Tackling bogus self employment and making formal work attractive

1. Tackling bogus self employment and making formal work attractive Dr. Eva Fehringer. January 2016

2. Different types of self employed – hybrid forms • Selfemploymentoccurs in variousways: hybrid employmentcategories like dependentselfemployed, otherformslike„newself-employed“ oronepersoncompany • No uniform orclearcutdefinition • „freeservicecontract (dependentcontractors): ongoingservice on freelancebasis, oftenfixed-term, oftencompletelydependent on their quasi employer but formally not subjecttotheinstructionoftheclientandfreetoscheduletheirworking time (hybrid) • newself-employedworkers i.e. holdersof a contract for workwithout a tradelicence, coveredbysocialinsurance • In bothcases real workingsituationin manycasesresemblelargelythatofdependentworkers, commonfeaturethatthey do not employotherpeopleandmostlywork for one (main) client Dr. Eva Fehringer

3. Independent Contractors , free service contract workers (dependent self employed workers) - Criteria • No personal dependence • Nointegraton in enterprise (organisation) • Nobindinginstructionsordirectivesconcerningworking time, placeofwork. • Free ofrestrictions on personal behaviour • Essential operatingressourcesprovidedbytheemployer • Performingservicesmostly in person • Remunerationaccordingtoperiodof time spent on work, ratherthanbased on performance • Noapplicationofvacationlaw, Working Hours Act, Act on Rest Periods, nominimum wage collectivebargainedwages (overtime)… • Hybrid legal category , sincethe 90s included in Social Security like employeesandsince 2008 Member ofChamberof Labour, Unemployment Insurance, Compensation in Case ofInsolvency, Maternity Pay (socialsecurity like employees) • Ifemployeeorself - employeddecided on casebasis, test for employeestatus in caselaw, balancingthefactors Dr. Eva Fehringer

4. New self employed workers and one person companies - new wording for old phenomena • Liberal professionswithouttradelicence , Contractofworks- journalists, authors, artists, psychotherapists • Insured like selfemployed (since 1997, therforecalled „new“ selfemployed), unemploymentinsurance on a voluntarybasis • Not memberoftheChamberofLabour norEconomicChamber,Interestsofthisgroup not represented • Part of New Selfemployed liberal professions (pharmacy, archtitects..), membersoftherespective professional chambers • One Person Companies, Members oftheChamberof Economy, treatedasself-employed bigincrease in the last years, de facto nocompanies • Nocollectiveagreements, nominimumwages, nosick- pay (orveryworseconditions), nopaidholidays, worseconditionsconcerningsocialinsurance……. (highercontributions), nounemploymentinsurance (theoraticallyposs) Dr. Eva Fehringer

5. From regular jobs to precarious employment – Data unclear • Between 2008 and 2013 decreaseoffreeservicecontractworkers (dependentselfemployed) of 28% (18.700) becauseofbetterprotection.(Around 52.000) 33.000 ofthesecontractsare marginal employment (under415.- a month). • New self-employed: around 50.000, (around 16.000 liberal professions) • Onepersoncompanies; In generallittledata. In 2013 around 267.000 persons. (acc. Chamberof Economy) High increasesince 2006 (In 2006 number was 180.000). But dataratherunclear. Around 60% of all membersofthechamberofeconomyareonepersonundertakings. Estimated 2015 around 300.000. In realitymanycasesofbogusself-employment. • Increasedue tosocialdumping (outsourcing) andtoliberalisationoftrades in 2003 (i.a. Eurequirement) (Absurd tradelicences for selfemployedcooks, secretaries, carryingof heavy goods , cleaningoftools on constructionsites, workers in supermarkets…) Should not be registered astrade, nevertheless, thetradelicencesexist. • Existing Case law: Simple taskscannotbeselfemployedworkrequiring a tradelicence (nevertheless, de facto thesetradelicenceareaccepted) • Employer`sjustification: „outsourcingtasksbecauseof high levelofprotectionunderlabourlaw“ = form ofsocialdumping Dr. Eva Fehringer

6. Widespread use of bogus self employment and bogus dependent self employment –negative consequences • Widerspreaduseofdependentself-employment: collectivebargainingandcollectiveinterestrepresentation via tradeunionsandworkscouncilsisunderminded • In manycasesclearcircumventionoflabourlawstandards (highercosts)= socialdumping, loweringofstandardsandwages, increasedinstability in termsofjobsecurity • Underminesjobqualityandsolidarity (going back tothe 19th century) – againstthe European SocialModel • Difficulttoestablishdifferencebetween Independent Contractors, New SelfEmployedandSelfEmployedwithtradelicence – all 3 formsoften a meansforcircumventionoflabourlaw • Strong Focus on constructionsector • EuDirective on singlemembercompanyhas potential toworsensituation: poss. abuseofthe SUP to promote crossborderbogusselfemploymentaswellas wage andsocialdumping • EU policy in generaltoo neoliberal, oursourcing, flexibility….. Dr. Eva Fehringer

7. Situation of Theatre Staff /Artists/Journalists • Precarioussituationofartistsas „rolemodel“ forgeneralprecarisation? • Study on Social Situation ofArtists in Austria (data 2008), Situation nowmightbeevenworse • Unsurpsisingly high numberofselfemployedpersons • Verylowearnings • Statutoryframeworkconditions (Theater Work Act,) but appliesonlytofewactors, severaltheatreswithcollectiveagreementsfortheatrestaff • Multiple employmentsandsocialinsurances, complexconstellations, problemswithunemploymentinsurance • Social Fund forArtists, fundingforselfemployedartists • Actors, theatrestaff, journalists: bogusselfemployment (andotherprecariousworkingarrangements) (in caseofactors also connectedwithfinancialsituationofsmalltheatres, • Latelymorecontrolandsanctions • collectiveagreementfordependentselfemployedjournalists • Journalistsaffectedbyoutsourcing, outsourcedtobecome„self-employed“ Dr. Eva Fehringer

8. Watchlist • SinceJuly 2015, foundedby Trade Unions, supportby BMASK • Complaintsareforwardedto Control Bodies (Health Insurance) (anonymus) • Diverse Cases on Webpage e.g. artsmanagerandjounalist Dr. Eva Fehringer

9. Dr. Eva Fehringer

10. Making formal work attractive • Wrongmessage, therecannotbeany alternative orchoicebetween formal and informal (undeclaredwork) • Informal Work = deprivingworkersoftheirrights=socialdumping • The answerto informal workissanctions • EU Fundamental Principleis Democracy andRuleof Law not the „Ruleof Pick andCoose“ orComplyandExplain • Laws as a meansofprotectionofworkersagainstexploitationandsettingsocialstandardsbylaw, also a meansagainst unfair competition • Austrian strong SocialPartnershipfostersacceptanceoflaw • Better: Making informal workunattractive • Tougherlawsandsanction: e.g. Act against Wage andSocial Dumping • ILO focus on informal work, Recommendation on transitionofthe informal tothe formal economy; EU Platform on undeclaredWork Dr. Eva Fehringer

11. Measures • Applysocialsecurity: Independent Contractors (dependentselfemployed) arecoveredbyaccident, healthandretirementinsurance (overthe marginal earningstresholdof 405-)like employees • New selfemployedareinsuredaccordingtotheSelfEmployed Insurance Law • Whenregisteringwiththe Insurance, theinsurance will check ifitisreallyself- employmentorratherdependentcontractorsoremployees (checklistwithsomequestions) • Since 2008 dependentcontractorsare also insuredagainstunemployment • Compensation in Case ofbankruptcy • Member ofthe Austrian Chamberof Labour (Councellingandrepresentation at court) (Trade Unions also representdependentselfemployedworkers) • OnerecentmeasureagainstSocial Dumping : Anti Wage andSoial Dumping Act, aims at ensuringequalpayconditionsfor all employees, in caseofunderpaymentsanctioningoftheemployer Dr. Eva Fehringer

12. Conclusion, Ideas • Importanceeffectiveimplementation, controlanddissuasivesanctions • Act against wage andsocialdumping , Control by Financial Police andConstructionWorkers Holiday andSeverance Pay Fund, Health Insurance, sanctions in thecaseofunderpayment Criminalsanctions in thecaseof non paymentofsocialinsurancecontributions • Prominent Court Case: Federal Chamberof Labour v. Vienna: Councellors on WasteManagement haveworked for Vienna for 6 ongoingyearswithclearinstructions. Court decidedthatthis was a classicalemploymentrelationship (hopethatthis will be an example for morecases) • Falseselfemploymentwidespread, but noreliabledata (Single Person Companies) • Underminesthe European Social Model, socialandlabourrights, solidarityandsocialdialogue • Erosion oftheSocial Model. Regression to 19th century, Welfare State in danger • EnterpreneurialRiskis on theworker (going back tothe 19th century), nosecuritiesforworker but hastobe flexible (accordingtothewishesoftheemployer) Dr. Eva Fehringer

13. Conclusion - Ideas • Most importantmeasure: effectivecontrolandimplementaionoflaws, effectiveenforcementdetectingfalseselfemployment, effectiveanddissuasivesanctions! Criminallawwhencircumventingsocialsecuritycontributions (SocialFraud), coordinationbetween different authorities • Labour Law should also applytodependentcontractors (dependentself-employed), criticalofestablishingnewcategoriesofworkers, ratherabolishthem, noderegulation • Court Riskshould not be on theemployee: Introductionofcollectiveclaims in proceedings (not used in the Austrian legal system, only in a restricted form forconsumerinterests), Trade Union shouldbeabletoact on behalf oftheemployee • ReversalofBurdenof Proof, Employerhastoprovethatworkerisself-employed (like BE) Dr. Eva Fehringer

14. Conclusion - Ideas • ExtendingProtection • New definitionofworkersisneeded, focus not only on personal dependencebut also on economical • Restrictingthesupplychain (bogusselfemploymentandboguscompanies ) • Notradelicences for simple tasks, for taskswhichcannotbefulfilledas a typicaltrade • Problem whencrossborder (posting i.a.), sanctionscannotbeexecuted, bettercooperationbetween MS (EnhancementDirective) • Collective agreements on wagesandworkingconditions for dependentself-employedworkers ! (untilnowonly for journalistsandteachers in private educationfacilities) Dr. Eva Fehringer

15. Thank you for your attention! Dr. Eva Fehringer