The Gig is Up? False Self-Employment in Ireland

The New Normal

While the ‘gig economy’ has been in the headlines for some time, recent high-profile decisions in the UK have forced employment status back into the spotlight. Although the Pimlico Plumbers, Deliveroo drivers and Hermes couriers’ decisions have been making headlines in the past two weeks, the reality is that those cases are highly fact-specific and do not significantly develop the law. However, they emphasise the need for employers to be cautious about independent contractors’ contractual arrangements.  

Gig economy is a term used to describe the idea of online platforms which match the supply and demand of work on a short-term, payment-by-task basis. Existing forms of employment continue to erode, as workers increasingly seek more flexible work patterns and choice as to the level of commitment to employers. A recent study commissioned by the Workplace Relations Commission (the “WRC”) indicates around 200,000 Irish people are in temporary or other non-permanent employment arrangements.

The Irish Landscape

While Pimlico, Deliveroo and Hermes have been widely reported in Ireland, they need to be read in context of Irish employment law. The claimants in these cases have been considered ‘workers’ and not ‘employees’. In Ireland, however, there is no legal concept of a ‘worker’. A ‘worker’ is an individual deemed (in the UK) to be entitled to some but not all of the statutory rights enjoyed by employees. As such, it remains to be seen how such cases would be addressed by Irish courts.

Until such a case comes before the Irish courts, the existing ‘employee vs contractor’ decisions continue to apply. In Ireland, this was demonstrated recently where six plasterers were deemed by the WRC to be employees rather than self-employed, resulting in awards of over €18,000 between them. The level of control and “mutuality of obligation” tests, as well as the ability to appoint a substitute, remain the benchmarks for identifying whether an employment relationship exists, rather than any descriptions used by the parties.

An individual may be deemed under false or bogus self-employment where they have undertaken to provide their services as a self-employed contractor, but in reality are treated like an employee. For example, the plasterers in the above case worked hours specifically set by the business, which also  supplied all material and equipment, instructed the plasterers at all times as to what they were to work on and moved them from task to task as required.

Public Awareness Campaign

This issue of bogus self-employment is very much on the Government’s agenda. The Department of Employment Affairs and Social Protection (the “Department”) recently launched a public awareness campaign inviting individuals who believe they may be in false self-employment to apply for an assessment of their employment status. Employers should be aware that a welfare inspector may be appointed to investigate the employment relationship in question.

Where a finding of false self-employment is made, the Department will amend the individual’s PRSI contribution record accordingly. The Department will also liaise with the Office of Revenue Commissioners, which may result in Revenue pursuing back payments of PRSI and other financial penalties from the employer.

Legislation in Ireland

There is currently no provision regulating false self-employment in Irish legislation. However, two Private Members Bills, the Prohibition of Bogus Self-Employment Bill 2018 and Protection of Employment (Measures to Counter False Self-Employment) Bill 2018 are currently at the first and second stages of the legislative process respectively.

It may be the case that assessment of employment status is ultimately addressed in the Employment (Miscellaneous Provisions) Bill 2017, which is currently at Report stage in the Dáil.

What should employers do?

In the wake of a recent report conducted on contractors at RTE in which it emerged that 106 ‘freelancers’ have ‘attributes akin to employment’, the broadcaster has committed to reviewing its policy. The report recommended that RTE introduce ‘an overarching policy and process’ with regard to the payment of freelancers.

With the Department’s ad campaign and the rise in high-profile ‘gig economy’ cases in the UK, it is only a matter of time before such a case comes before the Irish courts. We recommend that employers conduct a review of all of their contracts for engagement of services in light of the WRC’s Code of Practice for Determining Employment or Self-Employment so that they accurately establish the appropriate legal status.

How can we help?

The Employment Group at McCann FitzGerald carry out resource engagement reviews and help organisations develop user friendly but effective contracts and template contracts to ensure the appropriate engagement of employees and contractors.