Tag Archives: Bogus Self Employment

Minister for Employment Affairs and Social Protection Regina Doherty

Last night.

On RTÉ One’s Drivetime.

Philip Boucher-Hayes interviewed the Minister for Employment Affairs and Social Protection Regina Doherty.

They discussed bogus self-employment – where a worker is forced by an employer to declare themselves as self-employed rather than employees and the employer doesn’t have to pay PRSI.

And they spoke about how the deputy secretary of the Department of Social Protection told an Oireachtas committee in November that the department does not prosecute employers hiring people under bogus self-employment conditions.

During the interview Ms Doherty admitted that her department doesn’t prosecute employers for the practice “for a variety of reasons”.

She later told Mr Boucher-Hayes that she disagreed with him when he said it appears employers are being given a “free pass”.

From the interview…

Philip Boucher-Hayes: “The Deputy Secretary of your department appeared before an Oireachtas committee back in November and said that it was departmental policy not to prosecute employers who were engaging people on bogus self-employment terms. Let’s just play it. It’s only 10-seconds long.”

Regina Doherty: “Sure.”

[plays clip]

“We have not been keeping specific stats on bogus self-employment.”

Boucher-Hayes: “The other clip there is Patricia Murphy saying that it is department policy not to prosecute.”

[plays clip]

“The department itself has not taken a criminal prosecution against employers because we have, in fact, used, in our joint operations, the powers available under the tax acts to attach and apply administrative policies and we consider to be, at this time, more effective, and timely.”

Boucher-Hayes: “You’re not prosecuting employers who break the law but you will pursue benefit fraudsters through the courts. This sounds like one law for white collar criminals and another for blue collar criminals?”

Doherty: “No, it’s certainly not. What we do with regard to the scope environment is that if you presented yourself and I use you as an example because we’re talking: If you presented yourself to ask us to do an investigation into your employment status, we would do it.

“If we determined that you were incorrectly categorised, we would go to your employer and say Philip Boucher-Hayes started working for you on the 1st of January, 19-0-flat – you owe us and him and the Revenue Commissioners X amount of money and we would penalise them.”

Boucher-Hayes: “But what about where I work for somebody who has employed 100 or more people on bogus terms and you can prove that and see that they are systematically breaking the law? Why wouldn’t you prosecute them?”

Doherty: “And again, what we do is we bring everybody in line, in the category that they should be paying. We backdate all of the proceeds that the PRSI claims both the employer and the employee should be making to the Revenue Commissioner and to myself and to my own department…”

Boucher-Hayes: “But Regina Doherty, it is a criminal offence to employ people on these terms, why are you not prosecuting them? Why are you giving them a free pass?”

Doherty: “We’re not giving them a free pass. And we conduct thousands, tens of thousands investigations…”

Boucher-Hayes:No you are giving them a free pass because the Deputy Secretary General of the department admitted that there had only been one prosecution, in spite of the fact that this is a criminal law, under the statute books but your policy is: not to enforce it.”

Doherty: “Yeah, I think the main determination and the main ambition from the department is to get people correctly classified – that’s the way the department has always worked. We changed our inspection regime in the last year to actively go out and pro-actively conduct uncalled or unannounced inspections in particular industries which we have never done beforehand. And what we’re doing now today is changing two things this year: we’re going to introduce anti-penalisation legislation to make sure that nobody that is in that status of maybe being coerced into being self-employed should be afraid to take a case…”

Boucher-Hayes: “Ok, that’s great. But up until now, you have been…”

Doherty: “Let me finish, for one second…if you just let me finish for one second…I’m also going to take away the attractiveness of employers using people as contract staff at some point, with legislation, in the next 12 months. So if I can tackle this in a number of ways, ultimately, what I want is: I don’t want to penalise anybody. I don’t want to make employers the bad guy…”

Boucher-Hayes: “What do you mean? Hang on a second. You penalise people who are committing benefit fraud. You prosecute them but you don’t do the same for white collar criminals. Why not?

Doherty: “Well, we actually do.”

Boucher-Hayes: “No, you don’t. You’ve done it on one occasion and that’s the figure of the Deputy Secretary General of the Department.”

Doherty:The reason that we don’t prosecute is that there are a variety of reasons. You’re making the assumption that everybody is put on a self-employment status without the knowledge, without the co-operation, without the consent. There are reasons why people find themselves classified in incorrect classifications and when they come to us we’ll investigate, we find those reasons and we correct and impose fines…”

Boucher-Hayes:You’re not naive to the fact that one of the main reasons is so that employers can duck their PRSI contributions, it’s a money-saving…

Doherty: “Well. That’s exactly what I just told you is that if I can manage to take away the attractiveness – I think that will fix an awful lot of our problems but what I’m more concerned about…”

Boucher-Hayes:You might fix an awful lot of your problems by making an example of the kind of people who are doing it and prosecute them through the courts…”

Doherty: “But what I’m more concerned about…what I’m more concerned about Philip is ensuring that those people who are out there, and we ran a campaign this year to let people know that we even exist, because, to be honest with you, a lot of people were not even aware of the scope, the section within my department on what it does: to let the people know that if they need any assistance or investigation into the classification of their status, from a PRSI perspective, we are here, we will make the investigation and we will make the correction.”

Boucher-Hayes: “Ok.”

Doherty: “And anybody that’s found wanting will be penalised financially. I know you’d probably like to see people hung up by their feet. What I want to do is make sure that we take away the attractiveness...”

Boucher-Hayes:No I think people would like to see everyone being treated equally before the law. That’s the reason that I raised the question because at the moment they’re not being, employers are being given a free pass on this one. Let’s just set that aside…”

Doherty: “I tell you what, let’s just agree to disagree cause I certainly don’t agree with you.”

Boucher-Hayes: “The scope decisions that you have referred to there: People bring their claims and very often, as our investigations established, the scope will find in their favour – that they are indeed bogus self-employed. But when that decision is appealed to the Social Welfare Appeals Office, by the employer, those decisions are routinely overturned our investigations found out.

“Is the system rigged in favour of the employers?”

Doherty: “Again, if I was to give you an example of the amount of people who apply for carers’ allowance that are refused that then have a mechanism to appeal, that are then overturned and found in their favour, would you think that the system is rigged towards people who are getting carers’ allowance or invalid benefits?”

Boucher-Hayes: “We’re talking specifically about bogus self-employment.”

Doherty: “No, no. You’re talking about a culture which you’re trying to assign to the department which is grossly unfair. We have in our department…”

Boucher-Hayes: “I’m not talking about…I’m talking about facts. I don’t know what the culture is. I’m just talking bout the numbers that have exposed themselves – every case that we looked at where the scope decision had gone against an employer was overturned in favour of the employer. The system would appear rigged would it not?

Doherty: “Well, no, it wouldn’t appear. In so far as when anybody makes an application and there’s an adjudication, everybody – whether you’re an employer or an employee, in this particular section – has the ability to appeal it. If they don’t like that decision they have the ability to appeal it again. And if they don’t like that decision they have the ability to take it to the actual courts of this land.

“The cases that you may have looked at might have been one way or the other particularly, but there is no sign or trend in our department with regard to people being categorised one way or the other.

“What there is in our department is an investigation section so that anybody who thinks that they are misclassified from a social insurance perspective to make a complaint and we will investigate.”

“And if they don’t like the outcome of the investigation, they have the opinion, or the ability, to be able to appeal it, appeal it and review it and there is no trend.”

Listen back in full here

Previously: Bogus Self Employment Cheats Us All


Tom Parlon (top) of the Construction Industry federation (CFI) believes bogus self employment in the construction industry is ‘grossly exaggerated’

In a recent interview with TheJournal.ie, Director General of the CIF Tom Parlon dismissed claims from a new construction union called ‘Connect’ that it would eliminate the Scourge” of bogus self employment in the construction industry.

Assiduously avoiding the term ‘Bogus Self Employment’, Tom told TheJournal.ie that there has been a move away from direct employment, not just in Ireland but internationally. However, he said the scale of this has been “grossly exaggerated”​

There has indeed been a move away from direct employment in the construction sector.

In 1998, the share of workers in the construction industry classified as self-employed was 16%. The Office of the Comptroller & Auditor General was, at that time, concerned that a significant portion of those classified as self employed were in fact bogus self-employed.

Partly because of the C&AG’s concerns, the Revenue Commissioners undertook a special program of 6,200 visits to Principle Contractors in the construction industry. During the visits, the status of 63,000 sub-contract situations was examined.

12,000 (19%) of those sub-contract situations were not genuine self-employment, they were bogus self employment.

In 2001, concerns were expressed at the Public Accounts Committee that misclassification was still rife in construction.

The then Chairperson of the Public Accounts Committee,  Jim Mitchell, ordered a similar special program of visits to Principle Contractors in the construction industry. The results of this PAC investigation exposed the same high level of bogus self employment in the construction industry – circa 20%.

Over the following 6 years, the rate of self-employment in the construction sector fell almost 3% to 13% with a commensurate reduction in the percentage of Bogus Self Employed. The investigations instigated by the C&AG and the PAC were pivotal to that decrease.

In July 2007, Tom Parlon took up a position as Director General of the Construction Industry Federation. Within five years, in an unprecedented explosion unseen anywhere else in Europe, the percentage of workers in sub-contract situations in the construction sector more than doubled before peaking at almost 31% (Refer to QNHS data below).

Extrapolating from the only the widespread investigations available, instigated by the C&AG and the Public Accounts Committee, Bogus Self Employment in the construction sector was over 40% in 2013 and is currently running at almost a third (30% – 33%) of those classified as self employed in the construction sector.

In 2015, the Irish Congress of Trade Unions released a report which states that Bogus Self Employment in the construction sector was costing the tax payer 80,000,000 euro in PRSI per year.

This figure was based upon 30,000 – 40,000 sub-contract situations but later Dáil replies state that the actual number of sub-contract situations is in excess of 100,000, resulting in a loss to the taxpayer of circa 250,000,000 euro in PRSI per annum.

As was confirmed by the Minister for Social Welfare in recent weeks on Drivetime RTE, there are no official figures available from either Social Welfare or Revenue on Bogus Self Employment, however, the QNHS data is generally accepted as credible, unlike the Pernicious Mr. Parlon.

Martin McMahon podcasts with Tony Groves at The Echo Chamber and blogs at RamshornRepublic

Previously: Bogus Self Employment Cheats Us All