The organization “Young Barristers” addresses the Government of Georgia with an initiative to legally define the status of self-employment and demands to regulate it at the legislative level.
According to the organization’s main lawyer, Nika Gogberashvili,during the pandemic conditions the topic of self-employment has been actual, as well. As it turned out, there is no legal definition of “self-employed” workers in our legislation, which would have been used by the Government of Georgia in the process of providing social assistance, Therefore the state is forced to determine the temporary criteria, which will identify such persons. Accordingly, based on the experience, gained, against the fight of COVID 19 in Georgia, it is important to generalize the practice and reflect it on future legal relations, attach it to the legislation and in that respect, share the foreign experience, as well.
The organization considers the fact, that according to the Law of Georgia on Employment, “a person, who works in his or her industrial or personal farming unit for profit or family income (in a cash or in kind) is considered as self-employed”. Such kind of provision of the law is quite obscure and, at first glance, useless in the process of identifying individuals, who fall into the target group of state aid. On top of that, the Ministry of Economy has to publish the mandatory criteria in the form of targeted social employment instructions, which, if confirmed, will make worker “self-employed”. It should be noted out, that the instructions apply to a fairly wide segment of “self-employed” individuals, which, should be assessed positively, as it is the most difficult and almost impossible to determine the specific criteria which will be suitable for absolutely every self-employed person.
According to the Government’s instruction, “self-employed worker is the individual, who was engaged in any kind of economic activity and earned income, except for worker who was hired to do it.” Self-employed workers are divided into 2 category:
- Individuals, who are registered in the Revenue Service;
- Individuals, who were engaged in the economic activity and/or earned income, but aren’t registered in the Revenue Service.
The pandemic situation has taught us that the issue demands to be concretely and firmly regulated. Instruction isn’t a part of legislation. It is only a temporary tool, without any kind of obligation and the further use, but it can be considered as an attempt to better regulate the topic.Organization is ensured, that it is mandatory to create a reusable regulation, which comprehensively in details set out the standards reflecting the current conditions in the country and create a unified guideline to act, in order of having other force majeure situation.
During the discussion, the “Young Barristers” studied the experience of the US, Great Britain and Germany, in order to check out what kind of legislation is applied, as well as, to see the statistics of self-employed people in the labor market.
Great Britain –We don’t see the specific and concrete definition about, what kind of requisites should be considered in order to recognize the worker as employed/self-employed. However, there are decisions, as a precedent level, which helps people, to determine, what kind of labor-legal status worker owns. For example, if a person works for the company, but uses its own tools and at his or her expanse hires other workers, in order for them to do the same work, in that legal relations, the worker is considered as self-employed. But in each cases, based on the dispute, the court determines whether the person is self-employed or not. Due to the fact that we have freedom and flexibility principles applied in the Great Britain, a lot of people opt for having the self-employed statues and the statistics shows us, that in the year of 2008-20017, their percentage has grown up to 34%. They did 271 Billion contribution to the economy and for now, 14% of workforce comes from them.
The study of the issue has showed us, that in the Great Britain we have 3 category of self-employed workers:
a) Self-employed, who have their own business or company, and work, as, for example, “resellers” or “alone”, or with a “partner”. They may have hired workers for that job, as well –totally covering up to 4.8 Million people;
b) Self-employed, who work alone without hired workers – 4.4 Million, most of them, 29% work in the agriculture, 17% in the defense system, 16% - in the infrastructure; 12% - as professional scientists and mechanics;
g) Freelance – the subcategory of people, who are hired in the field, where the high-class managerial, professional and technical skills are required – 2 Million.
Germany – in 1999 the Government took the act in order to promote the self-employment. Such kind of legislative act, for the first time in history, contained a list of criteria that gave an opportunity to distinguish between a self-employed and an “economically dependent worker”.
An “economically dependent worker” doesn’t employ other people, but works only for one employer, performs the work, which is performed other ordinary employees, and fails to provide the evidence, which supports for the workers self-employment status. An employee is considered to be a person, who meets these listed criteria, however, in addition, The Federal Labor Court, based on the case law, has developed additional criteria to consider person as employed. In particular, the fact of being dependent on the contractor’s instructions during the implementation of labor relations, where the attention is drawn on the three issues – the employment relationship is carried out at the specified time of the contract, at the specified place, with the specified content. Moreover, that person is also a member of the unit’s organizational structure.
Based on the statistics, in 1991-2009 the number of self-employed workers has grown up to 40%, from 3 Million to 4.2 Million, and in 2012, in Germany, there was 4.3 Million self-employed presented. It should be noted out, that from 2012 the number of them is decreasing and based on the provided information, in 2018 4 Million person is considered as self-employed.
The United States of America –Based on the Federal Law, we have 2 category of self-employed workers. In the first category, we have the people who are one and only owners of their property and business and in the second category, the workers who have legal relationship with the third parties as independent contracts, which can be said, as individual entrepreneurs.
Based on the 2017 Federal Statistics, in the year of 2017-2020, 27 Million Americans should have left their full time job, which would result in having 42 Million self-employed workers. Nowadays, can be said, that in the United States, where 164 Million people are considered as workforce, 20% of them comes to self-employed people.
Based on the International Labor Organization’s latest information, in the countries with high economy index, only 12.4% comes to the self-employed workers, but in the state with a small economy, that number rises up to 81.9%. And as for Georgia, according to the National Department of Statistics, in 2018, the share of self-employed workers in the total employment (excluding agriculture) is 36.2%.
The organization “Young Barristers” has already addressed the Government of Georgia with a proposal to define the legal statues of “self-employed” people, as well as, to regulate it at the legislative level. The organization will continue to actively participate in the further discussions on the issue in order to support it.
