- The
earnings threshold to determine whether people employed under a contract of service pay
PRSI at Class A or J remains at
€38.
- Employees earning between €38 and €287 inclusive in any week should be recorded under Subclass A0.
- Employees earning between €287.01 and €356 inclusive in any week should be recorded under Subclass AX.
- In any week that the earnings exceed €356 it should be recorded under Subclass A1 or A2 *.
- Participants in Community Employment earning €287 or less in any week should be recorded under Subclass A8. In any week that the earnings exceed €287 record under Subclass A9.
- Community Employment supervisors and employees on apprenticeship schemes are insurable at Class A in the normal way.
- The annual earnings ceiling for
PRSI had been increased to €40,420 for employees.
- The Class J contribution normally relates to people with reckonable earnings of less than €38 per week (from all employments). However, a small number of employees are insurable at Class J
irrespective of earnings e.g. employees aged 66 or over and people in subsidiary employment (defined below).
- Class B, C, D or H employees earning up to €287 inclusive in any week should be recorded under Subclass B0, C0, D0 or H0.
- Class B, C, D or H employees earning between €287.01 and €356 inclusive, record under Subclass BX, CX, DX or HX.
- People covered under Classes J, S and K earning up to €356 inclusive in any week should be recorded under Subclass 0 i.e. J0, S0 or Class M (for people within Class K) as appropriate.
- Employees/Self-employed (excluding those listed in NOTE below) earnings/income in excess of €356 in any week should be recorded under Subclass 1 (i.e. B1, C1, D1, H1, J1, S1 or K1).
- * Employees/Self-employed who are exempt from the Health Contribution (see NOTE below) with earnings/income in excess of €356 in any week record under Subclass B2, C2, D2, H2, J2, S2, or Class M (for people within Class K).
- The Class S minimum contribution for year 2003 remains at €253.
- The annual earnings ceiling for
PRSI has been increased to €40,420 for employees.
* NOTE: |
Medical Card Holders, people aged 70 and over and recipients of a Social Welfare Widow's/Widower's Pension, One-Parent Family Payment or Deserted Wife's Benefit/Allowance continue to be exempt from the Health Contribution, even where their earnings exceed €356 per week. |
COMPONENTS OF THE
PRSI CONTRIBUTION
|
The Pay Related Social Insurance (PRSI) contribution is made up of a number of different components including:
- Social Insurance at the appropriate percentage rate for employees and employers which varies according to the earnings of the employee and benefits for which the person is insured.
- 2.00% Health Contribution, payable by the employee where applicable, goes to the Department of Health and Children towards funding the Health Services.
- 0.70% National Training Fund Levy, included in the employer's contribution in Classes A and H.
LEVELS OF PAYMENT FOR 2003 |
PRSI contributions will be payable on the following basis:
- At the appropriate percentage rates for employees on reckonable earnings up to €40,420.
- The employer's share (Social Insurance and the 0.70% National Training Fund Levy in Classes A and H) and the 2.00% (Health Contribution) by the employee where applicable, on ALL reckonable earnings in excess of €40,420.
- Class S, social insurance at 3% and the 2% Health Contribution (where applicable) on
ALL reckonable income.
- The Health Contribution and Training Fund Levy are included in the contribution rates outlined above.
PRSI is calculated on the employee's reckonable earnings i.e.
gross pay reduced by Superannuation and Permanent Health Insurance contributions made by the employee, deducted under a net pay arrangement by the employer, which are
allowable for income tax purposes.
PRSI EXEMPTION ON LOW EARNINGS
|
Employees covered under Classes A, B, C, D and H, with reckonable weekly earnings of not more than €287, continue to be exempt from paying
PRSI for that week. However, the employer's share of
PRSI remains payable as normal.
PRSI -FREE ALLOWANCE FOR EMPLOYEES
|
The
PRSI -FREE ALLOWANCE remains at €127 per week (per individual employment) for employees with weekly reckonable earnings in excess of €287 in Classes A and H, and at €26 for all employees in Classes B, C and D. The allowance does not apply to the Health Contribution or the employer's share of
PRSI. In other words, in Class A it applies in respect of the calculation of the 4.0% employee social insurance deduction, but not to the 2.00% Health Contribution. The allowance is non-cumulative, therefore, it only applies for weeks of insurable employment in which
PRSI is payable (see "holiday pay" below).
It is particularly important to remember that this allowance does not alter the gross reckonable weekly earnings threshold which determines the appropriate contribution subclass.
It is important to note that the method of calculating
PRSI outlined above caters for the inclusion of the €127/€26
PRSI-FREE ALLOWANCE.
For employees paid other than weekly, alternatives to the weekly
PRSI -FREE ALLOWANCE are:
Weekly | €127 | €26 |
Monthly | €551 | €113 |
Fortnightly | €254 | €52 |
MEDICAL CARD HOLDERS WIDOWERS/WIDOWS/LONE PARENTS |
It is the employers responsibility to establish if employees are medical card holders, are aged 70 or over, are recipients of a Social Welfare Widow's/Widower's Pension, One-Parent Family Payment, Deserted Wife's Benefit/Allowance or a Widow's/Widower's Pension acquired under the social security legislation of a country covered by
E.C. Regulations, as they are exempt from the 2.00% Health Contribution irrespective of earnings.
People, in any of the categories listed above, whose earnings/income are in excess of €356 per week fall into Subclass A2, B2, C2, D2, H2, J2, S2 or Class M (for people within Class K) as appropriate.
Employees with weekly reckonable earnings of €287 or less, fall into Subclass A0, B0, C0, D0 or H0. Those earning between €287.01 and €356 fall into Subclass AX, BX, CX, DX or HX.
For people in classes other than A, B, C, D and H, in any week that reckonable earnings are €356 or less, Subclass J0, S0 or Class M (for people within Class K) will apply.
NOTE: All people aged 70 are entitled to a Medical Card from 1 July 2001. They are considered exempt from payment of the 2% Health Contribution regardless of whether or not they are in possession of a medical card.
In general
PRSI deductions are decided by the nature of the employment and the amount of the employees reckonable earnings
in any week . Therefore, the employee's
PRSI Class can vary from week to week if earnings change. The following earnings thresholds determine the appropriate subclass within Class A
except where otherwise indicated. For rates tables see above.
UP TO €37.99 (FROM ALL EMPLOYMENTS) - J0 |
Insurable for occupational injuries benefits only, regardless of hours worked.
Note: Class J also applies to all employees aged 66 and over and employees in subsidiary employment (see below)
irrespective of earnings.
€38 TO €287 (INDIVIDUAL EMPLOYMENTS) - A0 |
The exemption from payment of
PRSI applies to
employees in Classes A, B, C, D and H with earnings of €287 or less and should be recorded under Subclass A0, B0, C0, D0, H0 or A8. The employer's
PRSI remains payable as normal.
Alternatives to the €38 to €287 weekly thresholds:
Monthly | €165* to €1,244 |
Fortnightly | €76* to €574 |
* This threshold only applies to Subclass A0 employees whose total earnings in each week are at least €38.
NOTE: In all other Classes when reckonable weekly earnings/income do not exceed €356 (unchanged exemption limit for payment of the 2% Health Contribution) record under Subclass J0, S0 or Class M (for people within Class K).
€287.01 TO €356 (INDIVIDUAL EMPLOYMENTS) - AX |
The weekly earnings limit up to which
employers in Class A pay a lower 8.5% rate of
PRSI remains at €356. In any week that the employee's earnings fall within this band i.e. €287.01 to €356, record under
Subclass AX. This earnings band also applies to
Subclasses BX, CX, DX, HX and
A9 (with the normal employer rate payable). See
NOTE above for other classes.
Alternatives to the €287.01 to €356 weekly thresholds:
Monthly | €1,244 to €1,543 |
Fortnightly | €574.01 to €712 |
IN EXCESS OF €356 (INDIVIDUAL EMPLOYMENTS)- A1/A2 |
The weekly earnings limit up to which employees are exempt from paying the 2% Health Contribution remains at €356. Therefore,
people in all classes who earn €356.01 or more in any week should be recorded under Subclass A1, B1, C1, D1, H1, J1, S1 or K1 as appropriate or Subclass A2, B2, C2, D2, H2, J2, S2 or Class M respectively for widows/widowers etc.
Alternatives to the €356.01 weekly thresholds:
Monthly | €1,543.01 |
Fortnightly | €712.01 |
Note possible refund: Where an employee's weekly earnings fluctuate above and below €356, but the cumulative earnings during 2003 do not exceed €18,512, the employee may claim a refund of the 2% Health Contribution deduction from the Collector-General, Customer Services, (PRSI Refunds), Sarsfield House, Francis St., Limerick.
A contribution week is each successive period of seven days starting on the 1 January each year. Thus, week 1 is the period from 1 to 7 January inclusive, week 2 from 8 to 14 January and so on.
For 2003, the contribution week starts on a Wednesday and ends on a Tuesday.
A contribution at the appropriate class should be awarded to an employee in respect of each contribution week or part thereof for which s/he receives remuneration.
If you pay an employee for a period greater than a week, the relevant
PRSI -free allowance should be applied for each of the weeks involved. It is also important to determine the subclass correctly.
EXAMPLE: An employee receives two weeks holiday pay with a current weeks wages - three contributions are awarded, the earnings should be averaged over 3 weeks to determine the correct
PRSI subclass, and three weeks
PRSI-free allowance (€127 x 3) should be applied. This arrangement also applies where holiday pay is paid on termination of employment.
Lump sum payments made to employees on termination of employment are not regarded as reckonable earnings for
PRSI. These include redundancy, gratuities, ex-gratia and pay in lieu of notice. However, a Class K contribution is payable on the taxable amount. If the lump sum is exempt from tax, it is exempt from
PRSI.
People who were insured at Class A, B, C, D, H or S who are no longer liable to, or cease compulsory
PRSI may opt to pay Voluntary Contributions to provide cover for Pensions.
Applications must be made within 12 months from the end of the
PRSI Contribution year in which a
PRSI contribution was last paid or credited. For further information contact:
Voluntary Contribution Section -
Tel. (051) 356 000 or (01) 704 3000 Extn. 6006/7
PRSI FOR THE SELF-EMPLOYED
|
People whose income is accessable to
PAYE income tax but who are held not to be insurable as employees, continue to be insurable at Class S. However, where their reckonable income
from all sources is less than €3,174 for year 2003, they will not be held to be insurable (see paragraph on Voluntary Contributions). In such cases, Class S should be applied during the year and contributors can apply for a refund of the
PRSI paid during that year, after the end of the tax year from:
Refunds Section - Tel: (01) 704 3000 ext 2069/2250/2190.
The minimum contribution under Class S is €253 for the year 2003. Where a self-employed person's total
PRSI deductions for the year are less than €253, the outstanding balance must be paid to the Department of Social and Family Affairs:
Directors Unit, Self Employment Section (051) 356027.
Employers, who are personally liable for
PRSI under Class S, are required to register with the Department of Social and Family Affairs. A registration form SE3 is available for this purpose from:
Self-Employment Section -
Tel. (051) 356 000 or (01) 704 3000 Extn. 6003 to 6005
NATIONAL TRAINING FUND LEVY |
The National Training Fund Levy of 0.70% is included in the employer's share of
PRSI under Class A and H,
with no change in the overall rate payable by the employers.
From 6 April, 2000, a refund of
PRSI on enforceable maintenance payments made by a separated person to his/her spouse is available. The
PRSI due will be re-calculated on the reckonable earnings/income reduced by the amount of maintenance payment. Any excess
PRSI paid will be returned by claiming a refund after year end, 31 December 2002 from the Collector-General, Customer Services, (PRSI Refunds), Sarsfield House, Francis St., Limerick.
COMMUNITY EMPLOYMENT SCHEMES |
Participants on Community Employment are insurable at Suclass A8 or A9. See above for rates.
NOTE: Community Employment Supervisors and employees on Apprenticeship Schemes are insurable at Class A in the normal way.
Subsidiary employment, which is insurable at Class J irrespective of earnings, is defined by Statutory Instrument No. 73/91 e.g. employment of people who are also insurable at Class B, C, D or H in their main employment.
REHABILITATIVE EMPLOYMENT |
(i)
Sheltered Workshop employment is not insurable under Social Welfare Acts as it is:
- Not regarded as being employment under a contract of service (ie no employer/employee relationship involved).
- The allowance being paid is not "reckonable income" or "reckonable emoluments" for
PRSI (and
PAYE) purposes.
(ii)
Workplace Environment employment in the open labour market where a normal employer/employee relationship exists is insurable at a Class A rate if weekly income is €38 or more and at a Class J rate if less than €38.
PERSONAL PUBLIC SERVICE NUMBER |
(
PPS No. - formerly
RSI Number)
It is vital that the correct
PPS No. is shown on your P35L end of year return in respect of each employee.
Without the correct
PPS No. it may be impossible to update your employee's record or process a claim for social welfare benefit. This in turn could lead to further enquiries to employers.
If you need assistance in tracing the
PPS No.(s) for your employee(s), please contact:
Client Data Services - Tel. (01) 704 3283/4
You will need the following information when you call:
(i) Your own employer's
PAYE registration number
(ii) The employee's name
(iii) The employee's date of birth.
Alternatively, you can fax in a request with the above information on your headed notepaper to: (01) 704 3392.
RECORDING OF CONTRIBUTIONS |
(End of Year Returns for 2003)
The P35 end of year return should not include any class/subclass of
PRSI which was not applicable during the tax year.
In the event of changes of class occurring (e.g. Class A0 and J0) an aggregate total of weeks for all classes should be included on the P35. If more than two classes/subclasses are involved during the year, a form PRC 1 (copy in your P35 Pack) or a computer printout in the same format should be completed, showing the classes and number of weeks of insurable employment in each class or subclass. Form P35 LT has to be used when the
PPS no. is unknown, it should be noted that the Employee's Name, Address, Date of Birth and Mother's Birth Surname must be recorded.
Where an employee leaves his/her job the employer should complete a form P45 and give it to the employee IMMEDIATELY. The P45 is very important and may be required as evidence of entitlement to Social Welfare benefits.
TAXATION OF UNEMPLOYMENT/DISABILITY BENEFIT |
Payments in respect of child dependents are excluded from the taxation of Unemployment Benefit and Disability Benefit. In addition, the first six weeks of Disability Benefit is exempt from tax.
The Department of Social and Family Affairs will notify employers of the amount of Disability Benefit to be taken into account for tax purposes where appropriate. Taxation of Unemployment Benefit will still be mainly applied by the tax office.
Enquiries in relation to taxation of Benefits should be directed to the local tax office or the Central Telephone Information Office at LoCall 1890 605 090.
Employees should apply for Retirement Pension (payable at age 65) or Old Age Contributory Pension (payable at age 66) three months prior to pension age.
Widows and Widowers should apply for a Widow/Widower's Pension as soon as possible after the death of their spouse.
Failure to apply in time may result in loss of pension. Unlike Retirement Pension, a person can continue working and claim a Widow's, Widower's or Old Age Contributory Pension. Further information is available on:
Retirement/Old Age Pension - Tel. (01) 704 3351
Widow's/Widower's Pension - Tel. (01) 704 3385
LoCall 1890 500 000
Employees who give up work to care for a child under age 12 or an incapacitated person, may have their Old Age (Contributory) Pension rights protected while out of the workforce.
For further information contact:
Homemakers Section - Tel. (01) 704 3096
A Ready Reckoner containing WEEKLY calculations in respect of Classes A, J, K and S and further information regarding
PRSI Rates for Employers and Employees is available from:
Information Services
Department of Social and Family Affairs,
Oisin House,
212-213 Pearse Street,
Dublin 2.
Telephone (01) 7043000
A range of information is now available for employers on the Department's website at
www.welfare.ie.
This Leaflet is intended as a guide only and does not purport to be a legal interpretation.