I move: "That the Bill be now read a Second Time."
I welcome the Minister of State, Deputy Finian McGrath, to the House. Employment policy is at the heart of public policy. There are, of course, core issues to do with pay, such as how do we get weaker growth in take home pay and how do we best ensure wage growth is consistent with sustainable economic growth and economic competitiveness. However, employment policy is about much more than simply pay. It is about decency, the dignity of work, fairness and harmonious industrial relations. Employment policy is now faced with a direct threat. We can legislate for issues such as sectoral employment, sectoral orders, collective bargaining and minimum wages, but what if employers claim those in their workforce are not their employees? What if they argue they have a workforce of self-employed, independent contractors only? From the Government's viewpoint, what are we to do when the employers who assert this reduce our tax and PRSI revenues when we must increase welfare spend, and so reduce the resources available to the State for expenditure on essential public services?
Any discussion on employment policy now must take account of the significant changes we have seen to the complexion of the labour force in recent years. We know atypical employment is growing. It is not always easy to establish the status of self-employed individuals. There are genuine undertakings on the one hand and disguised employees on the other. The reality is unscrupulous employers can and do take advantage of this confusion and this is to the detriment of all of us in society. We are told self-employment is a free choice, an opportunity to respond flexibly and profitably to the need for restructuring, to reduce the direct and indirect costs of labour and to apply resources more flexibly. It is true many thousands of self-employed people are skilled professionals or craftspeople who work for multiple customers using their own tools and initiatives and deploy their talents and entrepreneurial abilities to the work they do. However, there is another growing and very insidious reality. Among the self-employed there are also some very low-skilled individuals who work as day labourers for a single employer. They are sometimes called dependent independent contractors. Self-employment can be and is being, as we speak, imposed on the most vulnerable in our society, namely, the low paid and those with little or no social protection. This cohort deserves our attention and legislative intervention.
The State, particularly the welfare state, ends up paying the bill when employers discover so-called independent contracting as a way of escaping their social insurance obligations. Where businesses use a self-employment fig leaf to evade their obligations as employers, we must be vigilant and we must counteract what is, in fact, a downright fraud on the Exchequer. The Competition (Amendment) Act 2017, which originated as a Labour Party initiative developed originally by my colleague, Senator Bacik, means that for the first time in Irish statute law there is a test to establish false self-employment, but it does so only in the relatively narrow confines of trade union membership and the right to join a trade union for the purposes of collective bargaining. What I propose in this legislation is that we build on the Act passed by the Houses last year and apply the false self-employment test across the board in our employment protection law. In other words, these new laws would apply to the general population of workers.
There is, of course, no single test to determine self-employment, but essentially the question revolves around whether a person runs a business on his or her own account. The matters to be taken into account in deciding whether people are truly in business on their own account include whether they do not decide independently their conduct in the market but are entirely dependent on their principal, whether they do not bear any of the financial or commercial risks associated with the principal's activities and whether they merely operate as auxiliaries within the principal's undertaking.
The Revenue Commissioners and the scope section of the Department of Employment Affairs and Social Protection apply these common law rules at present, albeit, it seems, to the satisfaction of few. The scope section makes statutory decisions on the insurability of employment under the social welfare Acts, but the Department told a media outlet last week it has no figures recording the number of cases involving bogus self-employment. I find this quite extraordinary. What we need to be clear about is that the question of whether an individual is engaged under either a contract of service or a contract for services is a question of law, regardless of how the parties choose to describe themselves at any given moment in time. There can be no question of opting into or out of our employment protection laws.
Bogus self-employment in the construction industry, in particular, has increased at an alarming rate in the past decade, with very real consequences, as so many workers discovered to their cost during the economic crash. Workers suffered not just the loss of employment protections but of social insurance cover also. The citizens of the State, who depend on the ability of the State to invest in public services, were deprived of substantial revenue in the form of lost PRSI contributions, taxes forgone and public moneys lost to what we might describe as unscrupulous contractors engaged in de facto fraud.
I would not take too much comfort from the recent ESRI study on this matter. It was based on questions asked in the quarterly national household survey, which involves workers being asked to self-declare whether they were employees or self-employed. This is not an adequate way, as far as I am concerned, of gathering the information we need to fully inform public policy-making in this country. It also seems clear to me from reading its report that the interdepartmental working group, which was established in July 2015 to examine the tax and PRSI implications of bogus self-employment, had riding instructions to adapt the phenomenon of bogus self-employment and the State response to it rather than counteract it.
We have introduced this legislation because a mere tinkering around the edges with this issue will not fix the problem. Our Bill would provide a holistic approach to the determination and classification of employment status and a set of clear rules in law. The Bill defines, in section 2, what an employment relationship is and makes it clear an employment relationship may exist in cases where: the individual is also an employee of other persons; the individual is also, in respect of other work being done by him or her, self-employed; the individual works as an outworker or teleworker; the individual does part-time work, temporary work, seasonal work or vocational work; remuneration of the individual is calculated by reference to the amount of work actually done; and where the hours of work or remuneration of the individual are otherwise uncertain. The exception to this general rule is where someone is genuinely in business on his or her own account and is providing a contracted service to a customer or client.
Section 3 will confirm employment status is a status relationship defined in law and is not purely the subject of a personal agreement. In other words, someone cannot contract out of Irish employment law.
The use of so-called personal services companies to shield bogus self-employment or disguise what is an employment relationship is tackled in section 5.
Section 6 would apply our tax avoidance laws to bogus self-employment so that an employer who decides to deliberately misclassify the status of an employee would be considered to be a tax and PRSI cheat and have the same penalties applied to him or her as is the case for other tax defaulters.
The Bill provides a mechanism for the resolution by the Workplace Relations Commission of disputes as to whether a work contract gives rise to an employment relationship. The Bill proposes at long last to define and regulate the phenomenon this country has been grappling with for almost half a century. I want to make it clear I do not stand here before the Minister of State as a representative of a party or movement of Luddites. As I have said, we all know about the growth of atypical employment but there is no turning back the clock and we must adapt and get used to more flexible ways of working. The point is we should not preside over a situation where flexibility is simply something that is expected from one side and not the other, and where that dynamic is, unfortunately, favouring employers over employees and where there is little balance to speak of.
This does not mean we must recognise quite spurious claims that some people are not really employees and that they are really independent contractors or self-employed entrepreneurs. The basic inequality of bargaining between employers and workers forces these workers into poor rates of pay combined with low and uncertain hours, little structured training and limited career progression. The Labour Party's priorities and my priorities are all about making sure the benefits of economic growth are fairly shared across society. I hope this is a principle the Minister of State shares also.
We have no interest in jobs at any price or in the spread of casual labour at the lowest wages. We reject the false promises of an economic recovery that is fuelled by a ruthless race to the bottom and I hope other Members of this House would do the same. We also need to counter the common misconception, as common now in the newsroom and the lecture hall as on the construction site, that parties are free to choose whether to provide services, as employees are self-employed, and that they can in some way design their contracts accordingly. It is not the case. We need to reassert that the test of employment status is a matter of law, and is not determined by the label attached to the relationship by the parties.
Needless to say, it is not my purpose or the purpose of the Bill to bring individuals who are genuinely self-employed into the employee framework, and we have made that very clear. Genuine entrepreneurship and self-employment should be supported and encouraged in a dynamic market economy like ours. In its early months, the current Dáil unanimously accepted a motion from the Labour Party on workers' rights. That motion outlined a programme of work to tackle abusive terms and conditions of employment, low pay, insecure hours, forced and bogus self-employment and other issues. Passing this Bill, as we hope to do in this House this afternoon, will give some practical effect and reality to that motion. It will be a practical and urgent step to tackle the phenomenon of bogus self-employment and to bring frankly perverse gig economy-type abuses to an end. It will be, in my opinion, the biggest single improvement to employment law in this country since we joined the then European Economic Community in 1972. I hope that this House sees fit to back this warranted legislation, which is absolutely necessary to protect some of the most vulnerable workers in this society.