Employer's duty to pay social insurance (PRSI)

Rules

Your employer needs your Personal Public Service Number (PPSN) to make social insurance contributions for you. If your employer does not make the correct PRSI contribution, your employer will be held responsible for the cost of the entire contribution and any arrears that may be due. Failure to meet this responsibility can mean that PRSI which has not been paid can be recovered in court as a debt to the State.

Your employer can also be required to repay to the Department any social welfare payment you may have received.

PRSI inspections

Every year, Inspectors from the Department of Social Protection visit many employers. The purpose of inspections is to find employers that:

• Do not pay any PRSI contributions for their employees
• Do not keep proper records for them
• Encourage employees to claim unemployment payments
• Understate wages being paid to employees

The Department's Inspectors have power to inspect records and there are penalties for people who obstruct or refuse to supply information, or fail to keep or produce records and documents.

PRSI exemption

In some cases, employers do not have to pay their share of PRSI for employees. However, employees must still pay their share of PRSI unless they are a worker posted to Ireland (see below).

From 1 July 2011 the lower rate of employer PRSI was halved (to 4.25%) for all jobs that pay up to €356 per week. The rate will be restored to 8.5% from 1 January 2014.

Employer Job (PRSI) Incentive Scheme

The Employer Job (PRSI) Incentive Scheme is open to employers who create new and additional jobs. Under this scheme, employers do not have to pay the employers' portion of the PRSI contribution for certain employees for 18 months. To qualify for this scheme both the job created and the person employed must meet certain criteria. Find out more about the Employer Job (PRSI) Incentive Scheme.

Employer's PRSI Exemption Scheme

The Employer's PRSI Exemption Scheme was open to employers who took on an employee getting the Back to Work Allowance. Under this scheme, employers did not have to pay the employers' portion of the PRSI contribution for the first 2 years. To qualify, the employer must employ a person getting Back to Work Allowance for the first time on the day he or she starts work with the company. Both the Employer's PRSI Exemption Scheme and the Back to Work Allowance are now closed to new applicants.

Workers posted to Ireland

A worker who is ordinarily resident in a country not covered by EU Regulations, or with which Ireland does not have a Bilateral Social Security Agreement and who is sent to work temporarily in Ireland by an employer who is not ordinarily registered in Ireland nor has their principal place of business in Ireland, Northern Ireland, Great Britain or the Isle of Man, may be exempt from paying Irish PRSI contributions for up to 12 months.

Paying PRSI contributions during illness

If your employer pays you when you are ill, you will continue to pay PRSI. Some employers will continue to pay you when you are out of work due to illness as long as you hand over to your employer any Illness Benefit payment you get from the Department of Social Protection. In this case, your employer only pays a PRSI contribution on the amount of sick pay minus the amount of Illness Benefit.

If your employer pays you when you are ill and allows you to keep your Illness Benefit payment, your employer's PRSI contribution is paid on the full amount of the sick pay, ignoring the Illness Benefit payment.

If your employer does not pay you when you are absent from work through illness, no PRSI contributions are due.

From 2012 Illness Benefit is taxable. However any payments for dependent children are not taxable. You can get more information in Revenue's PAYE Notice To Employers and in Revenue's guide IT50, both of which are available on the Revenue Commissioner's website. (Before 2012 the first six weeks of Illlness Benefit were not taxable.)

Pension contributions and PRSI

Employee and employer contributions to a pension are both chargeable to PRSI. In Budget 2012 the 50% relief on employer PRSI for employee contributions to pension schemes was abolished.

Employing family members and PRSI

Most employees are liable to pay PRSI. Exceptions to this general rule apply in the case of certain family employment. This term is used to describe a situation in which a self-employed sole trader either employs, or is assisted in the running of the business by a spouse, civil partner or other family member(s). If the business does not operate on a sole trader basis - for example if it is a Limited Company or a Partnership - it is not family employment.

The following categories of family employment are insurable under the social insurance system in exactly the same way as employments that have no family connection:

If you are employed as an employee by a prescribed relative and the employment is not related to a private dwelling house or a farm in or on which both you and the employer reside (PRSI Class A or Class J applies). If you are employed as an Apprentice by a prescribed relative (even if the apprenticeship employment does relate to a private dwelling house or a farm in or on which both you and the employer resides) there must be a registered Contract of Apprenticeship involved (PRSI Class A or Class J applies).

A prescribed relative is a parent, grandparent, stepparent, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother, or half-sister.

The following categories of family employment are the exceptions that are not covered by the social insurance system:

• If you are employed as an employee by your spouse or civil partner
• If you are employed as an employee by a prescribed relative and the family employment relates to a private dwelling house or a farm in or on which both you and the employer reside
• If you assist or participate in the running of the family business but not as an employee. (For example, a son/daughter who is attending full-time education who participates in the business (e.g. farm) after school hours or a spouse/civil partner who carries out book-keeping work for the business - but is not an employee.)

Points to note:
PRSI Class M is used to record situations in which there is no liability to social insurance.

Subject to certain conditions, if you cease to be covered by compulsory PRSI you may opt to become insured on a voluntary basis and pay voluntary contributions.

More information can be found on Family Employments & PRSI (SW 102).