Tackling bogus self employment and making formal work attractive

Dr. Eva Fehringer. January 2016

Different types of self employed – hybrid forms

- Self employment occurs in various ways: hybrid employment categories like dependent self employed, other forms like„new self-employed“ or one person company

- No uniform or clear cut definition- „free service contract (dependent contractors): ongoing service on freelance basis, often fixed-

term, often completely dependent on their quasi employer but formally not subject to the instruction of the client and free to schedule their working time (hybrid)

- new self-employed workers i.e. holders of a contract for work without a trade licence, covered by social insurance

- In both cases real working situation in many cases resemble largely that of dependent workers, common feature that they do not employ other people and mostly work for one (main) client

Dr. Eva Fehringer

Independent Contractors , free service contract workers (dependent self employed workers) - Criteria

No personal dependenceNo integraton in enterprise (organisation)No binding instructions or directives concerning working time, place of work.Free of restrictions on personal behaviourEssential operating ressources provided by the employerPerforming services mostly in personRemuneration according to period of time spent on work, rather than based on performanceNo application of vacation law, Working Hours Act, Act on Rest Periods, no minimum wage collective bargained wages (overtime)…Hybrid legal category , since the 90s included in Social Security like employees and since 2008 Member of Chamber of Labour, Unemployment Insurance, Compensation in Case of Insolvency, Maternity Pay (social security like employees)If employee or self - employed decided on case basis, test for employee status in case law, balancing the factors

Dr. Eva Fehringer

New self employed workers and one person companies - new wording for old phenomena

Liberal professions without trade licence , Contract of works- journalists, authors, artists, psychotherapists Insured like self employed (since 1997, therfore called „new“ self employed), unemployment insurance on a voluntary basisNot member of the Chamber of Labour nor Economic Chamber, Interests of this group not represented Part of New Self employed liberal professions (pharmacy, archtitects..), members of the respective professional chambersOne Person Companies, Members of the Chamber of Economy, treated as self-employed big increase in the last years, de facto no companiesNo collective agreements, no minimum wages, no sick- pay (or very worse conditions), no paid holidays, worse conditions concerning social insurance……. (higher contributions), no unemployment insurance (theoratically poss)

Dr. Eva Fehringer

From regular jobs to precarious employment – Data unclear Between 2008 and 2013 decrease of free service contract workers (dependent self employed)

of 28% (18.700) because of better protection.(Around 52.000) 33.000 of these contracts are marginal employment (under 415.- a month).

New self-employed: around 50.000, (around 16.000 liberal professions) One person companies; In general little data. In 2013 around 267.000 persons. (acc. Chamber

of Economy) High increase since 2006 (In 2006 number was 180.000). But data rather unclear. Around 60% of all members of the chamber of economy are one person undertakings. Estimated 2015 around 300.000. In reality many cases of bogus self-employment.

Increase due to social dumping (outsourcing) and to liberalisation of trades in 2003 (i.a. Eu requirement) (Absurd trade licences for self employed cooks, secretaries, carrying of heavy goods , cleaning of tools on construction sites, workers in supermarkets…) Should not be registered as trade, nevertheless, the trade licences exist.

Existing Case law: Simple tasks cannot be self employed work requiring a trade licence (nevertheless, de facto these trade licence are accepted)

Employer`s justification: „outsourcing tasks because of high level of protection under labour law“ = form of social dumping

Dr. Eva Fehringer

Widespread use of bogus self employment and bogus dependent self employment –negative consequences Widerspread use of dependent self-employment: collective bargaining and collective interest

representation via trade unions and works councils is underminded In many cases clear circumvention of labour law standards (higher costs)= social dumping,

lowering of standards and wages, increased instability in terms of job security Undermines job quality and solidarity (going back to the 19th century) – against the European

Social Model Difficult to establish difference between Independent Contractors, New Self Employed and

Self Employed with trade licence – all 3 forms often a means for circumvention of labour law Strong Focus on construction sector Eu Directive on single member company has potential to worsen situation: poss. abuse of the

SUP to promote crossborder bogus self employment as well as wage and social dumping EU policy in general too neoliberal, oursourcing, flexibility…..

Dr. Eva Fehringer

Situation of Theatre Staff /Artists/Journalists Precarious situation of artists as „role model“ for general precarisation? Study on Social Situation of Artists in Austria (data 2008), Situation now might be even worse Unsurpsisingly high number of self employed persons Very low earnings Statutory framework conditions (Theater Work Act,) but applies only to few actors, several

theatres with collective agreements for theatre staff Multiple employments and social insurances, complex constellations, problems with

unemployment insurance Social Fund for Artists, funding for self employed artists Actors, theatre staff, journalists: bogus self employment (and other precarious working

arrangements) (in case of actors also connected with financial situation of small theatres, Lately more control and sanctions collective agreement for dependent self employed journalists Journalists affected by outsourcing, outsourced to become „self-employed“

Dr. Eva Fehringer

Watchlist Since July 2015, founded by Trade Unions, support by BMASK Complaints are forwarded to Control Bodies (Health Insurance) (anonymus) Diverse Cases on Webpage e.g. arts manager and jounalist

Dr. Eva Fehringer

Dr. Eva Fehringer

Making formal work attractive Wrong message, there cannot be any alternative or choice between formal and informal

(undeclared work) Informal Work = depriving workers of their rights=social dumping The answer to informal work is sanctions EU Fundamental Principle is Democracy and Rule of Law not the „Rule of Pick and Coose“ or

Comply and Explain Laws as a means of protection of workers against exploitation and setting social standards by

law, also a means against unfair competition Austrian strong Social Partnership fosters acceptance of law Better: Making informal work unattractive Tougher laws and sanction: e.g. Act against Wage and Social Dumping ILO focus on informal work, Recommendation on transition of the informal to the formal

economy; EU Platform on undeclared Work

Dr. Eva Fehringer

Measures

Apply social security: Independent Contractors (dependent self employed) are covered by accident, health and retirement insurance (over the marginal earnings treshold of 405-)like employees

New self employed are insured according to the Self Employed Insurance Law When registering with the Insurance, the insurance will check if it is really self- employment or

rather dependent contractors or employees (checklist with some questions) Since 2008 dependent contractors are also insured against unemployment Compensation in Case of bankruptcy Member of the Austrian Chamber of Labour (Councelling and representation at court) (Trade

Unions also represent dependent self employed workers) One recent measure against Social Dumping : Anti Wage and Soial Dumping Act, aims at

ensuring equal pay conditions for all employees, in case of underpayment sanctioning of the employer

Dr. Eva Fehringer

Conclusion, Ideas Importance effective implementation, control and dissuasive sanctions Act against wage and social dumping , Control by Financial Police and Construction Workers

Holiday and Severance Pay Fund, Health Insurance, sanctions in the case of underpayment Criminal sanctions in the case of non payment of social insurance contributions Prominent Court Case: Federal Chamber of Labour v. Vienna: Councellors on Waste

Management have worked for Vienna for 6 ongoing years with clear instructions. Court decided that this was a classical employment relationship (hope that this will be an example for more cases)

False self employment widespread, but no reliable data (Single Person Companies) Undermines the European Social Model, social and labour rights, solidarity and social dialogue Erosion of the Social Model. Regression to 19th century, Welfare State in danger Enterpreneurial Risk is on the worker (going back to the 19th century), no securities for worker

but has to be flexible (according to the wishes of the employer)

Dr. Eva Fehringer

Conclusion - Ideas

Most important measure: effective control and implementaion of laws, effective enforcement detecting false self employment, effective and dissuasive sanctions! Criminal law when circumventing social security contributions (Social Fraud), coordination between different authoritiesLabour Law should also apply to dependent contractors (dependent self-employed), critical of establishing new categories of workers, rather abolish them, no deregulationCourt Risk should not be on the employee: Introduction of collective claims in proceedings (not used in the Austrian legal system, only in a restricted form for consumer interests), Trade Union should be able to act on behalf of the employeeReversal of Burden of Proof, Employer has to prove that worker is self-employed (like BE)

Dr. Eva Fehringer

Conclusion - Ideas Extending Protection New definition of workers is needed, focus not only on personal dependence but also on

economical Restricting the supply chain (bogus self employment and bogus companies ) No trade licences for simple tasks, for tasks which cannot be fulfilled as a typical trade Problem when cross border (posting i.a.), sanctions cannot be executed, better cooperation

between MS (Enhancement Directive) Collective agreements on wages and working conditions for dependent self-employed workers

! (until now only for journalists and teachers in private education facilities)

Dr. Eva Fehringer

Thank you for your attention!

Dr. Eva Fehringer