Hidden Work

Jul 16, 2018

Sunday Business Post, 15 July 2018 

It's dangerous to read too much into any aspect of current Brexit manoeuvrings, given that the situation on Brexit is changing almost at an hourly rate.  But I was struck at the reports of one particular threat levied at government ministers when they met in Chequers last week to discuss the Prime Minister's latest Brexit scheme.  Chequers is a good distance outside of London, about 40 miles to the north-west.  Any minister not playing ball at the cabinet meeting and opting to resign would have to make their own way home.  Use of the ministerial car would be withdrawn with immediate effect. 

Though presumably any resigning Minister would have been able to cadge a lift from a sympathetic former colleague, the threat underlined just how remote the policy decision making process can be from the lot of the worker.  No matter whether a hard, soft, chaotic or frictionless Brexit is agreed, it would be unlikely that any senior government figure from either side would have to queue for hours at passport or customs controls as a consequence of their policy decisions.  VIPs will still be ushered past checkpoints and will certainly be unaffected but there will be no special provision for HGV drivers (for example) at the new and hastily assembled customs checkpoints that will be the inevitable consequence of a hard, no deal Brexit.  

Mind you, there has been a long-standing tradition of distancing the great and the good from the ordinary worker.  Country estates were sometimes designed so that the local gentry would not be burdened by the sight of mere workers going about their duties – the likes of Tullynally Castle in Co Westmeath is a fine example of a residence carefully designed to ensure that those privileged to live in it would never see those they were employing.

However, if there is still blindness in some quarters to the lot of the worker, the situation isn’t helped by the difficulty of identifying exactly what being a worker now means.  The classical line between the employee providing services under an employment contract, and the self-employed worker is increasingly blurred.  Some of this blurring is due to the rise of technology. 

The permanent and pensionable model associated with many public sector and blue chip private sector jobs is less prevalent.  An increasing number of employees are in non-standard, non-traditional forms of employment, the so-called “gig economy”.  Rather than work within set times and for set benefits including holiday pay and pension entitlements, more and more people are working on an ad hoc basis.  

While this type of work is sometimes described as zero hours contracts working, most people on variable working hours are not working so-called zero hours contracts but are working “if and when” type contracts.  It's an important distinction, highlighted by research from the University of Limerick published some time ago.  Under zero hours contracts, an employee is required to be available for work even if the work is not available.  In comparison, under if and when contracts, while there is no particular obligation on the employer to offer working time, neither is there a particular obligation on the employee to take it up if work becomes available.  

If and when contracts make for more flexibility for employers and indeed can suit many employees alike, but it’s not all plain sailing.  Flexible work arrangements don’t just impact job security, maternity and paternity rights, sick pay and softer benefits such as career progression and training.  There are also tax implications. 

In a previous era, the concern would have been to establish that a person was not an employee, to the benefit of the hirer.  More recently, the courts have been considering cases where the individual was trying to confirm their status as an employee to the benefit of the worker.  Last month, the UK Supreme Court gave a judgment in a case involving a plumbing and heating engineer, who although he paid his tax as a self-employed person, was found to be in employment.  This in turn would permit the plumber, a Mr Smith, to pursue his case for disability entitlements against the company found to be his employer, Pimlico Plumbers Ltd.  

If the incidence of non-standard employment increases, cases like the Pimlico Plumbers case will be more common and this June 2018 case from the UK’s highest court will set an important precedent.  Irrespective of their employment status, workers need to know not just what they are paying in tax and PRSI, but also what they can expect from the state and their employer as a consequence of their labour.  There is a wider implication as well. 

The PRSI system is currently under review by government.  One idea is to merge the USC and PRSI systems, which suggests that the emphasis could be on collection systems without due regard to the impact on the employment and entitlement status of the worker, be they employed or self-employed.  This is one piece of policy making which must not be blind to the needs of people working in this economy.  A reform of PRSI without reference to the benefits which should flow from it would be unacceptable. 

Dr Brian Keegan is Director of Public Policy and Taxation at Chartered Accountants Ireland