Bogus self-employment costing exchequer '€1bn per year', activist tells Oireachtas committee

Bogus self-employment costing exchequer '€1bn per year', activist tells Oireachtas committee

An Oireachtas committee has heard that bogus self-employment is rife across industries in Ireland, representing a “massive” problem.

The Oireachtas Committee on Social Protection heard that in the case of a worker wrongfully deemed to be in self-employment it is “impossible” for the worker to have that decision overturned.

Certain professions, notably in the construction, transport, and IT industries, have come under fire in recent times for treating workers as PAYE employees but labelling them as self-employed.

It has been suggested that some companies are allegedly allowed to treat employees in such a manner in order to avoid the payment of social insurance benefits on their behalf.

The committee was addressed by Dublin activist Martin McMahon, who said in his opening statement that the Social Welfare Appeals Office (SWAO) is in the practice of overruling the Department of Social Protection’s SCOPE function regarding the status of those who believe they are being labelled as self-employed erroneously.

This sees de facto tax breaks given to the companies for whom those designated as self-employed work, he said, and was being arrived at via a process reliant on “unlawful” test cases, and that only one of those cases has ever come to light via the Department.

Asked how he thought the situation could be resolved, Mr McMahon said that legislation is “not the answer”.

“You can’t impact this with oodles of legislation, because the system is broken and the Social Welfare Appeals Office is the issue,” he said.

"The scale of the problem is huge, it’s massive,” he said, adding that in his opinion the cost to the exchequer on an annual basis “is conservatively €1 billion per year”.

“SWAO has shown itself to be incompetent, and the Department of Social Protection has shown itself to be incompetent,” Mr McMahon said. “Let’s refer all cases to the circuit court and let it decide, not civil servants,” he added.

The test case Mr McMahon cites dates from June 1995, which saw the SWAO deem a courier to be self-employed.

He said that the SCOPE section had been unaware of the use of historic cases as a precedent for overruling its findings by the SWAO until being made aware of the process by Mr McMahon himself in April of this year.

Sinn Féin TD John Brady told the committee that the behaviour Mr McMahon had outlined was “absolutely mind-blowing” and amounted to “unlawful collusion” involving the State and private industry.

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