Dependent self-employed individuals: are they different from paid employees?
| DOI | https://doi.org/10.1108/ER-11-2022-0502 |
| Published date | 07 February 2023 |
| Date | 07 February 2023 |
| Pages | 704-720 |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations,Employment law |
| Author | Ondřej Dvouletý,Dagmara Nikulin |
Dependent self-employed
individuals: are they different from
paid employees?
Ond
rej Dvoulet
y
Department of Entrepreneurship, Faculty of Business Administration,
Prague University of Economics and Business, Prague, Czech Republic, and
Dagmara Nikulin
Faculty of Management and Economics, Gdansk University of Technology,
Gdansk, Poland
Abstract
Purpose –This study focusses on dependent self-employment, which covers a situation where a person works
for the same employer as a typical worker whilst on a self-employment contractual basis, i.e. without a
traditional employment contract and without certain rights granted to “regular”employees.
Design/methodology/approach –The research exploits the individual-level dataset of 35 European
countries extracted from the 2017 edition of the European Labour Force Survey (EU LFS) and compares the
characteristics of employees and dependent self-employed individuals. Methodologically, the study relies on
the estimation of a multivariate logistic regression model.
Findings –The main hypothesis assuming that dependent self-employed work most often in low-skilled
occupations was empirically supported. There was also a non-linear (u-shaped) relationship between the years
of accumulated experience (with a turning point at 35 years) and the likelihood of being dependent self-
employed. Other results showed that dependent self-employed are less likely to be women and the dependent
self-employed are more likely born outside of the countries where the dependent self-employed participate in
the labour markets.
Originality/value –The study contributes to the field by adopting a comparabledefinition of dependent self-
employment and exploiting the recent theoretical support of The Work Precarity Framework. The
phenomenon should still be addressed by policymakers and labour office representatives, aiming to protect,
primarily, vulnerable lower-skilled workers. The ongoing research should study the longitudinal dimension of
dependent self-employment with a focus on motivational aspects.
Keywords Dependent self-employment, Heterogeneity of entrepreneurs, Bogus, Fake, False, Sham, Pseudo or
involuntary self-employed
Paper type Research paper
1. Introduction
Given the proliferation of technological change and the appearance of new forms of
employment, relations in the labour market have been altered fundamentally, including the
complexity of self-employment. Growing attention is paid to the different forms of
self-employment, which on the one hand, may be perceived as a way to circumvent labour
regulations (Sargeant, 2017;Baker et al., 2018;MacDonald and Giazitzoglu, 2019), described
as precarious work, with less stability, higher risk and uncertain income (Putnin¸
s and Sauka,
2011;Ald
en and Hammarstedt, 2016;Moore and Newsome, 2018;Conen and Schippers, 2019;
ER
45,3
704
JEL Classification —H55, J21, L26
This work was funded by Internal Grant Agency of Faculty of Business Administration, Prague
University of Economics and Business, (No: IP300040). An earlier version of the paper was presented at
the 22nd Annual Conference of the European Academy of Management (EURAM): Leading Digital
Transformation, held in Winterthur (Switzerland) in June 2022. The authors thank the editor Dennis
Nickson and two anonymous reviewers for their helpful and encouraging comments and suggestions.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0142-5455.htm
Received 7 November 2022
Revised 21 December 2022
16 January 2023
Accepted 19 January 2023
Employee Relations: The
International Journal
Vol. 45 No. 3, 2023
pp. 704-720
© Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-11-2022-0502
Hernanz and Carrasco, 2021;Heyes and Tomlinson, 2021;Kitschelt and Rehm, 2022) but on
the other hand, a way how to allow individuals to strive for more independence and freedom
(Rustagi, 2013;Allen and Curington, 2014;Hagqvist et al., 2015;Murgia and Pulignano, 2021).
Another perspective highlights the importance of self-employed persons working as
freelancers, their role in enabling entrepreneurial attitudes (van Stel and de Vries, 2015;Burke
et al., 2020) and their impact on the productivity and efficiency of other organisations (Popiel,
2017;Bologna, 2018;Drahokoupil and Fabo, 2019;Pichault and McKeown, 2019).
A burgeoning research stream focu sses on motives, which explain why peop le choose
self-employment as their car eer choice. In general, the push and pull factors ar e mentioned,
which suggest two opposite drivers of becom ing self-employed (Segal et al., 2005;Murnieks
et al., 2020). Extensive research by Burke (2011,2015) documents the vari ety amongst the
self-employed labour force, which cover both less skilled vulnerable workers and
well-educated, highly skilled prof essionals and freelancers. Si milarly, B€
ogenhold and
Klinglmair (2016, p. 844) note in thei r study that: “the category of self-employment includ es
very privileged positions as well as v ery marginal ones, coexisting in the same category at
thesametime”.Other scholars (B€
ogenhold, 2019;van Stel and van d er Zwan, 2019;Dvoulet
y,
2020;van Stel et al., 2021) also confirm th e heterogeneous nature of self-em ployed
individuals regarding income lev el, occupation, education, dependency and security level.
Based on these observations, some recent studies (Skrzek-Lubasi
nska and Szaban, 2019;
Cie
slik and Dvoulet
y, 2019) attempted to capture the diverse nature of people classified as
self-employed into such categories as job creators, solo self-employed professionals and
freelancers, dependent (also associated with several normative connotations and terms like
fake, false, bogus, or pseudo) self-employed, part-time or hybrid self-employed. Each of these
categories must be clearly defined; otherwise, the scholarly discussion will not move further
and the contradictory arguments regarding solo self-employment will remain.
This study focusses on one of these identified categories of self-employment –dependent
self-employment, which is associatedwith the most problematic labour market-related aspects
(Behlingand Harvey, 2015;Mooreand Newsome, 2018;Horodnicand Williams, 2019a,b;Mill
an
et al., 2020). Dependentself-employment covers a situation where a person conducts thesame
tasks and works for the same employer as a typical worker whilst on a self-employment
contractual basis, i.e. without a traditional employment contract and without certain rights
granted to “regular”employees (Burke, 2011;Rom
an et al., 2011;Th€
ornquist, 2015). Such a
workingrelationship is beingused in order to circumventlabour market regulationsand for tax
evasion purposes(Mill
an et al., 2018;Moore and Newsome, 2018;Koufopoulou et al.,2019).
Thus, it is not surprising that there is a significant interest of policymakers in this
phenomenon related to both monitoring and potential policy responses. The issue was noted
several times, for example, in reports of the European Parliament (Directorate General for
Internal Policies), the International Labour Organisation (ILO) or the Organisation for
Economic Development and Coordination (OECD) (OECD, 2000;Eichhorst et al., 2013;ILO,
2016) and thecurrent policy debate is driven mainlyby the neoliberal approach towardspublic
policymaking (Moisander et al., 2018). The 2015 statistics from the European Working
Conditions Survey(EWCS) show that 55% of self-employedwithout employees in Europe are
dependenton the main contractor and/or work withoutany authority (Williams and Horodnic,
2019, p. 73).However, these striking numberswere later calibrated in the Eurostat(2018) report
on self-employment in Europe, which included additional conditions required to find the
accurate and statistically feasible definition of dependent self-employment. Cie
slik and
Dvoulet
y (2019, p. 299)summarise these conditionsas follows: individualsare called dependent
self-employed if “they work full-time as solo self-employed for one client only (or one client is
dominating, i.e. generating 75% or more income) and a (dominating) client decides their
working hours”.If we apply this definition,we see that the size of the issueis not that large, as
indicated by Williamsand Horodnic (2019) or earlier by Williamsand Lapeyre (2017), but still
Dependent self-
employed
individuals
705
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