The Department of Employment Affairs and Social Protection has no legal basis for the imposition of self- employed status on many workers, its Oireachtas committee is expected to hear today.
Martin McMahon, a Dublin activist and commentator, will tell the committee that his experience of the issue stretches back to 2000, when he first broached the problem with the department’s Scope function — which gives guidance on the insurability of employment as regards the application of the law.
At the time, Mr McMahon claimed he was an employee, and not self-employed so far as the law was concerned. Certain professions, notably in the construction and transport industries, have come under fire in recent times for treating workers as PAYE employees but labelling them as self-employed.
It has been suggested 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. Mr McMahon has said in his opening statement to the committee that he calls such misclassification of employees ‘gigification’, which he said constitutes “the approval and assistance of the State in creating bogus self-employed workers”.
He said that in this context Scope is “sidelined” by being overruled by the Social Welfare Appeals Office (SWAO), which sees de facto tax breaks given to the companies for whom those designated as self-employed work.
Mr McMahon said the process is reliant on “unlawful” test cases, and that only one of those cases has ever come to light via the department.
He said that the secretary general of social protection John McKeon had acknowledged the unlawfulness of those test cases in May by telling the Public Accounts Committee “no legislative provision” exists “which provides for appeals officers to make decisions on the employment status of groups or classes of workers”.
Mr McKeon also stated in the same correspondence that “it is also the case that the legislation does not preclude such an approach”.
The test case Mr McMahon cites dates from June 1995, which saw the SWAO deem a courier to be self-employed. He said 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.
“This ‘test case’ does not form part of any deliberations or decisions by the Scope section then or now,” he said “In the 24 years since the test case Scope still hasn’t been informed that the SWAO overturning of its decision was actually a test case.
"Workers appearing before the SWAO are not informed by social protection or the appeals office that precedents are applied which are not known to Scope, the courts, the legal profession, or any other legal body of the State,” he added.
The hearing will be the sixth occasion on which the social protection committee has heard representations on the issue of bogus self-employment. Unions have suggested the practice is costing the State hundreds of millions of euro in lost revenue.
In March, new proposals emanated from the department aimed at “clamping down” on the practice, including the creation of a standalone team in order to investigate alleged incidents of bogus self-employment in large companies, with 200 social welfare inspectors to be allocated to the investigation of the practice.