Seanad Éireann debate -
Wednesday, 3 Jul 2019

Vol. 266 No. 11

Social Welfare Bill 2019: Second Stage

Question proposed: "That the Bill be now read a Second Time."

Minister for Employment Affairs and Social Protection (Deputy Regina Doherty)

I am delighted to present this Bill to the Seanad. It has a single straightforward purpose - to give effect to the announcement made in the Budget Statement 2019 to establish a new scheme of jobseeker's benefit for the self-employed from November of this year.

This new scheme will provide a social insurance support to self-employed contributors who lose their businesses and will provide them with the support and breathing space they need to reassess their next steps. The Bill is very much in keeping with this Government's policy of supporting self-employed people and entrepreneurs.

The new benefit we are introducing reflects the Government’s aim of creating a supportive environment for entrepreneurship, including providing an income safety net to employees and self-employed alike. This Government has sought to encourage enterprise and, in particular, has sought to introduce a new deal for the self-employed when it comes to accessing their benefits.

Senators will recall that we extended treatment benefits and invalidity pension to the self-employed in recent years to ensure that they reach some parity with employees in the benefits they can access from the social insurance contributions. The introduction of a new jobseeker’s benefit scheme for the self-employed represents the next step in the Government’s work to extend PRSI benefits and will provide an income safety net to thousands of small and medium businesses throughout the country. For the first time, this gives the self-employed access to the safety net of income supports if they lose their self-employment, without having to go through the rigours of a means test.

Many of the features of the existing jobseeker's benefit scheme, which provides support to employees who have lost their jobs, will apply to this new scheme. For example, the personal rate of payment of €203 per week will be the same for both schemes. The duration of payment, for six months or nine months depending on the claimant’s social insurance record, will also be the same. The scheme has been designed to take into account the fact that PRSI contributions by the self-employed are paid by way of an annual lump sum.

The activation of self-employed workers who have had to close their businesses, and their re-engagement into employment, whether that is again in self-employment or as an employee, will be a priority in my Department. We are currently examining the activation supports available for this cohort, but in any event, claimants of the new payment will have access to the full range of activation supports currently available to all other jobseekers. This includes, for instance, referral to group information sessions, one to one interviews and subsequent caseworker support.

Self-employed people who are operating businesses at low levels of income can continue to access the means tested jobseeker's allowance scheme. There are almost 7,000 self-employed in receipt of this payment as of today.

I would now like to briefly outline the contents of the Bill, which contains nine sections in three Parts. Part 1 comprises section 1, which provides for the standard provisions setting out the Short Title of the Bill, its construction and citations, and commencement provisions.

Part 2 deals with amendments to the Social Welfare Consolidation Act 2005. Section 2 is again a standard provision which defines the principal Act used in this Part.

One of the consequences of introducing the new scheme is that it is necessary also to amend some of the provisions of the Act governing the existing jobseeker’s benefit scheme. These changes are provided for in sections 3 and 4. Section 3 extends the qualifying conditions for the existing jobseeker's benefit scheme by providing that the first condition to determine eligibility for payment can now be met by having 104 employment or optional contributions, for example PRSI class A contributions, as has always been the case, or by having have 156 self-employment contributions PRSI class S, which is being added. This positive change recognises that some people will have engaged in both employment and self-employment in their working lives. By recognising that either form of employment gives rise to entitlements within the social insurance system, this change will help to ensure that an individual will not be at a disadvantage as a result of a move from employment to self-employment.

Section 4 provides that where a claimant who is in receipt of jobseeker’s benefit, self-employed, also satisfies the qualifying conditions for jobseeker’s benefit, periods spent in receipt of jobseeker’s benefit, self-employed, will be treated as though jobseeker's benefit is being paid. This is a standard provision to ensure that a claimant does not secure a double benefit.

Section 5 is the key element of the Bill and provides for the introduction of a new Chapter 12A to the principal Act, which sets out all of the provisions governing the new jobseeker’s benefit, self-employed, scheme.

The new Chapter 12A provides for the general qualifying conditions for receipt of jobseeker’s benefit, self-employed, the social insurance contribution conditions, the rate of benefit payable, including reduced rate benefits payable where the average reckonable weekly earnings of the claimant fall below certain thresholds, the increases payable where there is a qualified adult or qualified children, the duration of payment, and the requirement to engage with activation services and disqualifications. These provisions mirror, to a great extent, the existing provisions governing entitlement to jobseeker's benefit. I do not propose to go through the detail of all of these aspects at this time, but we will have an opportunity to examine these in greater depth on Committee Stage.

Section 6 provides for a range of amendments to the general provisions of the Act which cover all social insurance schemes and are required to reflect the introduction of the new jobseeker’s benefit, self-employed, scheme. The amendments are set out in the form of a Schedule to the Bill.

Part 3 of the Bill provides for amendments to the Taxes Consolidation Act 1997 as a result of the introduction of the new scheme. Section 7 provides for the definition of the Taxes Consolidation Act 1997 used in this Part.

Sections 8 and 9 amend sections 3 and 126, respectively, of the Taxes Consolidation Act 1997 to provide for and confirm the tax treatment of payments under the new jobseeker’s benefit, self-employed, scheme. Jobseeker’s benefit, self-employed, will provide an insurance-based safety net which has not, until now, been available to those setting up or running their own businesses. As Senators will know, the people about whom we are talking are, in very many cases, engaged in small family-run businesses. During the recession everyone took a hit, but I particularly remember how small businesses suffered. Almost overnight, there were fewer vans on the road; many office units shut down and small businesses such as mobile hairdressers literally went out of business overnight. Now that the economy is starting to hum again, it is positive that we are seeing more and more vans on the road, not that we welcome the queues for breakfast rolls, but it is good to see them on the road, fewer empty office units and more shops with entrepreneurs taking a chance. That is a great indicator of our national spirit and culture and the recovery is starting to bed in. We talk a lot about multinational companies locating in Ireland and the welcome jobs they bring to all counties, but the backbone in creating employment is small and medium-sized enterprises which, in the main, are started by Irish entrepreneurs. By providing for greater fairness and support for these job creators, we can continue to build the best possible environment for growth and prosperity for all citizens.

I hope to be in a position to introduce a small but important amendment to the Bill on Committee Stage. It relates to a separate matter from that covered in the Bill. It concerns the procedures governing appeals in relation to social welfare payments against decisions of deciding officers appointed as bureau officers under section 8 of the Criminal Assets Bureau Act 1996. In practical terms, the purpose of the amendment will be to provide that such appeals will always have to be submitted to the Circuit Court. The amendment is being drafted by the Office of the Attorney General and we will have an opportunity to deal with it in greater detail on Committee Stage.

I know that I can expect to hear valuable contributions from Senators. I look forward to speedy passage of the Bill in the Seanad and bringing it to the Dáil with the aim of having it enacted and starting the payment of jobseeker's benefit for the self-employed in November.

Acting Chairman (Senator Maria Byrne)

I thank the Minister. I welcome Senator Leyden's wife, Mary, and her brother, Joe, as well as Phil Burke from Westport to the Visitors Gallery. They are most welcome.

Senator Catherine Ardagh

I, too, welcome Mary Leyden and her guests to the Visitors Gallery. I hope they will have a lovely day.

I thank the Minister for Employment Affairs and Social Protection for introducing the Bill in this House. As a small business owner since 2006 and a Fianna Fáil Senator, I am very happy to support the Bill, the purpose of which is to provide for the introduction of a new social insurance scheme, jobseeker's benefit for the self-employed, which will be payable, as the Minister said, to individuals who lose their self-employment and have the required number of PRSI contributions to qualify for the payment.

Fianna Fáil has consistently supported extending on a phased and voluntary basis the full range of social protection supports to self-employed PRSI contributors as part of our commitment to foster an entrepreneurial culture, as well as enhancing social solidarity. As part of the arrangement to facilitate the formation of a minority Government, Fianna Fáil extracted policy commitments in the confidence and supply agreement to support entrepreneurs and the self-employed. Therefore, it supports the Bill and the creation of a social welfare safety net for the self-employed. However, it is imperative that the Government ensure the legislation is enacted as soon as feasible and efforts continue to remove the systematic discrimination against the self-employed. As the Minister stated, small businesses and self-employed persons are the backbone of the economy. There are nearly 250,000 small and medium-sized businesses in the country which, according to the CSO, account for more than 99% of all businesses. Many hurdles are faced on a daily basis by job creators who keep delivering for their communities. The self-employed pay higher income tax and PRSI rates than those whom they employ, while up until this point there has been no equivalent social protection support if a business failed. This treatment has crippled small businesses and low income self-employed persons who are trying to meet their financial responsibilities every week. Their endeavours need to be rewarded.

I am a solicitor in practice, but I collect more money for the Government each year by way of taxes. I collect stamp duty, VAT, household charge and local property tax payments. Sometimes I think of myself as a tax collector, rather than a contributor. I am glad that something is being given back to the self-employed because they are the ones who put themselves out on a limb, take the huge risks and, ultimately, employ others and give back to communities. It is small businesses throughout the country in small villages that really get things going. Many small rural and urban communities are only viable because of the small businesses located in the vicinity. I work in Crumlin village where Tesco and An Post are the two largest businesses; the rest are small businesses which range from the bike shop, the florist and the hairdressers to charity shops. It is really important that they be acknowledged and have their work for the community rewarded. Fianna Fáil has consistently supported extending on a phased and voluntary basis the full range of social protections available. As part of the agreement to facilitate the creation of a minority Government, Fianna Fáil looked for commitments for the self-employed. We have succeeded in having dental and optical benefit extended to the self-employed, which I welcome and for which I thank the Minister. Self-employed PRSI contributors are also now eligible to qualify for invalidity pension. It is essential that the Minister continue to eliminate systematic discrimination against the self-employed. The Fine Gael-led Government failed to meet its commitment in the programme for Government to provide for full equalisation with the PAYE tax credit by 2018. I hope this is something the Minister can examine.

Fianna Fáil welcomes the Bill, but it is essential that more be done to tackle the issue of bogus self-employment. It arises where a working relationship is misclassified as a contract for services or a commercial agreement when it should be considered to be a contract of service or employment. In instances where people are forced to register as self-employed, it circumvents basic employee rights to holiday pay, sick pay and pension contributions and deprives the State of PRSI revenue. The practice needs to be stamped out to protect workers and the State's finances. I hope this legislation will not have a knock-on effect in increasing bogus self-employment, but I am sure the Department is tackling the issue to ensure bogus self-employment is eradicated.

Senator Joe O'Reilly

I welcome the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty, and salute her as a reforming Minister across a range of areas, whether it be the recognition of home workers, the unfortunate staff who are abused when their tips are taken and used to pay part of their wages or the recognition of the rights of the self-employed. She is humane and a breath of fresh air in the Department. I am very proud to salute her. I do not think there is anybody who would challenge me in making that proposition.

During the recession I became emotionally involved with an individual. The young man in question had a business that failed. As a consequence, he could not receive social welfare payments. The barrier was he had a small plot of land and a house as an investment and rental property on which he was paying a large mortgage.

He had a wife and children, and it was a pitiful sight. I was so emotionally involved with him at the time and I met him on many occasions because I thought the situation was dreadful. Such was his trauma arising from this that he let his business fold, almost involuntarily, and went on to become an employee in an area that does not challenge him. There is nothing wrong with his employment or his employer, but he works in an area where he is not challenged, accepts a much lower income than he is capable of earning and is, I suspect, frustrated. My point is he developed a fear of being self-employed and of anything entrepreneurial. His family felt the same and told their dad that they did not want him to be self-employed anymore. My involvement with him brought the social welfare situation home to me in a big way.

It would be wrong of me not to say that I am here representing my colleague, the party spokesperson on social protection, Senator Ray Butler. It would not be necessary to mention that were it not for the fact that he has been a pioneer and advocate in this field and a champion of the self-employed since the day he entered politics. It is his mantra, whether at our parliamentary party meetings or in this Chamber. He needs salutation and the work he has done to bring about this day merits public recognition. I am sure he is proud and happy that it is being brought forward by his county colleague.

A few other issues merit a mention. It is important that we do not lose entrepreneurs or make people afraid. This cushion will give people the courage to go into business and not be afraid for themselves and their family; it is crucial that that fear be removed. That is a very important point. I reference again the fact that they will also be supported in job activation. The Minister said that ways to support the self-employed in job activation are being looked at, which is important because they have so much potential and ability. As is recognised in America in a way that it is not here, when people fail in business, it is a significant learning experience and that learning can be brought to another business; that is why they should get the support to once again make the leap. Similar to the person who starts to drive again having been in a car accident, they need courage, personal development and to be unafraid to get into the driving seat once more and get going.

I am delighted that this is a continued recognition of the self-employed, to the extent that treatment benefits and the invalidity pension are now available to them. That is great, and this is a further progression of that. We cannot make Cinderellas of the people who, as the Minister said, sustain our small rural economies that cannot attract multinationals. It is good that the self-employed will have the same rate of €203 per week. Why should it be otherwise? The provisions take account also of the fact that, for PRSI, certain people pay a lump sum at the end of the year.

To go back to my original point, I am very keen on activation. I am a teacher by background and think that, from day one, there should be support, encouragement and learning to help people make the great leap and go back into business, bringing their brilliance, knowledge and experience to another business to further more job creation.

The Minister makes the point that, because of low incomes and the nature of their circumstances, 7,000 people will get jobseeker's allowance. That is how it should be and there is nothing to challenge that. It is reassuring that both Class A and Class S contributions are recognised, for obvious reasons, which is an important dimension.

No matter what way we look at this, it creates fairness and opportunity, supports enterprise and provides a bridge, safety net and soft landing for those in the self-employed sector. My friend who I knew during the recession was only one of many; I just happened to become involved with that case and there was something very pitiful about it. He must have felt a shocking level of alienation, unfairness and injustice. Why was he different? Why was he scapegoated for having initiative, when he could not possibly but fail in the role he was in?

This is a good day's work, one of many from the Minister, and I laud it. She said that it will begin in November, but this cannot happen quickly enough. I would love to know that we will have a good activation programme and will continue to support people who create jobs at a local level.

Finally, we talk about sustaining rural Ireland. We can do that only by keeping those who run our small businesses and who create jobs and infrastructure in those areas. A large pharmaceutical industry cannot be attracted to an isolated rural parish if there is no infrastructure. Let us keep the people who can keep those communities going.

Senator Máire Devine

Sinn Féin welcomes the Bill and the extension of another social welfare support to the self-employed. Businesses can fail and, if that happens, it is crucial that we support those who take a gamble on self-employment. The loss of a business is difficult and lack of financial support can make a bad situation worse. During the economic crash, we learned that the effect on self-employed people was phenomenal; there was no safety net for them and many of them emigrated or went to the wall. I treated a lot of them. There were a lot of mental health issues at the time because there was no income safety net. The extension of jobseeker's benefit, which will at least assist them financially, is positive.

In 2017, the Department of Employment Affairs and Social Protection carried out a survey of Class S contributors to find out what they would like extended to them. It is good that we had that public consultation. Of respondents, 80% said that the range of social welfare benefits available was quite poor or very poor, and an overwhelming majority said that they would be willing to pay a higher PRSI rate in return for at least one additional social insurance benefit. The top three benefits sought by respondents were long-term illness, short-term illness and unemployment. Since the survey was published, the invalidity or long-term illness benefit has been extended to the self-employed, which is welcome. This Bill will extend unemployment benefit to jobseekers, but the short-term benefit has not been extended and it must be in our future plans to do so. It is wrong that if people who are self-employed become ill and unable to work, they have no access to any social welfare support, and this needs to be addressed urgently.

Recently, a family member of mine who is the earner in the household became seriously ill. They will recover, but they will be out of work for four months and are relying on the generosity of the credit union and family and friends to keep the household ticking over. There is nothing for them.

Yesterday, I attended the Department's briefing to be more informed on this. The big question being mulled over involved the 250,000 people who left this island during the crash. What would have happened if they had stayed? The public purse would have been bled even drier than it was. It was not sustainable and, in a way, they did us a favour by leaving because we had nothing to give. There was no support in place for them, they had no future and so they left. That ties into the different upcoming referenda, which are not for debate here.

That haemorrhaging of our people certainly helped the public purse and prevented us from crashing out altogether. How do we future-proof these benefits so that they will still be available and will not be cut should another big economic crash occur? Such cuts led to the scenario from which we are only now recovering.

As I have said, the roll-out of additional benefits to the self-employed needs to continue. Illness benefit must be prioritised. Class S contributors spoke to us in this survey and we must listen to them. We are not naive to the additional costs associated with extending benefits to this cohort of workers, but the Department's own survey concluded that 88% of respondents would be willing to pay PRSI at a higher rate in return for additional social insurance benefits.

As I have said, Sinn Féin welcomes this Bill. It is good to see benefits being extended to the self-employed but I do wish to pick up on a point that at least one other Senator, Senator Ardagh, has raised. We need to be bold in tackling a very big issue facing the sector, namely, bogus self-employment. Bogus self-employment is where rogue bosses deliberately misclassify workers as self-employed subcontractors in order to dodge social insurance and pension contributions, pay rates, employment law and other responsibilities. They are dodging their responsibility to make contributions to this State.

At 6 a.m. on 28 June, at the site of the new national children's hospital, in the shadow of which I live, Unite held a protest against the bogus self-employment it believes is going on at the site. This protest was attended by Patricia King and many other supporters. The noise of the protest competed with that of the workers, which is another issue I will take up. This is a big issue. It deprives the State purse of resources and spending power. We must act to end this practice. There are big financial gains for these employers. These classifications are fraudulent. This is not a victimless crime. The costs are paid by the workers, good employers and the State. Workers forced into bogus self-employment are also denied the rights and protection directly-employed workers are entitled to under employment law and collective agreements.

Last month, my colleague, Deputy Brady, introduced a Bill to tackle this very issue. This Bill stands up for these workers and for the State. It not only seeks to make it an offence to issue a self-employed contract to an employee, but it goes much further in ensuring that the self-employed receive the same basic rights and protections as employees, such as annual leave and pay.

I compliment the Minister on this Bill, which will have a positive impact for those who are self-employed. I ask her to address the issue of short-term illness benefit and the concerns I have expressed in respect of bogus self-employment in her response.

Senator Alice-Mary Higgins

I thank the Minister for bringing this Bill for discussion before the summer. I hope that we will have a chance to engage further in respect of amendments in the autumn. I see that it is planned to ensure there is space and time to allow Senators to supplement or contribute to the Bill. Issues have been raised in respect of short-term illness benefit. There are some other practical issues on which I will engage, for example, the ability to make voluntary contributions. As we know there are constraints on those who wish to make such contributions such as thresholds that must be reached. I look forward to engaging with the Minister on a few technical issues of that nature on Committee Stage.

I will speak to some of the more general concerns and questions I have. It is very important that the State offer a safety net and support for everybody who needs it at the time they most need it. I recognise that many people have moved back and forth between employment and self-employment. It should not be the case that people find themselves at a distance from the State. I refer not only to State support payments, but to associated supports in respect of activation and access to training and employment. It is also important to be clear that self-employment takes a wide variety of forms. While the kind that has been discussed at great length today is the entrepreneur who is an employer, European figures show that only 23% of self-employed people in Europe are employers. The Minister may have comparable figures for Ireland. While the small business people we have discussed do exist, they comprise less than a quarter of the self-employed cohort in Europe. Perhaps the figures for Ireland could be found.

Almost as many people across Europe are vulnerable workers. We know that this is also an issue in Ireland. I sit on the Joint Committee on Employment Affairs and Social Protection and I have seen it. The term "vulnerable workers" refers to those classed as being particularly vulnerable to exploitation and who may not have control over the circumstances of their work or employment. In many cases such people fall into the category of what has been called bogus self-employment. I would divide this into two categories: false self-employment and forced self-employment. As the Minister will be very aware, the Joint Committee on Employment Affairs and Social Protection has heard very strong and striking testimony on these issues. Senator Nash, who is not here today as he is at the conference of the Irish Congress of Trade Unions, has tabled legislation on this issue, as has Deputy Brady. I know the Minister has asked to see the results of the committee's discussions to assist her in potentially progressing her own legislation on this matter.

This issue needs to be tackled alongside, if not in advance of, the issues addressed by today's Bill. They must be progressed in parallel. We cannot be seen to provide any further incentive for employers engaged in bad practice to press or force people into the type of bogus self-employment seen at present where employers effectively determine whether people are employees or should be considered as contractors. There is a question as to the definition of a worker. The European figures I mentioned suggest that determining what is a worker or an employee is an issue Europe-wide.

This Bill also has very significant economic implications. Those who are classed as PRSI employees make contributions at the rate of 14.75%. In many cases the self-employed pay 4%. The employer is, of course, not required to make an equivalent contribution. We have to be very cognisant of ensuring that this Bill gives people the protection and support they need while not contributing to the problem of employers who have been involved in bad practice being let off the hook for contributions to the public Exchequer. That is an issue. I say that in the context of wanting to support people by giving them access to these payments but also wanting to ensure that employers feel pressure from the State. I urge the Minister to ensure that legislation to address bogus self-employment and to ensure all those categorised as self-employed have chosen self-employment and are accurately categorised is progressed at least in parallel with, if not in advance of, this Bill. Unfortunately, we cannot say that all those categorised as self-employed in the State are accurately categorised.

We are looking at a smaller level of PRSI contribution, although I have made the case that some contributions are made which are not measurable in the same way as a direct PRSI contribution, such as the contributions made by carers from which the State has benefitted so much. The State may have to provide supplements to balance out these contributions. This relates to other issues in our pension systems such as the idea of a care credit. If such measures are to be included in budget 2020, it will require the Minister for Finance to recognise that a general taxpayer subsidy needs to be provided and increased. Bringing self-employed persons into this net of safety and protection, which is important, and recognising and supporting such people, should not come at the cost of other social welfare payments but may require instead an additional contribution from the Exchequer and the State as a whole. That is a financial question. A case can be made for such action. The case for such measures for carers can certainly be made. Others have made that case. I say these things in the context of the Minister's plans to progress this Bill in the autumn, when debate on the budget will be under way.

I hope this will be useful to the Minister in terms of ensuring we get the additional resources we need in terms of care credits and the pension system. I look forward to engaging on some of the technicalities during the Committee Stage debate.

Senator Michelle Mulherin

The Minister is very welcome to the Chamber. I acknowledge the welcome energy and drive that she brings to her role and, in particular, her ability to listen to all sides when proposals are brought to her and she tries to drive forward for the common good. That is a very valuable characteristic and I thank the Minister for all her good work.

The work of a self-employed person is very onerous. He or she does not get away with too much in reality. The self-employed sector is well regulated and they have to account not just for themselves but for others to Revenue. Small businesses must comply with a great many regulations that we have introduced to protect consumers, as well as other laws we have introduced. The buck stops with them. Those in small businesses are dynamic and are employing people. In fact, they go beyond the duty of their work and their businesses for the community, which is probably in contrast to many of the larger businesses. Those in small businesses are the people who are organising the festivals or sponsoring the local teams, and they are an asset to any community because their heart is in it. This enhances the community at so many different levels.

Many businesses hit the wall during the downturn in the economy and went out of business. This was a very difficult time and then the small business person found that he or she was not entitled to a social welfare payment, jobseeker's benefit, while his or her staff would be looked after. Very often these people continued to run their business without taking a salary but ensured that their outgoings were met as much as possible. I welcome all measures that have been taken to date to recognise the situation of the self-employed and that they should not be penalised for being self-employed but encouraged for that spirit of entrepreneurship of which we have all spoken and which is valuable to our society. It is that spirit which makes us the sort of country that we are. We are people with get up and go - can-do people. We need to remove obstacles as much as possible in these people's paths. I warmly welcome the Bill.

I acknowledge that Senator Butler, who is not present today, regularly advocated for this sector, as we all know. In that same vein, I ask the Minister to look again at the employer's rebate under the statutory redundancy payment scheme. The employer's rebate was removed at a time of financial crisis in the country. It was costing the county money. The irony of its abolition is that many of the small businesses that went to the wall were sole traders who were not incorporated and did not have the protection of the corporate veil. Many were hit particularly badly. In previous times they were able to avail of the 60% rebate up to January 2012, when it was reduced to 15% before being abolished in January 2013. I have encountered a number of cases where the business is winding down because the person is retiring, and he or she has to pay redundancy which that person cannot afford and it is becoming a charge on his or her estate. The widow or widower has a charge on the family home. In one case, an accountant who had provided for his retirement and had a nest egg of €150,000 spent all this money on redundancy payments. I do not think that is fair or right. When a rebate of 60% was paid, multinational companies relocating to eastern Europe were able to get the 60% rebate having received financial support from the IDA to set up in this country, whereas the Trojan small and medium-sized enterprise businesses that bring a dynamic to local economies, especially in rural areas, were hit badly. I ask the Minister to consider ways to ease the burden. Why should the widow or widower of such an enterprising person see a charge on a property or an asset when the individual tried to provide for him or herself and did not have much to show for all his or her years of effort, hard work and taking risks?

Another aspect of the employer's redundancy payment is the calculation of the payment. I understand the current formula for calculating redundancy is that the employee gets two weeks' salary for each year of service and that provision was introduced in 2003. I encountered a case where the employer had taken on staff in the early 1980s and the redundancy that they were required to pay the staff was calculated from the early 1980s on the basis of the two-week rule. Can that be lawful? Can a rule that was introduced in 2003, if I am correct, operate retrospectively? This is what is being sought from this employer. That is not fair. It does not sound like it would be constitutional that a penalty would be placed on an employer. I would appreciate it if the Minister could enlighten me on it. I thank the Minister.

Senator Rónán Mullen

Cuirim fáilte roimh an Aire. I thank the Minister for this important and long overdue Bill. When the Minister for Finance confirmed in the Budget Statement 2019 that he intended to extend access to jobseeker's benefit to self-employed people, there was considerable relief across all self-employed sectors. The Minister confirmed in April that the Department would introduce this scheme in late 2019.

I commend the Minister and the Department on this speedy approach adopted after years of debate and ping-pong between various Departments. When the general scheme of the Bill was published, it was made clear that a person must have 104 employment contributions in PRSI class A or have 156 self-employment contributions in class S as a first condition to determine eligibility for payment. This was promoted as a recognition and support for mobility between a person's employed and self-employed contributor status. It was a recognition of the accumulation of rights in different labour market statuses and a move that specifically aimed at helping to ensure that an individual did not find himself or herself disadvantaged as a result of a move from employment to self-employment. As I understand it from replies provided by the Minister in the Dáil, it is expected that 6,500 people will become eligible in the first year of operation, which is to be welcomed.

The social contribution that the self-employed make to our economy and, more importantly, to our society cannot be overemphasised. Many of these people are some of the most enterprising, courageous and creative people we have. It is only just, therefore, that we afford them an opportunity to avail of a statutory safety net when things go wrong. It would be wrong of me, of course, not to acknowledge the very real challenges that are posed by what is termed disguised employment or bogus self-employment. I know the Minister and her departmental officials have conducted a wide-ranging analysis of these difficulties, and they were identified in the report of the working group. That report made it very clear that trends in world labour markets show a move away from the binary concept that a worker who is not unemployed is either employed in a mutually dependent contract of service relationship with an employer or is a self-employed free agent, competing for business on a contract for services basis. It is disturbing from an authentic social justice perspective that the finding is that these new forms of service relationships in the so-called gig and sharing economies have blurred the lines as to what constitutes contracts of service as opposed to contracts for services.

There is real concern that such confusion is being taken advantage of to reduce employment rights and responsibilities, and avoid tax and social insurance liabilities. For the ordinary worker it means they are vulnerable to exploitation, lack of resources to engage the appropriate professional advice and pressure not to report such exploitation for fear of blacklisting. In the construction, meat processing and forestry sectors this vulnerability has allegedly allowed employers to use the electronic relevant contracts tax system to incorrectly classify workers as self-employed contractors. We will have heard today that these claims are resisted by the industries concerned. The construction industry has sought to advance the view that the promotion of bogus self-employment as widespread is part of a narrative created by the unions. According to IBEC, the overwhelming feedback from its members was that what are described as "intermediary-type structures and self-employment arrangements" come in a very wide variety of forms and cannot easily be placed into neat categories. It explains that these types of arrangements are not undertaken to avoid taxation or employment law obligations but simply reflect the project-led nature of the sector.

The conflicting assessments that one gets around all of this must be confronted not only to address the tenuous legality of these arrangements if that is the case but, more importantly, because of the impact on human dignity. I hope the Minister does not mind a slight digression but in preparing for this debate I came across something that Pope Benedict XVI wrote some years ago in his encyclical Caritas in Veritate:

The economic sphere is neither ethically neutral nor inherently inhuman or opposed to society. It is part and parcel of human activity, and precisely because it is human, it must be structured and governed in an ethical manner.

I think that is what we are about here today. In practical terms we are seeking to put an ethical structure on this aspect of the economic sphere. All of us want to see workers, employed and self-employed, treated in an ethical manner where the dignity of their contribution can be recognised and where a support structure can be put in place if and when it is needed. Failure to do this would mean that creative risk will continue to be stifled because of the lack of support when things do not go right for one reason or another. In that sense the Bill before us is necessary even if it is a rather belated acceptance that society is not just a set of legal arrangements between people, it is also a partnership in the Burkean sense of that term. By supporting the self-employed entrepreneurs and innovators among us we, therefore, support each other in the promotion of a more just and fairer economic environment.

I thank the Minister. I am sorry that I have to step out for a short while so I will not be able to hear her response to my contribution and the other contributions but I will certainly check up on it later.

Senator Kieran O'Donnell

I commend the Minister on this very important debate for the self-employed that comes on foot of the treatment benefits and invalidity pension for the self-employed. I come from the self-employed ranks and practised as an accountant. One of the big issues was that the self-employed found it impossible in many cases to qualify for any form of social welfare. They would have qualified for jobseeker's allowance but in many cases it was very difficult to qualify due to, for example, business assets that did not generate income. This legislation puts the self-employed on an equal footing with PAYE workers, which must be commended.

We must encourage people to become self-employed. One of the reasons that people were cautious about becoming self-employed was that they felt there was no safety net. This legislation now provides a dimension of a safety net. When someone with a young family or whatever considers becoming self-employed, he or she will weigh up risk. One of the risks of becoming self-employed is that one might leave a secure job or a reasonably well-paid job. Even though one has a great idea one will still be uncertain that the move will work out and in many cases one would be unwilling to take the risk. This legislation does not provide a huge safety net but it is very important and I campaigned for it for many years. I have spoken in both Houses, over many years, about this particular issue, as I am sure the Minister will be aware. Today is a positive day. This legislation is a proactive measure by the Government that sends out a statement to the self-employed. When I speak about the self-employed I am speaking about the person who works on his or her own and perhaps employs one or two people. In many cases these people are the backbone of the SME sector. It is a class S stamp that will apply to all and one needs either 104 contributions for an A stamp or 156 contributions for an S stamp. Typically, the relevant contribution year is the second last year. In most cases people who set up as self-employed should qualify.

Once again, I commend this Bill that will come into effect in November. As someone who comes from the ranks of the self-employed, I wanted to contribute to today's debate. This measure will continue to encourage an entrepreneurial environment. Further steps will be taken and the earned income credit, formerly called the POE credit, will be evolved for the self-employed. We need innovative entrepreneurs but, equally, we need employees and we must strike a balance. I hope that this legislation will encourage creative people who have ideas about setting up a business in some small way to consider setting up as self-employed. I also hope that in five or six years' time there will be entrepreneurs stating that one of the reasons they considered setting up, and created businesses and extra jobs is because the jobseeker's benefit was made available to the self-employed. Well done to the Minister.

Acting Chairman (Senator Maria Byrne)

The Minister has three minutes as we must stop at 5.30 p.m.

Minister for Employment Affairs and Social Protection (Deputy Regina Doherty)

I thank everybody for their contributions. I know it is difficult to talk about jobseekers as self-employed without being genuinely concerned about false and forced self-employed, which are very different and require different mindsets. This legislation is very small, short and directed towards balancing and equalising the rights of self-employed and employed people with regard to access to the Social Insurance Fund. This legislation literally does what it says on the tin, which is to provide one of the two last remaining items that are not available to the self-employed. One of the Senators is right to state that the last item is the short-term illness benefit. While the will is there to provide it, budgetary constraints must be taken into account because the benefit is a much larger cost on the Social Insurance Fund than extending this particular benefit. An actuarial review is being conducted and I hope to have its findings at the end of this year to talk about the challenges that face the fund going forward so that we can all make informed decisions around pension contribution changes and social insurance contribution changes. These are decisions that we must collectively make together and I look forward to doing that.

To confine myself to discussing this Bill, we have finished Second Stage today. I look forward to hearing the contributions that will be made on Committee and Report Stages. I know people have valuable insights into how they would like to see this implemented and I look forward to hearing the contributions.

Question put and agreed to.

Acting Chairman (Senator Maria Byrne)

When is it proposed to take Committee Stage?

Senator Maura Hopkins

Next Tuesday, 9 July.

Committee Stage ordered for Tuesday, 9 July 2019.