FLOW 23 – A successful conference on digital transformation
02 June 2023
4 Sight Group in collaboration with the Malta Chamber of SMEs organised the 2nd edition...
GRTU Director General and EESC
Employers Representative has this week objected to an EESC draft Opinion which
aims at giving the wrong message on the status of being self-employed. Mr
Farrugia objected during the EESC Section for Single Market, Production and
Consumption (INT) on the draft opinion entitled 'Abuse of the status of
self-employed'. He emphasised that the paper raised serious concern.
Mr Farrugia warned that the draft report
does not respect the subsidiarity principle and that the rapporteur insists on
proposing initiatives that go beyond the scope of action of the EU. Should the
draft opinion be adopted as it stands, the EESC would make recommendations
contradicting the subsidiarity principle.
Mr Farrugia stated that the EU
expressly excludes any harmonisation of the laws and regulations of the Member
States as regards social policy and employment issues. Commissioner Andor,
following a question of the EU Parliament requesting the Commission action to
tackle bogus self-employment, replied in October 2012 that the national
authorities, including the courts, are responsible for laying down and
enforcing the criteria for determining the status of an employed person and can
prevent and sanction abuses more effectively at their level. In a previous
Opinion in 2010 the EESC itself stated that no discussion on this issue can
ignore the diversity ofnational regulations and practices: under European
social legislation, the definition of worker and entrepreneur is established at
Vince Farrugia recommend that the
current draft proposal be amended to respect the principle of subsidiarity and
become in line with previous positions of the European Commission on this
issue, particularly as regards to the draft opinion's definition of sham
self-employment and how this would help bona fide self-employed and micro
The draft opinion states that 'There
is currently no unambiguous, EU-wide definition making a clear distinction
between bona fide self-employed people and sham-self-employed. The absence of
such a clear distinction is one of the causes of abuse of the self-employed
Mr Farrugia argued that the absence
of a definition cannot be regarded as the cause of the abuse. Furthermore, the
flexibility of the various definitions offer national authorities and courts an
efficient tool to adopt the most appropriate decisions in a prompt and most up
to date manner.
In the draft opinion the rapporteur
also proposes to take into account the 'financial dependence on only one
client' to apply to the definition of employment relationship. Such a proposal
lacks sense and would lead to ludicrous situations. The rapporteur's proposal
would result in defining as 'employee', for instance, any start-up
entrepreneur, or any architect or lawyer with one big client. It is obvious
that, in a market economy, an entrepreneur would have a higher risk if his/her
business is based on one client only. This does not mean, however, that such
entrepreneur should become de facto an employee.
In addition to this GRTU's DG also
said that the EESC cannot support a "one-size-fits all" solution. As
the rapporteur correctly points out the social contribution regimes and the tax
laws for self-employed workers differ across the EU. The design of national
social security, labour protection and taxation laws has a great influence on
the national definitions of a self-employed worker as well as the definition of
dependent work. In Denmark, for instance, it is easy to establish an employment
contract but the Danish authorities grant significant support for dismissed
workers. In Germany, for example, the labour laws grant high protection for
employed workers but the support for the unemployed is rather low.
This diverse situation results from
the current legal framework provided by the EU Treaties, making the main
proposals put forward by the rapporteur impossible to put in practice. Further
to the legal impossibility provided by the EU Treaties, it is recognized across
the EU that there is not a single model of employment, tax and social
legislation that can be generalized across the EU. Each country is best placed
to understand their own particularities and decide on its own on the best laws
according to its national situation.
Mr Farrugia described the draft
opinion as regretfully misleading and too often lacks precision on too many
fronts, and therefore called for the draft opinion to be amended. Most of the
draft opinion either does not bring an added-value to the pursued objective of
tackling the abuse of bogus self-employment or it simply cannot be implemented
due to the lack of competence of the EU on the issue. Mr Farrugia went on to
propose a list of alternative measures that could be discussed and proposed for
action to the European Commission.
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