Gig economy presents taxing challenge
by Bernard Harbor

Substantive aspects of employment law need to be reviewed to protect workers in the so-called ‘gig economy,’ but reform of social welfare and taxation policy is a bigger issue. So said Jeremias Prassl of Magdalen College, Oxford, who spoke at the prestigious Industrial Relations News conference on 8th March.

Confronted with zero-hour arrangements, bogus ‘self-employment,’ and other new forms of work organisation, Professor Prassl said unions had to address the limits of laws on unfair dismissal, minimum wages, and qualifying periods for job protection.

But he said tax was a bigger issue because the so-called gig economy was luring people away from standard employment relationships by offering them a “no income tax” proposition.

Stephen Holst of legal firm McCann Fitzgerald agreed, saying that at least €60 million was lost to the exchequer through the false classification of work as self-employment. This is because self-employment allows companies to avoid paying employers’ PRSI, while workers could avoid tax.

He said such arrangements could initially be attractive to workers, but were less so when they needed PRSI-related benefits like maternity leave, pensions and social security. He said tax and PRSI reforms “could be the biggest driver of change, even though it seems quite boring.”

Prassl said there was evidence that the ‘gig economy’ was causing huge tax losses in other jurisdictions too. And he said moving workers out of the PAYE system meant they carried all the burden of tax compliance.

He said it was possible to address the problem because all the data about who works, who for, and for how much, existed on the platforms – like Uber and Deliveroo – that typify the ‘gig economy.’

Prassl said unions should tackle these aspects of the changing economy while embracing technology and innovation. He said we should avoid “falling into a crazy Luddite trap” because, over the centuries, technology had never destroyed the net amount of work, but had made it “better, safer, and more fun.”

He said unions faced a practical challenge to develop services that gig workers want. But reaching and communicating with them was doable because they are among the most IT and social media literate.

He said even some employers in the sector now saw the value of basic standards and workers’ representation.

LikeLike (0) | Facebook Twitter