When Community Employment (CE) was originally set up in 1994, the rationale for having local sponsor groups employ the CE participants was to give these community groups valuable experience of establishing themselves as an employer, paying wages, making Revenue returns, etc., so that this experience could be re-used in the future for setting up other local initiatives and possibly local enterprises. Another advantage of having the participants employed by their Sponsoring organisation is that they are protected by all applicable employment legislation (e.g. legal entitlement to annual leave, maternity leave, parental leave, etc.). The PRSI contributions paid as part of employment under CE goes towards future contribution-based social welfare claims (e.g. jobseekers benefit, illness benefit) and State Pension entitlements.
The Department has examined the implications (legal, administrative and operational) of changing CE participants’ status to that of welfare recipients after CE was moved under the direct control of the Department in 2012. If CE participants were paid directly by the Department as welfare recipients, they would no longer be covered by any employment legislation (as they would not legally be “employees”). They would no longer have access to the State’s industrial relations mechanisms where disputes arise (Rights Commissioners, Labour Court, Employment Appeals Tribunal) and trade unions could no longer represent CE participants’ interests as employees.
In terms of cost savings to the Department of the CE scheme, changing the participants’ status would have little effect, as the participant gross pay rates would remain the same regardless, as each scheme manages the payroll for participants. In terms of the participants, only those who currently pay Class A9 PRSI (4% on all income) that have weekly earnings in excess of €352 per week would see a slight increase in their net pay (as no PRSI would be deducted). The downside of that is that they would not have the benefit of any paid contributions for their future social welfare entitlements and State Pension.
However, it is an issue I am aware of and I have asked my Department to examine possible solutions to ensure it does not act as a barrier to activation.