seem to have focused on test cases and it has been apparent for some time that the Revenue and the Department of Social Protection have denied that these cases existed. Now that they have acknowledged that these cases did exist, they suggest that they are no longer in use, having been replaced by this charter. Can Mr. McMahon indicate whether those historic cases have been implemented and are they still, in effect, being developed?

Mr. Martin McMahon

I thank the Deputy for the question. Case law specifically precludes test cases. Each case must be taken on its own merits. Revenue has agreed that is the case. It has also agreed to label all couriers as self-employed based on a decision from a social welfare appeals officer in 1995. That decision was further clarified to the Committee of Public Accounts in 2000 where the Secretary General stated that a number of test cases were selected. Revenue has told the Committee of Public Accounts that is why couriers are classified as self-employed to this day. Are they still being implemented? Yes, they are. In 2016, a group of 16 construction workers took cases to the scope section where they were all classified as employees and not self-employed. That was then appealed to the social welfare appeals office, which voiced its intention to use those 16 cases as test cases. The 16 individual workers protested profusely that the State could not do that.

Mr. McMahon mentioned the scope section and its cases. Do we have any idea how many workers win cases in the scope section and how often that happens, once a final decision is made and the employer does not appeal?

Mr. Martin McMahon

The Department of Social Protection has not given us any specific number of the number of cases that are overturned by the scope section. We are told that it is approximately 30%. We are told that a very small number of cases come through the scope section to the social welfare appeals office. That is true, as was discussed in the Joint Committee on Employment Affairs and Social Protection in 2019. There is a reluctance on the part of employees or workers who claimed to be employees to use the scope section because they are afraid of being victimised at work. That was acknowledged by the Department of Social Protection as the overriding reason workers will not come forward. The Department uses test cases and it stated as much in the article in The Irish Times to which I referred. The former Minister, Senator Doherty, went on to say that the Department uses test cases with the agreement of employers and workers. It is hard to see how one can get agreement from an entire industry of workers from 1995 and apply it to workers right across the board today. These workers have no idea why they are self-employed and none of them are informed as to why that is the case.

I was listening to an interview with Mr. McMahon as recently as last week. He had seen a draft of a social protection committee report. Can he give us an indication as to what he thought about that report? Was it accurate? Did it acknowledge failings? Did it give recommendations as to how this matter could be rectified? Did it give him confidence?

The report I think Mr. McMahon refers to is the draft report of another committee. It would be confidential, as of now, but I think Mr. McMahon received a copy.

Mr. Martin McMahon

I did yes.

I am just asking for Mr. McMahon's opinion from what he has seen of the draft report.

It was due to the fact that he was one of the people involved in the process, and a copy was sent to the stakeholders.

Mr. Martin McMahon


I ask Mr. McMahon to be careful in referring to that as it is a document which belongs to another committee that has not yet been finalised.

For clarification, I am just asking for the witnesses opinion of the draft report.

Mr. Martin McMahon

I will speak in general terms and will not be specific. A number of meetings were held between 2018 and 2019. I was the penultimate witness at that committee. I told the committee pretty much what I have told this committee today about the use of test cases. That does not appear anywhere in the report. I gave that evidence despite the fact that the social welfare appeals office was asked in afterwards to explain the use of test cases. None of that made it into the report, it was as though I was never there at all. Am I satisfied with the draft conclusions? No, I am absolutely not. I have until 9 April to send a submission, which I will, to say that I am extremely dissatisfied with its report. All the people who appeared before me from Revenue, the Department of Social Protection to Scope, none of them told the committee that there were test cases as Revenue has now told the Committee of Public Accounts. As far as I am concerned, everything that went before my telling that committee that there were test cases is null and void. It did not tell the full truth and the full truth, as this committee now knows, is that it used test cases.

Mr. McMahon will make a submission on that.

Mr. Martin McMahon

I will make a very strong submission on that.

It appears, then, that Mr. McMahon has no confidence in the draft report. Am I correct?

Mr. Martin McMahon

I will not put my name to it or allow my name to consent to the report as it stands.

Mr. McMahon has no confidence in it.

Mr. Martin McMahon

Absolutely none.

I just wanted that clear. From the Revenue and Department of Social Protection submissions, it seems they still fail to see there is an issue with the current system. The question is where we go from here. ICTU's statement said that the only effective resolution to this long-standing matter is the introduction of legislative measures whereby all workers are classified as direct employees in the first instance until proven otherwise by an employer. Would Mr. McMahon agree that is really the only way that this can be rectified?

Mr. Martin McMahon

I do but I see a very serious issue with it. The Department of Social Protection and Revenue are specifically precluded from making group and class decisions by case law. In the Denny case, a seminal case on bogus self-employment, Mr. Justice Keane was very clear that each case must be taken on its own particular facts; just because one is a courier one cannot say that all couriers are self-employed no more than one can say that of a journalist or doctors. The Department has admitted that it is doing test cases and using the precedents to label entire industries as self-employed. Where ICTU is saying that they should be employees by default and the employer should have to prove if they are self-employed, the way it works now is that the Revenue Commissioners and the Department of Social Protection are classifying workers as default self-employed. If the worker wants to appeal that decision he or she must go through a process, and that process relies on a worker not being able to overturn the decision.

I am sorry, but I have to try to keep to time to allow everyone in. There are 13 members.

I thank Mr. McMahon for raising this. The definition of self-employment has been an issue on these islands going back to 1860. Undoubtedly, there are contracts for service which should be contracts of service. In some cases that suits a worker who should be a direct employee because they perceive an incentive where they might pay less tax in the short term, but what they are doing is depriving themselves of employment rights and PRSI entitlements over time. I have come across this on many occasions. There has to be a bigger discussion beyond the view of the Department of Social Protection or the Revenue Commissioners. There needs to be education on this too.

I talked about case law. I take Mr. McMahon's points on the way the Department or Revenue operates. Regardless of that, common law also applies. If we look at the definition of a contract of service, and the appalling term, the law of master and servant, all that case law allows a person to raise an issue in the courts. Mr. McMahon is correct, they say it should be done on a case-by-case basis and they use legal tests, the control test, the integration test and so on. We know all the famous cases involving the Sunday Tribune, Readymix and so on. Would it be fair to say that regardless of how agencies operate, it is open for any employee to take a case through the legal process to prove that he or she has a contract of service in the same way as the Uber case in the Supreme Court in the UK, which is likely to be a precedent that we would also recognise here? That is an option, although expensive, perhaps prohibitively so.

Mr. Martin McMahon

I disagree that it is an open option. The way the process here works, as laid out by the Department of Social Protection, is that a worker must make his or her case first to the Scope section of the Department of Social Protection. Then the employer, and it generally is the employer, can appeal a decision by the Scope section which says that the worker is an employee, to the social welfare appeals office. If the social welfare appeals office overturns the Scope section decision, which it has done with every single courier case since 1993, then the worker's access to the courts starts at High Court level. Before the social welfare appeals office existed, Scope decisions were appealed to the Circuit Court directly. By using the social welfare appeals office, which is acting outside the legislation, it has raised the bar of access to the courts for workers. It is prohibitive for a worker to take a case to the High Court.

The option to go all the way through the entire court system is open but the difficulty is that it is prohibitive and the bar of access is too high.

Mr. Martin McMahon

The Denny case started as a Scope decision that Sandra Mahon was an employee. That case was not overturned by the social welfare appeals office. It was appealed from the social welfare appeals office to the High Court. It was the State that paid. That is an important point. If the social welfare appeals office overturns the decision, it is the worker who must pay in the higher courts, not the State. That is the basic problem with all this. It is prohibitive. It took six years and hundreds of thousands of euro in legal fees for the State to defend the Sandra Mahon Denny case.

Does Revenue define what is a direct employee to employers on its website? If one goes through them, some employees, particularly couriers, fall into the category of direct employees.

They do not control how, when or where they do their work, they supply labour only, they are paid in fixed hourly rates, they cannot subcontract out their work, they do not supply materials etc. It appears that some categories of worker meet the test of a direct employee. We cannot assume, but seeing as how it is likely that that would be the court's conclusion, perhaps Revenue and the Department of Social Protection should recognise the fact now and prevent those within the industry from having to take a long test case. It was clearly indicated in the Uber case in the UK that the drivers were direct employees.

Mr. Martin McMahon

The Deputy is referring to the Revenue Commissioners' code of practice. I believe committee members have with them correspondence from the committee to me. It says that the code of practice came from the employment status group, which was set up in a rush after I requested a scope section decision on my insurability of employment. My case was specifically discussed by the group while it was sub judice. The decision of the group, as recorded by the Communication Workers Union, which was present at the time, was that the status quo had to remain. The status quo is test cases, which are prohibited by the higher courts. The code of practice that was mentioned is a voluntary one, not a statutory one. It has-----

Should the code of practice be amended to recognise what has happened in the UK courts?

Mr. Martin McMahon

No. The code of practice should be done away with completely. It does not decide case law. It does not decide insurability of employment. Only case law does. The code of practice is a box ticking exercise. As the committee has seen in ICTU's submission, employment status is not decided by a box ticking exercise. That is complete nonsense. The code of practice can mean whatever one wants it to mean. That the Revenue Commissioners have told this committee that it is on a par with, if not superior than, case law is outrageous. It is not on a par. Only case law applies.

I wish Mr. McMahon a good morning. Actually, it is the afternoon. I am an hour behind.

One must ask what happens when things go wrong and people do not have their rights. We saw much of that after the economic crash, particularly in the construction sector where people had spent their whole lives working, many of them self-employed. It is only when one sees people reaching their 50s or approaching pension age and finding themselves out of work without an entitlement to a contributory pension that one realises how precarious this situation is for what is a large number of people. Astonishingly, we have seen a growth in the number of people who are categorised as self-employed even though it is known that their work is precarious. Do people believe that they really have a choice? Are the courts a choice? What should be done? There will always be some degree of self-employment, but the extent of it now is out of kilter. Solutions already exist in legislation. Can they be implemented immediately and how would Mr. McMahon go about doing so?

Mr. Martin McMahon

Cui bono? That is an important question. Who benefits from the fact that the Revenue Commissioners and the Department of Social Protection, while admitting that bogus self-employment exists, cannot and will not quantify it? It is not the worker, it is not the pension fund into which employer's PRSI should be going but is not, and it is not the Exchequer, given that less tax is paid by the self-employed. Only employers are benefiting from this. If the Department can send social welfare inspectors to look through the knicker drawers of lone parents, it can look through its own data. It has all of the data. It simply does not want to look at them.

If the worker has a choice to go to the courts, why do the scope section and the social welfare appeals office exist at all? They are meant to take the expense away from the worker. If they cannot do that, they should not exist. It is as simple as that.

The only solutions are laid out in legislation. Anything else would require new legislation. Any decision that is considered unsafe by the chief appeals officer can be set out. Any use of a test case or any scope decision that has been overturned by the social welfare appeals office on the basis that a pre-existing test case exists is demonstrably unsafe. It cannot be done. This means that every case dating back to 1993 must be set aside. The old process that existed before the social welfare appeals office was set up saw a decision of the scope section being appealed by the employer to the Circuit Court, which was a lesser bar and less expensive for the worker. We should return to that situation immediately. All existing and future cases on the insurability of employment that would have been appealed to the social welfare appeals office should be appealed to the Circuit Court. Under current legislation, if the appeals office finds a case to be too complicated, it can refer the case to the Circuit Court. Obviously, a case is too complicated for the social welfare appeals office if it does not understand that it cannot use test cases. Therefore, all existing and future cases must automatically be referred to the Circuit Court. That is provided for under law.

There are solutions, but these are the ones that must be implemented immediately if we are to be fair to workers. We cannot have test cases and decisions arising from other test cases.

In an ideal situation, would further legislation be required to achieve a solution?

Mr. Martin McMahon

I see from ICTU's submission that it would seek a definition of "employee" in the law. That would make a difference. If the Department of Social Protection has stated that it does not feel compelled to act within the legislation, though, what would be the point in making more legislation that it could simply ignore? The Department, the social welfare appeals office and the Revenue Commissioners have to accept the supremacy of case law. They cannot ignore it. Once they accepted it, there would be a purpose in creating legislation. Until they do, however, there would be no purpose and it would be a waste of time.

What are the impediments? I recall an appeal case in the construction sector. People in that sector, for example, might be blacklisted. What is stopping people? In an ideal world, workers would want their rights protected by the same protections that are available to their contemporaries in other sectors. Mr. McMahon has written an extensive book and he is invested in this issue. Well done in that regard. What impediments to vindicating people's rights has he seen?

I ask Mr. McMahon to give a brief answer because we have gone over time.

Mr. Martin McMahon

The greatest impediment is that the Department is ignoring case law.

I thank Mr. McMahon for his presentation. I would like some clarification.

When Mr. McMahon says that the Department is using test cases and a decision is made on a test case, how many people could that test case affect? If it is a substantial number, is it available to that group for one person to go forward to the court, for instance? On test cases, there was recently a case in the High Court about the leaving certificate grading system, where many people had issued proceedings but just one case was taken to court for a hearing. A decision was made on that and that dictated the outcome of the other cases. Will Mr. McMahon outline examples of where a substantial number of people were expected by one test case?

Mr. Martin McMahon

The Deputy raises an important point. The Department of Social Protection, Revenue and the social welfare appeals office are making group and class decisions. They determine employment status by group and-or by class. No legislation exists to allow that. Therefore, no legislation exists to allow a group of workers to overturn that case or to appeal that case by group or by class. There is simply no legislation to allow workers to do that. This affects thousands of employees. If one looks at all couriers going back to the origin of couriers as a type of work, going back to the early 1980s, from that time up to the present, all of those thousands of people have been classified as self-employed. If one looks at construction, where the employer gets to designate employment status and the Department sought to have test cases in 2015, hundreds of thousands of workers are involved, past, present and future.

Would Mr. McMahon not accept what I am saying? If there is a group of 100 people, I accept fully what Mr. McMahon is saying that they cannot take a class action, but there is nothing preventing all 100 from filing a High Court writ. It is not the way I would like to go if there was a better appeals process, which obviously needs to be done by way of legislation. There is nothing preventing all 100 people in a group entering a writ and one person going forward with a test case, which will dictate the outcome for the remaining people. Would Mr. McMahon not accept that that mechanism is there?

Mr. Martin McMahon

No. There is no mechanism for group or class to overturn a group or class decision.

I fully accept that one cannot take a class action. I gave the example of the leaving certificate grading system where quite a number of people issued High Court writs but only one case went forward. In the scenario that Mr. McMahon is talking about, there is nothing preventing a group from issuing individual High Court appeals itself and for one person to then go forward to court with the case. What is needed is a process to deal with the appeals process rather than having to go into the High Court. That mechanism is there.

Mr. Martin McMahon

A better example of that would be Electricity Supply Board v. the Minister for Social, Community and Family Affairs in 2006, which was presided over by Mr. Justice Gilligan. This involved ESB meter readers. There were five of them and the judge consolidated the case. That is as close to group or class decisions as one gets. He made the decision that these workers were not self-employed, as the ESB claimed, and that they were employees. That was in 2006. To this day, Revenue and the Department of Social Protection are still ignoring the High Court decision, even though meter readers are in fact and in law employees, they are still classified as self-employed by Revenue and the Department of Social Protection. The problem is that they are simply ignoring the courts and case law. One can do that, namely, put a group of workers together and get them to go one at a time, and they will still ignore it. It does not get one anywhere. They simply choose to ignore it.

I have been involved where that has arisen. In one case, more than €400 million had to be refunded to people. There was a large group of people involved in that. It works.

Mr. Martin McMahon

In the case of Electricity Supply Board v. the Minister for Social, Community and Family Affairs in 2006, the High Court ruled that five of these workers were employees. That was 15 years ago. To this day, Revenue and the Department of Social Protection still classify them as self-employed.

What appeals process does Mr. McMahon suggest should be put in place to deal with this issue?

Mr. Martin McMahon

I suggest the process as it existed before the social welfare appeals office took it on itself to listen to appeals. The Scope section decision is appealed to the Circuit Court by whoever wants to appeal it to the Circuit Court and it is done in full public view. The problem with the social welfare appeals office is that it is completely secret. Do it in full public view where everybody can hear what is going on.

Would Mr. McMahon support legislation to that effect?

Mr. Martin McMahon

I would support legislation to the effect that one cannot by default label everybody as self-employed and then make them fight their way out of it in a system that is rigged against them. Until the Department, Revenue and the social welfare appeals office accept that they are bound by case law, that cannot happen.

Would Mr. McMahon accept that the process for an appeal to the Circuit Court was set up by way of legislation?

Mr. Martin McMahon

That can already happen within the existing legislation. There are cases deemed too complicated by the social welfare appeals office and they can be referred to the Circuit Court. The social welfare appeals office has shown that it is incapable of making decisions according to case law. Therefore, by default, it should refer them all to the Circuit Court, taking it out of the hands of the social welfare appeals office altogether.

I welcome Mr. McMahon and thank him for his diligent pursuit of this issue. Regardless of what the Department of Social Protection and Revenue might outline about the cases, which is not to disparage their specific responses, the issue of bogus self-employment is real. Anybody who has been out in the real world knows that there are people who are classified as self-employed who, under any basic rationale, clearly are not. They are working for one employer on a full-time basis for a prolonged period.

I refer to one case that I am aware of. I have a report here from a person who won a case. This person was working for a meat processing plant in Cork. The report states that the person is a line worker for a specific employer so he regards himself as an employee of an agency. He works for eight to ten hours a day. He was subject to control and direction. He is not free to take up similar work at the same time. It goes further to highlight how this individual was clearly an employee. However, his employment situation was that he technically worked for a company registered in his name in Poland, despite that he had never been to Poland. It took six months for this person to get his Scope decision and a further six months to have his decision regularised. Even then, his PRSI payments were apparently not backdated. The Department of Social Protection referred to its method, which it is confident in, of catching bogus self-employment through inspections. In the case I have outlined, there were not any follow-up inspections of that person's colleagues, who one would have to imagine are in the exact same position.

Representatives of Meat Industry Ireland attended the Special Committee on Covid-19 Response. They spoke of the use of agency workers and they indicated that the use of agency workers in that sector was actually declining at the moment. Does Mr. McMahon get a sense that the number of workers who are entrapped into this type of employment situation across all sectors is declining or increasing?

How many people are involved? Is the emergence of new types of companies, such as Deliveroo, and workers associated with such companies contributing to an increase in such employment or is it a type of employment practice that is in decline, as stated by Meat Industry Ireland?

Mr. Martin McMahon

I thank the Deputy for his questions. I will take it from the start, and again the question here is cui bono? Who benefits from this situation? It is not the State and not the workers. It is the employers who are using this practice of bogus self-employment to save themselves circa 30% on labour costs. That is who benefits. If the Revenue is saying that bogus self-employment is not an issue, it should prove it. If it is saying it is an issue, it should quantify it. Otherwise, it is not at this game at all.

On meat processing, what the Deputy is referring to with the agency are intermediary-type set-ups. Those are what we call the workplace with no employees. They are moving or being moved to intermediary-type set-ups, as would be used by the likes of Ryanair. A company with six directors, all of whom are pilots, supplies services to Ryanair exclusively. As the pilots association will confirm, as far as it is concerned, the pilots concerned are employees. The practice of setting up an intermediary company to disguise the reality that people are employees is on the rise. The chairman of the Revenue Commissioners has said there are many thousands of these companies out there. Some of these companies have even received awards from the State for what they are doing. It is ridiculous.

On inspections, this is very interesting. Figures from the Revenue Commissioners on inspections show the number is in the low thousands. Back in 1998, the Comptroller and Auditor General sent officials from the Revenue out to inspect 60,000 employment situations within the construction industry and they found 12,000 of them to be misclassified. Two years later, the Committee of Public Accounts, under the chairmanship of the late Deputy Jim Mitchell, did the same thing. Some 60,000 employment roles were examined and 12,000 were found to be misclassified as self-employed. That is a huge number. It was 18% or 19% back in 1999 and 2000. Now, Revenue is doing at most a couple of thousand inspections per year and is saying it is capturing all the bogus self-employment. How could it?

What changed was the employment status group. A decision was made that the status quo must remain and those wide-scale investigations stopped completely. They have never been repeated in any sector. The level of bogus self-employment within the construction sector according to ICTU is now 23% so it has not decreased over the 20 years since this last came up in this committee. It has increased.

There have been several reports of what is known as blacklisting, where workers are either threatened with losing or do lose their jobs for even attempting to raise the issue of their employment status. I referred to the meat processing sector because it is often the case that employees or self-employed people in that area happen to be independently working through an agency for a factory, for example, while also renting their accommodation from the same source. It is not just that these workers' jobs are at risk but also their homes. Does Mr. McMahon have any evidence or reportage regarding the type of means by which blacklisting occurs?

It occurs to me that-----

The Deputy is over his time.

-----the solution should be fairly simple in one sense because there is a legislative route we could explore. I say that because I understand how there could be an element of self-employment in the construction sector. In many cases, we are talking about small, independent contractors which might need carpenters or labourers for a defined time. It would not make sense for either party to be involved in an employment contract per se. However, if we were to set out in legislation conditions to clarify when an obligation falls on an employer to consider someone an employee, for example, a defined period of time, number of hours or number of contracts in an employment, that could provide a means to easily resolve a large proportion of these cases. Does Mr. McMahon have a sense of what those definitions should be regarding periods of time, lengths of contracts and numbers of hours worked?

I ask Mr. McMahon to give a brief reply only because we have gone way over time.

Mr. Martin McMahon

On blacklisting in meat processing and construction, fear is the big word. It is not just me saying this because the Department acknowledges it and ICTU have stated this in the committee. Fear of being blacklisted is the major concern. It has happened in construction and in the case of the 16 workers I represented in the Social Welfare Appeals Office in 2016. I take the Deputy's point on whether some indicator could trigger employment status. Really and truly, as the Revenue Commissioners have stated, it does not matter whether people want to be self-employed. The only question is whether the legal criteria apply. Nothing else matters. People cannot choose not to pay tax just because they do not want to. The State is entitled to its cut. Everybody who gets paid has a contract. The payer has a contract and it is the State that is entitled, as part of the social contract, to deduct taxes and PRSI. Just because people do not want to pay tax and PRSI, they cannot use self-employment or bogus self-employment as the out. It is not as simple as a tick-box exercise, even if Revenue, the Department of Social Protection and the Social Welfare Appeals Office are using a tick-box exercise.

I thank Mr. McMahon. I have some questions now but I will allow a second round of questions. I had to cut some members short to keep the meeting moving but I hope we will get to a second round.

On Mr. McMahon's submission and the matters detailed in the correspondence we have to hand, my concern is that we have one of the lowest rates of employer PRSI contributions in the European Union. While that is fair enough, if there are discrepancies and the State is not getting its full whack, that is obviously a concern. There are also concerns about precarious employment. Some of my acquaintances have been caught in these bogus self-employment situations in construction and it is not very nice.

Most of what is happening seems to rest on the test case in 1995. I will outline what I know about the case and Mr. McMahon can correct me if I am wrong. The case in 1995 was taken by a courier who believed he was an employee. He was classified by his employer as self-employed. He then appealed that judgment to the scope section of the Department which upheld the decision. The case was then to go to the Social Welfare Appeals Office. In the interim, the individual in question emigrated because his employment status was precarious at that stage. At that point, the company, which I will not name although I am aware of the name, stepped in and produced another person who was counted as a worker. My information is that this person may not have been an actual motorcycle, bicycle, van or lorry courier and may instead have been a director of the company. His case was put forward to the scope section and it went through to the Social Welfare Appeals Office. Subsequently, it was determined that person was self-employed.

I want to be careful here as I do not want anyone named but my understanding is that this is the test case on which rests all the later goings on regarding bogus self-employment and what is being used to explain and defend it at times. Is that correct?

Mr. Martin McMahon

I will clarify about the 1995 test case. As the Secretary General of the Department of Social Protection has told the Committee of Public Accounts, a number of test cases were selected. They do not explain how they were selected. They do not explain who was involved in the selection process. They do not explain what safeguards were taken to make sure these were actually representative test cases. It was not the courier. The courier went looking for a decision, from the scope section, because he was put forward by the courier industry as a test case.

The question arises whether he was actually representative of couriers. The courier, who was meant to have been there, has put on record that he was not in the country and had emigrated. It was confirmed by the general manager of the company that the worker had emigrated. That begs the question, who actually was in the test case in the social welfare appeals office in 1995 if it was not the courier who was found to be an employee by the scope section? Who actually appeared? Because of this secrecy, we do not know. We do not know which self-appointed spokesman for all couriers past, present and future stood in the social welfare appeals office and said they were happy to be called self-employed.

The scope section of the Department of Social Protection has upheld that the worker in question was not self-employed but an employee. Is that correct?

Mr. Martin McMahon

Yes, absolutely. He was an employee.

There is correspondence that went back and forth. There is correspondence from the head of Revenue, dated March 1997, which was circulated to all known courier firms, particularly those which were represented at a meeting in the Burlington Hotel on 3 March 1997. There is some correspondence that followed on from that to the legal firm which represented some of those present. Who else was at the meeting in the Burlington Hotel?

Mr. Martin McMahon

According to the Revenue Commissioners themselves, present at that meeting were representatives of courier employers, an accountancy firm which had lobbied the Revenue Commissioners for many years to have all couriers classified as self-employed, and the Revenue Commissioners. That is who was present at the meeting. There is no reference to couriers or to individual couriers being at this meeting. There is no reference other than the Chief Inspector of Taxes at the time asking the company to inform the courier companies to inform the couriers that this was going to go through. They were not represented nor can anybody say they were represented nor can anybody say a single courier could speak for all couriers past, present and future for evermore. That is the important thing - for evermore.

The letter dated 7 March from the head of Revenue states that because that person proposes to treat couriers as self-employed for tax purposes, courier firms are not obliged to deduct tax and PRSI through the PAYE system. The first part of the sentence is significant, which says because that person proposes to treat couriers. We have heard many times this is not a matter for Revenue but one for the Department, yet here is Revenue setting out its position. It was a participant in the meeting that was held in the Burlington Hotel on 3 March 1997 and there is correspondence from it afterwards that set out its position. By any fair reading it would seem to me from those pieces of correspondence that Revenue was involved in this process of coming to this agreement, that it was setting out its interpretation of it afterwards and that it was central to it. That is a concern because, from our point of view on the Committee of Public Accounts, there is the matter of whether the State got what was due to it in terms of the proper classification of PRSI. Obviously we are also very concerned that the proper PRSI contributions for workers were not clocked up.

If a person who is a courier, who is on a building site or who is in journalism who is classified as self-employed were to a case, there is always a fear of being blacklisted, which happens across society and not just in this country. It is very much a notable practice in England in the construction industry. The route people here must go is through the scope unit in the Department of Social Protection, which in general seems to form an objective view. When a case is lodged with social welfare appeals, however, the problem is an applicant seems to lose due to the 1997 agreement. Is that the correct analysis of what is happening here? The scope section may look at it objectively, declare that a person is an employee and is not self-employed, but when a case goes to the appeals section in the Department, that section refers back to the 1997 deal. Is that what is happening?

Mr. Martin McMahon

I will start with Revenue. Revenue has told the Committee of Public Accounts it is nothing more than a collection agent for PRSI on behalf of the Department of Social Protection. Revenue should not have a view other than it is a collection agent for the Department of Social Protection, but Revenue has told the committee it does have a view, and an historical view, that couriers are self-employed. That is not Revenue's call. Revenue does not get to make that call. That is a social welfare call. Revenue has overstepped the mark in even having an opinion on whether couriers are employed or self-employed.

Revenue says that for tax and PRSI purposes it has labelled them all as self-employed. There is no other purpose to be self-employed. It is only for tax and PRSI purposes. A person is not self-employed for the purpose of telling bedtime stories. It is for tax and PRSI. Revenue has labelled them as self-employed, full stop, regardless of tax and PRSI.

The failure to collect PRSI is what now has us in a pensions crisis. It is my opinion there is no pensions crisis. There is a failure to collect employers' PRSI crisis going back over 40 years, which has never been resolved.

I have seen 19 decisions from the scope section. Of those 19 decisions there is only one that I would say was questionable. From the social welfare appeals office I have seen 19 decisions. There is only one of those where I would say it was not questionable. There is only one where it literally refused to hear the case. Even though it was appealed, it literally refused to hear the case. Once it gets into the social welfare appeals office, it is using test cases and precedents set by test cases.

To clarify, it is a test case. Is it a 1997 deal as well in terms of that agreement?

Mr. Martin McMahon

The issue with the test case is, because employment status is not occupation specific, and it does not matter whether a person is a courier, a journalist or a lecturer in a college, if a precedent is set in one case, as it was in 1995, such precedents can be used in all employments. Revenue has distilled all case law and legislation down to four what it calls tick box indicators, which have already been rejected by the courts. It has set up a parallel system to the courts which does not pay any attention to case law, as we have already seen, and by which literally anybody can be classified as self-employed, and that is what it is doing.

I thank Mr. McMahon for his contribution to the committee. He has interesting observations. I understand from his opening remarks that he has been dealing with this issue for quite a number of years, so I admire his persistence on the issue.

In terms of the bogus self-employed, Mr. McMahon mentioned couriers, meter workers and journalists, for example. How prevalent does he believe the overall issue is in society?

I looked at the NESC report from November of last year and it says it is about 10% of those who were declared self-employed in Dublin and elsewhere, yet in Kerry for example, it was higher, at around 21%, which might tally with Mr. McMahon's earlier remarks about farm labourers, etc. I am interested in his opinion on the NESC report from November 2020. I have heard him refer quite a bit to couriers today, but in which other sectors and areas does he believe bogus self-employment is very prominent? How many workers are we talking about? He referred to pensions or, in his opinion, the lack thereof, but how many employees are we talking about across the State at any given time?

Mr. Martin McMahon

We know from the Irish Congress of Trade Unions, ICTU, that 100% of couriers are considered by the State to be self-employed. We also know from ICTU that in construction self-employment is running at 23%. Construction was at 19%. We know from the Irish Air Line Pilots' Association that self-employment is rife among some airlines and it is becoming rife among other airlines. That comes back to the point that it gives a competitive advantage to some companies over others not to have to pay PRSI, holiday pay, taxes or maternity pay. It is driving down standards. One cannot compete against these people, so therefore one must do as they do. It is driving down standards right across the industry. In a previous meeting of the Committee of Public Accounts when the Minister of State, Deputy Fleming, was the Chairperson, he asked the National Transport Authority, NTA, what percentage of its workers were classified as self-employed. It replied that 50% of its workers were classified as self-employed.

It is very important to understand that the State is the biggest creator of bogus self-employment status and the biggest abuser of existing case law. If one includes, for example, intermediary set-ups like personal service companies, as they are used in RTÉ, one is looking at many hundreds of thousands of workers. It is retrospective. It goes back 40 years. If it keeps going the way it is going, it will be going for another 40 years.

In terms of what kind of money is being lost, as ICTU told the social protection committee, in construction alone it is €240 million a year and that is a very conservative estimate of PRSI and taxes forgone to the State because of bogus self-employment. If we extrapolate that across all sectors and include intermediaries such as IT companies then one is easily talking €1 billion a year. That is a very conservative figure. Again, it comes back to cui bono, who is benefitting from this, because it is not the State and it is not the workers. Why can Revenue not quantify it or prove it does or does not exist? Why is Revenue not doing anything about it?

I thank Mr. McMahon. Could he comment please on the National Economic and Social Council, NESC, report from November last year?

Mr. Martin McMahon

It probably does vary from region to region. I look at it from country to country. I have looked at it in various countries. If one takes Germany, for example, it has a rate of self-employment which is half our rate while Greece has a higher rate than ours. Self-employment rates in a country are not an indicator of an entrepreneurial country, having a higher rate is an indicator that there is something wrong in the system. Nobody is going to tell us that Greece is the best in the world.

I take that point but, in brief, what is Mr. McMahon's feedback on the report from NESC?

Mr. Martin McMahon

NESC said in some places that it is up to 25% in some industries. I agree with that. As we have seen, it is easily up to 25%.

Does Mr. McMahon think it accurately captures the extent of the problem?

Mr. Martin McMahon

I do not think that anything accurately captures the extent of it. Revenue has access to all these figures. The Department of Social Protection has access to the amount of PRSI taken by each person, so it could tell what company has taken PRSI at what rate and for how long. There are the indicators. If one wants an indicator of how many people are bogus self-employed, one can just look at that. It is a little indicator. If somebody had been working for two years and his or her 4% of PRSI has amounted to €50 every week, that is a very good indicator that he or she is not self-employed. It is the same person paying him or her for two years what amounts to a weekly wage, regardless of what way it does the matrix or how the company works this, it amounts to a weekly wage. They are the indicators. These bodies can look at all of this information, but they simply do not want to. That is the problem. Nobody has a clear picture, although there are indicators of what the picture is. As the Deputy said, it is up to 25% and as the NTA said, it is up to 50%. We know it is 100% for couriers and that 23% of construction workers are self-employed. It is literally all over the place.

I thank Mr. McMahon.

Some members had other questions. They can indicate if they wish to come back in and I will let them speak in that order. I will ask a question while members are trying to decide on their questions.

In a reply to the Committee of Public Accounts from Revenue on 3 February, following its appearance before the committee to a question on the basis, legal or otherwise, for couriers to be deemed self-employed, we were informed it is primarily if they work for one company. We received a long reply which included the lines:

However, case law has established tests to determine whether contracts are contracts for service (i.e. self employed contractor) or contracts of service (i.e. employee) and generally, these tests are applied to determine employment status along with a review of the evidence available regarding the nature of the relationship. Revenue’s position is that each case is individual and needs to be considered on its own merits.

The reason I read that out is that it seems to significantly at odds with the situation in the courier industry where the default position is that couriers are considered as self-employed in the first instance. Could Mr. McMahon comment on that?

Mr. Martin McMahon

Yes, Revenue is, by default, calling them self-employed and that also works with the eRCT, electronic relevant contracts tax, system in construction where the employer gets to designate employment status without any input from the worker whatsoever. The system is rigged so that the worker simply cannot overturn the decision. As we have seen, if worker wants to do so, it is a significant and costly process which starts in the High Court and will go to the Supreme Court, because that is what happens. Is there a remedy for being labelled as self-employed? No, in practical terms there is no remedy. It does not exist.

I refer to another reply from Revenue where the question read:

A test case regarding bogus self employment amongst couriers was discussed. Please provide further details in relation to this case including detailing any associated costs.

The reply stated:

Reference to a “test case" regarding bogus self employment amongst couriers had been raised at the Joint Oireachtas Committee on Employment Affairs in 2019. There is no one specific "test" case. However, couriers were regarded as self employed for PRSI purposes as a result of a Social Welfare Appeals Officer’s decision.

As I understand it, that is one case. It does not refer to "decisions of" but to "a decision". I take that to mean a single case.

Mr. Martin McMahon

It is a huge contradiction on the part of the Revenue Commissioners and it really goes to the heart of their credibility in this. How can the Revenue Commissioners say each case must be taken on its individual merits, but they have decided to label them all as self-employed, based on this test case from an appeals officer in the social welfare appeals office? Both things cannot be true at the same time. The evidence shows that the actual truth is that they have labelled all couriers as self-employed based on a social welfare appeals office decision. That decision is clearly described by the Secretary General as a test case. Both things cannot be true. Somebody needs to nail the Revenue down on this. It cannot be true.

The RTÉ experience was useful as we saw that permanent employment was offered to a cohort of people who were identified, and that is welcome. It is up to the organisation to decide whether it is retrospective and whether there are tax liabilities. I am using RTÉ as an example. Is there any kind of a sanction where misdesignation occurs? That seems to be something we need to focus on. Let us suppose the committee arranged a series of hearings to deal with this issue comprehensively, find the source of the problem and get to a point where we actually count because if we do not count, we do not deal with things. What would be the ideal list of witnesses to get to the heart of the issue and what should be the pecking order?

Mr. Martin McMahon

I am glad Deputy Murphy brought up RTÉ because it is a specific case. The director general of RTÉ brought in a private company - not the Department of Social Protection, Social Welfare Appeals Office or the Revenue - to do a scoping exercise because of decades of complaints from within RTÉ that workers are misclassified as self-employed. More than 81 situations were investigated. The exercise was limited in scope, only looked back over a short period and those who were looked at were also limited. Regardless, 81 of those workers were found to have been misclassified as self-employed. Had the Department of Social Protection done what it should have done and carried out the investigation, no Statute of Limitations provision would have restricted how far back the Department could look. It could look back to the year dot and declare that a person owes X amount in PRSI. Eighty-one people in one company is a clear indicator that bogus self-employment is being used as a business model in RTÉ. Yet, it was only when the Committee of Public Accounts said it would investigate bogus self-employment that the Department of Social Protection issued a statement that it was looking at RTÉ. It is late it the day to be looking at it now. Since the State has not looked at it and the Department of Social Protection has not carried out an inspection, there has been no sanction. These workers, who had been deprived of their rights going back years, were then offered derisory employment contracts that made them worse off than being bogus self-employed. That should never happen. A notice should have issued to RTÉ for all back payments to the year dot.

If I may intervene for a moment, a report has been done by Eversheds and it is available. In fairness to RTÉ, it does not have representatives at the meeting to defend itself. I ask witnesses and members to be careful in that regard.

I accept that it was one specific company. I am using RTÉ as an example. If we were to go after this systematically, what would be the pecking order?

Mr. Martin McMahon

I would start with intermediaries. The Revenue Commissioners have told the Committee of Public Accounts that they have no look-through power for intermediaries. I am not sure whether the Department of Social Protection does. It may be the case that it does. I remember something from 20 years ago to the effect that personal service companies had come up 20 years ago and some provision was made so that the Department could look through personal service companies. I believe there is already some provision in place. It may not be with the Revenue but with the Department. If not, I would start with intermediaries. That is where the big money is in the information technology sector and the multinationals. The question of construction and couriers is simple. We should stop using test cases. We should set aside those sectors where test cases have been used. They are simple to solve. However, the intermediary sector is one where there is a vast amount of money and no one can quantify it. It does not form part of the €1 billion loss. That is why I take the view the figure would be far larger if we were to look at intermediaries. I would start with intermediaries. Construction and couriers are real low-hanging fruit. That could be done straightaway or overnight.

Mr. McMahon stated that the greatest impediment to resolving this was the Department of Social Protection ignoring case law. Should reviews be done of all decisions that were made by the appeals office? Is that an avenue worth chasing? Let us assume we are trying to tackle this issue, deal with it with some finality and correct all the failings. If the Minister is unwilling to champion it, would that warrant an investigation to examine what has occurred historically?

Mr. Martin McMahon

I believe 100% that it warrants an independent investigation. That should happen immediately. This is a huge amount of money. This affects our pensions. We are now being told we have to work two or three extra years for our pensions but the State has not been collecting employer PRSI. I will say it again. There is no pensions crisis; there is a crisis arising from a failure to collect employer PRSI, yet we are paying for it. Does there need to be an investigation? Yes, absolutely.

Should the Department of Social Protection be involved in insurability of employment decisions at all? I believe the Department has proven that it is not capable of doing this and I believe it should be removed from the role completely. The scope office at the Department is the only office that is acting exactly as it should be. Nothing is perfect but that office is 99% of the way there. The Social Welfare Appeals Office should have nothing to do with it. That office has already proven that it is incapable of dealing with these cases according to case law. The Revenue Commissioners are collection agents. They should do what they are told and not have opinions on whether people are employees or self-employed. It is not their place. The Revenue Commissioners should not be sitting down in the employment status group arguing that historically couriers have been self-employed. That is neither here nor there and it has nothing to do with them.

We should take this away from the Department of Social Protection because it has a conflicting interest. The Department wants to reduce the numbers on the unemployment register and will do it by any means necessary, including by making people work as bogus self-employed workers. The Department has a conflict so we should take the conflict out and give this matter to someone else to address. Before we do that, we must overturn what those responsible have already done wrong. I have no objection to the Workplace Relations Commission taking over this role but it cannot be done in private. That the WRC is doing this in secrecy is allowing an office of the State to make million and billion euro decisions over which no one has any oversight. It is not done in the public domain, but it should be.

A submission was received from the Irish Congress of Trade Unions. No one from ICTU is here but it sent a submission, in fairness. The submission states that in the absence of legislative provision, unfortunately, individual workers will be forced to pursue costly civil cases. Mr. McMahon has outlined that some of these workers would have to go to the High Court rather than the Circuit Court because these cases go to the appeals office in the Department of Social Protection. Has anyone ever taken a case to the High Court?

Mr. Martin McMahon

The Denny case and the ESB meter readers case both went to the High Court. In the ESB case, despite a High Court ruling that those involved were employees, the decision was simply ignored. They have taken it upon themselves to decide that the Department is the sole arbiter of who is employed and self-employed and they do not have to listen to case law. They are saying it straight up. They maintain they are not compelled or bound by case law and they have said that clearly multiple times.

They also went on to state in their submission that arising from all they set out, it was their considered view that the only effective resolution to this long outstanding matter was the introduction of legislative measures whereby all workers are classified as direct employees in the first instance - in other words, they would flip that over completely - until proven otherwise by the employer. To Mr. McMahon's mind, is that the only solution here?

Mr. Martin McMahon

It is a good solution but, as I have said, because the Department of Social Protection does not feel it is bound by case law then one is putting more legislation into a process that does not believe it is bound by the legislation. Until one can compel it to be bound by the legislation then it is actually a waste of time. It is admirable and something which should happen but as it is using test cases, which are outside the law and are specifically prohibited by existing case law, how does one make legislation work when it will not use the legislation?

I do not see anyone else indicating to come in. The final question I have is in relation to where this should go from here regarding the area being examined. What does Mr. McMahon think is the most appropriate means of examining this? What body should examine it?

Mr. Martin McMahon

I certainly think the Committee of Public Accounts will have a busy few months seeking answers from the Department of Social Protection, the social welfare Bills office, and more answers from the Revenue Commissioners which its representatives could not provide when they were before the committee last time and which they knew nothing about. I count myself as a whistle-blower. As a whistle-blower, there is no forum in the State where I can sit down and explain in detail from start to finish exactly what is happening and all the nuances involved. This is a very brief meeting. It is two hours long with five minutes for an opening statement. It is not just an issue for me, but it is one for all other whistle-blowers. No forum exists within the State where we can sit down and tell our stories, our way, without fear of reprisal. It does not exist and that is not accidental. That is on purpose. They do not want whistle-blowers blowing the whistle and that is what I am doing. I am blowing the whistle on bogus self-employment. In the absence of a forum in which I can sit down and tell the story from start to finish, the Committee of Public Accounts is the only forum.

I thank Mr. McMahon for all the information supplied today and for coming before the committee. Obviously, we try to deal with meetings in a certain way but due to the Covid regulations it is a bit disjointed. Sometimes we find ourselves talking over each other because we do not have the same benefits we would have if we were all in the same room. We are doing our best with it and I thank Mr. McMahon for being patient with us.

We really appreciate the work Mr. McMahon has done on this. It is a very important piece of work and he referred to the pension pot which is one issue of concern. That is made up of PRSI contributions and if correct contributions are not going in, there will not be enough in the pot. Another important point is the conditions for workers. I know one of the Deputies mentioned earlier that anyone who thinks there is no bogus self-employment has not been out in the fresh air, and has not been out in the world. I say that having been out in the fresh air because I have certainly seen it going on and am aware of it going on. People involved in and working in those industries are in a very difficult precarious situation. As legislators, we have a responsibility to try to do what we can. Our role here is to make sure the public accounts are in order but by virtue of that, it will help in some way to protect those workers as well.

That was a good exchange. I thank the members of the committee. I know they asked questions and looked into this before. They asked thoughtful questions and I thank them for that. I also thank the committee secretariat. The information has been provided to us. I understand the Joint Committee on Social Protection, Community and Rural Development and the Islands intends to examine and report on the issue of bogus self-employment. I propose we forward the information gathered on this matter to that committee for any action that is deemed appropriate. Is that agreed?

Mr. Martin McMahon


That question was for the members to answer.

Mr. Martin McMahon


Yes. It is agreed.

Is it agreed to request the clerk to seek any follow-up information and to carry out any other agreed actions arising from today's meeting? Agreed. The meeting is adjourned until 3.30 p.m. tomorrow, 31 March, when the committee will meet in private session.

The witness withdrew.
The committee adjourned at 2.05 a.m. until 3.30 p.m. on Wednesday, 31 March 2021.