Building sector’s abuse of self-employed classification to be outlined

Oireachtas committee to hear how 24% of construction workers wrongly tax labelled

Bogus self-employment occurs when workers who should be classified as employees are marked as self-employed, which can lead to benefits for employers who otherwise would have to pay PRSI and sick pay. Photograph: Chris Ratcliffe/Bloomberg

Bogus self-employment occurs when workers who should be classified as employees are marked as self-employed, which can lead to benefits for employers who otherwise would have to pay PRSI and sick pay. Photograph: Chris Ratcliffe/Bloomberg

 

Almost one-quarter of workers in the construction sector are self-employed, raising the risk of bogus employment practices in the trade, union leaders will tell an Oireachtas committee today.

A union delegation led by Patricia King, general secretary of the Irish Congress of Trade Unions, will tell the Oireachtas committee on employment affairs that 24.3 per cent of those working in construction were classified as self-employed with no employees, compared to a level of just 3.9 per cent in industry in general.

Ms King will also point out that the sector has seen an influx of self-employed workers in recent months, with 6,000 more working in the sector in the year to the end of June 2018.

In 2017, almost €60.2 million in unpaid payroll taxes was recovered from the construction sector after a probe by the Revenue Commissioners’ joint investigations unit, which also led to 500 subcontractors being reclassified as employees.

Financial loss

The ICTU leader will tell the committee that recent efforts by the Government to tackle bogus self-employment “has failed to correct the problem”, and that the expansion of bogus self-employment has led to “very negative consequences” for workers as well as “a significant financial loss to the State”.

“However, there are significant benefits to the person who in normal circumstances would be his or her employer. This incentive has led a number of employers in a number of sectors of the economy to misclassify workers,” according to Ms King’s opening statement to the committee.

Bogus self-employment occurs when workers who should be classified as employees are marked as self-employed, which can lead to benefits for employers who otherwise would have to pay PRSI and sick pay.

Ms King will say that trade unions believe “the problem of bogus self-employment is a very significant problem and needs interventions at a number of levels”. The ICTU, in its opening statement, argues that moving from a paper-based to an online system for the registration of contractors was a mistake.

“All semblance of effective monitoring and control disappeared with the move online,” which allowed principal contractors designate any number of workers as self-employed without challenge.

The unions will also call for increased resources to be made available to the Department of Employment and the Revenue Commissioners so that they can increase their capacity for non-compliance interventions.