Getting started in Payroll for the Republic of Ireland Presented by Kathy Soulsby
What we’ll cover in this module Pensions u Working Time u National Minimum Wage u Deductions u
Superannuation
Superannuation Contributions Employees ordinary deductions for a Revenue approved fund or scheme u are allowable for tax purposes on a net pay arrangement Special contributions (such as lump sum payments) may still be allowable u Where the total of the additional voluntary contributions (AVCs) and the u 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 If employers do not provide an occupational pension scheme they are obliged u to provide at least one standard PRSA scheme Where qualifying contributions are deducted by the employer, the net pay u arrangement applies If the qualifying contributions are not deducted by the employer, the u employee can claim the tax relief directly from the Revenue, which will be given as an additional tax credit
Superannuation Contributions Employers can contribute to the employees’ PRSA and claim corporate tax relief u on the contribution PAYE, PRSI and USC should not be applied to contributions paid by an employer on u the employees behalf to a Revenue approved superannuation scheme or a PRSA Retirement Annuity Contract A person can pay a premium under an RAC to provide a pension for themselves, a u spouse or dependants The net pay arrangement can be applied when contributions are deducted directly u 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 An employee is entitled to a rest period of not less than 11 consecutive hours in of u 24 hour period they carry out work for their employer An employee is entitled to a break of at least 15 minutes where they have worked u for a period of 4 and a half hours And an employee is entitle to a break of at least 30 minutes where they have u worked for 6 hours (the 15 minute break above can be included in this time) The Minister may insist on a longer break, depending on the classification of u employee, and the break can be increased to be up to one hour in total A break allowed to an employee at the end of the working day shall not be u regarded as satisfying the requirement under the Act
Working Time An employee shall be granted a rest period of at least 24 consecutive hours in u each period of 7 days However an employer may grant the employee, in the next following period of 7 u days, 2 rest periods each of least 24 consecutive hours lieu of the rest period at the end of the first 7 days This is a legal minimum and may be increased as laid out in any terms and u conditions of employment Unless otherwise stated in a contract of employment, one of the rest periods u 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 Where an employee is employed in an activity and the weekly working hours of u which vary on a seasonal basis, or It would not be practicable to use a reference period of 4 or 6 months because of u technical considerations or the conditions under which the work is organised or otherwise 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 % of minimum Hourly Rate 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 1 st one third period 6.86 75 2 nd one third period 7.32 80 3 rd one third period 8.24 90
National Minimum Wage To calculate the hourly rate, take the gross pay and divide by the actual hours worked u The following payment types cannot be included in the calculation u Overtime premium Call out premium Service pay Unsocial hours Tips premium Public holiday or Allowances for Standby or on call Certain absence pay Certain weekend premiums special/additional allowances leaving duties payments ER pension Redundancy Advances BIK (except board & Payments not contributions lodging) related to employment Compensation for Suggestion scheme Employer Loan injury or loss of tools award
National Minimum Wage Working hours for the calculation are whichever is the greater of: The hours set out in any document such as a contract of employment, collective u agreement or statement of terms of employment or The actual hours worked or available for work and paid u "Working hours" include: Overtime u Travel time where this is part of the job u Time spent on training authorised by the employer and during normal working u hours
National Minimum Wage Working hours for the calculation are whichever is the greater of: The hours set out in any document such as a contract of employment, collective u agreement or statement of terms of employment or The actual hours worked or available for work and paid u "Working hours" do not include: Time spent on standby other than at the workplace u Time on leave, lay-off, strike or after payment in lieu of notice u Time spent travelling to or from work i.e. ordinary commuting u
National Minimum Wage Pay reference period: The employer selects the pay reference period, from which the average hourly pay u will be calculated The employer must include details of the pay reference period in the statement of u employment conditions to be given to an employee Your employee may request a written statement from you of their average rate of u 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: The legislation does not apply to a person employed by a close relative (for u 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
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