Company disregard of employee PAYE status

king2

I started working part-time for a company recently and was informed that my wages were to be paid through a contractor agency. The company had up until a few months ago paid workers through the PAYE system.They then decided they would start paying through a Contractor agency,"to cut down on administration"they said, nothing to do with the fact they wouldnt have to pay employer PRSI anymore of course.Apparently there was alot of objection and bitterness among the workers at the time but they eventually felt that they had to accept their fate. I was a bit concerned at the prospect of being paid through an agency but not as concerned as when I saw how much PRSI I actually would have to pay. I would have to pay both employer and employee PRSI as well as 5% of everything earned to the contractor agency. On a gross salary of €1600 per month I would have to pay a total of €296 compared with a total of €77.20 if paying as a PAYE worker.

Is there any legislation that protects the PAYE worker from gross abuse like this by unscrupulous employers who dont want to pay their share, facilitated by contractor agencies and accounting firms out to make an easy killing from vulnerable, often poorly paid workers. How can it be the case that a Company can simply decide its workers are not PAYE workers anymore and subject them to this perversion?

DoMyBooks

The revenue are pretty strict on employed/self employed its topical with them at the moment. Here is a link to a guide www.revenue.ie/en/tax/it/leaflets/rev_dsw.pdf

The guide also tells you what to do if you have concerns

This is taken directly from the leaflet
4 Guidelines on whether
you are an employee
While all of the following factors
may not apply to your work you
would normally be an employee if
you:
are under the control of another person who directs you as to how, when and where the work is to be carried out
supply your labour only
receive a fixed hourly/weekly/monthly wage
cannot sub-contract the work
do not supply materials for the job
do not supply equipment other than the small tools of the trade
are not exposed to personal financial risk in carrying out the work
work set hours or a given number of hours per week or month
work for one person or for one business
are entitled to sick pay/holiday pay/pension etc.
receive expense payments to cover subsistence and/or travel expenses
are entitled to extra pay or time off for overtime.

Toblerone1978

It seems that under this arrangement, you're not the contractor, the agency is. And you're an employee of the agency.

I would have that most of DoMyBooks post is applicable if you were hired as a contractor directly, rather than through an agency.

king2

Yes, the agency is the contractor in reality.Would that mean that by using the agency, my employer has not broken any rules in relation to revenue guidelines by changing our working arrangement ?, ie instead of being an employee of him we are now employees of the agency. There must have been laws broken however by the employer simply electing to make his employees work for an agency so that he could avoid paying employer prsi.

Pandoras Twist

Would the agency not have to pay your PRSI now as you are employees of the contractor, and not independent contractors?

And if they are trying to consider you all as independent contractors than the conditions listed by Do My Books apply so chances, depending on the circumstances, they won't be able to say that you are working idependently as they probably give you holiday leave, and they own the capital that you use in the course of business etc.

Either way I would contact the Revenue, as they have probably heard of a few businesses trying to do this

king2

We are paying employer prsi but the agency organises it so that to the taxman it looks like they are paying it.

The company we really work for sends the agency details of gross pay due to us. The agency then "invoices" the company for this amount which is paid by the company to the agency.

A new gross amount for tax and prsi purposes is then arrived at by the agency after they have deducted their fee and employee "expenses".We are supposed to submit expenses,eg mobile phone, internet, so that the agency can falsely reclassify income earned by us for our hours of work as expenses reimbursed by them and therefore not liable to tax and prsi.

Pandoras Twist

Thats very sly.

Definitely ring the Revenue anyway would be my advice. Looks like they're building themselves a loop hole by trying to change the nature of your employment. Have you been reissued different contracts?

Mr. Incognito

There is whistleblower provisions on the revenue website.

This would not hold up to scruity whatsoever as it seems both companies are under the same control.

I would report them at once

barneystinson

I'm no employment law expert, but I'd say there could be a case for unfair dismissal for anyone who was an employee of the company, and got forced to take a P45 and then begin working for the agency.
Also anyone who was in the job more than 2 years would be entitled to statutory redundancy...
(I'm assuming that everyone was issued a P45 by the old company and then began a new employment with the agency contracting them in to the former employer.)
If you never worked directly for the company then it won't apply to you obviously.

king2

Im not sure that there were p45s issued, I will enquire.There definitely wasnt any statutory redundancy paid though.I think the situation even before the agency was irregular.Employees were paid a retainer and then paid an hourly rate on top of this.The retainer was put through the books for paye purposes while the hourly rate paid "under the counter."

barneystinson

king2 wrote: »

Im not sure that there were p45s issued, I will enquire.There definitely wasnt any statutory redundancy paid though.I think the situation even before the agency was irregular.Employees were paid a retainer and then paid an hourly rate on top of this.The retainer was put through the books for paye purposes while the hourly rate paid "under the counter."

Hey King2, I've PM'ed you, don't know if you've spotted it... You might PM me back please...