Tomorrow morning (24th January), the opening Statement of Mr. Niall Cody, Revenue Chairman, to the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach states:
“Bogus Self-Employment and the Impact on Tax Revenue Moving now to the final topic, the Committee is aware that on 31 January last year, the Government published a report entitled “The use of intermediary-type structures and self-employment arrangements: Implications for Social Insurance and Tax Revenues”. The Report was prepared by a working group comprising the Department of Employment Affairs and Social Protection (DEASP) and the Department of Finance, with technical support from Revenue. It found that on aggregate, there is no evidence of any significant change in the level of self- employment in the economy; and that there is limited evidence of bogus self- employment (disguised employment)”
Reality: There is ample evidence available to Revenue to show that bogus self employment (white collar fraud) costs the exchequer far more than claimant fraud (blue collar fraud):
“In 2016, a major inter-departmental report was completed with a special subsection on construction, and in 2016 nearly 18,000 construction investigations yielded almost €58m in back-tax, interest and penalties” (Irish Independent April 2018).
That’s a return to the exchequer of over €3,000 for every individual bogus self employment case examined.
In comparison, Social welfare claimant fraud totaled €41 million in 2016. The Department of Social Protection conducted more than 5 million reviews between 2012 and 2016 and only managed to yield €41 million in 2016.
For far less money, time consuming reviews and investigations, €58 million was recovered through bogus self-employment investigations. Revenue failed to disclose what the non-compliance rate was for these 18,000 individual bogus self employment investigations, but with returns in excess of €3,000 per investigation, there is no justifiable reason for Revenue and the Department of Social Protection to continue to ignore bogus self employment. Why are they circling the wagons?
Since the 1st of January 2019, Van, Motorcycle & Pushbike Couriers will no longer operate under the 21 year old special tax arrangement between Revenue/Social Welfare and Courier Company owners. Under the previous system, tax and PRSI were deducted at source from couriers, this has ceased since January 1st. Revenue is now advising that couriers self-declare as self-employed and pay tax and PRSI accordingly.
A note of caution: Although eventually forced to abandon the Special Tax Arrangement, Revenue state:
“Revenue are of the view that, in general, motor cycle and bicycle couriers are engaged under a contract for service i.e. they are self-employed individuals”
Fact: The Scope Section, The Chief State Solicitor’s Office, The Employment Appeals Tribunal, and more recently the Tax Appeals Commission have determined that couriers are not self-employed..
My advice for couriers? DON’T DECLARE AS SELF EMPLOYED
Instead, write to:
Scope Section, Department of Employment Affairs and Social Protection
or Email email@example.com and request an ‘Insurability of Employment’ determination. The vast majority of you are not self-employed, never have been, and this is why:
ILLEGAL STATE AID –
On the 3rd of April 1997, the Office of the Chief Inspector of Taxes wrote to a chartered accountancy firm, which represented Courier Firms at: Quote “Discussions”.
The subject of the discussions as described by the Office of The Chief Inspector of Taxes
Fact: The Courier Industry was operating almost entirely in the black economy.
Fact: Revenue were fully aware that the Courier Industry was operating as such.
Fact: Courier Firms were non-compliant with their tax obligations.
On the 3rd of March 1997, a meeting was held between Courier Company representatives and representatives of the Revenue Commissioners in the Burlington Hotel. A Special Tax Arrangement was agreed between the parties. The non-compliance of the entire Courier Industry for at least 5 years was wiped from existence. With effect from the 6th of April 1997, the Revenue Commissioners deducted tax and PRSI, at source, weekly, from individual Couriers pay cheques.
Revenue themselves refer to it as a PAYE operation. PRSI was deducted at S Class, the self-employed PRSI class.
The Revenue Commissioners are also very clear as to why they were going to classify all couriers as self-employed:
“In the interest of uniformity”
Fact: All couriers were classified by the Revenue Commissioners ‘In the interest of uniformity’.
3 years later, a courier was determined by the Scope Section of the Department of Social Protection to be an employee and not self employed. The individual courier was labeled as self employed under the special tax agreement. This decision by Scope was appealed to the SWAO. At the Appeal hearing, the Minister’s Senior Counsel submitted a lengthy legal submission concluding –
“It is contended that the Appeals Officer is bound to hold that the claimant is employed under a contract of service” (employee)
Despite no new evidence, no new point of fact or law to warrant an appeal in the first instance, the Appeals Officer overturned the Scope Decision.
While this Appeal was waiting for this hearing in the Social Welfare Appeals Office, the Chairman of the Public Accounts Commission began inquiries into the employment status of couriers. To this end, he wrote to both the Chairman of the Revenue Commissioners and the Secretary General of the Department of Social Welfare. He asked why were all couriers being treated as self employed. The Chairman of the Revenue Commissioners replied –
“As regards taxation, the issue of couriers an particularly motorcycle couriers was the subject of protracted discussions between Revenue and courier industry representatives”
The Revenue Chairman enclosed copies of what he terms “the arrangement reached for tax purposes”.
It is in these arrangements that it states that a Social Welfare Appeals case of 1995 was non-binding and that the classification of all couriers as self-employed by the Revenue Commissioners was “in the interest of uniformity”.
The Secretary General of the Department of Social Welfare also replied to the Chairman of the Public Accounts Committee. In his letter he stated:
“In order to resolve the matter, a number of representative ‘Test Cases’ were selected in 1993/94 for detailed investigation and formal insurability decision under social welfare legislation. This process resulted in a decision by an Officer of the Social Welfare Appeals Office on 12 June 1995 who decided that a courier was self employed …. The Appeals Officer’s decision established the criteria in relation to the employment status of couriers that has, since then, been generally accepted thought out the industry and also but the Office of the Revenue Commissioners for tax purposes”.
Fact: Each case must be assessed on its own merits in accordance with the general precedents of Irish Law concerning contract of service. Operations which seem the same may differ in the actual terms and conditions in any given case.
Fact: The Revenue Commissioners did not accept that the decision by an Appeals Office of 12 June 1995, established criteria in relation to the employment status of couriers. The Revenue Commissioners were at pains to point out that the decision of 12 June 1995 was not binding on Revenue, that each case must be taken on its own merits and that the Revenue Commissioners classification of all couriers as self employed was ‘In the interest of uniformity’
Fact: The 1995 Appeals Office case was not a ‘Test Case’. It can not lawfully be a test case.
Fact: The only person to refer to the 1995 Appeal case as a test case is the Secretary General of the Department of Social Welfare and he only calls it a test case 5 years after the appeal hearing and only when under pressure to explain to the Chairman of the PAC why occupations which may differ in the actual terms and conditions are all being treated as self employed by the Department charged with determining employment status.
For 21 years this Special Tax Arrangement, based on nothing more than the Revenue Commissioners instruction to treat couriers as self-employed ‘in the interest of uniformity’ has continued. Every Scope Section determination made in accordance with the general precedents of Irish Law, which challenged this Special Tax Arrangement, has been overturned by the Social Welfare Appeals Office.
On the 30th of October 2018, the Tax Appeals Commission issued determination 23TACD2018 regarding PAYE and PRSI (TAX APPEALS COMMISSION) which determined that a delivery driver was an employee and not self employed.
This determination from the Tax Appeals Commission is identical in all relevant detail and legal argument with the Legal Submission submitted by the Minister for Social Welfare’s Senior Counsel to the Social Welfare Appeals Office over 18 years earlier in March 2000.
On the 13th of November 2018, in Revenue eBrief No. 198/18
the Revenue Commissioners state “The previous agreement set out in Appendix 1 will no longer apply”
Fact: The Agreement set out in Appendix 1 is the Special Tax Arrangement agreed between the Revenue Commissioners and representatives of Courier Firms in the Burlington Hotel in March 1997.
Fact: For the entire duration of the agreement, both the Revenue Commissioners and the Department of Social Welfare were fully aware the classification of all couriers as self-employed was contrary to the general precedents of Irish Law and that the repeated overturning of Scope Section Determinations by the Social Welfare Appeals Office was a Political Policy which unlawfully ignored the general precedents of Irish Law.
Fact: This Special Tax Arrangement was not available as a rule to other employers to evade their PRSI obligations.
Fact: This Special Tax Arrangement with the Revenue Commissioners and the Department of Social Welfare to evade employers PRSI contrary to the general precedents of Irish Law amounts to illegal state aid for the courier industry.
The Special Tax Arrangement is not the only tax arrangement of its kind. The Revenue Commissioners and the Department of Social Welfare have a number of these special arrangements with selected industries, most notably the eRCT system.
The deliberate misclassification of employees as self-employed is an offence under the social welfare acts. It is social welfare fraud. When the State is complicit, it is Illegal State Aid.
There are a basic set of steps to every active cover up. Regardless of whom is covering up what, these steps are universal.
Attack the person exposing the cover-up, do it repeatedly, throw whatever shit you can in the hope that something will stick. This is a classic deflection tactic and will continue regardless of what evidence comes to light.
An Internal Review has a twofold purpose, firstly, it slows the pace of exposure and secondly (and infinitely more importantly), it places control of the process firmly in the hands of those covering up. Any written evidence can be ‘disappeared’ or if that proves impossible, contradictory manufactured evidence can be adduced in order to muddy the waters.
This is particularly of use when combined with with step 1.
Those with nothing to hide have no fear of an independent outside investigation. When you hear the words ‘Internal Review’ it is a certain indicator that a cover-up is taking place.
This step has a number of names – ‘No evidence of wrongdoing’ – ‘Not enough evidence to prosecute’ etc. It places the onus on the person exposing the cover-up to leave no stone unturned in their exposure of a cover-up. This step is the one most often bought into by Media. A comprehensive exposure may run to hundreds or thousands of documents, not exactly convenient for editors with the attention spans of goldfish. Reducing your exposure of a cover up to a convenient soundbite guarantees that an ‘Incomplete Label’ will be placed upon it.
Deny & Delay
When all else fails, deny, deny, deny. When ‘Plausible Deniability’ is no longer possible, baldfaced lies become dogma. The Justice process is so slow that continued denials may take years if not decades to reach a courtroom or tribunal. The cost’s involved in using the Courts are prohibitive for most individuals who will already have been beggared in their efforts to expose a cover-up. ‘Kicking’ it to the courts is the last line of attack by those who would cover-up. By the time any decision is made, the cover-up is no longer relevant to Media and the wrongdoers will have escaped any meaningful sanction regardless of a Judges decision.
The bigger the cover-up, the more people involved. In Ireland, the reward for aiding and abetting in a cover-up is promotion. It’s the ‘bung’ that just keeps giving, an increase in remuneration that spans the length of a career and on into ones pension. Once compromised you belong to the ‘man’ – the next time you’re asked to look the other way you are compelled to do so. Over time, a dysfunctional organisation ends up with willing compromisers in all the top positions. Even paragons of virtue are susceptible to the promotion manipulation. One can do everything by the book, cross all the T’s, dot all the I’s and dig your heels in. In return you will get a clap on the back, an ‘attaboy, job well done’ and a move up the ranks that on the surface is a promotion but in reality is a move out of the way so that a willing compromiser can take over.
FLAC – An appeal should be
decided on the applicable law and the individual
circumstances of the case, not by policy directions
from the Department of Social Protection.
Gigification is State approved misclassification of employees as self-employed in order for some employers to evade PRSI obligations. Gigification is always bogus self employment, but bogus self employment is not always Gigification. The difference is the approval and assistance of the State in creating bogus self employed workers.
At a meeting between vested interests in the Workplace Relations Commission(WRC), the Gigification of punitive employees was renamed as ‘Contingent Employment’, but don’t let that fool you, Gigification has one purpose and one purpose only – To save ‘selected’ employers circa 30% on labour costs as an enticement to ‘create’ jobs.
Gigification grants illegal state aid, in the form of a secret PRSI exemption, to ‘selected’ employers. It is a secret tax break which puts compliant employers at a distinct economic disadvantage.
The employment status of workers and the rate of PRSI to be paid is entirely the responsibility of the Department of Social Protection to be made in accordance with the law, at least on paper it is.
In practice, the Revenue Commissioners make blanket decisions on the employment status of thousands of workers not in accordance with the law, but instead in accordance with a political imperative to reduce the numbers on the unemployment register by any means.
Unless a punitive employee forced into one of these ‘Special Tax Agreements’ writes to the SCOPE Section of the Department of Social Protection and specifically requests an ‘Insurability of Employment’ decision, the legal sustainability of these politically motivated ‘Special Tax Agreements’ between the Revenue Commissioners and ‘selected’ employers never faces scrutiny.
A Potted History
In 1979, PAYE workers began a series of protests against the PAYE tax system. At that time, PAYE workers were employees, and the burden of income tax, they felt, was unfairly targeted at these employees. Self employed workers paid tax through a self assessment scheme.
In the years that followed, along with changes to the income tax system, an increased focus was put on those working outside the tax net, particularly those working ‘On The Lump’.
The Lump worker is paid cash ‘off the books’ by the employer. No tax or PRSI is deducted at source. The employer pays a lump sum of money for the work the worker does each day or week, hence “working on the lump”. The employer claims that the worker is self employed. Working on the lump is the most basic form of bogus self employment. Working on the lump is also known as working in the ‘Black Economy’.
Following the introduction of Selective Employment Tax (SET) in the UK in 1966, construction industry employers offloaded thousands of directly employed workers and then re-employed them in a “self-employed” capacity. Many of these workers were Irish and the practice of offloading employees and rehiring them as self employed followed them home to Ireland.
In order to combat these workers working on the lump and claiming social welfare at the same time, Governments in the UK and Ireland introduced various forms of tax certificates for these workers and labeled them ‘sub-contractors’. The social welfare and tax systems in both countries gave generous allowances for travel, clothes, lodgings, tools etc. The worker then paid income tax on a much smaller amount than a directly employed worker and the employer avoided all responsibility. Many employers refused to take on direct labour, as they knew that many of them would be trade unionists who would use collective bargaining to improve pay and conditions. Employers blacklisted union and activist workers.
This practice of ad hoc, specifically tailored tax agreements for the construction industry was duplicated in other industries. The Revenue Commissioners met and negotiated several of these deals with individual employers and industry wide representatives.
In Accordance With The Law
The Denny Case
In February 1992, the SCOPE Section of the Department of Social Welfare opened an ‘Insurability of Employment’ decision making process into the employment status of a young woman called Sandra who worked as a demonstrator in various supermarkets. Sandra was labeled as self-employed by her employer as were all supermarket demonstrators.
Less than 3 months later, on the 6th of May 1992, the SCOPE Section Deciding Officer, applying all of the available evidence and also the legal principles handed down in various court judgments over the years, issued a decision that Sandra was not self-employed as claimed by her employer. Sandra was an ordinary employee.
Employment status is never just a matter of choice.
Before 1992, SCOPE decisions were legally binding decisions. A notice would be issued to the employer and all PRSI arrears would be demanded. The employer could appeal directly to the Minister to reverse the decision or appeal it directly to the courts. In both instances, the Department would be required to defend it’s own decision.
This SCOPE decision however, wasn’t appealed to the Minister or the Courts, it was appealed to the then newly formed Social Welfare Appeals Office (SWAO).
The Social Welfare Appeals Office was established by legislation in 1991. It is an office of the Department of Social Protection responsible for determining appeals against decisions on social welfare entitlement & insurability of employment issues. The Social Welfare Appeals Office is a quasi-judicial tribunal and can, if it so chooses, consider a case ‘de novo’ or afresh.
The Department of Social Protection is required to implement the decision of an Appeals Officer which is deemed to be “final and conclusive” unless a review by the Chief Appeals Officer is requested on a point of law or fact or unless statutory appeal is taken to the High Court on a point of law.
The appeals mechanism is not independent. The Appeals Office must adjudicate on decisions of the Department of Social Protection, of which is it a part. Appeals Officers are employees of the Department, appointed by the Minister for Social Protection, and may return to another Department section after working in the Appeals Office. Furthermore, the fact that decisions on social welfare appeals are not published routinely, means that people appealing decisions are also forced to work in an information vacuum and are unclear how cases are decided. It is worth remembering that people cannot access state legal aid to advise and assist them in what can be a very complicated process.
It was into this new Office of the Department that the contentious decision of SCOPE, another Office of Department, was appealed.
The SCOPE decision was contentious because it challenged the authority of the Revenue Commissioners, so much so, that on the 15th of December 1992, a letter issued from the Inspector of Taxes, Tralee, indicating his intention not to pursue the question of requiring Kerry Group PLC to deduct income tax under the PAYE system from merchandisers/demonstrators/promoters.
This letter from the Revenue Commissioners exposes that the Revenue Commissioners were operating an industry wide ‘Special Tax Agreement’ to label all merchandisers, demonstrators and promoters as self employed and were refusing to bound by insurability of employment decisions made by the SCOPE Section.
This letter was submitted to the SWAO appeal of the SCOPE decision as a ‘matter’ for the Appeals Officer’s attention. The Revenue Commissioners were clearly applying pressure to the SWAO to overturn the SCOPE decision in Sandra’s case under threat of totally ignoring any decision that would affect their industry wide ‘special tax agreement’.
An obscure, unreported Civil Court case, Cronin v Kerry Co-operative (24 June 1990), was also submitted to the SWAO appeal to justify the Revenue Commissioner’s refusal to be bound by either SCOPE or SWAO decisions on merchandisers/demonstrators/promoters.
Despite this intense pressure from the Revenue Commissioners, the newly formed SWAO held it’s ground and fully supported the original SCOPE decision. The decision was further appealed to the higher courts by the appellant company. Eventually, following a 6 year battle, the higher courts ruled that Sandra was an employee. The original SCOPE decision was strong enough to survive every level of the quasi-judicial and judicial process and became one of the definitive rulings on insurability of employment widely known as Henry Denny & Sons (Ireland) LTD, trading as Kerry Foods v. The Minister for Social Welfare  1 IR 34.
It is worth noting that the details related here would never have become public had the SWAO ruled against SCOPE. The SWAO is a secret quasi-judicial tribunal, all hearings are secret and none of it’s rulings are open to public scrutiny. This was the first and last time that the Social Welfare Appeals Office supported a SCOPE decision which challenged a pre-existing Revenue ‘Special Tax Agreement’.
In 1993, less than a year after the SCOPE decision that Sandra was not self-employed, the SCOPE Section made an Insurability Of Employment decision that an individual courier was not self-employed as his employer claimed. This decision was immediately appealed to the Social Welfare Appeals Office by the employer.
Unlike the previous SCOPE Section decision, the SWAO overturned this decision and sided with the employer. This information has never been made public and no details of the case are available to the public as to why the SCOPE decision was overturned.
Although the Social Welfare Appeals Office claims that there is no searchable database of decisions, this case is cited in a legal submission by Courier Company legal representatives in a separate SWAO appeal some years later. The case was Thunder v Roadrunner Couriers (Claim No. SC 2443/1993).
This case is described as Thunder v Roadrunner couriers, not Social Welfare v Roadrunner Couriers, marking a significant change in how insurability of employment appeals are described. It is no longer the Department who defends their own decision, but instead the onus is on the individual worker to defend the SCOPE Section decision.
Public Accounts Committee
In July 2000, the Chairman of the Public Accounts Committee wrote to the Chairman of the Revenue Commissioners and asked why all couriers were being treated as self-employed by the Revenue Commissioners.
On the 9th of August the Chairman of the Revenue Commissioners replied –
“The issue of Couriers and particularly Motorcycle Couriers was the subject of protracted discussions between Revenue and Representatives of the Courier Industry. I enclose copies of our letters of 7 March 1997 and 3 April 1997 to (Solicitors Company) which represented Courier Companies at the discussions. The letters outline the agreement reached for tax purposes”
Prior to the inquiry from the Chairman of the PAC, this ‘Special Agreement’ between the Revenue Commissioners and Courier Company representatives was unknown. Only a handful of people yet know about it.
The Chairman of the Revenue Commissioners went on to explain the Revenue Commissioners rationalization for reaching a ‘Special Tax Agreement’ with Courier Company owners –
“For the purpose of Insurability under Social Welfare Law a motorcycle courier was found to be self-employed by a Department of Social, Community and Family Affairs Tribunal some years ago. The decision was not challenged further through the High Court on a point of law and consequently would stand for social insurance purposes”
Except that it doesn’t work like that. Each case must be taken on it’s own merits, occupations which appear the same may differ in the actual terms and conditions. It is not legally sustainable to label all workers in an industry as self-employed based on one decision alone. A fact the Chairman of the Revenue Commissioners was fully aware of. The Revenue Chairman’s position was immediately contradicted in the ‘Special Tax Agreement’ (Section 2.2) attached by the Revenue Chairman –
It is no wonder this dirty deal was kept secret by the Revenue Commissioners and Courier Companies. So here are the indisputable facts –
Courier Companies were not compliant with their most basic of tax obligations.
There was always an obligation on Courier Companies to make a return of all persons who were paid in excess of 3000 punt (3810 euro).
The non-compliance of Courier Companies spanned at least a decade.
Courier Companies were operating entirely in the Black Economy.
Courier Companies were paying all their Couriers ‘On the Lump’.
No individual Couriers participated in negotiations to make them self employed PAYE employees.
The Revenue Commissioners absolved Courier Companies of all past non-compliance based on a hitherto unheard of Social Welfare Appeals Office overturning of a SCOPE Section decision.
The Revenue Commissioners indemnified Courier Companies from all future insurability of employment responsibilities.
This is a PAYE arrangement, its very existence is an overriding indication that Couriers cannot offer their services concurrently to others, that they are not in business of their own account, that they are ordinary employees and not self employed.
Law Unto Themselves
In September 2000, the Chairman of the Public Accounts Committee wrote to the Secretary General of the Department of Social, Community and Family Affairs and asked for his observations on why all couriers were being treated as self-employed by the Department of Social Community and Family Affairs.
In October 2000 the Secretary General of the Department of Social Community and Family Affairs replied –
“The employment status of couriers has under review for some time. Some couriers consider that they are self employed while other regard themselves as employees. This has implications for PRSI purposes, as there are different statutory provisions for employees and self employed persons. Similar provisions exist in relation to employment law and safety legislation. In order to resolve the matter a number of representative test cases were selected in 1993/94 for detailed investigation and formal insurability decision under Social Welfare legislation. The process resulted in a decision by an Appeals Officer of the Social Welfare Appeal Office on 12 June 1995 who decided that a courier was self employed if he –
Provided his own vehicle and equipment
Was responsible for all expenses including tax, insurance, maintenance etc, and
Payment was made on the basis of rate per job plus mileage allowance.
The Appeals Officer’s decision established the criteria in relation to the employment status of couriers that has, since then, been generally accepted throughout the industry and also by the Office of The Revenue Commissioners for Income Tax purposes”.
This reply from the Secretary General in Oct. 2000 is staggering in it’s deception. The employment status of couriers was not under review, the ‘Special Tax Arrangement’ had pigeon-holed all couriers as self employed 3 years previously, and that’s just the beginning.
Following the SWAO overturning of the SCOPE decision in the Thunder v Roadrunner Couriers case, representatives of Courier Employers engaged in discussions with the Revenue Commissioners to have all couriers labeled as self-employed in order to retrospectively evade their statutory obligations even though the Revenue Commissioners accepted and acknowledged that Courier Companies had failed to comply with their statutory obligations for over a decade. The Special Tax Agreement would have gone ahead then had it not been for the protests of individual SCOPE Section Deciding Officers who objected to the blanket classification of couriers as self employed.
Three ‘couriers’ were selected by the Courier Company representative and put forward for insurability of employment decisions. The Deciding Officers in the SCOPE Section were not informed that they were to be considered test cases. Deciding Officers are legally obliged to assess each case on its own merits in accordance with the general precedents of Irish Law because operations which may seem to be the same may differ in the actual terms and conditions in any given case. Deciding Officers cannot legally consider any case to be a test case, nor can the Secretary General (The futility of doing so will become apparent later in this piece).
Following due consideration, the SCOPE Section issued decisions that all three couriers were ordinary employees and not self-employed. Inexplicably, these decisions were appealed to the SWAO by not just the Courier Companies representative but by the couriers themselves. An anonymised account of this appeal is contained in the Annual Report of The Social Welfare Appeal Office 1995, although the SWAO, unlike the Secretary General, cleverly avoids calling the case(s) ‘Test Cases’ –
‘Motor-cycle Business Couriers.
A Deciding Officer gave a decision that a motor-cycle business courier was employed under a contract of service (as an employee) while engaged by a business courier firm. Both parties appealed the decision. The case was understood to be of wider significance to the trade.
The Appeals Officer held an oral hearing. Both appellants were present and the Courier firm was legally represented. The Deciding Officer and Social Welfare Inspector were also present. Payment to the courier was ordinarily made by the firm on the basis of a basic engagement rate plus a mileage travel allowance. Individual jobs were allocated (generally by radio) by the employer on the basis of availability and the location of the courier. The firm supplied the radio and the carrier bag. The bag bore the firm’s logo, which also appeared on the delivery dockets carried by the courier. The courier supplied the motorcycle and paid all related expenses such as tax, insurance and maintenance, as well as the outdoor clothing.
In presenting her case, the Deciding Officer stated that application of standard tests for determining the nature of an employment engagement showed the existence of a contract of service (employee). She held that the firm possessed the right to direct, control and dismiss the courier (control test). The courier’s job was so closely tied into the firm’s activities that they could be regarded as inseparable (integration). The courier was not an independent business unit (entrepreneurial).
Counsel for the firm submitted that the courier was fully free on how he did a job assigned, being at liberty as to the form of transport and route used. He was free to work for other employers. He did not have to provide personal service. He could refuse work. If he were off the road for any reason he would not be paid.
On motor-cycle couriers being an integral part of the firm’s operations, the fact that only about 50% of the business was related to motor-cycle couriers, the rest being done through the bus and rail networks (and so, it was submitted, the firm could carry out its integral courier activities without motor-cycle couriers as such).
As to the free-standing nature of a courier’s job, it was not unlike that of a taxi driver – the profit margin could be increased by greater activity. Counsel referred to case law to support these contentions.
The courier appellant’s evidence did not conflict with the submission on behalf of the appellant firm. specifically the courier confirmed the flexibility for jobs, the possibility of getting another courier to take his place and instanced occasions on which he had declined to accept jobs offered (fifteen refused in the previous week because they did no suit him for different reasons).
The Appeals Officer allowed the appeal. In commenting on the case the Appeal’s Officer acknowledged that there were features of the courier’s engagement which were more consistent with a contract of service rather than a contract for services. However, in his view, the factors supportive of the existence of self employment outweighed such features. These critical factors included the want of control, acceptability of a substitute, freedom to refuse jobs and the flexibility in hours of availability. Consequently, the nature of contractual engagement was that of a self-employed person and not that of an employee’.
So what really happened?
Well, straight off the bat, these were not ‘Test Cases’. This ‘test case’ claim is like a mutating virus, it started out with Scope in 93/94 with no way there were test cases, it mutated in ‘95 with the SWAO claiming that the decision was of ‘wider significance to the trade’. Skip forward to 97 and it mutates again, this time the Revenue’s Special Tax Agreement claims it’s a ‘non binding decision that does not override the statutory rights of couriers’ and then suddenly in 2000 the Secretary General of the Department of Social Protection, under pressure to reply to the PAC Chairman’s inquiry, performs the final mutation and outright calls them test cases. The Secretary General’s ‘Test Case’ claim was refuted by the Courier Company Representative some years later in the Employment Appeals Tribunal where he described the cases as ‘Inconclusive’.
Only one case is described in the SWAO report. The SCOPE Section Employee determinations on the ‘number of representative cases’ previously described by the Secretary General, unless appealed, still stand and are still valid to this day.
Was this single case described in the SWAO representative of all couriers, van, motorcycle and pushbike?
Three motorcycle couriers were ‘selected’ by the courier company representative. One of these couriers claims to have emigrated shortly after the SCOPE decision that he was an employee. He returned to Ireland after the SWAO appeal had concluded and took up a managerial position with the courier company he previously worked with as a courier. He had continued involvement with courier insurability of employment decisions. A subsequent Social Welfare Inspector’s report on a separate case 4 years later named him as a representative for the company opposing a SCOPE decision that a courier was an employee in the company in which he was now a manager.
It is unknown which of the other two couriers is the case described in the SWAO report. What is known, is that in the intervening period between the SCOPE Section decisions in 93/94 and the SWAO hearing in 95, both men were registered as directors of a courier company in documents available in the Companies Office. After the SWAO decision in ’95, both men opened their courier business and operated one of the largest Courier Companies in Dublin for many years. Is it any wonder ‘The courier appellant’s evidence did not conflict with the submission on behalf of the appellant firm’?
In July 2000, an individual courier wrote to the SCOPE Section and requested an insurability of employment decision. This courier was not ‘selected’ by anybody. In his letter, the courier explained why he believed he was an employee and not self employed.
The courier had no knowledge of the (secret) Special Tax Agreement between Revenue and Courier Companies which labeled him self-employed. Nor did he know that the general manager of the company he was working for was also the representative of the Courier Companies who had negotiated the Special Tax Deal in the Burlington 3 years earlier. Nor did he know that his direct manager was one of the Secretary General’s ‘Test Cases’ from ’95.
As is the procedure, a SCOPE Deciding Officer wrote to a Social Welfare Inspector on 27 July 2000 requesting that he complete SCOPE’s standard ‘Insurability of Employment’ (INS1) form with a Company representative. The Deciding Officer also enclosed a list of 14 separate specific questions to be answered by the Company’s representative and requested that a report of this interview be returned to SCOPE.
The SCOPE Section does not have it’s own dedicated investigators.
Upon being notified that an insurability of employment investigation was underway, the courier was put under a sustained barrage of harassment and abuse from Company managers and from one of the owners of another Courier Company, the one that had been set up by 2 of the Secretary General’s ‘test cases’. This is not unusual, of 13 cases in 3 separate industries this author knows of, all have lost their jobs, 12 have been blacklisted by their respective industries, all have been harassed, all have been abused. Workers (not ringers, ringers do quite well) who request insurability of employment decisions are whistleblowers. They are exposing fraud. Not only are they targeted for abuse from their employers, the State gives them a damn good kicking too.
Representatives of the Courier Company immediately sought and were refused an ‘Off The Record” meeting with SCOPE Section representatives.
It was then, with breakneck speed, that the Kangaroo Court was convened.
The Kangaroo Court
It was the Chairman of The Revenue Commissioners who first revealed that a group of powerful people had already met up to ‘rule’ on the individual courier’s request to SCOPE.
In his 9 August 2000 letter to the Chairman of the Public Accounts Committee (previously mentioned), the Revenue Chairman wrote –
“I understand that (NAMED) has formally taken up the question of his insurability status with the Dept. Social, Community and Family Affairs. The issue of couriers was also raised at the inaugural meeting of an ’employment status group’ under the auspices of the Programme for Prosperity and Fairness. The group consist of representatives of ICTU, CWU, IBEC, Revenue and the Departments of Finance and Social, Community and Family Affairs. It is envisaged that representatives of the Department of Enterprise, Trade and Employment will be invited to the next meeting”.
This Kangaroo Court was formed in the time between the SCOPE Deciding Offier’s request to the Social Welfare Inspector dated 27 July 2000 and the Revenue Chairman’s letter to the PAC Chairman dated 9 August 2000.
That it was convened specifically in response to the individual courier’s request to SCOPE is confirmed in a letter dated 12 April 2001 from the Secretary to the Chairman of the PAC to the individual courier. It unequivocally exposes that a group of powerful vested interests met and discussed the individual courier’s case while the case was under legally binding determination by the SCOPE Section –
“I enclose, for your information, a copy of an article from the Revenue Commissioners’ publication ‘Tax Briefing, issue 43, April 2001’. The article relates to the Report of the Employment Status Group set up under the auspices of the Programme for Prosperity and Fairness. I believe its contents may be of interest to you in light of the case you are making (In fact, I believe your case was the one which gave rise to the Group’s formation and I know it was certainly discussed at some of the Group’s meetings!)”.
There are two reports of this meeting. The first is the official cover story contained in the Revenue Commissioners’ publication ‘Tax Briefing, issue 43, April 2001’. The second is an internal report from the Communications Workers Union who were present at the inaugural meeting of this Kangaroo Court –
“There is an ongoing case involving one of the CWU members (NAMED) with Social Welfare. In this case (NAMED) claimed to be employed and not self employed and took an appeal to SCOPE Section against his alleged employer (NAMED).
The view of IBEC, Revenue & Finance was that the status quo should remain.
Where a worker has a disagreement over his/her employee status they can take a case to the high court and seek a legal definition”
Forever more, Insurability of Employment cases were to be decided by policy directions from the Kangaroo Court and not on the applicable law and the individual circumstances of the case. The Kangaroo Court demonstrably set out to overrule the precedents set by the Denny Supreme Court case just a few years earlier.
The Department of Social, Community and Family Affairs representative on this Kangaroo Court had deeply embedded himself with the individual courier case with SCOPE and served, at the Minister’s pleasure, at the highest levels in the Social Welfare Appeals Office until his retirement almost a decade later. As the Minister’s representative on the Kangaroo Court, he was duty bound to ensure that the Kangaroo Court’s policy direction superseded applicable law and individual circumstances in the SWAO’s decisions.
Crooked Is As Crooked Does
As was shown in the refusal to have an ‘Off the Record’ Meeting and indeed in the refusal to bow to Revenue pressure in the Denny case, the integrity of individual SCOPE Deciding Officers was known to be above reproach.
This presented a problem for the Kangaroo Court who clearly wanted SCOPE to rule according to it’s secret edict in the ongoing case of the individual courier, an instruction which was made known by the Kangaroo Court’s Social Welfare representative to both SCOPE and the SWAO.
Eventually, on the 17th of August 2000, the Social Welfare Inspector who had been instructed by SCOPE to complete the Insurability of Employment Form (INS1), and ask the 14 additional questions, met with representatives of the Courier Company. The ‘Official’ investigation had begun, a week after the Kangaroo Court had ruled.
3 people were present at this meeting. The Social Welfare Inspector, the General Manager who was also the Courier Companies representative in the Burlington Hotel who negotiated the ‘Special Tax Agreement’ in ’97, and the Office Manager who had previously been one of the Secretary General’s ‘Test Cases’ in ’95.
The Social Welfare Inspector and the General Manager drove from their respective offices in west Dublin to meet together with the Office Manager in a dank smelly armpit of a courier base in Dublin 2.
The ‘Insurability of Employment’ (INS1) form was completed and signed by the General Manager and witnessed by the Social Welfare Inspector. The INS1 form was previously praised by Mr Justice Ronan Keane for its incisive clarity in the Denny Case. It is practically impossible to ‘game’ the INS1 form.
The 14 additional questions were not asked by the Social Welfare Inspector. Instead the Social Welfare Inspector wrote a report of this meeting but he claimed that he met both the Office Manager and another Manager of the Company, not the General Manager, even though it is the General Manager’s signature on the INS1 form which was completed at this meeting. This several page report attributes evidence to a Manager he never met or spoke to, ever! This ‘report’ directly contradicts the signed and witnessed evidence given by the General Manager on the ungameable INS1 Form.
Several years later, the individual courier summonsed the Social Welfare Inspector to the Circuit Court where the Social Welfare Investigator was forced, under oath, to admit that he had never met or spoken to the man he attributed evidence to in his extensive report. The Department of Social Welfare was informed at the time by the Circuit Court Judge that this matter should require another day in court but the Department has ignored the Judge’s comments ever since and has refused, numerous times, including this year, to act upon this evidence of deliberate deception.
Both the completed INS1 form and the falsified Social Inspector’s Report were returned to the SCOPE Section.
The Futility of Fake ‘Test Cases’
On the 6th of September 2000, the SCOPE Section Deciding Officer issued his decision on the insurability of employment of the individual courier –
“Having considered all the available evidence on file in this case and the Social Welfare Inspector’s Report, I am satisfied that (NAMED) is employed under a contract of service (Employee) by the company. He is an integral part of the business, has to render personal service and is subject to control, direction and dismissal by the company”
The decision was backdated to the beginning of the couriers employment with the company on 2 August 1997, exactly 4 months after the industry wide ‘Special Tax Agreement’ had been signed off on in the Burlington Hotel.
A short, one line letter issued from the SCOPE Section to the Social Welfare Inspector who had falsified his report. It stated –
“Please note Scope Decision in this case and deal with compliance”
The secret tax agreement lay in tatters, not worth the paper it was written on. There was no basis in law to label all couriers as self-employed. Hundreds of couriers and other miss-classified employees in dozens of companies were now in a position to claim their rightful employment status. The implications would be felt across a plethora of industries. Pandora’s box was well and truly open.
The courier wrote to the Chairman of the Public Accounts Committee –
“Thank you for your prompt reply and the enquries(sic) you have made. Further to this matter, I have received a decision from Scope, attached. This decision makes it completely apparent that the protracted discussions between Revenue and representatives of the courier industry did not represent the couriers nor in any way reflect the true conditions under which they labour. A cabal of courier companies deliberately misled and continue to mislead the Revenue, Social Welfare and the tax payer. Blatant abuse is openly available for all to see”.
On 22 September 2000, a firm of accountants wrote to the SWAO to appeal the SCOPE decision. They gave no grounds for appeal other than they believed the courier was hired under a contract for services and they ask to review the evidence. They claim that there is a ‘Contract’.
On the 1st of November 2000, the Chief Appeals Officer wrote to SCOPE and notified them that an appeal had been lodged. He quotes legislation and requests documentation. At the end of his letter he suggests that the SCOPE Deciding Officer should save them all the bother of an appeal –
“Please note that under Section 248 (1) of the Social Welfare Consolidation Act, 1993, the Deciding Officer’s decision may be revised by a Deciding Officer if this appears to be warranted in the light of new facts or evidence. Where such action is taken, you are requested to inform the Appeals Office in order that the Appeal may be recorded as closed”
Now the thing about this request for more documentation, the Deciding Officer had already issued all the documentation he was legally required to.
Whether the Deciding ever knew of this communication from the Chief Appeals Officer or not is unknown. What is known is that a lengthy letter was sent to the Chief Appeals Officer from the SCOPE Section. This letter is a matter of serious concern. It significantly alters the Deciding Officer’s decision and the evidence and yet the Deciding Officer’s name is printed at the bottom as though it was he who had written it. This letter states that all this information was already sent to the Accountancy Firm.
Along with the printed name at the bottom of this letter, is a signature, a ‘PP’ signature, a ‘signed on behalf of signature’, it is the name and signature of the Department of Social, Family and Community Affairs representative on the Kangaroo Court.
On 16 October 2000, the Chief Appeals Officer replied to the Accountancy Firm and enclosed –
Couriers original request to Scope including attachments
Both INS1 Forms
Letter from Scope to SW Inspector
Falsified Report from Social Welfare Inspector
Fabricated Memo from Minister’s representative on the Kangaroo Court
At the end of his letter, the Chief Appeals Officer made a request that is going to make the toes of every legal eagle curl –
“Upon review of these papers please forward the grounds of Appeal to the Chief Appeals Office”
Exactly a month later the Social Welfare Appeals Office (The current Chief Appeals Officer to be more accurate) again wrote to the Accountancy Firm and pleaded for their reasons for Appeal –
“With further reference to your letter of 22 September and, in particular, you request to have the opportunity to present a detailed case on review of the evidence available to the Deciding Officer, perhaps you would advise, please, if you are now in a position to furnish detailed Grounds of Appeal”
There is no other Judicial or Quasi Judicial process where this ‘fishing’ for detailed grounds of appeal and the SWAO’s craven subservience would be tolerated.
On 23 January 2001, 128 days after the legal deadline to provide a written Appeal clearly stating the Grounds of Appeal, the Social Welfare Appeals Office allowed the Appeal go ahead without any grounds for an appeal whatsoever.
The Appeals Officer asked everybody to identify themselves. This was the first time the Social Welfare Inspector and the Manager named in his falsified report had actually met. The Appeals Officer declared his intent to proceed and stated that he would be getting the Social Welfare Inspector to read from his falsified report.
The Accountancy Firm didn’t show up (they were obliged to by the way), instead the Courier Company turned up with a top drawer legal team. The Appeals Officer then referred to his previous correspondence and asked if the Courier Company was going to provide written grounds of appeal.
The Barrister for the Courier Company said that they would not. It immediately descended into chaos.
Neither SCOPE nor the Courier would agree to continue without legal representation. The Chief Appeals Officer adjourned the hearing.
After the meeting, still inside the Social Welfare Appeals Office, the Scope Section representatives and the Courier were asked into a room. The man inside went on to explain that the insurability status of couriers had already been sorted out. He said previous cases had sorted it. The courier told the man that the previous cases were ringers and the meeting abruptly ended. The man was the Minister’s representative on the Kangaroo Court. A few minutes later the same man went into the same room with the Appeals Officer who was hearing the case.
Scope Lawyers Up
“It is not the practice of Scope Section to be represented by legal counsel at Appeal Hearings”
Leo Varadkar, September 2016.
The Appeal resumed on 1 March 2001, no reasons for Appeal were provided.
SCOPE had lawyered up and it wasn’t SCOPE acting alone. The legal team they brought with them represented the Minister for Social Community and Family Affairs, it said so on their Legal Submission. This Legal Submission on behalf of the Minister cited Henry Denny & Sons (Ireland) LTD, trading as Kerry Foods v. The Minister for Social Welfare (1998) and concluded –
“Applying the law to the facts of the instant case, it is concluded that the Appeals Officer is bound to hold that the claimant is employed under a contract of service (employee).”
The Courier Company’s legal submission still did not provide grounds for appeal, it simply listed the Deciding Officer’s conclusions and said they were ‘factually incorrect’. The Courier Company Barrister cited McAuliffe –v- the Minister for Social Welfare (1995) as the relevant legislation.
The Courier was represented by a union who provided their own legal team. The courier had lost his job and could not afford to engage representation of his own. 48 hours before the resumed hearing the union had informed the courier that their Barrister was the first cousin of the Manager named in the Social Welfare Inspector’s Report. That Manager was not at the reconviened hearing. The courier had been notified by the SWAO that he would be fined for non appearance. This Barrister’s Legal Submission broadly followed the Minister’s Legal Submission.
The Appeals Officer dismissed the INS1 forms as ‘not particularly instructive‘ and then instructed the Social Welfare Inspector to read his (falsified) report aloud which he did.
An attempt was made by the Barrister for the courier company to introduce what he called a ‘Written Contract’. Upon examination, it turned out that it wasn’t a written contract. It was a single page ‘Application Form’ the courier had been required to fill out when he joined the company. It asked for his name, address, previous employments and RSI number. This page had been stapled to the bottom of an extensive contract which the courier had never seen. The Barrister claimed that it was a mistake and withdrew the contract. An account of this is contained in a subsequent ‘Attendance Docket’ written by one of the solicitors present –
“(Barrister for the Courier Company) produced a ‘Contract/Application Form’ which were pinned together, together with a covering sheet. (Opposing Barrister) pointed out that the document produced was never given to (The Courier) and he only got one single page, and that was the reason he signed it. (Courier Company Barrister) made a big deal of the fact that he had signed one page of it and not the other. The effect was that it looked like a complete contract which had been furnished to all couriers, which clearly was not the case. (Barrister for the Courier Company) conceded this.”
And that was it. The Appeal lasted 4 hours. No new evidence was presented. The false written contract the Courier Company attempted to introduce was exposed as a fake and despite being told that they were required to provide Grounds of Appeal in the hearing by the Appeals Officer, the Courier Company never did.
To Hell or the High Court
On 5 of June 2001, the Social Welfare Appeals Office issued its first decision –
“I consider that the courier here is employed under a contract of services (employee). As indicated, the circumstances her of the engagement of (courier) by the appellant company are more in keeping with a contract of services (employee) rather than of an employer and employee one. Consequently on the evidence and in law the appeal succeeds.”
Not just once but twice in the Appeals Office decision it says the courier is Contract of Service (employee) and still the appeal is allowed and the courier is classified as self-employed.
Following a telephone call from the courier to the Social Welfare Appeals Office protesting this contradictory decision, another decision is issued on 11 June. This decision repeats word for word that the courier is an employee and that the appeal is allowed.
On 13 June, a letter was sent to the courier from the SWAO, it stated –
“Due to a typing error …. the decision sent to you was incorrect”
This time the decision stated that the courier was ‘Contract For Service’ (self employed). The Appeals Officer, a civil servant, then cited both the Denny case AND the McAuliffe case as rationalization for his decision.
On 29 June Solicitors who had been present in the SWAO hearing wrote to the Chief Appeals Officer –
“We are most surprised at the decision reached by Appeals Officer in this case. No new evidence was presented by the Appellant. It is quite clear, that the effect of the decision of the Supreme Court in the Denny case in 1988, when applied to the facts of the (individual courier) case, leads to but one conclusion:- that (the courier) was directly employed by the (Courier Company) on a Contract of Service”
This letter not only represented the views of the Union legal representatives, but also the views of the Minister of Social, Community and Family Affairs Legal representatives.
The Social Welfare Appeals Office refused to budge. It didn’t care what the Supreme Court had ruled, the ruling from the Kangaroo Court overruled the Supreme Court. Policy Direction would forever more supersede Applicable Law in the Social Welfare Appeals Office. All evidence would be ignored, and the SWAO would always support the employer thus forcing the punitive employee to the High Court to defend the employment status decision made by SCOPE.
The High Court is not a financially viable option for any ordinary worker. The cost involved are prohibitive.
The courier did pursue a separate case with the Employment Appeals Tribunal for ‘Constructive Dismissal’ by the employer. The case was heard over 3 full days starting on 23 October 2001. The Courier Company was legally represented, the courier was not. In 2002, the EAT ruled unanimously that the courier was an employee and that he had been constructively dismissed for seeking an ‘Insurability of Employment’ decision from SCOPE (It is worth noting that the Chairperson of the EAT is a Senior Counsel, not a Civil Servant appointed by and serving at the pleasure of the Minister for Social Welfare) –
“At the outset the Tribunal must determine as a preliminary issue whether or not the claimant was an employee as defined in the Unfair Dismissals 1977 to 1993. The claimant claimed to be such. It is contended on behalf of the respondent that the claimant was a self-employed contractor.
In arriving at its decision the Tribunal has given careful consideration to the evidence tendered on behalf of the claimant and the respondent in this case and it has given consideration to the documentation adduced in evidence.
In examining this preliminary issue the Tribunal has carefully considered the established tests enunciated by the courts which have emerged over the years and the Tribunal has considered these tests in the context of the particular circumstances of this case. Having given such consideration it is the finding of the Tribunal that the respondent company exercised a significant degree of control over the claimant while he was engaged as a motor cycle courier. It is the view of the Tribunal having regard to the evidence given that there was very little opportunity for the claimant to operate “on his own” while operating as a courier for the respondent. We also consider significant the fact that the rate set per delivery was set essentially by the respondent company. In relation to the risk and profit factors the Tribunal finds that in the course of his work the claimant carried little or no risk. In particular he was not required to have insurance for the goods he carried. It is also clear from the evidence adduced that the claimant had no opportunity to profit from the venture upon which he was engaged. While the case is being made that the claimant could earn as much or as little as he liked the reality of the case was that the claimant worked a full day almost every day at a rate set by the respondent company. In this the claimant was no different to a piece work employee.
We are therefore satisfied that the claimant was not in business on his own account. It is on this basis and on the basis that the decision in McAuliffe was based on a different set of facts that we distinguish the present case from the learned judgement of the High Court in McAuliffe –v- the Minister for Social Welfare.
In conclusion therefore and having regard to the totality of the evidence in this case and the realities of the working relationship as found by the Tribunal, the Tribunal unanimously finds that the claimant was employed under contract of service and therefore was an employee within the meaning of the Unfair Dismissals Act 1977 to 1993.
The Tribunal therefore determines that it has jurisdiction to deal with the claimant’s alleged unfair dismissal.
As previously set out dismissal as a fact was in issue between the parties. The claimant has set out in evidence the factors which he says left him no option but to leave his employment with the respondent. While the Tribunal heard evidence from the respondent’s General Manager the latter, while stating that it was not the policy of the respondent to abuse or intimidate any worker, was not in a position to counter the claimant’s evidence with regard to other personnel. While the Tribunal accepts that the reduction in the claimant’s income did largely arise because of certain circumstances beyond the respondent’s control the Tribunal is nevertheless satisfied that the working relationship between the claimant and the respondent did deteriorate following the claimant’s decision to make application to the Department of Social Community & Family Affairs for an insurability decision. On balance therefore the Tribunal is satisfied that it was his realisation on the 4th January 2001 of the un-sustainability of the working relationship that prompted his leaving the respondent’s employment and not the offer of other work. Accordingly, the Tribunal determines that the claimant was constructively dismissed on the 4th January 2001 which dismissal we find to be unfair for the purposes of the Unfair Dismissals Act 1977 to 1993″
It was in the Employment Appeals Tribunal that the Manager named in the Social Welfare Inspector’s falsified Report finally got to speak. He vehemently denied ever meeting or speaking to the Social Welfare Inspector, he was fully supported in this by the Courier Company’s legal representatives. The Chairperson of the Employment Appeals Tribunal commented that the Department of Social, Community and Family Affairs should have to answer for this but were not present in the EAT.
This EAT decision was later overturned in the Circuit Court on a point of Jurisdiction. Unless and until the Social Welfare Appeals Office decision was overturned in the High Court, that decision had supremacy over the EAT decision.
It is to Hell or the High Court to challenge the Kangaroo Court edict with a guarantee that the Scope evidence will be so tainted by other Dept. of Social Welfare employees that a fair hearing in the High Court is impossible.
Last week, during a Dail debate on Employment Rights Deputy Richard Boyd Barrett referred to ‘Rhatigan’s cases’ and called the Social Welfare Appeals Office a ‘Kangaroo Court’.
Deputy Boyd Barrett was immediately shouted down by the government benches but the Deputy is entirely correct. I was present at these cases. Along with my long time associate and tireless worker for the employment rights of construction workers, Kenneth O’Connor, we represented the construction workers in the Social Welfare Appeals Office. As a quasi judicial tribunal acting on the policy directions of a Kangaroo Court convened in the 13 days between 27 July 2000 and 9 August 2000 and not on Applicable Law, the Social Welfare Appeals Office is most definitely acting as a Kangaroo Court.
Construction workers are labeled as self-employed under the Revenue’s ‘Special Tax Agreement’ with Construction Companies. This Special Tax Agreement is called the ‘Electronic Relevant Contracts Tax’ agreement or ‘eRCT’ as it is known in the industry. The eRCT agreement works on exactly the same principles as the Courier Companies ‘Special Tax Agreement’. Workers are automatically labeled as self-employed by the employer without any input from the worker (Ireland is the only country in the EU where this is allowed to happen). Tax is deducted at source making this a PAYE scheme for supposed ‘self-employed’ workers.
Several years ago, a dispute between dozens of workers and building company JJ Rhatigan & Co. made national headlines. Two of the disputing workers, Garry Gleeson & Luke Fitzpatrick, spent 3 day and 3 nights atop a 200 foot high crane to highlight what they claimed was non-payment because of irregular subcontracting which had replaced legitimate employment (contract of service) across Rhatigan sites. JJ Rhatigan & Co claimed that the conduct of picketing workers was “appalling” and that the company was entitled to injunctions restraining pickets at any of its sites. In seeking injunctions, Counsel for the company contended in the High Court that no bona fide trade dispute existed because JJ Rhatigan & Co was not not the employer of the workers picketing the sites.
14 of the disputing workers subsequently requested Formal ‘Insurability of Employment’ Decisions from the SCOPE Section of the Department of Social Protection.
In August of 2015, the Formal Decisions in all 14 cases were issued from the SCOPE Section. The Deciding Officer’s Decision confirmed what the 14 men had been claiming all along – they were EMPLOYEES (Contract of Employment) of JJ Rhatigan & Co & not Self-Employed sub-contractors as was claimed by JJ Rhatigan & Co.
All of these men had been labeled as self employed under Revenue’s Electronic Relevant Contracts Tax(eRCT) Special Tax Agreement. The decisions were appealed by the company to the Social Welfare Appeals Office.
Days before the Appeal was due to be held in September 2016, the Union representing the men, the Union which had secured a sizeable settlement for unpaid wages from Rhatigan & Co in the Labour Court, informed the men that they would not be representing them in the Social Welfare Appeals Office.
These men, bricklayers and labourers, were cast alone into what is described by Free Legal Advice Centre(FLAC) as ‘a very complicated process’ where people ‘cannot access state legal aid to advise and assist them’.
On the Union abandonment of the men – there are two parts to this, firstly, every union knows that employer companies are lawyering up to the teeth in the Social Welfare Appeals Office and they’ll have to fight them all the way to the Supreme Court, an expensive business. Secondly, ICTU was part of the Kangaroo Court. Micheal Noonan spelled this out clearly on the 23 June 2015 –
“Guidance on that matter (bogus self employment) is provided in the code of practice for determining employment or self-employment status of Individuals which was prepared jointly by the Irish Congress of Trade Unions, business representative bodies and relevant State agencies”
ICTU immediately replied to then Minister Noonan and attempted to distance themselves from the policy directions of the Kangaroo Court –
‘Congress was indeed involved in drawing up the original “Code of Practice for determining Employment of Self Employment Status”, some years ago in line with our participation on the Hidden Economy Group. As we understood it, the purpose of this code was to ensure the use of agreed objective criteria when determining the appropriate status of employees or contractors within the meaning of the law.’
But Noonan is correct, ICTU sat on a Kangaroo Court, where it should never have been. ICTU had no business agreeing ‘criteria’ with vested interests while a case was underway, that was the exclusive duty of the Scope Deciding Officer.
The evening before the Appeal was due to go ahead, the workers contacted me through Kenneth O’Connor. I advised the men to attend but to seek an adjournment in order to obtain legal representation. I told the men that the employer would be lawyered up to the teeth.
An adjournment was granted. Some days later the men wrote to the Chief Appeals Officer and expressed their serious concerns about the Social Welfare Appeals Office process –
”Dear Chief Appeals Officer
I have the following concerns, please address them as soon as possible.
Notice Of Appeal
On the 19th of August 2015, JJ Rhatigan & Co. were informed of the SCOPE decision that I was employed by them under a contract of service (employee).
JJ Rhatigan & Co were advised that they had 21 days to appeal ‘stating clearly the grounds of your appeal’. To date, the grounds of Rhatigan’s appeal remain a mystery. No point of fact nor point of law has been forthcoming. In the absence of a point of fact and/or a point of law appealing this decision, it is invconceivable that the Social Welfare Appeals Office would agree to an appeal. JJ Rhatigan & Co have not appealed the SCOPE decision within 21 days stating clearly the grounds of their appeal.
As 14 of these letters were sent to JJ Rhatigan & Co., there can be no doubt that JJ Rhatigan & Co. are fully aware of their legal obligation to clearly state their grounds of appeal. Considering JJ Rhatigan & Co’s failure to provide clear grounds for appeal, I respectfully request that an appeal be dismissed forthwith.
There appears to be an attempt on the part of the Social Welfare Appeals Office to deal with all 14 decisions and appeals as one case with all to be heard and decided upon in one hearing. I strongly protest this approach, decisions are based on established facts, not assumptions and as such there is no basis for categorisations purely by occupation. Each case must be assessed on its own merits in accordance with the general precedents of Irish law. Operations which seem to be the same may differ in the actual terms and conditions in any given case.
Further to the issue of individual cases, the Appeals Officer voiced an intent to use these cases as ‘test cases’. I do not wish to be considered as a ‘test case’. Although it is correct to recognise that my case has wideranging implications for the building trade, it is incorrect for the Social Welfare Appeals Office to use it as a test case. Considering that each case must be assessed on its own merit, it is highly questionable that the SWAO has the authority to adjudicate on the employment status of persons who have not been assessed on their own merit by SCOPE or the SWAO. In essence, to use these cases as ‘test cases’ would be to pass judgement on workers who have not been afforded an opportunity to represent themselves or to have representations made on their behalf. The only matter before the SWAO is an appeal of the specific SCOPE decision that I was found to be an employee of JJ Rhatigan, it is impossible to see how considerations other than this very specific case fall within the legal powers of the Social Welfare Appeals Office.
At the recently adjourned hearing in the SWAO, I was present without legal representation. The SCOPE section did not have legal representation. JJ Rhatigan & Co. were fully legally represented with barristers and solicitors. I was not informed that JJ Rhatigan & Co. would be legally represented.
I am merely a ‘Notice Party’ to these proceedings. JJ Rhatigan & Co. is the ‘Appellant’ and the Department of Social Welfare is the ‘Respondent’. It is entirely the responsibility of the Department of Social Welfare to defend the SCOPE decision. I was genuinely shocked at the absence of legal representation for SCOPE. A decision with multi-million euro implications, important enough for industry legal representation, wasn’t legally defended by the Minister for Social Welfare.
I would be grateful if you would forward to me, at your earliest convenience, any information on how I can claim legal expenses from the SWAO.
From the moment I entered the SWAO on Wednesday last, I felt ambushed. I’d been given no reason for appeal, no fact or law which I could prepare to defend against. I was faced with JJ Rhatigan’s formidable legal team and a handful of social welfare employees for whom the entire process already seemed to be a fait accompli. I fought and won my right to be recognised as an employee. The system used to classify thousands of workers in the building trade and beyond as ‘contract for service’ (self-employed) is exposed as unjustifiable. Dubious test cases in a secret and unaccountable court to once again shoe horn me into dodgy self-employment is not acceptable.
The workers came out to my home. I explained clearly that no matter what evidence is presented in the Social Welfare Appeals Office, the outcome has already been decided. It was decided years ago by a cabal of industry barons, top civil servants and Union representatives. I explained that the Social Welfare Appeals Office is a charade, an expensive piece of theatre where all the employer has to do is show up.
I advised that they seek legal representation for themselves and also to pressure the Department of Social Protection to provide legal representation for SCOPE.
The men could not afford legal representation and in reply to a Dail question from Mick Barry TD in September 2016, the then Minister for Social Protection, Leo Varadkar claimed –
“It is not the practice of Scope Section to be represented by legal counsel at Appeal Hearings”
The bricklayers and labourers were instructed by the Social Welfare Appeals Office, under threat of fine, that they had to attend the re-convened Appeal in January 2017, legal representation or no legal representation. In the absence of legal representation, Ken and I agreed to go along with the workers to help them as best as we could.
As was expected, Rhatigan & Co. turned up with top class and very aggressive legal representation. Neither Scope nor the workers were legally represented.
Over the course of 3 days the majority of the men attended appeals one after the other. Some of the men did not make an appearance, one was injured, one had left the country and at least one would not attend for fear of losing his job,
At the end of the appeals, the Social Welfare Appeals Officer asked the Scope Section Deciding Officer had he heard anything that would warrant changing the original SCOPE decisions . The SCOPE Deciding Officer stated that he had heard nothing which would change his original decisions.
The only matter of interest which arose during the appeals was an attempt by the appellant company to use a ‘Health & Safety’ register. This was a multi paged document all workers on site were required to sign on entering the company’s site. In a box beside the workers’ signatures was another box. The name of a company not the appellant company was written in this box. The intention was to show that the workers had signed both their names and also the name of an entirely different company than the Appellant Company. About half way through the appeals, it was noticed that the company name had not been written in by the workers but instead that a person unknown had trawled through the extensive document and filled in the spurious company name in the available box beside each signature. It was conceded by the Company and the Social Welfare Appeals Office that the workers had not written in the spurious company name. No explanation was forthcoming from the company nor was one demanded by the Appeals Officer. It was fake evidence.
Back to the Future
On 25 May 2017, the Social Welfare Appeals Office issued decisions. In every case the Appeal by JJ Rhatigan & Co. had been successful. The SCOPE Section decisions were overturned.
The Social Welfare Appeals Office didn’t even try to hide that it is making decisions based on the policy directions of the Kangaroo Court and not by applicable law. In the first point of all the Social Welfare Appeals Office conclusions, it states –
‘The Oireachtas appointed expert group to determine self-employment status provided a definition of a likely self-employed person’
And this is the difference between how the Scope Section make decisions and how the Social Welfare Appeals Office make decisions. Scope cannot accept the policy directions of a Kangaroo Court ‘Expert Group’ as factors in their deliberations, they must stick strictly to Applicable Law. The Social Welfare Appeals Office quite openly cites these policy directions as a factor in its decisions.
The Kangaroo Court was never an ‘Oireachtas Appointed Expert Group’. It was a hastily convened group of powerful interests who met specifically to discuss an individual case and to replace the Applicable law and SCOPE decisions with policy directions, specifically that the ‘Status quo should remain’ and that the individual must be forced to the High Court to overturn their bogus self employment.
The non-legislative approach of the Kangaroo Court was confirmed as far back as 2002 by the Comptroller & Auditor General. In reply to a letter complaining that Courier Companies were getting a secret tax exemption, he replied –
“The issue of what constitutes a ‘contract of service’ as distinct from a ‘contract for service’ is an interpretational minefield. The recent report of the Employment Status Group (Kangaroo Court) serves to confirm the difficulties in this area as evidenced by their decision shy away from the legislative approach to defining what an employee is”
The Comptroller & Auditor General went on to explain –
“I wouldn’t agree that contractors in the Courier Industry are exempt from taxation laws. What can be said is that the arrangement employed is administratively efficient in collecting tax from a sector which traditionally has been recalcitrant when it comes to paying tax”
PAYE workers don’t get a choice to be ‘Recalcitrant’ when it comes to paying tax. The bogus self employed worker pays exactly the same percentage of PRSI as an Employee. It was, and is, the employer who is evading the loin’s share of PRSI. Regardless of whether the C&AG agrees or not, the fact remains that employers are evading vast amounts of PRSI through gigification.
The Comptroller & Auditor did accept that special tax agreements were not ideal –
“All concerned recognize that it is far from being an ideal system and there is room for improvement”
In the 16 years since the C&AG wrote this letter, no improvements ever came. The ‘far from being an ideal system’ has become the norm.
Meeting the Minister
I’ve contacted every Welfare Minister and at least two Justice Ministers since Dermot Ahern (SW & Justice). Mary Coughlan, Seamus Brennan, Martin Cullen, Mary Hanifin & Éamon Ó Cuív all ignored me, Fianna Fail were a brick wall.
I sat down with Dominic Hannigan and explained it to him. Dominic got it straight away, in fairness anybody who has taken the time ‘gets it’. Dominic took it to Joan Burton as Social Welfare Minister, Joan replied that it was “Not currently an issue”. Since leaving office, Joan has a new found interest and pontificates regularly on why it is now an issue.
More recently, I wrote to Justice Minister Fitzgerald and explained what I believed to be the criminality involved and the implications. Minister Fitzgerald, against my wishes, forwarded it on to the then Social Welfare Minister Leo Varadkar. Like all of his predecessors, Leo did nothing, didn’t even acknowledge that he had received it from Minister Fitzgerald.
Before the Dail broke for last summer, the newly appointed Minister for Social Protection agreed to meet me. We met for an hour in Ashbourne, Co. Meath. I explained to the Minister exactly as I have done here. The Minister said that she would be in touch with me, she hasn’t been.
Between 2011 and 2015 the Government claims to have created 140k new jobs. Figures from the CSO show that 38.5k of the 140k jobs are classified as self-employed, that’s 1 in every 3.5 jobs, more than four times the EU average. Seetec is not distinguishing between employed, self employed and bogus self employed. Thousand of people are being forced into bogus self employment by the Department of Social Protection. The Department is a conveyor belt of victims for gigification.
Once trapped in bogus self employment, you don’t turn up on the unemployment register, even and invariably when you are out of work.
The downsides to bogus self employment are immense. Many times more is defrauded through gigification than is defrauded through claimant fraud but as Gene Kerrigan recently put it –
“Attacking people on “welfare” plays well with the right-wing set. Thieving employers who fund their trophy mansions out of stolen PRSI may be far more socially harmful – but attacking them wouldn’t stir the class hatred that solidified Mr Varadkar’s support”
And that is the point here, Gigification is stealing from the early risers, from the PAYE payers, from compliant employers. In recent weeks, the Taoiseach and the Minister for Social Protection announced Social Welfare benefits for supposed self employed workers. Once again the genuine PAYE employee and employer are taking the hit for PRSI evading employers. There is significantly less in the PRSI pot to fund social services. There are many other far reaching consequences such as sub-contractor self certification in construction but the most socially damaging aspect is pensions. This government is hell bent on linking pensions to PRSI contributions, but many early risers are denied their employer’s contributions through State instituted bogus self employment using Gigification.
Employer’s lobby groups have long campaigned against employer’s PRSI. It is worth pausing a moment and considering what PRSI, ‘Pay Related Social Insurance’, really is. PRSI is an agreement between government and citizens that work will be rewarded with a safety net funded by the early riser with a larger proportion funded by compliant employers. It is the price of employing people in Ireland and Ireland has among the lowest prices for prospective employers in the EU.
This government also proposes merging PRSI and USC. The net effect will be to make it impossible to measure the missing employer PRSI contributions. Every time you hear that government advert on the radio praising themselves for extending social welfare benefits to all self employed people, remember it is you paying the price for PRSI evading employers.
What Gets Measured Gets Done
Last week the Minister for Social Protection justified the Government’s lack of action on bogus self employment with –
“Data from the recent CSO Quarterly National Household Survey record 312,000 individuals as self-employed in 2017, or 15% of total employment. This is consistent with the average levels of self-employment within the EU. There is no evidence of a significant change in the level of self-employment over the past 16 years, since we started collecting the data”
This government is not measuring bogus self employment.
The Quarterly National Household Survey shows a significant surge in the ratio of self-employed to employed workers in the constructions sector since 2007. This is the reverse of what would be expected to happen.
After 2007, the number of workers in the construction sector dropped dramatically. Precarious work, sub contracting/self employment, would be expected to drop faster than employed positions, but the reverse happened. Employers in the construction sector did exactly what construction sector employers did in the UK following the introduction of Selective Employment Tax (SET) in the UK in 1966: After 2007, Irish construction industry employers offloaded thousands of directly employed workers and then re-employed them in a “self-employed” capacity as a cost cutting measure.
Only 2 accurate, widescale, investigations have been carried out into bogus self employment in Ireland. Both put the rate of Bogus Self Employment at circa 20% and that was back between 1999 & 2001. Since the Kangaroo Court issued its policy directions, no widescale investigations have been conducted.
As for the Minister’s claim that Ireland is –
“Consistent with the average levels of self-employment within the EU”
Five countries have more than nine out of ten working persons as employees (Denmark, Germany, Estonia, Sweden as well as the EFTA country Norway).
Italy has the second highest rate of ‘self-employment’ second only to Greece.
What if I was to tell you that self employment rate is not a positive indicator but instead a negative one.
Don’t believe me?
Greece, Italy & Poland have the highest rates of self employment. The lowest rates of ‘Self-Employment’ are in Luxembourg, Sweden and Germany.
Any guesses which economies are doing better?
The rates of self employment EU wide show that Greece is by far the most entrepreneurial country, twice as entrepreneurial as Ireland, 4 times as entrepreneurial as Luxembourg.
When was the last time you heard of any country sending delegations to Greece to see how they have achieved this astounding entrepreneurial recovery?
The entire EU knows that the rates of self-employment are bullshit. What is missing from the graph is the rate of bogus self employment, working for cash, the black economy, Gigification.
The difference between Germany and Greece or Ireland and Greece is not some genetic predisposition toward entrepreneurialism, it is in the policing of the black economy, the ‘lump’ worker, the fraudulent employer.
And Finally ….
Until recently, the Employment Appeals Tribunal was the only other credible avenue for a bogus self employed worker to have their employment status examined. It wasn’t easy, but as this piece shows, it was possible. Recent changes to the industrial relations process have added an extra layer of adjudication for the worker to navigate before reaching the EAT. This has resulted in an effective ban on workers claiming to bogus self employed gaining access to the EAT (I have experience of this in the past few weeks).
Infinitely more concerning is the change to secrecy in WRC proceedings. It is secrecy which has allowed fake witnesses, fake reports and fake statements flourish in the Social Welfare Insurability of Employment process and most particularly in the Social Welfare Appeals Office. When some of the biggest employers in the country are appealing their PRSI obligations, that is a matter of public interest and should never be done in secret.
It is somewhat heartening to see that WRC secrecy has not gone unnoticed in the Law Library.
And finally ….. (for real this time) …… When I met with the Minister for Social Protection, my overriding concern was that there was no way for the bogus self employed worker to overturn their self employment misclassification. SCOPE doesn’t work, it is deliberately sidelined. If the State is on your side it takes 6 years and costs maybe a million euro in legal fees, but the State hasn’t been on anybody’s side since 2000 meaning that SCOPE is a rabbit hole into which you will disappear forever. The Minister announced her solution to bogus self employment last week –
“Any worker who has concerns about his or her employment and-or PRSI status should contact my Department (SCOPE) and the matter will be investigated. This can only happen with the co-operation of the worker”
Really Regina, is that it, is that the best you can do?
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