bogus self-employment

Bogus self-employment practices next on Government agenda

The Government is exploring proposals aimed at clamping down on bogus self-employment practices. The issue was discussed at some length in debates leading up to the enactment of the Employment (Miscellaneous Provisions) Act, 2018 but the government decided the issue would need standalone legislation.

As new technologies continue to disrupt the way in which business and employment is done, it is becoming more and more difficult to determine employment status.

Defining bogus self-employment in Ireland

Bogus self-employment is defined by the Department of Employment Affairs and Social Protection as an employment practice where an employer willfully and wrongly classifies an employee as a self-employed contractor to avoid employer related tax and social insurance contributions and pro-employee employment rights which attach to employment.

“Standalone” team

Minister for Employment Affairs and Social Protection, Regina Doherty proposed the assembly of a new “standalone” team to focus on the issue. The proposals suggest that the dedicated unit would investigate alleged bogus self-employment in large employers and certain complex employment arrangements that other employers have in place.

Tax losses

The government is keen to address an issue that may be costing the state as much as €300 million in unpaid PRSI every year. Unions are also supportive of the government position as workers who are incorrectly classified as self-employed contractors are denied their statutory employment rights under Irish and EU law.

Revenue Code of Practice for determining employment status

The Department of Social Protection carries out determinations of employment status for tax and social insurance purposes. These determinations rely on the criteria set out in the Revenue’s Code of Practice for Determining Employment or Self-Employment Status of Individuals. Under the Minister’s proposals, the code will be updated to include insights gained from more recent case law which has examined increasingly complex issues concerning the determination of employment status.

The evolution of the employment relationship

Digital platforms are disrupting the traditional employment relationship. Employment tribunals in the UK have already been asked examined cases involving Uber drivers and Deliveroo riders. What seems clear is that flexible work arrangements are here to stay and legislators are coming under pressure to regulate the employment relationship in the new world of work.

As the collaborative or ‘gig’ economy continues to expand, it is important for businesses to monitor government activity on employment status. In the meantime, a clear contract should be put in place with any self-employed workers that clearly specify the nature of the working relationship.

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