Employer's Guide to the PRSI Special Collection System for Non-PAYE Employees
There are two methods of paying Pay-Related Social Insurance (PRSI) in respect of employed persons:
- through the PAYE system, where an employee's income tax liability is assessed under the PAYE income tax system, PRSI contributions are collected by Revenue;
- through the PRSI Special Collection System for non-PAYE employees, where PRSI contributions are paid directly to the Department of Social and Family Affairs.
1.1 What is PRSI?
Pay-Related Social Insurance (PRSI) is paid by full-time employees, part-time employees and self-employed people. It is a percentage of gross reckonable earnings in a week/fortnight/month. PRSI is made up of a number of different components including:
- the Social Insurance element which goes into the Social Insurance Fund to help pay for Social Welfare benefits and pensions
- the Health Contribution, payable by employees, goes to the Department of Health and Children to help fund the health services.
Note:
The Health Contribution is NOT payable under the Special Collection System (see Section 3.1).
1.2 What is a PRSI Contribution?
A PRSI contribution is awarded to an employee for each week (or part of a week) of insurable employment (see Appendix 2). An employee who works for the full Tax Year is awarded 52 contributions.
Many benefits and pensions are dependent on the number and Class of PRSI contributions that have been awarded to an employee.
1.3 What is a Contribution week?
As the Irish Tax Year begins on 1 January, and the PRSI system runs in parallel to it, a contribution week is each successive period of seven days, starting on the 1 January each year. For example, the 1 January 2004 is a Thursday, so every contribution week for the whole Tax Year 2004 runs from Thursday to Wednesday.
An employee who works for only seven days during the Tax Year 2004, from a Sunday to the following Saturday actually works during two contribution weeks. The first four days (Sunday to Wednesday) are in the first contribution week and the next three days (Thursday to Saturday) are in the second week – the employee is therefore entitled to two contributions for this period. It is important that this fact is reflected in the End of Year Return when you declare the number of weeks of employment.
1.4 Who is liable for payment of PRSI?
PRSI is made up of an employer's share and an employee's share.
As an employer, you are liable for paying both shares in respect of all your employees. However, you are entitled to recover the employee's share from wages, but only at the time of payment. It is therefore in your interest to make the correct deduction at the time of payment of wages.
1.5 What are Contribution Classes?
The rate of PRSI payable is dependent on the Contribution Class into which your employee falls.
In general, PRSI Contribution Classes are decided by the nature of the employment and the amount of the employees' gross earnings in any week.
Most workers in private sector, industrial, commercial, domestic and agricultural employments pay PRSI contributions at Class A or J.
Class A applies to the vast majority of insured people and gives the employee cover for all social insurance benefits and pensions, while Class J gives cover for Occupational Injuries Benefits only.
Claas A applies
- where gross earnings are €38.00 or more per week
Class J applies
- where gross earnings are less than €38.00 per week
- to employees age 66 or over
- to the subsidiary earnings of public sector employees who pay Class B,C, D or H in their principal employment
1.6 What is a PPS No.?
All PRSI Contributions awarded to employees are recorded under their Personal Public Service Number (PPS No.). This is the same number which the employee uses for Income Tax purposes and is usually shown on all documents issued by Revenue.
The PPS No. was previously called an RSI (Revenue and Social Insurance) Number, and you may still see references to the RSI number on certain forms. If you are asked to state an RSI number, you should simply state the PPS No.
If your employee does not have a PPS No., please contact your local Social Welfare Office who will make arrangements for a number to be allocated.
Note:
It is very important that each employee has a PPS No. and that the employer ensures that this number is quoted on all communications. Otherwise, essential details about the employee's social insurance history may not be credited to his/her record and this could cause delays in the payment of Social Welfare benefits or pensions.