Getting started in Payroll for the Republic of Ireland Presented by - - PowerPoint PPT Presentation

Getting started in Payroll for the Republic of Ireland

Presented by Kathy Soulsby

What we’ll cover in this module

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Pensions

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Working Time

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National Minimum Wage

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Deductions

Superannuation

Superannuation Contributions

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Employees ordinary deductions for a Revenue approved fund or scheme are allowable for tax purposes on a net pay arrangement

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Special contributions (such as lump sum payments) may still be allowable

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Where the total of the additional voluntary contributions (AVCs) and the normal contributions are within the given percentages (see the table) these may be awarded tax relief as a net pay arrangement, which means that PAYE, PRSI and the USC deductions will be calculated net of these deductions

Superannuation Contributions

u As well as the age based percentage ceilings

contributions there is also a cap on the amount of earnings that contributions can be applied to and qualify for tax relief

u The taxable portion of a termination payment is not

relevant earnings when calculating the ceiling on contributions

u A PRSA is a personal retirement savings account (a long

term savings account), designed to help people save for their retirement and is available from providers whose schemes have been approved by the Revenue and the Pensions Board (this isn’t an occupational scheme)

Superannuation Contributions

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If employers do not provide an occupational pension scheme they are obliged to provide at least one standard PRSA scheme

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Where qualifying contributions are deducted by the employer, the net pay arrangement applies

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If the qualifying contributions are not deducted by the employer, the employee can claim the tax relief directly from the Revenue, which will be given as an additional tax credit

Superannuation Contributions

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Employers can contribute to the employees’ PRSA and claim corporate tax relief

• n the contribution

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PAYE, PRSI and USC should not be applied to contributions paid by an employer on the employees behalf to a Revenue approved superannuation scheme or a PRSA Retirement Annuity Contract

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A person can pay a premium under an RAC to provide a pension for themselves, a spouse or dependants

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The net pay arrangement can be applied when contributions are deducted directly by employers, however this only applies if there is no occupational scheme in place

Permanent Health Benefits

Permanent Heath Benefits

u People who pay a premium for a policy covering continuance of income

and benefits during sickness, accident or injury can claim tax relief in respect of the payments made

u Where qualifying Permanent Health Benefit contributions are deducted

via the employer, the net pay arrangements apply

u Employee contributions to a Revenue approved Permanent Health

Insurance or Income Continuance Plans are exempt from PRSI as long as the net pay arrangement applies

Organisation of Working Time Act

Working Time

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An employee is entitled to a rest period of not less than 11 consecutive hours in of 24 hour period they carry out work for their employer

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An employee is entitled to a break of at least 15 minutes where they have worked for a period of 4 and a half hours

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And an employee is entitle to a break of at least 30 minutes where they have worked for 6 hours (the 15 minute break above can be included in this time)

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The Minister may insist on a longer break, depending on the classification of employee, and the break can be increased to be up to one hour in total

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A break allowed to an employee at the end of the working day shall not be regarded as satisfying the requirement under the Act

Working Time

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An employee shall be granted a rest period of at least 24 consecutive hours in each period of 7 days

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However an employer may grant the employee, in the next following period of 7 days, 2 rest periods each of least 24 consecutive hours lieu of the rest period at the end of the first 7 days

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This is a legal minimum and may be increased as laid out in any terms and conditions of employment

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Unless otherwise stated in a contract of employment, one of the rest periods should be on a Sunday or, if the rest period is more than 24 hours, should include a Sunday

Working Time

u An employee who is required to work on a Sunday will be compensated by

their employer, unless the contract already provides for this, by the following means unless the contract states that the normal pay received compensates for working on the Sunday. Compensation will be by:

u Payment of an allowance as is reasonable and having regard to all the

circumstances, or

u By an increase in the employee's rate of pay an amount reasonable for

the circumstances, or

u By granting the employee such paid time off as is reasonable having

regard to all the circumstances, or

u By combination of two or more of the above unless a collective

agreement stipulates another type of compensation

Working Time

u An employer shall not permit an employee to work, in each period of 7

days, more than an average of 48 hours calculated over a period not exceeding:

u 4 months, or u 6 months if 4 months is not practical (i.e. where there have been

significant fluctuations)

u The days or months in the reference period must be consecutive days or

months

Working Time

A reference period should not include:

u Annual leave u Absences from work authorised under the Maternity Protection Act or the Adoptive Leave

Act

u Sick leave

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Where an employee is employed in an activity and the weekly working hours of which vary on a seasonal basis, or

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It would not be practicable to use a reference period of 4 or 6 months because of technical considerations or the conditions under which the work is organised or

• therwise of an objective nature

u In this circumstance a collective agreement that, for the time being has effect in

relation to the employee, and which stands approved of by the Labour Court under section 24 may specify a work reference period in relation to the employee of more than 4 or 6 months but not more than 12 months

National Minimum Wage

National Minimum Wage January 2016

Minimum Hourly Rate € % of minimum wage Experienced adult worker 9.15 100 Aged under 18 6.41 70 First year from date of employment aged over 18 7.32 80 Second year from date of employment aged over 18 8.24 90 Employee aged over 18 in a structured training during working hours 1st one third period 6.86 75 2nd one third period 7.32 80 3rd one third period 8.24 90

National Minimum Wage

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To calculate the hourly rate, take the gross pay and divide by the actual hours worked

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The following payment types cannot be included in the calculation Overtime premium Call out premium Service pay Unsocial hours premium Tips Public holiday or weekend premiums Allowances for special/additional duties Standby or on call allowances Certain absence pay Certain leaving payments ER pension contributions Redundancy Advances BIK (except board & lodging) Payments not related to employment Compensation for injury or loss of tools Suggestion scheme award Employer Loan

National Minimum Wage

Working hours for the calculation are whichever is the greater of:

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The hours set out in any document such as a contract of employment, collective agreement or statement of terms of employment or

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The actual hours worked or available for work and paid "Working hours" include:

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Overtime

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Travel time where this is part of the job

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Time spent on training authorised by the employer and during normal working hours

National Minimum Wage

Working hours for the calculation are whichever is the greater of:

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The hours set out in any document such as a contract of employment, collective agreement or statement of terms of employment or

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The actual hours worked or available for work and paid "Working hours" do not include:

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Time spent on standby other than at the workplace

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Time on leave, lay-off, strike or after payment in lieu of notice

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Time spent travelling to or from work i.e. ordinary commuting

National Minimum Wage

Pay reference period:

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The employer selects the pay reference period, from which the average hourly pay will be calculated

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The employer must include details of the pay reference period in the statement of employment conditions to be given to an employee

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Your employee may request a written statement from you of their average rate of pay for any pay reference period within the last 12 months. The employer has 4 weeks to supply the statement Exceptions to those entitled to receive the national minimum wage:

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The legislation does not apply to a person employed by a close relative (for example, a spouse, civil partner or parent) nor does it apply to those in statutory apprenticeships

National Minimum Wage

Exemption for employer

u If an employer cannot afford to pay the national minimum wage due to

financial difficulty the Labour Court may exempt an employer from paying the rate for between 3 and 12 months

u The employer must apply to the Labour Court for the exemption with the

consent of a majority of the employees, who must also agree to be bound by the Labour Court decision

National Minimum Wage

Exemption for employer

u The employer must demonstrate that they are unable to pay the national

minimum wage and that, if compelled to do so, would have to lay-off employees or terminate their employment

u An exemption may only be sought from paying the full rate of the

national minimum wage i.e. 100% and not for cases covered by the reduced rate e.g. employees who are under 18

Deductions from Pay

Deductions from pay

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The Payment of Wages Act 1991 refers to situations where either deductions are made from pay or the employee is required to make a payment to the employer

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The following deductions from pay are allowed when:

u They are required by law, for example, tax (PAYE) and social insurance (PRSI), u They are provided for in the contract of employment, for example occupational

pension contributions.

u They are made with the employee’s written consent, for example, trade union

subscriptions

u They are to recover an overpayment of wages or expenses u They are required by a court order, for example, an attachment of earnings order

in a family law case

u They arise because the employee is on strike

Deductions from pay

u Where the employer suffers loss through an employee’s fault. In these

cases a deduction (or payment by the employee) is only allowed where:

u It is allowed for in the contract u It is fair and reasonable u The employee has received a written notice of the deduction - a full

week's notice if the deduction arises from an employee mistake

u The amount of the deduction does not exceed the loss or cost of the

service

u The deduction takes place within 6 months of the loss/cost occurring

Deductions from pay

u Local Property Tax Liability wef 2013 u The employer/pension provider is obliged to commence deductions of

LPT and spread these deductions evenly over the pay periods

u They are required to account for and remit the deducted LPT to the

Revenue on Form P30

u Where an employer is given parts 2 and 3 of form P45 by a new

employee, they should send part 3 to Revenue

u Revenue will issue a P2C to the employer to commence deduction of

the outstanding amount of LPT from the new employee's wages.

u Even though there is a figure for LPT deducted shown on the P45,

employers should not deduct LPT from a new employee's wages until they receive a P2C for the new employee

Deductions from pay

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Attachment of Earnings orders

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An order shall be to an employer who has the maintenance debtor in his employment, who will make periodical deductions of amounts (specified in the

• rder), having regard to the normal deduction rate and the protected earnings

rate, from the maintenance debtor's earnings and to pay the amounts deducted as the Court orders

u in case the relevant antecedent order is an enforceable maintenance order, to the

District Court clerk specified by the attachment of earnings order for transmission to the person entitled to receive payments made under the relevant antecedent order,

u in any other case, to the person referred to in the order or, if the Court considers proper,

to the District Court clerk specified by the attachment of earnings order for transmission to that person

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An order shall not be made without the consent of the maintenance debtor unless the Court is satisfied that the maintenance debtor has, without reasonable excuse, defaulted in the making of any payment under the relevant antecedent order

Deductions from pay

u An attachment of earnings order will specify the normal deduction

rate

u It will specify the protected earnings rate below which, the relevant

earnings should not be reduced by a deduction for the attachment of earnings order

u It will contain information considered appropriate for the purpose of

enabling the employee to be identified by the employer

END

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