Pay Tax for Part Time Employees?

narcissism

If I employ part time employees do I have to pay their taxor can I give them cash on the basis that they agree to do their own tax returns?

seamus

You are obliged to look after the tax affairs of all or your PAYE employees, regardless of whether they're part time or full time.

What you can do is employ them on a contract basis, so they're not actual employees of yours, but casual contractors. Then they must look after their own taxation.

narcissism

To employ them on a contract basis is it as simple as offering them a termed contract - for example 1 year and not making them permanent employees?

leeroybrown

No. A fixed term worker has the same rights to benefits, etc as a permanent employee. To do this would require them working for a separate limited company (either their own or an umbrella company) and selling their services to you at a set rate including service VAT. They still have to pay their own taxation so ultimately it will still come out of your pocket. This method of employment is normally used in situations where a company wants a no-ties employee for a fixed period that is directly billable to a particular project, wants to avoid problems with the fixed-term workers act or needs to get around internal hiring freezes (common in large multinationals). This would end up costing you more.

Essentially you are asking if you can employ workers on a cash-only basis to save the cost of PAYE and PRSI. The answer is there are no - this is illegal. There are employers who do it and get away with it but it's still illegal.

bravo

I remember working outside the paye sector a few years ago - I was regarded as self-employed, sole trader, worked the samw patterns as paye workers in the same job, but submitted an invoice weekly to be paid on the basis that I looked after my own tax affairs.
I'm sure this was and still is legal if both parties agree.

leeroybrown

Actually, bravo has hit on an interesting point. This normally doesn't apply as anyone contracting is generally assumed to be earning decent cash and will use the limited company to write off expenses against tax. Assuming that there are no recent legal impediments this can be done as a sole trader with the bonus that a low-earning sole trader has (or at least had) some decent tax exemptions.

narcissism

Thanks!
Would employing 4 people 5 days a week from between the hours of 3pm and 9pm be considered full time or part time?
They may need to also work a full day on Saturdays.
What would anyone recommend - I would like them to come out with €16 an hour into their hands.

seamus

I would consider that full time. They're working for you 5 days of the week, which pretty much leaves them with little time to work elsewhere.

Can't really advise you on payment, that all depends on the job. You're going to have to pay them a little more per hour than you would pay an actual employee. This is "compensation" for their having to sort out their own tax affairs, not having a normally-negotiated job, not getting paid for holidays and bank holidays and otherwise the headache that comes with contracting. On the flipside you have no PRSI contributions to make.

There will also be other things you need to take into consideration - for example, the contractor gets the right to choose their own holidays. Because they are their own employer, then you can't decide when they take holidays. They simply decide and tell you when they're not going to be available.

There are a number of state bodies I would advise consulting about your rights and obligations in these situations; Enterprise Ireland, Forfas, BASIS, ISME and the Chamber of Commerce.

calsatron

Your not going to get away with this.

Revenue guidlines state that any contracter working for you who basically performs as an employee is in effect an employee and should be treated as such.

The only way round it is to have them set up as limited company, which is prohibitively expense for your employees.

You could try it but you'd get rumbled as soon as one of your employees was informed that they were in effect an employee and should be entitled to holiday pay, sick pay etc etc.

There was a famouse case that proved all this when the Gas board meter inspectors took Board Gais to court, they won, they were operating on exactly the same principle your proposing.

See here for more info:

http://www.siptu.ie/YourRights/TUFGuideToLabourLaw/ContractofEmployment/ContractOfServiceandContractForService/

leeroybrown

Thanks for that clarification calsatron. Personally I wouldn't consider going anywhere near this type of arrangement. Without the correct legal and taxation advice doing this would be fraught with potential pitfalls.

narcissism

Thanks for all the advise!
I guess my problem is that I hadn't fully thought about the business model before posting this but was just throwing out the question for advise. I know a little more now and will be taking on 8 part-time (all taxes paid by company) as opposed to 4 full time and then all can work on Saturdays also.