Present: David Mc Ginn Department of Social Protection, Sinead Misteall Department of Social Protection, Noel Commins (Contracts Manager) JJ Rhatigan & Co and Sarah O Donohoe HR Manager JJ Rhatigan & Co.
JJ Rhatigan & Co is a registered building contractor with a company head office address at Wolfe Tone House, Fr Griffin Road, Galway.
Rhatigan's stated that they currently had ongoing construction projects at Kishoge School Project in Lucan, Dublin, Griffeen Valley Educate Together School in Lucan, St Patrick's College Drumcondra, the Radisson Blu Hotel, Golden Lane, Dublin.
1. RHATIGAN'S POSITION ON SUBCONTRACTORS/EMPLOYEES
JJ Rhatigan & Co building contractor was stated to have approx. 250 direct employees, including admin, HR, Engineers, quantity surveyors, project managers, Health & Safety managers, contract managers, site foremen etc. They stated that it is their policy and in their view, universal in large scale construction projects in this country, to contract out aspects of work particularly in relation to certain site trades including block-laying. Such contracts would typically involve an agreed price for a quantified amount of work - blocks laid, provision for addition work prices (changes to building spec etc.) outside the agreement and provisions with regard to timeframes and quality. They deny that they directly employed any block-layers or labourers working to blocklayers on any of their sites.
Rhatigan's also stated that it was their policy where practical to have only one trade subcontractor for each trade on site eg. one block-laying contractor. They stated that a sub-contractor would supervise his own workers on the site, control and direct them as per agreed site plans and schedules and act as the contract/conduit for all communication in relation to the work being done by the sub-contractor's employees. However, anyone (and everyone) on site, whether employed by Rhatigan's or a subcontractor would be subject to some level of control by the site Health and Safety manager. Rhatigans acknowledged that they provided all materials except PPE and hand tools.
2. SITE RECORDS
In compliance with Health and Safety requirements, a record of attendance on site was maintained by the H&S Officer. It was stated the workers or sub-contractor must undergo site induction training and sign in as they enter the site each day, however, Rhatigans stated that not everyone signed in every day on the attendance on site reg. Records produced by Rhatigan's provide a record of individuals' signature and detail of who they were working for (named sub-contractor, supplier, and main contractor). The individuals involved in this insurability enquiry have signed in quoting "P Ryan, Gleeson, Stephen Gleeson or G&M (Gleeson & Molloy)" as their employer. In the case of one of the alleged sub-contractors - Nick Ryan, it is evident from the site records that he personally did not sign or was not on the premises - see reference under 5 below. The site opening time was 7am - 6pm. According to Rhatigan the site was closed to everyone outside of those hours - resulting in a fixed daily pattern. Granted, signing the registers as of employees of e.g. P Ryan does not make the workers his employees but it does somewhat indicate who they thought or understood their employer to be. Likewise for S Gleeson and G&M.
3. ALLEGED SUB-CONTRACTORS
Rhatigan's acknowledged that there has been a significant dispute in relation to the Kishoge site and that they were aware of claims by a number of tradesmen and labourers (and the Unite trade union) that they were employed directly by Rhatigan's. Nothwithstanding the outcome of the dispute in this case and the subsequent settlement and agreement documented below, a decision has been sought form the Department of Social Protection as to insurability of those involves and who was the employer. Reports including Employee INS 1 and Employer INS 1 for each individual concerned are listed separately for a decision but it is worth detailing the extended discussion with Rhatigan's in relation to the position of two individuals Nicky Ryan and Stephen Gleeson who it is claimed had been sub-contractors.
4. BLOCK-LAYING AT KISHOGE SCHOOL DEVELOPMENT
In relation to the Kishoge school development, Rhatigan's stated that they subcontracted the block laying work form the beginning of the project to a Nicky Ryan trading as Patrick Ryan. Ryan had been and continued to be contracted on another Rhatigan school project - Griffeen Educate Together School in Lucan. The terms of payment per block were tha same for each contract with him so they did not specifically lay out the price per block for the Kishoge contract. The tender/contract was dated from 6th Febraury 2014 - the date of the main contract to Rhatigan's for the project. It was stated that Ryan was on the Kishoge site from 26/27th of May 2014. It was stated that Ryan continued as the lock-laying sub-contractor until approx. 11th July 2014. After this date the block-laying contract was stated to have been taken over by Gleeson and Molloy Bricklaying Services LTD. Given the scale of this project is seems inconceivable that no written or more formalised contract existed in the context of this element of sub contraction.
5. NICKY RYAN TRADING AS PATRICK RYAN
Nicky Ryan (the stated sub-contractor) was in receipt of Jobseekers Allowance from the Department of Social Protection from 3/1/2013 to 27/5/2014 and from 7/8/2014 to date. He was never registered as an employer.
Rhatigan's stated that Nicky Ryan trading as Patrick Ryan was registered as a subcontractor with Revenue. Payments were made to him under the number he provided (PPSN withheld) and registered on Revenue RCT system. Rhatigan's are unsure whether this number related to Nick Ryan or to Patrick Ryan. This PPSN is incorrect. The correct number for Patrick Ryan is (withheld) as per Revenue documents. Patrick Ryan is not registered as an employer. It seem strange that Rhatigans or CAS were not aware of this considering he was engaged on another Rhatigan site too.
Rhatigan's were insistent that Ryan was not an employee of Rhatigan & Co that he was not generally subject to direction, control or dismissal. The only situation where dismissal from the site would arise would be on a blatant Health & Safety issue on site - where Ryan would be jeopardising either his own or other workers safety. However, if he was infrequently on site, someone else would have to control and direct employees on a daily basis. This does not add up.
Rhatigans stated that details of the job would be have been discussed at the outset with the Contracts Manager, in this case Noel Commins. He would have shown Ryan a set of plans with a list of specifications available and milestone dates. This 'spec' would have direct Ryan somewhat on what work had to be done and in what order (in relation to other work on the site) it was to be done in.
Rhatigan's state that Nicky Ryan trading as Patrick Ryan provide evidence of public liability insurance to them however there is no documentary evidence held by Rhatigan's with regard to Public Liability Insurance for Ryan although it is their contention that it was tendered. Individuals for whom an insurabliity decision is sought provided their own PPE and tools - these were the only elements that they provided. All other machinery to facilitate block laying was supplied to Rhatigan's and not Ryan's. One might expect that if he was legitimate sub-contractor then all machinery to facilitate block laying would be provided by Ryan.
Rhatigan's also emphasised that it was a condition of engagement that Ryans, as with all the other sub-contractors, had to be on site at all times onece he had staff on site. Rhatigan's stated that they only dealt with the subcontractor in terms of issuing instructions/specifications regarding the work. They did not deal directly with any of Ryan's block-layers. In some cases, by agreement, they would deal with a foreman appointed by the sub-contractor but it was not suggested that Ryan had his own foreman on site. However - from site record there is little evidence of Ryan being onsite during the contract so either Rhatigan's did direct the block-layers either individually or through one of them so it is hard to find this assertion a credible one especially in the absence of the alleged sub-contractor being on side to direct and control the block laying cohort.
When reviewing documentation provided by Rhatigan's we noted a contract date for Ryan which was earlier than May. Rhatigan's explained that the tender process is dated form the date the company was awarded the contract themselves - in this case Rhatigan & Co were awarded the contract from the Dept of Education on Feb 6th 2014. This, they stated, is the date on all tender documents. As already explained above - the pricing detail was not attached for Nicky Ryan t/a Patrick Ryan for the Kishoge site as it was identical to the pricing between Nicky Ryan t/a Patrick Ryan agreed for the Griffeen site - which he would have been working on at the time of this second contract. The tender was signed by Nicky Ryan. not Patrick but the document proffered to us by Rhatigans in respect of Kisheog, was not signed by Rhatigans. It is debatable if a formal contract existed.
As part of the interview with Rhatigan several issues were discussed including the way the site was run with particular emphasis on the block laying process. Noel Commins, the Contracts Manager with Rhatigan stated that all block laying was subcontracted to one or at most 2 subcontractors per site. The manual labour was provided by the subcontractors. He stated this was the industry norm.
Rhatigan's stated that in respect of the Kishoge School Project, Rhatigan's, Sub-contractors and the site were subject to audit by CAS (Contractors Administration Services) a project labour relations management service, employed by the Department of Education and Science, the owner of the project. Audit by CAS is common in large projects and involves ensuring that all project requirements (milestones and quality of work) and legal requirements including labour/employment law, wages, tax and PRSI compliance are in order. Rhatigan's assert a record of full compliance in respect of all CAS inspection criteria but indicated that CAS had some difficulties obtaining prescribed records from sub-contractors who were also liable to CAS inspection in Kishoge site.
It should be asserted that CAS has no statutory power nor did they formally advise this Department of any irregularities about this site.
Rhatigan's stated that CAS were driving site inspection at Kishoge and issues arose with Nicky Ryan's (trading as Patrick Ryan) work. It was felt that Nicky Ryan trading as Patrick Ryan couldn't keep up with the programme on site. There were concerns about the quality of the work where walls had to be demolished and rebuilt. At a meeting held to discuss the issue, a mutual decision was arrived at whereby Nicky Ryan t/a Patrick Ryan agreed to leave the site. The lsat date he was on site was July 11th 2014.
It is noted from both the induction register and the site attendance register in detail that there is no entry on either for Nicky Ryan or Patrick Ryan as being in attendance during the periods covered up to July 11th 2014. When questioned again on this issue, Sarah Donohoe of Rhatigans stated that Patrick Ryan had a number of projects on the go at the same time. One other was one of their but they thought that he had another contract that they were not aware of and accordingly he was on the road between contracts. She added that it would not be unusual for a sub-contractor not to sign on the site.
Nicky Ryan (the stated subcontractor) was in receipt of Jobseekers Allowance from the Department of Social Protection from 3/1/2013 to 27/5/2014 and from 7/8/2014 to date. He was never registered as an employer.
Payments to Patrick Ryan:
- 16/7/14 Kishoge Community College 2818.90
- 16/7/14 Griffeen Valley ETNS 2885.10
- 3/7/14 Griffeen Valley ETNS 5805.75
- 26/6/14 Kishoge Community College 4748.30
- 13/6/14 Griffen Valley ETNS 8987.40
- 12/6/14 Kishoge Community College 3902.50
- 5/6/14 Griffeen Valley ETNS 7214.90
- 22/5/14 Griffeen Valley ETNS 2827.36
- 15/5/14 Griffeen Valley ETNS 800.00
6. GLEESON AND MOLLOY BRICKLAYING SERVICES LTD
Stephen Gleeson was in receipt of Jobseekers payments on a continuous basis from 11/3/2008 to 17/6/2014. He is the subject of an ongoing SIU investigation. He was a director of a block-laying company - Mooney and Gleeson Brick and Block Laying Services Ltd, registered on 1/9/2009. He resigned as a director in June 2010 but was returned on the P35 as an employee for periods in 2011, 2012 and 2014 (apparently working from 31/1/14 to 9/5/14 with earnings of 9208 gross for the 14 weeks.
Stephen Gleeson worked on site at Kisheog during the initial period it is alleged that Nicky Ryan t/a Patrick Ryan were the block-laying sub-contractor. Rhatigan's assert that Gleeson was an employee of Ryan though the statement he made on the INS 1 claimed that he was employed directly by Rhatigan. We have confirmed with Revenue that Patrick Ryan contacted Revenue through their online system to register Stephen Gleeson as a sub-contractor for the purposes of RCT compliance from 27/5/2014 - his first day on site. While Gleeson contests that he did not agree to this he did give his PPSN and details to Ryan and he did confirm the registration on line. Revenue determined that 20% RCT was the appropriate deduction for Gleeson. Per Revenue there would have been a contract signed between the 2 contractors (Ryan & Gleeson) which would have been retained at the principal contractor's office. These documents are normally examined during a Revenue audit. Revenue also stated that it would be normal practice for the subcontractor (Gleeson) to retain his own copy. A copy of Revenue first RCT payment is dated July 1st 2014. The contract date was to run from May 27th '14 to May 27th 15 with a value of €12,000. Revenue notified S Gleeson of the details shortly after registration. Payments received by S Gleeson as subcontractor with Patrick Ryan named as the Principal totaled €6,613.80.
Noel Commins of Rhatigan's stated that Stephen Gleeson, whom he understood to be an employee of Patrick Ryan, approached Matt O'Reilly, Project Manager for JJ Rhatigan & Co on 11/7/14 with a view to taking over the brick laying contract on the departure of P Ryan from the site on that date. The matter was discussed with Noel Commins who agreed that it would be beneficial to both as S Gleeson would have been very familiar with the site and with the work by then. Mr Commins stated that he thought Mr Gleeson had been on site for possibly 6 weeks at that stage. Patrick Molloy first attended the Kishoge site at 8am on 11/7/2014 - the date Ryan left.
Commins stated that he met with Stephen Gleeson and Patrick Molloy on July 15th 2014. No minutes were available of the meeting but the discussion covered programme details, costs etc. He stated that he did not request anyone to become a subcontractor or become a limited company nor did he offer any insurance cover under Rhatigan's own cover. He stated that he understood that the company Gleeson & Molloy Bricklaying Services Ltd was pre-set up (being planned for some time) which is why Patrick Molloy joined the site. He also stated that there was no break at all in the work between the departure of P Ryan and the commencing of G&M which indicate that there was obvious agreement before they met, suggested the contract or provided any tender. The initial paperwork to incorporate a company is dated 16.7.14. preparation work and discussion would obviously have to be in train prior to that.
On asking what job specifications were Gleeson & Molloy given on commencement Mr Commins stated that Stephen Gleeson knew the job inside out at that stage and that Gleeson had a copy of site plans, drawings and work specifications too.
As with Ryan's contract/tender, the contract process commenced with a tender, dated form the date the company was awarded the contract themselves - in this case JJ Rhatigan & Co were awarded the contract from the Dept. of Education on Feb 6th 2014. This, they stated, is the date on all contract documents for Kisheog. A similar document was also signed between Nicholas Ryan and JJ Rhatigan, also dated Feb 6th 2014. The tender pricing for Gleeson & Molloy is on file.
As Stephen Gleeson was already registered as a subcontractor it is not clear why he felt the need to form a limited company with Patrick Molloy - who had only commenced work on the site on 11/7/14. The other condition of employment laid down by Rhatigan was that G&M, as with all the other sub-contractors, had to be on site at all times once they had staff on site. Rhatigan stated that they only dealt with the subcontractor in terms of issuing instructions/specifications regarding the work. They did not deal with any of the staff. Similar site attendance records as per Ryan, prevailed.
In late July 2014 CAS requested Gleeson and Molloy, through Sarah O'Donohoe HR JJ Rhatigan & Co to provide
- Tax clearance cert for G&M and for any subcontractors working for them.
- Public Liability Insurance.
- Pension plans
- Payslips for all employees.
- Contracts for all subcontractors.
Ms O'Donohoe stated that she met with them to advise them of required documentation. We put the point to her as raised in the NERA report - that she had given Stephen Gleeson a form stating that all workers he had brought on site were subcontractors, which they subsequently refused to sign. Ms O'Donohoe denied this stating that there was no such forms in existence.
When the documents requested by CAS were not forthcoming the Rhatigan Legal team requested the documents a second time on 22/8/14.
Rhatigan's stated that Gleeson and Molloy were unable to provide these documents and without warning Stephen Gleeson resigned from his company. Both Gleeson and Molloy told Rhatigan of the situation on 29/8/14. They also laid off two workers which led to a sit in and the beginning of the dispute with Unite. Patrick Molloy rang Noel and told him he would be on site the following Monday morning 1/9/2014 but he didn't show up. Per Rhatigan, some of the existing workers (Including the two men who had been let go) wished to work on site on Mon Sept 1st but Rhatigan could not permit any worker on site without their employers as neither S Gleeson nor Patrick Molloy were in attendance. Neither Stephen Gleeson nor Patrick Molloy worked on site after that. Another block laying subcontractor was appointed to the site on or about 4/9/2014.
Payments to Gleeson & Molloy - 31/8/14 23,923.38
7. ISSUES ARISING FOLLOWING MEETING WITH RHATIGAN'S
- There is evidence to suggest that there was some business relationship between Stephen Gleeson and Nicky Ryan on the Kishoge project. Gleeson was registered as a sub-contractor (Main stated to be P Ryan) for the purposes of Relevant contracts Tax from 27th May 2014 - the date when both Ryan and Gleeson started on the Kisheog site. Information provided by the Revenue Commissioners confirms that Stephen Gleeson registered as a sub-contractor to Nicky Ryan T/A Patrick Ryan. Gleeson maintains that registration was completed by Ryan without his knowledge.
- Payments registered as made under RCT between the two and the lack of evidence of significant site attendance by Nicky Ryan T/A Patrick Ryan would question whether Gleeson was in fact subcontracting to Ryan at Kishoge. If this was the case it is difficult to believe that Rhatigan's and Noel Commins (Contracts Manager Rhatigan's) in particular was not fully aware of this. Ryan was in fact simultaneously sub-contracting to Rhatigan's on another school construction site at Griffeen, Lucan.
- There is evidence from revenue that a payment of 4000 gross was made to Stephen Gleeson as a sub-contractor by Patrick Ryan (principal under RCT registration) on 1/7/14.
- Co-incidentaly, Rhatigan's have provided proof of payment to P Ryan of a sum of 4738.30 on 26/6/14.
- Further payments from Rhatigan's to Ryan of 2818.90 on 16/7/14 resulted in payments to Stephen Gleeson of 1134 gross (907.20 net) on 16/7/14 and 1479 gross (1183.84 net) on 18/7/14.
- Only one other payment in respect of Kishoge was made to P Ryan - 3902.50 on 12/6/14.
8. DISPUTE/LABOUR COURT RECOMMENDATION/AGREEMENT WITH UNITE
Rhatigan's admitted that they have been in dispute with the Unite trade union and a number of persons employed as block-layers/labourers to block-layers on the Kishoge site for several months. Following protracted but failed negotiations, the case was heard in the Labour Court who issued a recommendation on 29th January 2015 as follows:
- Having carefully considered the submissions of both parties to this difficult dispute the Court recommends that the Company, in full and final settlement of the matters at issue, allocate the sum of 100,000 euro to be divided amongst the workers involved in this dispute in accordance with a schedule of payments to be submitted by the Union following consultation with the workers affected.
- The Court further recommends that the parties exchange assurances that there will be no victimisation of any person arising from their involvement or non-involvement in the dispute and that they will be facilitated with work in the future where they are employed by sub-contractors that are successful in winning tendered contracts for work.
- On that basis the Court recommends that all other actions by both sides be subsumed into the terms of this recommendation in full and final settlement of all matters in dispute between the parties.
Rhatigan's stated that while not accepting the recommendation judgement they have, to resolve outstanding issues with Unite and the workers, subsequently reached a signed agreement with Unite for payment subject to a number of clauses. The agreement has a confidentiality clause but Rhatigan's have expressed willingness to supply a copy of the agreement to the Department of Social Protection or the Revenue Commissioners if requested to do so.
Rhatigan's stated that under the terms of the agreement Unite accepted that Rhatigan's were not the employers in this case. In the period concerned, both parties agree that 1. Patrick Ryan and 2.Gleeson and Molloy Bricklaying Services Ltd employed all the workers concerned for all the periods concerned:
- (Point 3) In consideration of the Terms of Settlement ("Agreement") set out below the parties hereby agree as follows:
- (Point a) The Workers accept that they were employed on the project by Patrick Ryan and Gleeson & Molloy Bricklaying Services Ltd. and that they were not Employees of JJR
- (Point h) UNITE recognise that in the first instance, issues in relation to Rates of Pay and Conditions of Employment are mtters between Employees and their direct Employer and are not a matter for JJR as a main contractor. Nothwithstanding this JJR are to coooperate with Unite the Union to resolve any such matter that may arise in the future in so far as is reasonable in accordance with this agreement and industry norms.
The agreement between Rhatigan's and unite raises a number of serious issues in this already complex case:
- Notwithstanding the agreement on who are the sub-contractors it is up to the Department of Social Protection and not the parties concerned to decide as to who is the employer in the case of the block-layers and labourers who have sought a decision as to their insurability. Any agreement cannot circumvent a formal insurability decision. *(This also applies to the Revenue's RCT system and all taxation at source systems used by Revenue for supposedly self-employed persons)
- The approach taken by Unite in support of the case that workers were employed directly by Rhatigan's in their representations to and meetings with this Department has been totally undermined by their agreement dated 18th February which provides in writing, a contrary position on their part. It was after all Unite who formally sought the decision on insurability for the workers concerned.
- If this position is also accepted by the workers they represent, this potentially has implications for the accuracy of the INS 1 statements made by each of them.
- It is unclear as to the basis for dividing the 100,000 euro recommended by the Labour Court (and part of the subsequent agreement between Rhatigan's and Unite) and if these amounts are to be regarded as wages. Rhatigan's maintain that the amount is purely a compensation payment and not an amount in lieu of wages. They insist that they have no further liability in relation to the payment nor do they know how much any individual is receiving.
- If these payments are regarded as wages - we cannot assess any liability without a decision on insurability.
- Rhatigan's have advised that they see it as a matter for the two alleged sub-contractors involved bit it is clear that this money has not and is not being paid to the alleged sub-contractors under the Revenue Sub-Contractors payments system.
- Also if this is a liability of the two subcontractors (as claimed by Rhatigan's) why was the recommendation of the Labour Court that JJ Rhatigan should pay the settlement?
A full copy of the Labour Court Recommendation and the agreement between Rhatigan's and Unite are attached.
Dave Mc Ginn
DSP Area Manager SIU Galway
26th February 2015
SWI SIU Ennis
26th February 2015
For the attention of Scope (Brenda Moran). This is Stephen Gleeson from the strike with JJ Rhatigans. I am send the forms back as I would not have the PPS numbers or addresses for the people that worked with me on the site.
Since day one we have always took directions from JJ Rhatigans. They determied the hours we worked, supplied all materials tools etc.
When Nicky Ryan walked away for the job we still worked there under the management of JJ Rhatigans. After two weeks they coerced myself and Mr Molloy to take the job on or ourselfs and the other bricklayers could leave the job. As I feared for my job and every elses job I signed a form which I didn't know what I was doing. I don't have any experience in this.
I am a PAYE bricklayer and so are the lads that worked with me. I will send in the Labour Court submission with this letter as I am not very good at writing letters. But could I please have it returned to me when you are finished with it please. You will probly understand and get more infomation out of this, or if you want to meet me at any time I would be able explane it better to you.
I was also in touch with CAS Mr Barry O'Neill and made an offical complaint to CAS and the Board of eduation as it was a goverment project and it was up to JJ Rhatigans to ensure everyone was getting the craft rate of pay. Barry O'Neil would have a record of my compliant. His number is *** *******.
If you need any thing else from me dont hesitate to call.
Stephen *** *******
For the following 6 months, every detail of the evidence presented by JJ Rhatigan & the 14 workers was investigated. It was, without doubt, an exhaustive investigation with no rock left unturned. On the 19th of August 2015, the SCOPE section wrote to JJ Rhatigan & Co. and informed them of the decision:
JJ Rhattigan & Co were advised that they had 21 days to appeal stating clearly the grounds of their appeal.
On the 28th of August 2015, JJ Rhatigan & Co. wrote to the SCOPE section expressing their dissatisfaction with the SCOPE decision:
On receipt of this letter from JJ Rhatigan & Co., the SCOPE Section wrote to the Chief Appeals Officer, Social Welfare Appeals Office:
It was not until the 30th of September 2016 that the relevant investigation documents were forwarded to some but not all of the workers. This inexplicable delay is described by the Social Welfare Appeals office as an 'oversight' of the SWAO and is 'very much regretted'. Despite this, the Appeals Office has scheduled a hearing for the 25th of October 2016 where workers will be forced to attend, without legal representation, under threat of a 1,500 euro fine for non appearance.
THE ELEPHANT EXPOSED
Between 2008 & 2014, a total of €2342.3 million was collected in tax through the RCT system. €2435.5 million was repaid through the RCT system. This resulted in a net loss to the exchequer of €94.3 million. For all intents and purposes, deliberate misclassification of workers facilitated and condoned by Revenue's RCT system, amounts to illegal state aid for Principal Contractors in the construction sector.
RCT is just one of a number of similar 'Pay at Source' schemes operated by the Revenue Commissioners across several industries.
PREVIOUS BLOGS ON BOGUS SELF EMPLOYMENT