Ireland is beginning to emerge from the shades of Covid with almost full opening of the economy now planned for October 22nd. It brings with it some significant changes to working lives, education and business and while the signals are optimistic, caution is in the air.
The Irish have followed a conservative approach to the management of the pandemic and the approach has been widely supported. 87% of the population has been fully vaccinated with 91% having at least one vaccine. Recent figures suggest that while 20% would like to see a quicker opening up of the economy than the October plan, most support the government plan.
But like most other places it’s been a tortured road with twists and turns and no shortage of controversy. Current controversy revolves around the risks to pregnant teachers returning to schools where most children are unvaccinated. Also the rash purchase of unusable poor quality ventilators early on in the crisis. Overall, however, democracy and good communications have managed the crisis reasonably well. Vaccines and variants have, like everywhere else, been controversial with particular focus here on who gets what vaccine and in what priority. Suppressing socializing has been hard on everyone but especially the old and the young with the traditional community togetherness of funerals taking a particular hit. On line education has been a struggle for families with parents also working remotely.
But the changes in employment, facilitated by technology, have been fundamental. How employment is defined, how we manage blended working arrangements and how we accommodate new forms of work are all topics of increasing importance for policy makers, businesses and workers. It also has significant spillover effects in other policy areas, most notably housing and transport policy.
Home working has fundamentally changed attitudes towards the workplace with opportunities and challenges ahead for employer and employee – and the taxman. Caselaw continues to evolve to deal with the changing nature of the workplace and how employment status is defined.
The responsibility for employment tax deductions and payment rests with the employer in the case of employees whereas contractors are directly responsible for their own tax. Misclassification of workers can deny them certain protections arising from employment such as Payment Related Social Insurance (PRSI), in the Irish context and employment rights protection. It reduces the tax take also so is of concern to tax authorities generally.
The Irish Revenue has recently issued a Code of Practice on Determining Employment Status. The changing face of employment with increasing dependence on the so called ‘gig economy’, especially during Covid with food and other delivery platforms, has challenged authorities. The Revenue have, over the years, looked at particular sectors they suspect of using bogus self employment. It used to be the construction industry before the economic crash of 2008, today it’s the gig economy worker.
The use of delivery riders had led to Court challenges across numerous jurisdictions. In Ireland, Dominoes Pizzas challenged the Revenue finding that their delivery guys were employees and not self employed as the company asserted. Ultimately the case ended up in the High Court with a judgement in favour of the Revenues assessment that the delivery guys were employees and not self employed independent contractors.
The basis for the decision was multifactored but included the fact that there was a mutuality of obligation between employer and employee to carry out the work in question which formed an umbrella of individual contracts in respect of each assignment. If the driver was not able to fulfill a particular order then s/he could nominate a substitute who would be paid directly by the company. One of the key tests which the court saw as supporting an employment relationship was the fact that the drivers formed an integral and essential part of the business. It couldn’t function without them. They were required to wear a uniform and had other brand supporting obligations, for which they received specific additional payments. They also took orders directly from Dominoes and not from the customer, again suggesting they were vital to the business and not simply ancillary to it. They also clocked in and out and worked rosters and shifts unlike most self employed workers.
The court stated that ” A self employed plumber may agree to service a boiler but the plumber has inherently tremendous latitude in that task unlike the drivers who had ongoing obligations.” While it acknowledged the absence of a comprehensive statutory or common law definition, the court was not in favour of a box ticking exercise to analyse employment status instead taking the practical approach that “classification needs a careful and flexible understanding of relationships.”
Remote working and the right to disconnect
A Code of Practice issued earlier this year on the right to disconnect from work. While not legally binding it is a commitment under the National Remote Working Strategy 2021 which was informed by the large response to a public consultation which took place in October 2019, which showed that 94% of participants would like to work remotely after Covid recedes. A key issue behind the drive to plan the management of remote working was the potential dampening of workplace creativity and innovation which officials worried “could result in long-term impacts on firms’ productivity.”
While the right to disconnect does not have legal effect, there is legal provision for it to be influential in employment dispute mechanisms. For more detail on the right to disconnect see earlier blog International Employment Law Update | Covington & Burling LLP
Tax and investment
Investment is increasing globally in 2021 with biotech and pharma companies featuring strongly. The trend is mirrored in Ireland with venture capital investment now described as ‘very robust’, particularly in health and biotech and expected to increase given the importance and value of innovations in those sectors. Fintech has also seen significant 2021 investment.
Tax how long been a thorny issue for Ireland. Taxes kept Irish windows small. Tithes to church and rents to landlords kept the Irish poor for centuries. However, in the last few decades the Irish have turned taxes to their advantage with a low corporate tax regime that incentivizes foreign investment. The days of the small windows are over.
But the low corporate tax regime has been controversial and change is likely as implementation of the OECD base erosion and profit sharing project rolls out.
The Irish population has now exceeded 5 million for the first time since 1851, in the aftermath of the Irish famine which destroyed an already impoverished country and led to wholesale emigration of those lucky enough to survive. It’s now a much different Ireland, although the memory of the ‘Great Hunger’ lives on in the Irish psyche. An unexpected illustration of this happened during Covid. The Choctaw Indian tribe had heard of the famine difficulties facing the Irish in 1847. Despite their own poverty, they collected and sent monies to Ireland to help. 173 years later, during Covid, the Navajo and Hopi Indian tribes were struggling and set up an on line fund seeking help. The Irish contributed in significant numbers and the story, largely unknown to the Indians, resurrected in the Irish thank you messages. The Irish repaid the historic kindness, facilitated by an enduring memory, economic prosperity and a social media savvy population.
The Irish population has grown hugely since the 1960s. In 1961 the population was just 2.8m, with emigration still widespread and the economy just beginning to industrialise. Ireland, in 2021, has a young population with the highest birthrate in the EU and the lowest death rate.
It’s an advantage emerging from Covid.