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PRSI -Employer or Employee ??

  • 06-12-2011 7:06pm
    #1
    jos28
    Registered Users, Registered Users 2 Posts: 7,233 ✭✭✭


    My son is working full time and is not paid directly by the employer but by a recruitment agency. He just received his first pay slip and is shocked at the deductions. The agency took 5% as agreed, they deducted PAYE, USC and PRSI. They classified him as AL contribution and charged him BOTH the employees portion (€55.91) and the employers portion (€209.50). He contacted Social Welfare Scope Section and was told that this is incorrect and stated that there are no circumstances under which this can be done legally. Has anyone any advice or experience of this and if so how did you deal with it.


Comments

  • #2
    thesimpsons
    Registered Users, Registered Users 2 Posts: 1,696 ✭✭✭thesimpsons


    firstly is the 5% a regular charge or just a once off? I've never seen this happen. I've also never seen where an agency charges both portions of PRSI to the employee, its not correct. You probably need to ring up the agency and ask to speak to whoever processes the payroll and enquire as to what they are doing. Your son is only liable for his tax, USC, the employees share of PRSI. The agency should be paying the employers share of PRSI themselves. It could well be just an error but certainly needs to be investigated. You can check which social welfare class he should be on at the following page:

    http://www.welfare.ie/EN/Publications/SW14/SW14_11/Pages/ClassA.aspx


  • #3
    barneystinson
    Registered Users, Registered Users 2 Posts: 4,686 ✭✭✭barneystinson


    jos28 wrote: »
    My son is working full time and is not paid directly by the employer but by a recruitment agency. He just received his first pay slip and is shocked at the deductions. The agency took 5% as agreed, they deducted PAYE, USC and PRSI. They classified him as AL contribution and charged him BOTH the employees portion (€55.91) and the employers portion (€209.50). He contacted Social Welfare Scope Section and was told that this is incorrect and stated that there are no circumstances under which this can be done legally. Has anyone any advice or experience of this and if so how did you deal with it.

    He's obviously working through an umbrella company so?
    http://www.boards.ie/vbulletin/showthread.php?t=2055737514


  • #4
    jos28
    Registered Users, Registered Users 2 Posts: 7,233 ✭✭✭jos28


    The 5% is a regular charge which will be taken from his pay. The umbrella group scenario looks very confusing especially when he is just doing a bit of casual work on a day to day basis. He is not self-employed. His employer uses the agency, the agency uses a payroll crowd in Cyprus. Either way I cannot see how you can pay both portions of PRSI and still be classified as a PAYE worker. According to Social Welfare this is just a method used to avoid paying the 10.75% PRSI and they reckon it is wrong. He did not register as self-employed and is an employee according to SW.


  • #5
    whatnext
    Registered Users, Registered Users 2 Posts: 916 ✭✭✭whatnext


    looks very much like he is working through an umbrella company to me for 2 reasons, a/ an employment agency can not charge the employee in Ireland. b/ 5% is the normal charge for an umbrella company.

    The model you describe sounds like one regularly used for contractors with ad-hoc or short term work. If you look closely at the terms of engagement with the Umbrella Co (payroll company as you described it) you will most likely (contractually) find that he is employing him self through an umbrella company. Technically he is not self employed. The reason this model is some times used is to protect his social welfare entitlements after the employment ends.

    I've seen this quite a bit and know a few engineers and architects that use these type of services at the moment as they can only secure short term contracts and need to keep full PRSI payments made. If they were to contract as a Ltd company or sole trader they would lose the Social welfare entitlements


  • #6
    jos28
    Registered Users, Registered Users 2 Posts: 7,233 ✭✭✭jos28


    Thanks for all the replies everyone, I understand the concept of umbrella groups now. I understand how contractors would want to keep up their PRSI cons. Although I would imagine that Social Welfare would not view this practice in the same way. In my son's case however, this is just a couple of months work to tide him over Christmas. He is not overly concerned about his pension at this stage ! Does he have the right to opt out of the Employer's portion of PRSI ?


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  • #7
    whatnext
    Registered Users, Registered Users 2 Posts: 916 ✭✭✭whatnext


    Yes it is possible under a different type of umbrella system, but there are consequences, personally I would keep up full PRSI payments, PRSI is not just about pension.

    See the bottom section of the link

    http://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/social_insurance_prsi/social_insurance_in_ireland.html

    NB. THIS IS ONLY MY PERSONAL OPINION, (ie what I would do if in the same situation). I AM NOT A TAX EXPERT


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