The Oireachtas Public Accounts Committee has called for an independent investigation into “bogus self-employment” among couriers.
In a report launched on Thursday, the PAC recommends an examination into a special tax agreement with the courier sector which was signed by Revenue.
Members of the PAC said the actual number of employees affected and the amount of revenue lost is difficult to quantify, but it is believed to be significant.
Speaking at the launch of the report, Brian Stanley, PAC chairperson, said the committee were provided with evidence of a special tax agreement signed by Revenue with the courier sector at the Burlington Hotel in 1997.
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This made all workers in the sector self-employed “by default... unless the employer decides they want to have them as an employee,” said Mr Stanley.
He said that the workers affected have gone without entitlements such as sick pay, annual leave and pension contributions as a result.
“This precedent has been adopted by a range of other sectors, such as construction.”
He added that an erosion of working rights and the casualisation of employment has led to an increase bogus self-employment. “There needs to be investigations across a range of sectors.”
Mr Stanley added that Ireland already has one of the lowest rates of employer PRSI contributions in the EU and bogus self-employment was not helping.
The PAC report says Revenue provided the committee with correspondence regarding a voluntary PAYE system agreed by Revenue and courier firms in March 1997.
“The submissions included correspondence from Revenue which outlines the conditions of the voluntary PAYE system available to couriers, and asserts that couriers that fulfil a number of criteria should ‘in the interests of uniformity’ be treated ‘as self-employed for tax purposes’,” the report says.
Revenue also confirmed this decision arose from a Social Welfare Appeals Officer’s decision where “couriers were regarded as self-employed for PRSI purposes.”
The report says an independent investigation should take place to examine the amount of revenue lost to the State, the number of workers impacted by the agreement, and the financial loss to the workers.
Recommendations
The report also provided recommendations to end bogus self-employment, which occurs when employers avoid paying tax to the State and entitlements to workers.
The committee was briefed on actions taken by Revenue to combat this practice, such as Revenue conducting site visits across various employment sectors to ensure workers are correctly registered as either employees or self-employed.
In 2019 Revenue conducted 4,091 site visits. The report noted Revenue’s ability to conduct site visits in 2020 was hampered by the Covid-19 pandemic.
In 2019, 1,673 site visits occurred in the construction sector. About 6,650 individuals were interviewed.
Just less than 400 individuals, or 6 per cent of those interviewed, were reclassified as employees or registered as new PAYE applicants.
Between 2016 and 2018, Revenue recovered about €166 million through these compliance interventions in the construction sector.
The committee’s report called for a substantial increase to site visits across all sectors and said a minimum of 4,000 per year are needed from 2022, with a year-on-year increase thereafter.
The report also called on Revenue to publish statistics on the number of site visits it conducts, the number of people it interviews and the number of individuals reclassified as employees or newly registered for PAYE on an annual basis.
The report also called for the existing Code of Practice for Determining Employment or Self-Employment Status of Individuals, which was created in 2001, to be replaced.
“The committee is of the view, considering the scale of the problem, that the code of practice published by the Employment Status Group does not provide sufficient protection for workers, who may be falsely classified as self-employed,” the report said.