Bogus self-employment:  Oireachtas Committee told presumption of employment most effective remedy

unite-white-out-of-redUnite says bogus self-employment rife in construction but also encountered elsewhere

Eliminating bogus self-employment would be win for workers, win for Exchequer and win for compliant employers

June 20th:  Unite, which represents workers throughout the economy, today (Thursday) appeared before the Joint Committee on Employment Affairs and Social Protection to give the union’s perspective on bogus self-employment and the measures needed to counter the practice, which is thought to cost the Exchequer hundreds of millions of Euro due to non-payment of Employer’s PRSI. Unite’s full statement to the Committee is available for download here.

Addressing the Committee, Unite Regional Officer for Construction, Tom Fitzgerald, said:

“While bogus self-employment is rife in construction, Unite also encounters the practice in other areas ranging from archaeology to English Language Teaching. An archaeologist, for example, may be instructed to arrive at a site at a particular time, take a break at a particular time and finish at a particular time.  She or he may be working for an employer-defined hourly rate of pay. To all intents and purposes they are employed, working under the control and direction of the employer, unable to dispose of their time or to take up other work. Unlike regular employees, however, she or he has no entitlement to sick pay, paid annual leave, parental or family leave.  Since the employer does not pay social insurance contributions, let alone occupational pension contributions, the impact of bogus self-employment follows a worker into retirement.

“This is the experience of thousands of workers in all sectors of the Irish economy today”, Mr Fitzgerald said.

Referring specifically to the construction sector, Mr Fitzgerald continued:

“The highly fragmented nature of the Irish construction sector helps facilitate bogus self-employment.  This gives rise to tiers of sub-contracting, or what one could refer to as a sub-contracting cascade with the worker at the bottom of the cascade, several removes away from the principle contractor.  This inevitably gives rise to an erosion of terms and conditions of employment, and means that statutory obligations relating to taxation and social insurance – in particular – are not met. Unite believes that the high level of self-employment in construction actually reflects a high level of bogus self-employment.

“Not only does bogus self-employment in all sectors impose a significant cost on workers:  it also imposes a cost on the Exchequer and on the wider economy. The loss to the Social Insurance Fund due to non-payment of Employer’s PRSI is likely to run into the hundreds of millions of Euros, while there is also a loss of spending power in the economy due to loss of benefits arising from self-employment”.

Colette Godkin is Secretary of Unite’s English Language Teachers Branch and said that consideration should be given to a package of measures to address the scourge of bogus self-employment, starting with a presumption of employment:

“The burden of proof needs to be switched so that an employer can show that a worker is not in an employment relationship.   At the same time, the Government must establish a uniform framework that defines the distinction between employment and self-employment.

“The state has considerable power and should start using it.  The policing and contractual provisions of public procurement contracts should be strengthened to prevent labour abuses.  And the granting of licenses or permits must be contingent on not engaging in bogus self-employment or other precarious work practices.  In the case of English Language schools, for example, schools found to engage in such practices would be removed from the Interim List of Education Providers”, Ms Godkin said.

Tom Fitzgerald added:

“Eliminating bogus self-employment from the economy would be a win-win-win for workers, for the Exchequer and for compliant employers who may currently be at a competitive disadvantage vis-a-vis those who would use bogus self-employment and super-exploitation to give them a competitive edge in the market”, Mr Fitzgerald concluded.

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