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                              Tony Dobbins, CEROP, UCD

Background document and questionnaire for EIRO comparative study
on ‘Economically dependent workers’

Background and aims
The concept of ‘economically dependent workers’ refers to those workers who do not
correspond to the traditional definition of ‘employee’ - essentially because they do not
have an employment contract as dependent employees - but who are economically
dependent on a single employer for their source of income. The debate focuses on
emerging employment arrangements which are ‘mid-way’ between self-employment and
dependent employment. Economically dependent workers have some characteristics of
both: 1) they are formally self-employed (they usually have a sort of ‘service contract’
with the employer); 2) they depend on one single employer for their income (or large part
of it).

In some cases, economically dependent workers may also be similar to employees from
other points of view:
1. lack of a clear organisational separation - ie they work in the employer’s premises
    and/or use employer’s equipment;
2. no clear distinction of task - ie they perform the same tasks as some of the existing
    employees, or tasks which were formerly carried out by employees and were later
    contracted out to ‘collaborators’; and
3. the ‘service’ they sell individually to employers falls outside the traditional scope of
    ‘professional services’ - ie the tasks are simple, do not require specific skills and no
    professional knowledge or competence is needed.

The existence of such employment arrangements has been highlighted by the
International Labour Organisation (ILO) and is documented in a number of European
countries, such as Italy, UK, Germany, Spain and Portugal. The issue was also mentioned
in 2000 in the European Commission’s first-stage consultation paper of the social
partners on modernising employment relations (EU0007259N).
The issue is relevant from the industrial relations' point of view since economically
dependent workers do not generally benefit from the protections granted to employees
both by law and collective bargaining, including provisions on health and safety,
information and consultation, working time, vocational training and social protection.
They also fall outside the traditional reach of trade union representation.

The aims of this comparative study are to analyse:
  the scope and relevance of the issue of ‘economically dependent workers’ in each
  the emergence of demands for regulation of this kind of employment arrangement, as
  articulated in public debate;
  where relevant, the ways in which ‘economically dependent employment’ has been
  regulated by law, or the contents of existing proposals in this field; and
  the role of industrial relations, notably whether trade union representation and
  collective bargaining are being extended to economically dependent workers.

Each national centre should provide information on the following points.

A) In your country, are there any employment arrangements which could be classified as
   ‘economically dependent’ in the sense outlined above? In other terms, are there
   formally self-employed people who are dependent on one employer (or a few
   employers) for their income and are not clearly distinguishable from employees as
   regards the organisation and the content of their jobs (see above for details)? Please
   illustrate the main features of such employment arrangements.

The issue of employment status has gained prominence in Ireland in recent years as
working patterns have changed. There are employment arrangements in Ireland which
could be described as 'economically dependent'. That is, there are formally self-employed
people who are not clearly distinguishable from 'employees'. Generally, a worker
described as self-employed, a sole trader, or freelance, has no access to worker protection
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.

Is there an employment status which is specific to these workers or do they belong to a
general definition of self-employment?

The issue of employment status is very complex in Ireland, and the terms 'employee' and
self-employed' are not strictly defined in law. The Industrial Relations Act (1990) avoids
a strict definition of 'employee'. 'Economically dependent workers' are not strictly
classified under a distinct employment status, nor are they defined as self-employed. In
recent years, however, a number of criteria have been drawn up to assist employers and
unions in determining employment status. This criteria is contained in a new Code of
Practice on employment status (see B below), which was developed by a special
Employment Status Group, set up under the current national agreement, the Programme
for Prosperity and Fairness (PPF), in order to clarify differences between the status of the
self-employed and the 'employee'. The Employment Status Group is comprised of
representatives from the Irish Congress of Trade Unions (ICTU), the Irish Business and
Employers Confederation (IBEC), the Departments of Social Welfare, Enterprise, Trade
and Employment, Finance, and the Revenue Commissioners.

B) Even if there are no workers who could be classified as ‘economically dependent’,
please indicate specifically:

1. which are the essential criteria utilised to identify ‘employees’;

The Code of Practice drawn up by the Employment Status Group referred to above sets
out the essential criteria for identifying 'employees'.

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.

The Code of Practice sets out a number of additional factors that need to be considered:
 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 employers premises;
   There are special PRSI rules for the employment of family members.

The Code of Practice sets out a number of consequences that arise from the determination
of an individual's employment status. The status as an employee or self-employed person
will affect:

   The way in which tax and PRSI is payable to the Collector-General;
       An employee will have tax and PRSI deducted from his or here 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.
   Other rights and entitlements, under employment legislation:
       An employee will have rights in respect of working hours, holidays,
          maternity/parental leave, protection from unfair dismissal etc.
       A self-employed person will not have these rights and protection.

2. whether the definition of ‘employee’ is currently the object of any discussion or
   reconsideration in your country;

Yes, the definition of 'employee' has been an important topic of discussion between the
Irish government and the social partners in recent years. The Employment Status Group
was established under the PPF to reconsider the definition of 'employee' and to clarify
differences between self-employed persons and 'employees'. The Group issued a report,
which formed the basis of a new Code of Practice on Employment Status (see above).

3. if there has been any significant labour disputes, grievances or case law which
   address the demarcation between ‘employee’ and ‘non-employee’ status in order to
   grant to the latter protections and rights granted to the former, notably as far as
   workers who could be labelled as ‘economically dependent’ are concerned.

A key case relating to the distinction between 'employee' and 'non-employee' status was
Henry Denny & Sons Ltd. T/A Kerry Foods v The Minister for Social Welfare [1997].
The main subject in this case related to the fact that many self-employed workers have no
access to social welfare entitlements enjoyed by 'employees'. The test was whether a
person who has been engaged to perform certain work, performs it 'as a person in
business on their own account'. It was found that the worker in question was an
'employee' as opposed to a sole trader as considered by the employer, and was thus
entitled to social welfare. This case was discussed by the Employment Status Group and
formed the basis for much of the Code of Practice on Employment Status.

A potentially significant legal implication has arisen in recent years. Union members who
could be considered self-employed or sole traders have come under the scrutiny of the
Competition Authority because rates of pay set by the unions for 'self-employed' workers
are 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.

These changes are already impacting upon members of unions such as the National
Union of Journalists (NUJ) and the Irish Veterinary Union (IVU). In relation to the NUJ,
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 were 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.

C) Are there data on the number of ‘economically dependent workers’? Are there figures
on their distribution in the different sectors? In other words, are they particularly present
in some specific industries? If so, are there studies available which identify any particular
reasons or possible interpretations for this uneven distribution of ‘economically
dependent workers’ across sectors?
Referring to either official statistics or other research such as case studies (please,
indicate the source), try to provide data on ‘economically dependent employment’, as far
as the following aspects are concerned:
4. gender;
5. age;
6. education;
7. job positions and skills.

There is no data covering these issues.

D) If there are any relevant statistics or research, please provide information on
‘economically dependent workers’ with regard to:
8. any link to reorganisation processes (that is, does the importance of ‘economically
    dependent workers’ increase in the event of company restructuring, as a means to
    reduce costs, increase the firm’s adaptability, etc?);
9. the use of this kind of employment arrangements as a substitute for dependent
    employees or/and as a possible ‘selection mechanism’ for future recruitment on a
    permanent employment contract;
10. place of work and integration in the employer’s organisation;
11. wage differentials with respect to employees in similar job positions;
12. working time.

There is no data available covering these issues.

E) Is ‘economically dependent employment’ regulated by law in any respects? Where
there are legislative provisions, what is the content of the law? In replying to this
question, please refer to the following ‘check-list’ of issues for potential legal regulation:
13. wage levels;
14. working time;
15. duration and termination of contract;
16. illness and sick leave;
17. holidays;
18. maternity, parental or sabbatical leave;
19. collective representation;
20. information and consultation;
21. training;
22. health and safety.

'Economically dependent workers' currently receive little protection under Irish law in
relation to these issues. As mentioned in A above, generally, a worker described as self-
employed, freelance, or a sole trader has limited access to employment rights and
protection legislation relating to issues such as sick leave, maternity leave, unfair
dismissals, and so on. Significantly, as stated in point B, the Competition Acts have
potentially reduced the possibility of collective representation for such workers.

F) Are there any draft bills or legislative proposals on the regulation of ‘economically
dependent employment’? Please, indicate the areas of intervention covered by these
proposals, referring to the abovementioned check-list.

No. 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'.
G) Regardless of the existence of legislative provisions, is there a debate on
‘economically dependent workers’ in your country which highlights their specificities (in
particular, their ‘dependence’) and relates to formal recognition (that is the introduction
of a specific employment status or the extension of some prerogatives of employees to
such workers), especially as regards the protection and rights of this kind of worker?
Please, indicate specifically whether, and in what terms, such debate covers the issues of:
a) wage levels; b) working time; c) employment security; d) leave periods (illness,
maternity, parental or sabbatical leave); d) trade union representation; e) information and
consultation; f) vocational training; g) social protection; and h) health and safety
regulations. Are any other aspects prominent or relevant in the debate on ‘economically
dependent workers’ in your country? Which are the areas where proposals for regulation
are mostly controversial in this debate?
In covering the debate, please mention specifically the positions of trade unions and
employers' associations on ‘economically dependent workers’.

As above. There has been some debate in Ireland on the issue of 'economically dependent
workers'. The debate has mainly centred on issues such as worker protection, entitlements
to social welfare, and trade union representation. This debate coincided with the
establishment of the Employment Status Group, which was specifically charged with
clarifying the rather grey area of employment status. In the resultant report which the
Group produced, it is stated that the Group was set up 'because of a growing concern that
that there may be increasing numbers of individuals categorised as 'self-employed' when
the indicators may be that 'employee' status would be more appropriate.

In relation to the position of trade unions and employers, some trade unions - such as the
National Union of Journalists (NUJ) and the Communications Workers Union (CWU),
who have members with an unclear employment status - have been active in attempting
to make sure that workers who are deemed to be self-employed are treated as an
'employee', and thus, enjoy similar protection. Unions have also been trying to prevent
what they perceive as employer exploitation of self-employed and sub-contract workers.
The unions have also been somewhat concerned that the Competition laws will have a
negative impact on their ability to negotiate the pay of 'economically dependent workers'.

The attitude of employers has been somewhat different. For employers, using self-
employed, freelance or sub-contract work allows them to avoid many of the employment
regulations that apply to 'employees'. This facilitates a more flexible, and less costly,
form of labour, which is more easily attuned to market forces and changes in supply and

H) Are there signs of an extension of the coverage of industrial relations to ‘economically
dependent workers’? Essentially, are there developments relating to the following
23. representation: the creation of new trade union organisations specific to these workers
    or their representation by existing ones. Please specify the details of any such
    organisational developments;
There have been few new developments in this regard. Trade unions in Ireland have often
   found it difficult to organise 'atypical' workers, such as 'economically dependent

24. collective bargaining: the conclusion of collective agreements which cover
    specifically these workers or the inclusion of chapters on ‘economically dependent
    workers’ within collective agreements at any level (national, sectoral, territorial,
    company). If such provisions are present, please specify the content of at least one
    such collective agreement or chapter (as a reference, try to use the check-list provided
    for legislative regulation, above in question no. 5).

Yes, the current national agreement, the Programme for Prosperity and Fairness (PPF)
contains provisions applicable to 'economically dependent workers'. In particular, the
Employment Status Group was established under the terms of the PPF to clarify the issue
of employment status.

I) Is the issue of ‘economically dependent workers’ (whatever the actual definition
utilised in your country) present on the trade union agenda? What are the main strategies,
if any, that unions are discussing and implementing with respect to these workers?

See also point G above in relation to the trade union position. Yes, the issue of
'economically dependent workers' is on the agenda of some Irish trade unions. Some
unions - such as the National Union of Journalists (NUJ) and the Communications
Workers Union (CWU), who have members with an unclear employment status - have
been active in attempting to make sure that workers who are deemed to be self-employed
are treated as an 'employee', and thus, enjoy similar protection. Unions have also been
trying to prevent what they perceive as employer exploitation of self-employed and sub-
contract workers.

The unions have been actively involved in the work of the Employment Status Group.
Largely at the behest of the unions, the Group's report includes a list of institutions which
may provide assistance to those seeking to determine the status of workers. These
institutions include the Irish Congress of Trade Unions (ICTU), the Department of
Enterprise, Trade and Employment, the tax office, the social welfare office, and the
Labour Court. Significantly, the unions have signalled an intent to bring cases relating to
employment status to the Labour Court in an attempt to build precedence.

J) Please, give the NC assessment of the issue of ‘economically dependent workers’ in
your country, its present relevance and possible future developments, notably as far as
industrial relations are concerned.
The issue of employment status and 'economically dependent workers' has attracted
increased attention in Ireland in recent years as working patterns have changed. Where
workers are classified as self-employed, a sole trader, or freelance, they have very little
access to worker protection legislation/employment rights and are treated by the
employer as a business which is sub-contracted to do 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. At the current juncture, there seems little likelihood that
legislation will be introduced that will improve the employment rights of '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 minimum rates of pay for their
members. If they were to breach the terms of the Competition Acts, the unions face
prosecution. While, at present, the problem appears to be far from widespread, it has,
nevertheless caused some alarm within the ranks of the unions concerned.

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