Dáil Éireann Debate, Tuesday - 20 February 2018
42. Deputy Bríd Smith asked the Minister for Employment Affairs and Social Protection the legislative proposals she plans to introduce to address abuses of workers' rights in relation to bogus self employment, especially in the construction industry; and if she will make a statement on the matter. [8439/18]
View answer53. Deputy Mick Barry asked the Minister for Employment Affairs and Social Protection her views on a report (details supplied) published by her Department in January 2018; and if she will make a statement on the matter. [8446/18]
View answer57. Deputy Mick Barry asked the Minister for Employment Affairs and Social Protection her plans to introduce legislation on foot of a report (details supplied) recently published by her Department. [8447/18]
View answerI propose to take Questions Nos. 42, 53 and 57 together.
Bogus self-employment arises where an employer wrongly treats a worker as an independent contractor in order to avoid tax and social insurance contributions. There are robust arrangements in place for dealing with complaints of bogus self-employment. Social welfare inspectors inspect a wide range of businesses, as part of their on-going compliance operations. Inspections are also undertaken jointly with other agencies including the Revenue Commissioners and Workplace Relations Commission. Where evidence of non-compliance is detected, this will be pursued.
Officials also investigate specific cases referred to my Department’s Scope section. This section determines employment status and the correct class of pay-related social insurance (PRSI). Where misclassification of workers as self-employed is detected, the correct status and class is determined and social insurance arrears are collected as required. Under the Social Welfare Consolidation Act, there are specific offences in relation to employment contributions. On conviction, fines and or imprisonment can ultimately be imposed.
Any worker who has concerns about their employment and PRSI status should contact my Department and the matter will be investigated. This can only happen with the cooperation of the worker.
The classification of a worker for PRSI purposes can be complicated by the use of intermediary employment structures referred to by the Deputy. Revenue estimates that there are some 15,000 people employed using such structures.
My Department has concerns that such mechanisms may be used to reduce the amount of PRSI and tax being paid, with a subsequent loss to the exchequer and the Social Insurance Fund. A report on the issue prepared by officials from my Department, the Department of Finance and the Revenue Commissioners and informed by a public consultation with a wide range of stakeholders, was published at the end of January.
The report finds that the available data does not indicate that self-employment is accounting for any significant increased share of the labour force, and accordingly the perception of the level of disguised employment may be overstated. While the report indicates that intermediary arrangements can be abused to the detriment of workers and can distort the transparent and efficient operation of the labour market, it also notes that contract for service arrangements can provide flexibility, in many instances, for both businesses and workers, where they are freely chosen by both parties.
The report also contains an analysis of issues raised in the public consultation specifically pertaining to the construction sector. It looks at the administration of tax and social insurance in the sector, including 'relevant contracts tax' (RCT) and compliance activities. The report finds no evidence that the system facilitates the mis-characterisation of workers as self-employed as there are safeguards for workers who may have been incorrectly classified. For example, Revenue informs the sub-contractor after receiving the relevant contract from the principal contractor and will investigate if the sub-contractor is of the view that they are incorrectly classified. They can also engage with the Scope insurability section in my Department.
The recommendations of the Report are being examined in the context of the overall development and sustainability of social insurance and the supports available for both the self-employed and vulnerable workers. This Report and the recent Actuarial Review of Social Insurance provide a timely and evidence-led opportunity to undertake a full review of our social insurance system and to consult with stakeholders.
