Department examines bogus self-employment in media, journalism, and airline sector

Thu, 18 Jan, 2024 - 14:57

Cianan Brennan

The Department of Social Protection is investigating the prevalence of bogus self-employment in “media and journalism, and also the airline sector”.

The head of the department also said that a landmark Supreme Court judgement in terms of bogus self employment “does not necessarily transfer” into a reclassification of workers’ status.

John McKeon, the secretary general of the Department, told the Public Accounts Committee on Thursday that the recent Karshan judgement at the State’s highest court does not automatically mean that people incorrectly treated as self-employed for social insurance purposes are entitled to full employment rights.

Karshan, otherwise known as the Domino’s Pizza case, dates from last October and saw the court declare that pizza delivery drivers must be treated as employees rather than self-employed contractors.

Bogus self-employment is the practice where a worker who is acting in the capacity of an employee of a company or agency is classified as self-employed for PRSI purposes. As such, they do not have the same statutory social insurance contributions and holiday benefits that PAYE workers receive.

The precise impact of bogus self-employment on the country’s finances in terms of uncollected taxes and social insurance contributions is difficult to gauge but likely amounts to several hundred million euro per annum.

The Karshan judgement had led to speculation that those who were historically condemned to bogus self-employment status would be in a position to claim retrospective compensation for the benefits they had missed out on. However, Mr McKeon told the committee that “as noted” in the Karshan decision, that is not necessarily the case.

Previously the department had said it “welcomed” the decision in terms of the “clarity” it had provided in terms of employment classification.

When the example of home tutors, who are classified as self-employed, was put to Mr McKeon on Thursday he denied that the fact those workers are treated as employees via the PAYE system and are paid directly by the Department of Education means they are entitled to be seen as direct employees of the State.

He said that for such tutors “the contract that exists is between the household and the tutor” and that the fact they are paid by the Department of Education was done “for convenience reasons” only.

When it was put to Mr McKeon that his department historically from 1995 classified all couriers as being self-employed on the back of a single ‘test case’, he replied that “certainly in my tenure (I) have never seen a situation where a whole sector of employment was decided upon by test cases”.

“You’re going back over 20 years, I haven’t seen an example of it,” he said.

When it was further put to him by Social Democrats TD Catherine Murphy that his predecessor as secretary general Eddie Sullivan in 2000 had acknowledged in a letter to the PAC that all couriers should be deemed to be self-employed based on that test case, Mr McKeon said that letter had “established the criteria” for each case.

“It didn’t establish the outcome,” he said. However, all of the roughly 700 couriers working in Dublin at that time were classified as self-employed, while the numbers working in the industry have increased exponentially in the intervening years.

Mr McKeon said he is “loath to say” whether bogus self-employment is or isn’t still a significant problem in Ireland.

In terms of industries the department is investigating as being potentially affected by the practice, he cited “media and journalism, and also the airline sector”.

Regarding the media, in terms of his department’s review of 695 contracts of workers at RTÉ to establish if they had been incorrectly classified, he said that 160 of those reviews have been completed.