Co-operative Housing Ireland is developing 72 social homes in Cherry Orchard, and a union representative says bricklayers on the site are “bogus self-employed”.
This would mean the workers would not get holiday pay, sick pay, or pension contributions, and they wouldn’t be able to claim social welfare if they lose their jobs.
“The savings to the builder are absolutely massive,” says Andy Smith, deputy secretary general of the Building and Allied Trades’ Union (BATU).
The practice is “rampant” on sites across Dublin, including sites funded by the central government and local authorities, he says.
It is easy to put in the lowest tender for a construction job when you are not paying PRSI, holiday pay, or employer’s PAYE for your workers, Smith says.
Bogus or Self-Employed?
One bricklayer showed us evidence that he was “self-employed”, while working on the site in Cherry Orchard.
The Revenue Commissioners have a checklist to guide whether somebody is self-employed or not.
A self-employed person owns his or her own business, is exposed to financial risk, costs and agrees a price for the job. They also assume responsibility for investment and management and has the opportunity to profit from sound management. Self-employed people provide their own insurance and control their own working hours.
In contrast, an employee is someone who supplies labour only, receives a fixed wage, cannot sub-contract, has no responsibility for investment or management, works set hours for which they receive regular payment, and cannot profit from savings made on the job.
The bricklayer in Cherry Orchard says he fits the definition of an employee, rather than a self-employed person.
He says he doesn’t want to be taxed as a self-employed worker, but that his attempts to alert the Revenue Commissioners and the Department of Social Protection have not been successful.
In response to questions about employment on the site, a spokesperson for Co-operative Housing Ireland it “has been in contact with the developer on this site, who have provided assurance in relation their employment practices on this development.”
The main construction company on the site is MDY Construction, which said by email that it “fully complies with all Employment Protection Legislation, and with Revenue and Social Protection guidelines. If any worker has a concern or issue they should refer it to the WRC [Workplace Relations Commission] or the Department of Social Protection.”
On Council Sites
Construction workers on the site hadn’t received pay slips. “This is a flagrant breach of the law, and this is a public contract,” he said, when he raised the issue later a second time.
Now he has a motion pending before Dublin City Council to try to harden up the council’s oversight of employment on its sites.
The council should only allow companies to tender if they “do not use the tactic of bogus self-employment to reduce costs”, the motion says.
All sub-contractors on sites should have to employ their workers through the PAYE system too, he says.
Keegan worked as a PAYE worker in the construction trade for 20 years, until – at one point – he got a six-month contract with a new employer, he said.
He thought he was PAYE under that contract. But when he was unemployed in 2008 and unable to find work, he tried to sign on, and found that he had been registered as self-employed.
His work history and 20 years of paying his pay-related social insurance (PRSI) contributions were irrelevant, he said. You couldn’t move from being self-employed to claiming jobseekers benefit.
“It was a total disaster,” he says. “We were looking at losing our house.”
Luckily, he was offered work in Switzerland and left his family for two years to take it so that he could cover the mortgage. “I am just one story,” says Keegan.
If “bogus self-employment” is not tackled before the next downturn, it could affect another generation of construction workers, he said. “It’s a total disaster waiting to hit. It is quasi-legal, it’s immoral and it’s unfair.”
“Can You Come Down and Regulate It?”
A spokesperson for Dublin City Council said that the council cannot prevent bogus self-employment.
“City council construction contracts operate under the statutory requirement to use the Public Works contracts,” said the spokesperson.
This means that the terms are set by the Office of Government Procurement.
“There is no specific mechanism in the contracts to enable the council to prevent workers being forced into self-employed status,” she said.
There will be no penalties imposed by the council for a contractor that failed to put workers on the council site in Dolphin’s Barn on payroll, she said. “The employment status of workers is between the contractor and the employees.”
The bricklayer who showed evidence of self-employment on the Cherry Orchard site says he has tried to report employers to both the Department of Social Protection and the Revenue Commissioners, to no avail.
“Every time I land on a job I ring Revenue, and tell them I’m working on a cert here,” said the bricklayer. “Can you come down and regulate it?”
The Revenue Commissioners have clear guidelines on their website. Under those, he should be classed as an employee, he says.
The Revenue Commissioners says that if anyone has knowledge of tax evasion, they should contact them in confidence, and if sufficient information is provided, they will follow up on it.
“Revenue is alert to the risks posed by the misclassification of employees as self-employed individuals, in all industries,” said a spokesperson for the Revenue Commissioners. “Determination of employment or self-employment status is a question of fact.”
Revenue officials routinely visit businesses they suspect might not be fully compliant with their tax obligations, she said. Tackling tax avoidance is a key task, she said.
“In 2016, there were 17,801 compliance interventions in the construction sector, with a total yield of €57.74 million in tax, interest and penalties,” she said.
Revenue works closely with the Department of Social Protection and the Workplace Relations Commission to investigate these issues, she said.
“In 2016, special emphasis was placed on challenging inappropriate classification of workers as self-employed contractors. This resulted in 848 individuals registering as PAYE employees and the re-classification of 345 sub-contractors as employees,” she said.
A January 2018 report on self-employment arrangements from the Department of Finance and the Department of Social Protection, shows the percentage of construction workers who are self-employed rising from 26 percent in 1999 to 41 percent in 2013 before beginning to decline again, hitting 31 percent in 2017.
However, the report says there is no data on how many of those self-employed workers in the construction sector are bogus self-employed.
“There is no straightforward basis for estimating the numbers of people reporting as self-employed but who are effectively under the control and direction of a single employer in the much the same way as an employee,” the report says.
“Some respondents stated that they believe that in the construction sector a minimum of 25% of those reported as self-employed without employees are engaged in disguised employment. However, no definitive evidence was presented to support this claim,” it says.
Smith of the Building and Allied Trades’ Union said that the Scope section in the Department of Social Protection is responsible for investigating reports of bogus self-employment, but that it is short-staffed.
It can take as long as nine months for an investigation to commence, Smith said. The Department of Social Protection did not directly address questions as to how many Scope inspectors there are in Dublin.
“Any worker who has concerns about their employment and social insurance status may contact the Department and the matter will be investigated. It is inaccurate to say that they are not,” a spokesperson said.
If workers have been misclassified as self-employed, then the department collects from the employer whatever back payments of social insurance are due, he said.
The department works alongside the Workplace Relations Commission and Revenue in a joint investigations unit, he said.
They regularly do construction-site visits and inspections, and “increasingly so where such projects are being publicly funded. The work involves the examination of contractors and employees engaged on such sites,” they said.
The spokesperson didn’t say how long it takes for an investigation to start. “The time taken to complete an investigation will depend on a number of variables and the necessity to interview all parties involved in the employment arrangement and status,” he said.
[UPDATED: This article was updated on Wednesday 14 February at 1pm to include details from Co-operative Housing Ireland, in response to queries sent yesterday afternoon.]