Ireland: Self-employed workers
Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.
This study outlines the complex and unresolved issue of the employment status of the self-employed in Ireland as of November 2007. The self-employed do not enjoy the same employment status rights as workers classified as employees, and unions have been lobbying the Irish Government to rectify this. However, the Competition Acts have complicated matters. In particular, under current competition law, any self-employed person who combines with other self-employed persons to set wages or other remuneration is guilty of an anti-competitive practice.
1. Legal provisions and social security
Please provide the definition of self-employed workers which is applicable in your country.
The issue of employment status is very complex in Ireland and the terms ‘employed’ and ‘self-employed’ are not defined in Irish law. However, Ireland’s Revenue Commission and the Irish Courts have laid down a number of guidelines determining whether a person is deemed to be self-employed or an employee. These guidelines are also contained in a Code of Practice on Employment Status produced under Ireland’s social partnership agreements (see below).
According to the Code of Practice, an individual would be classified as self-employed if:
‘You are self-employed if you go it alone and set up in business on your own account. An example would be where you have your own business like a newsagent’s shop and bear responsibility for the success or failure of that business. You are also regarded as self-employed if you are in partnership, sharing in the control and in the success or failure of the business’.
A person would normally be self-employed if
they own their own business;are exposed to financial risk, by having to bear the cost of making good faulty or substandard work carried out under the contract;have control over what they do, how they do it, when and where they do it and whether they do it themself;are free to hire other people, on terms of their own choice to do the work that theyhave agreed to undertake;can provide the same services to more than one person/business at the same time;provide the materials for the job;provide equipment and machinery necessary for the job, other than the small tools of the trade;have a fixed place of business where you store materials equipment etc;cost and agree a price for the job;provide your own insurance cover e.g. public liability etc;control their own hours of work in fulfilling the job obligations.
In comparison, an individual would normally be classified as an employee if he or she:
is under the control of another person who directs as to how, when and where the work is to be carried out;supplies labour only;receives a fixed hourly/weekly/monthly wage;cannot sub-contract work. If the work can be subcontracted and paid on by the person subcontracting the work, the employer/employee relationship may simply be transferred on;does not supply materials for the job;does not provide equipment other than the small tools of the trade. The provision of tools or equipment might not have a significant bearing on coming to a conclusion that employment status may be appropriate having regard to all the circumstances of a particular case;is not exposed to personal financial risk in carrying out work;does not assume any responsibility for investment and management in the business;does not have the opportunity to profit from sound management in the scheduling of engagements or in the performance of tasks arising from the engagements;works set hours or a given number of hours per week or month;works for one person or for one business;receives expense payments to cover subsistence and/or travel expenses;is entitled to extra pay or time off for overtime.
Some additional points on employee status in Ireland:
An individual could have considerable freedom and independence in carrying out work and still remain an employee;An employee with specialist knowledge may not be directed as to how the work is carried out;An individual who is paid by commission, by share, or by piecework, or in some other atypical fashion may still be regarded as an employee;Some employees do not work on the employer’s premises
Briefly indicate the main differences, if any, in the social security regime of self-employed workers with no employees compared with: a) employees; b) self-employed with employees.
There are significant differences in Ireland between the social security regime of self-employed workers with no employees. Respective status as an employee or self-employed person will affect:
The way in which tax and social security contributions (PRSI) are payable to the Collector-General;
An employee will have tax and PRSI deducted from his or her income.A self-employed person is obliged to pay preliminary tax and file income tax returns whether or not he or she is asked for them.
Entitlement to a number of social welfare benefits, such as unemployment and disability benefits;
An employee will be entitled to unemployment, disability and invalidity benefits, whereas a self-employed person will not have these entitlements.
Please indicate the existence of any particular legal forms of employment which cover contractual relationships which are commonly regarded to be mid-way between dependent employment and self-employment (if necessary, see for a longer discussion of the concept the EIRO comparative study ‘Economically dependent workers', employment law and industrial relations’).
whether they are commonly considered as economically dependent employment;specify the main features of such forms of employment and whether they enjoy specific social security regime and, if relevant, the basic features of such special regime (please refer this illustration to the answer given to question 1.2 above).indicate any rules which generally apply to this kind of employment as for: a) working time and vacation; b) maternity and parental leave; c) sick pay and leave for sickness
There are employment arrangements in Ireland which could be described as 'economically dependent'. 'Economically dependent workers' are not strictly classified under a distinct employment status, nor are they defined as self-employed. That is, there are formally self-employed people who are not clearly distinguishable from 'employees' – a sort of ‘half-way house’ mid-way category. Generally, a worker described as ‘economically dependent’, self-employed, a sole trader, or freelance, has no access to worker protection and employment rights legislation and is treated by the employer as a business which is sub-contracted to do a fixed task or work for a fixed period. The issue of self-employed/freelance/sole trader versus 'employee' has generally revolved around whether the individual or individuals concerned have access to basic employee rights such as unfair dismissals, redundancy acts, maternity leave, and so on.
2. Recent trends in self-employment with no employees
Please provide data on recent trends in self-employment (since 2000):
| 2000 | 2003 | 2006 | 2007 | |||||
|---|---|---|---|---|---|---|---|---|
| Men | Women | Men | Women | Men | Women | Men | Women | |
| Self-employed (no.) | 244,500 | 47,400 | 270,000 | 49,800 | 287,600 | 56,100 | ||
| Self-employed with no employees (no.) | 161,200 | 29,800 | 177,400 | 31,400 | 186,100 | 33,300 | ||
The table above is based on data provided by the Central Statistics Office (CSO) Quarterly National Household Survey, and covers 2005-2007.
Please report, according to available research and studies,
the distribution of self-employment without employees across sectors and occupations;whether self-employment without employees has either increased or decreased significantly in recent years (since 2000) in specific:
Sectors and activities.Occupations (International Standard Classification of Occupations – ISCO 88, at one digit).and in specific groups of workers defined by:Gender (men/women).Age groups (younger/older; 14-24, 25-54, 55-64; 65 and over).Nationality (nationals/foreign nationals).Other relevant dimensions to be specified.
The above table indicates that self-employment (without employees) for both males and females has been on the increase in recent years in Ireland – though the data indicate that men are much more likely to be self-employed than women. Unfortunately, the CSO does not provide a breakdown on self-employment according to nationality, age, sector, etc.
Based on existing research and studies, please provide any available data on the diffusion and recent trends of:
All legal forms of employment indicated in section 1.3 above (contractual relationships mid-way between dependent employment and self-employment and economically dependent employment), specifying whether they concentrate in any sectors and/or occupations.
There is no data on this, but it is fair to assume that the trend has been towards an increase in so-called mid-way contractual relationships in Ireland in recent years. Journalism is an example of an occupation where these types of mid-way contractual relationship are common.
‘Bogus self-employment’, i.e. formal self-employment which is fraudulently used to disguise contractual relationships which should be properly registered as dependent employment, in order to avoid the protections and costs (both wage and social contributions) connected with the latter, specifying whether it concentrates in any sectors and/or occupations.
Construction is one sector in Ireland where ‘bogus self-employment’ is a serious issue. This is reflected by the fact that Revenue audits in the construction sector in the first nine months of 2006 uncovered many instances of bogus self-employment. There were 3,083 audits in the construction sector during this period, accounting for 29% of all Revenue audits. During this period, there were 1,457 site visits. In relation to Relevant Contract Tax (RCT), the system by which many construction workers are registered as self-employed, it emerged that during the first nine months of 2006, 411 subcontractors were reclassified as employees as a result of these audits. Also, 511 employees were identified who were not registered with the Revenue Commissioners and 490 self-employed subcontractors were identified as not being registered by the Revenue Commissioners. A total of 1,003 hidden economy cases deemed to be operating outside regulations were uncovered. The organiser for SIPTU’s construction branch is more concerned about what he believed was a much larger number of new RCT1 forms that were being given out during the same time, enabling many more workers to be classed as self-employed. He feels that it’s ‘business as usual’ for bogus self-employment in the construction sector.
3. Collective representation and collective bargaining
NCs are requested to indicate the main collective representation organisations of employed workers with no employees or of the workers with the special contractual relationships illustrated above in section 1.3. In particular, they should provide information on:
The type of associations (trade associations or trade unions).The associational domains of each of such associations: territorial, sectoral, occupational, professional, etc.Membership and membership rates.
There are a number of trade unions in Ireland representing self-employed or economically dependent workers. Ireland’s largest union, the Services Industrial Professional and Technical Union (SIPTU), is a general union representing approximately 225,000 workers in total across all sectors. For instance, SIPTU would represent workers in the construction sector classified as self-employed or economically dependent workers (but there is no breakdown as to how many fall under this category).
Also in the construction sector, the Building and Allied Trades Union (BATU) represents a number of workers classified as self-employed or economically dependent workers.
The National Union of Journalists (NUJ) represents a number of self-employed and economically dependent journalists. The Communication Workers Union (CWU), which has a total membership of approximately 19,000, also represents a number of economically dependent workers.
Any forms of social dialogue or collective bargaining these associations engage in, specifying:
The levels at which such activities take place (national, sectoral, territorial, company).The actors they engage in these activities with (public authorities, employers associations, single employers).The topics typically covered by these activities.The typical outcomes of such activities (joint documents and declarations, guidelines, agreements, etc.)A brief description of the content of some (two or three) of the main and most recent of such documents.
The unions above engage in collective bargaining at national level (with employer associations) and company level (with single employers). However, given the blurred nature of the employment status of self-employed and economically dependent workers, these categories of workers have often found it difficult to gain access to union representation/collective bargaining rights and other rights such as pensions.
In particular, under the current competition legislation, any self-employed person who combines with other self-employed persons to set wages or other remuneration is guilty of an anti-competitive practice. Therefore, union members who could be considered self-employed or sole traders have come under the scrutiny of Ireland’s Competition Authority because rates of pay set by the unions for self-employed workers are deemed to be contrary to the Competition Acts, 1991 and 1996. Consequentially, unions who seek to strike a minimum rate for the job for self-employed workers could be accused of price fixing and be found to be in breach of competition law. Irrespective of the prospect of criminal damages, the implications for the unions involved are potentially significant because they could lose members if they cannot even negotiate minimum rates for the job. With the growth of atypical employment such as self-employment and sub-contracting, employees are increasingly being moved to the status of an undertaking, and, as a result, unions may find that they cannot legally represent such workers on the crucial issue of pay. In sum, the Competition Acts have reduced the scope of collective representation for self-employed workers.
These changes in competition law are impacting upon members of unions such as the NUJ and SIPTU. Several groups represented by these two unions have already had long-standing industrial relations agreements fall foul of this unintended effect of the legislation, such as those relating to freelance journalists, actors and musicians. The use of competition law against self-employed workers first arose in late 1997, when, after receiving legal advice, the National Newspapers Association of Ireland (NNAI), representing newspaper employers outside Dublin, decided to pull out of a long standing pay rates agreement it had with the NUJ, which set minimum rates for the job. The NUJ represents freelance photographers and journalists employed by the national newspapers. Many of the photographers employed by the newspaper had their own business and worked for the newspapers as required. Following legal advice, the NNAI said that the fixing of minimum rates per job for freelance photography work, with the compliance of the NNAI and the NUJ, could be construed as price fixing if the photographers were deemed to be sole traders. While the Competition Authority was never formally asked to decide on the issue, the NNAI withdrew from the NUJ/NNAI Freelance Agreement fearing heavy fines if, as they argued, they could be found guilty of compliance in price fixing or anti-competitive practices.
Since then the issue has since arisen with Irish actors’ union Equity (part of SIPTU), in relation to its agreement with the Institute of Advertising Practitioners in Ireland (IAPI), on fees for radio and TV voiceovers. The Musicians’ Union of Ireland (also part of SIPTU) has also had to abandon any attempts at setting fees for musical performances. The legal basis of the Competition Authority’s current policy is set out clearly in its decision in the case of Equity and IAPI (decision E/04/002). The main ground on which IAPI and Equity contested the application of the Competition Act was in defining the actors as ‘undertakings’. The Competition Authority argued that if all trade union members were exempted from the Act, then ‘associations of independent pharmacists, publicans and barristers – to name only a few – would shortly obtain safe haven for their members by adding ‘union’ to their name and obtaining a negotiation license’. The Authority then examined the situation of the actors to determine if they were employees or not. First of all, it noted that hardly any were treated as PAYE employees by the Revenue. While this did not prove the case, it was seen as a ‘useful starting place’. The Competition Authority then put forward five other arguments as to why the actors were independent contractors: (a) they could work for several agencies at a time; (b) they did not receive benefits such as holiday pay; (c) they generally do not have employment security; (d) they are free to accept or decline a specific piece of work; (e) they are not generally thought of as employees of a specific agency.
It has been difficult for the Irish Government to take action on the issue without being seen to compromise the hard-won independence of the Competition Authority. Accordingly, unions are still attempting to rectify this state of affairs. Issues of this nature relating to employment status have been periodically raised by unions nationally through Ireland’s social partnership agreements, whereby the unions above (through the peak-level Irish Congress of Trade Unions, ICTU) engage with employer associations and government. In 2000, for instance, the social partners established an Employment Status Group in order to clarify differences between the status of the self-employed and employee. The Employment Status Group was comprised of representatives from ICTU, the Irish Business and Employers Confederation (IBEC), the Departments of Social Welfare, Enterprise, Trade and Employment, Finance, and the Revenue Commissioners. The Group issued a report, which formed the basis of a Code of Practice on Employment Status in 2001 (see above). The Employment Status Group decided against legislative proposals, preferring to introduce a voluntary Code of Practice setting out the criteria on employment status established by case law over many years. Some members of the Group wanted a statutory approach, while other members felt that the case law and criteria laid down by the courts over the years provided greater flexibility. The following quote sums up the final recommendations of the Group: 'It was decided to issue the report as a Code of Practice which would be monitored by the Group with a view to reviewing the position within 12 months. While it was accepted by the Group that the Code of Practice does not have legislative effect, it was expected that its contents would be considered by those involved in disputes on the employment status of individuals or groups of individuals'. Therefore, the matter of employment status has never been conclusively addressed – either in collective bargaining or law. There had been hopes that the ‘Towards 2016’ national pay agreement would result in some advance on this question. However, broader employment compliance issues took priority and the legal limbo for self-employed trade union members continues. It is understood that the unions behind the campaign now believe the most likely way to proceed is to bypass competition law altogether and include a new definition of ‘worker’ as part of any new employment rights legislation.
4. Employment and working conditions
Wage levels, of self-employed workers without employees compared with the national average.
No data is available on the wage levels of self-employed workers without employees, but Ireland’s Pensions Ombudsman has uncovered damning evidence on the lack of pension coverage for self-employed people in the construction sector. In 2005, Mercer HR Consulting – in a report commissioned by the Pensions Board and the Irish Government - was highly critical of the operation of the construction industry’s mandatory pension scheme. Mercer called for an examination of the phenomenon of bogus self-employment within the sector and suggested that the Construction Industry Monitoring Agency be provided with increased investigative powers. The Pensions Ombudsman expressed criticism of the operation of the Construction Federation Operatives Pension Scheme in his 2004 Annual Report. According to the Ombudsman, little has changed for the better in this regard: ‘Throughout 2005, I have received a steady stream of complaints regarding the operation of this scheme’. He alludes to the Mercer report, which indicated that between 50,000 and 70,000 construction workers remain outside the CFOPS, the industry scheme sponsored by the Construction Industry Federation. ‘I personally feel that the figure may be higher than that as official employment figures for the industry may be understated’. One of the major problems is the category of so-called self employed workers. At present, there are approximately 70,000 workers classified as having self employed status by the Revenue Commissioners and who are thus not eligible for inclusion in the pension scheme. According to the Pensions Ombudsman: ‘While such people are technically outside the scope of the Pay As You Earn (PAYE) system, they are not allowed to contribute to an occupational pension scheme; nor can any employer make a contribution on their behalf….Mercer identified this problem and maintained that the self employment of many of the workers was bogus’.
The incidence of low-paid jobs (that is, according to the OECD definition, jobs which pay less than two-third of the median wage) among self-employed workers without employees compared with the national average.
No data available.
Working hours, of self-employed workers without employees compared with the national average:
Average hours actually worked per week.Diffusion of long working hours (more than 10 hours a day).Diffusion of work at unsocial hours (night, weekend).
No specific data available.The working time of self-employed workers tends to be much more uncertain and less structured than that of employees. Place of work of self-employed workers without employees compared with the national average:
Home/office distribution.
No data available.
Exposure to risks and accidents at work of self-employed workers without employees compared with the national average:
Work accident rates.
No data.
Health outcomes, work-related health problems and occupational illnesses of self-employed workers without employees compared with national average:
Occupational illness rates.Work intensity and stress at work
No data.
Lifelong learning of self-employed workers without employees compared with the national average:
Participation rates in continuous education and training.
Self-employed workers are less likely to avail of continuous education and training than are employees.
Work-life balance of self-employed workers without employees compared with the national average:
Presence and take up rates of maternity/parental leave (according to the applicable social security regime).
The presence and take up rates of maternity/parental leave is lower for self-employed workers, mainly because they do not enjoy the same statutory rights as employees.
Presence and take up rates of long-term leave (according to the applicable social security regime). If possible, please indicate the reasons for long-term leave.
As above.
Degree of control of personal working time.
This depends. Usually, it would be expected that self-employed workers would have greater control than employees over their personal working time.
Degree of consistency of personal working time with family and social commitments.
No data.
Job satisfaction of self-employed workers without employees compared with the national average:
Degree of satisfaction with employment conditions.Degree of satisfaction with working conditions.
No data.
Although there is no data on the above issues, it is fair to assume that, compared to employees, self-employed workers and 'economically dependent workers' currently receive little protection under Irish law in relation to these issues and have limited access to employment rights legislation relating to issues such as pay, sick leave, maternity leave, unfair dismissals, and so on. The issue is complicated by the fact that there is no ‘one size fits all’ self-employed worker – they can be found in many different areas of employment: from low skill to high skill.
5. The social partners’ positions
See issues covered above in section 3 on collective bargaining. In relation to the position of trade unions and employers, some trade unions (such as the NUJ, SIPTU, and the CWU) who have members with an unclear employment status, have been active in lobbying to ensure that workers who are deemed to be self-employed are treated similar to an 'employee', and thus, enjoy similar protection, collective bargaining and employment rights. However, self-employed workers remain in legal limbo, and their employment status remains unresolved. As noted above, the issue is complicated by current competition law, and unions have to be careful they do not transgress the Competition Acts. Unions have also been trying to prevent what they perceive as employer exploitation of self-employed and sub-contract workers – for instance, in the construction sector.
In contrast, the attitude of employers has generally been somewhat different. For employers, using self-employed, freelance or sub-contract work allows them to avoid many of the employment regulations and expenses that apply to 'employees'. From an employer perspective, this often facilitates a more flexible, and less costly, form of labour, which is more easily attuned to market forces and fluctuations in supply and demand.
Ireland’s main employers body, IBEC, is of the view that addition of further legal definitions to the issues surrounding the question of employment status (employee v independent contractor/self-employed) at EU level would not be helpful ‘given the myriad of different individual situations that arise in practice’. In the Irish context, the existing Code of Practice on Employment Status, combined with the corpus of decided case law in this area, provides very useful guidance to all concerned with this issue, IBEC argues. The employers body notes that the current national agreement Towards 2016 contains a proposal to review the application of the existing Code of Practice on employment status with a view to more effective implementation. IBEC believes that any attempt to impose standard EU-wide definitions in this area would have considerable negative and disruptive effects on a well-developed national system which maintains a good working balance between social welfare, taxation and general employment law considerations.
6. NC Commentary
The employment status of self-employed and 'economically dependent workers' has attracted increased attention in Ireland in recent years as working patterns have changed. By and large, where workers are classified as self-employed, a sole trader, or freelance, they have very little access to worker protection legislation/employment rights/social welfare provisions, and are treated by the employer as a business which is sub-contracted to perform a fixed task or work for a fixed period. In short, they do not enjoy the same employment status rights as workers classified as employees, and unions have been lobbying the Irish Government to rectify this. At the current juncture, there is still no sign that legislation will be introduced that will improve the employment rights of ‘self-employed workers without employees’ and 'economically dependent workers'. If anything, the Competition Acts of 1991 and 1996 have further diluted the employment rights of such workers by potentially making it more difficult, and effectively illegal, for trade unions to negotiate pay rates for self-employed members. If they were to breach the terms of the Competition Acts, unions face potential prosecution. While, at present, the problem appears not to be widespread, it has, nevertheless caused alarm within the ranks of the unions concerned.
Tony Dobbins,IRN Publishing