Improving the lot of bogus self-employed workers

Many workers fulfil criteria associated with employees - but they don’t get any of the benefits

There’s a worker who cleans offices Monday to Friday. But even though he works regular hours, all his gigs are set up for him and he’s paid the minimum wage each week. The company he works for has hired him on a self-employed basis, which means that if he’s sick, he won’t get paid. And next week, he might have no work at all.

Or how about the content moderator, hired to view graphic images on websites and make decisions on whether they should be left up or taken down. The stress of the job can get to her but as she’s not an employee, she’ll find it difficult to get stress-related paid leave, or make a personal injury claim.

Despite not having any other clients, she doesn’t actually work for the internet giant – she works for herself.

Hiring contractors and availing of the services of self-employed people is a perfectly legitimate strategy for employers and employees alike. For companies, it allows them to scale up and scale down as business needs determine; for employees, it can mean a way to work independently, with greater flexibility, and sometimes at higher rates of pay than a full-time job would offer.


But it’s not always as simple as that, and there have been growing concerns that employers are increasingly availing of the services of workers on a self-employed basis to avoid the benefits that go with being an employee – pension contributions, sick pay, protection under the law for unfair dismissal, to name but a few. And employer’s PRSI, levied at a rate of 10.9 per cent on an employee’s salary. This is important in terms of accessing State benefits.

So-called bogus self-employment is where workers fulfil many of the criteria typically associated with employees, but don’t actually get any of the benefits – and the exchequer misses out on tax revenues.

Umbrella trade union group ICTU, for example, has estimated that this is costing the exchequer some €240 million per year in the construction sector alone through lost employer PRSI.

How do we know it’s bogus? Revenue has a code of practice on what constitutes an employee. If your work is under the control of someone else, if you receive a fixed hourly, weekly or monthly wage, if you cannot subcontract your work, if you work set hours; and if you work for one person or one business, then you should be considered to be an employee.

But this code is not statutory, which has left a lacuna into which employers have leapt.

Endemic problem

While Minister for Employment Affairs and Social Protection Regina Doherty told the Dáil earlier this month that she does "not know the size of the problem", solicitor Richard Grogan, a strong opponent of bogus self-employment, argues that it is "endemic", particularly across sectors like construction, cleaning, IT, modelling and the gig economy.

“What you’ve created is a hire-and-fire situation for the lower-paid. In my view it is abhorrent,” he says, adding, “it is completely undermining the rights of workers”.

What can be done?

Some would argue that the rise in self employed and contractors is part of how we work now and is here to stay. A pragmatic approach might be to create a new type of worker, or a sort of “dependent contractor”, who doesn’t have the same rights as an employee, but has more than someone who is self-employed. In the UK for example, three categories exist: you can either be self-employed, employed or a worker.

Others, however, fear such an approach would only serve to further muddy the waters.

For its part, the department has been strong on rhetoric and its contempt of the practice but weak on action, until now at least.

More recently, Doherty has come forward with a number of steps, including putting the aforementioned code of practice on a statutory footing. She is also considering giving the Workplace Relations Commission additional powers for workers who seek a determination on their employment status, and introducing legislation for determinations to be made on the employment status of groups or classes of workers, rather than just on individuals.

But all of these are slow, steady steps, which will depend on effective investigations and leaves workers like our aforementioned cleaner still missing out on benefits.

Grogan thinks an easier solution would be to require all workers, earning up to 1.5 times the minimum wage, to be hired on an employed basis, arguing that he doesn’t think the department is serious enough about dealing with the issue.

Take a stand

It’s not just the Government that is trying to curb work practices that might impinge on a worker’s rights. Employees too, are starting to take a stand on behalf of their fellow contractors.

Globally, it has been suggested that 50 per cent of Google’s entire workforce are contractors, known as “temporary, vendor contractors” (TVCs). If this was to be the case in the Republic (and we did ask, but the company wouldn’t give us a figure) then the internet giant has more than 3,000 people working for it on a contractor basis here.

It's a situation that employed workers at the internet giant are not necessarily happy about. Last year, some 20,000 Google staff around the world walked off in protest against a number of issues, including treatment of this TVC cohort.

The company responded by upping the benefits for TVCs in the US – including paid parental leave and at least eight sick days – and it’s understood to be now considering similar improvements elsewhere in the world.

But it won’t offer these to the contractors itself – because that, presumably, would be akin to employing them. Rather, it has requested that the agencies hiring the contractors provide these benefits instead.

Much like happened with tax practices, companies are out in front setting the pace in the new labour market – and the Government is struggling to play catch up.

Fiona Reddan

Fiona Reddan

Fiona Reddan is a writer specialising in personal finance and is the Home & Design Editor of The Irish Times