Selfemployment and the free provision of services

1
Self-employment and the free provision of services

• Jan Cremers
• CLR, Vilnius June 2007

2
Overview of the contribution

• Introduction
• Legal situation in the EU
• Some facts and figures
• Abuse of the status
• Equal treatment versus service provision
• The need for an unified definition
• Conclusions

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Introduction

• Criteria in the Member States with regard to the
  definition of a labour relation
• Subordination to a user-undertaking
• Submission to orders in the performance of work
• Integration in a (collective) scheme of planning,
  execution and control designed by others
• Economical and social dependency on the work
  carried out for an undertaking that belongs to
  someone else
• Financial dependency on a (single) employer.

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Legal situation self-employed 1

• Definition no uniform legal definition. Every
  authority defines according to different
  legislative rules (labour market, trade licensing
  and registration, tax regulations, social
  security, health insurance et cetera).
• Self-employed provide their gainful employment
  activity for profit, in the form of own account
  responsibility.

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Legal situation 2

• ILO International Classification of Status in
  Employment comprises several kinds of status
  employers (employing other people too),
  own-account workers (without employee),
  contributing family workers and members of
  producers cooperatives.
• Historically seen 3 main groups of
  self-employment small businesses, agricultural
  production, free-lance activities (like private
  doctors, auditors, tax consultants, solicitors,
  authors, salesmen).

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Some facts and figures 1

• The share of self-employment has traditionally
  been very high in Italy, Spain, Portugal and
  Greece. Also Poland always had a high share of
  self-employment.
• In general terms the rates for self-employment in
  services are higher than for the industry sector,
  with construction being the exception to this
  rule.

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Some facts and figures 2

• - UK
• - Germany
• - The Netherlands
• - France
• - Finland
• - Polen
• - Czech republic

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Abuse of the status

• False or bogus self-employed are workers who are
  treated as self-employed, but who, from the legal
  perspective, clearly fall within the category of
  subordinate employment.

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Equal treatment versus service provision

• Foreign workers are nowadays hired in (through
  all kind of agencies) not as workers but as
  service providers. Free provision of services
  combined with easy access to the status of
  self-employed is abused. Workers engaged are not
  contracted to deliver a special service on own
  account. With invoices cheap labour can be
  provided without compliance to national labour
  standards.

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The need for an unified definition

• The mobility of workers asks for instruments to
  protect these employees at least against
  circumvention of basic rights in the countries
  were the work is executed.
• It is therefore necessary to establish a clear
  definition of an employment relationship in the
  framework of the transnational provision of
  services.

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Conclusions

• It is of the utmost importance to address the
  difference between fraudulent practices and true
  civil and commercial business relationships
• national policy is unable to cope with disguise
  of the employment relationship as a result of
  cross border provision of services

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Conclusions

• for an adequate policy of protection for workers
  in an employment relationship the determination
  of the existence of this relationship is no
  longer a exclusive national concern
• it is necessary at EU level to work out a basic
  legal frame, with the aim to establish a clear
  and effective distinction between employed and
  self-employed.

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The European Institute for Construction Labour
Research

• Recent publications on
• Industrial relations in CEE countries
• Free movement of workers
• Labour migration
• Undeclared labour
• Employment patterns
• Clr_at_mjcpro.nl