Employers Guide to PRSI Contributions - SW3

The nature of employment mainly determines the PRSI contribution class that applies to the employee.

PRSI Class A applies to the majority of employees in the private sector and to employees recruited in the public sector since 6 April 1995.

Note

Since April 1991 the level of earnings, not the number of hours worked, determines insurability.

You can get full details of the main contribution classes and examples of both the employees covered by each class and the rate of contribution appropriate to each class from the SW 14 booklet.

Contribution Class A applies to people in industrial, commercial and service-type employment under a contract of service and civil and public servants recruited since 6 April 1995, whose combined reckonable earnings from all employments bring them into Class A.

The appropriate subclass within Class A is based on the earnings in each separate employment (see codes within PRSI classes in paragraph 27).

Contribution Class J applies to the following groups of people:

employees in industrial, commercial and service-type employment under a contract of service, whose combined weekly reckonable earnings from all employments are below the threshold for Class A (less than €38 per week in the 2005 tax year. Please check SW 14 for the current amount),
employees over 66 years of age,
employees who are also full-time civil and public sector employees and paying PRSI Class B, C, D or H in their full-time job.

Contribution Classes B, C and D apply to pensionable employees in the civil and public service, including civil servants, teachers, gardaí, the army and local authority employees who were recruited before 6 April 1995.

Contribution Class H applies to NCOs and enlisted personnel of the defence forces.

Contribution Class K applies to people under 70 years of age who are not insurably employed under the Social Welfare Acts. The following are examples:

people getting a pension from a former occupation,
people normally paying Class S who have reached 66 years of age,
people receiving income from positions of certain office holders, e.g. Judiciary, State Solicitors,
prescribed relatives.

However, if the weekly income is below the threshold for Class K (€400 in 2005 tax year) contribution Class M applies. Please see SW 14 booklet for current thresholds.

You should also use contribution Class M for people who:

are under 16 years of age;
are normally insurable at Class K who:
- hold a medical card or
- get a Social Welfare Widow's/Widower's Pension
- get a One-Parent Family Payment
- get Deserted Wife's Benefit/Allowance
- are aged 70 years or over
- get a widow's or widower's pension under the social security legislation of another country covered by E.C. Regulations.

Contribution Class S applies to self-employed contributors who pay tax and PRSI under the self-assessment system (Schedule D). For enquiries contact the Self-Employment Section (see address in paragraph 70).

Directors whose income is assessable under Schedule E tax may also be liable to pay Class S.

Directors

Depending on the circumstances, Directors can either be employees paying PRSI at Class A insurance or self-employed under a contract for services and therefore paying PRSI at Class S. The Department's website has a comprehensive checklist to determine Employment or Self-employment status of individuals. The links to these booklets are

Hard copies of these booklets are also available from Scope Section. If you are still unsure and require clarification on the Class of PRSI for specific directors you should contact Scope Section (address in paragraph 70).

If you are a company director and you are correctly paying Class S PRSI you should contact Directors Unit, Waterford for queries regarding your PRSI rates and entitlements. See paragraph 70 for contact address and phone numbers.

Agency Workers

Persons employed by Employment Agencies under a contract of service are insurable at PRSI Class A. The person or company who is liable to pay the wages or salary of the individual concerned in respect of work or service is deemed to be the individual's employer.

If a person, recruited by an Employment Agency and acting as a sole-trader, performs any work or service for a third party then that person is insured at PRSI Class S provided the annual income exceeds €3,174 for year 2005 (see SW 14 for current rate).

Excepted Employments

There are employments that are specifically excluded from cover under Social Welfare regulations. These employments are listed in Part II of the first Schedule of the Social Welfare Acts. A common excepted employment would be that of a spouse working for a sole-trading spouse, no PRSI is payable and Class M should be returned where the income is less than the Health Levy threshold and Class K when the Health Levy is payable.

For full information on insurability matters please consult our link on the social welfare website under
http://www.welfare.ie/foi/scope_insofemp.html

If you are not sure what contribution class should apply to any particular employee, consult Information Services (see address in paragraph 70).

To ensure that you are complying with the law, check if you are doing the following:

deducting PRSI under the correct contribution class for each employee,
deducting PRSI on all relevant payments to all employees, for example wages and salaries, bonuses, fees, overtime payments, part-time pay, benefit-in-kind (notional pay) and Christmas bonuses,
deducting the Health Levy from all relevant payments to all employees,
keeping accurate and up to date records for each employee,
making PRSI payments to the Collector-General,
keeping records for up to six years,
properly recording all your employees' PPS Nos. on P35L, and
returning your P35 by the 15 February each year.

If you have any queries or need advice on any of the above, you should contact your local Social Welfare Inspector

Remember - If you are an employer PRSI is your responsibility.

Failure to fulfil your legal responsibilities as an employer in relation to PRSI may result in penalties, prosecution or both.

Contents	Paragraph
*(A detailed appendix in alphabetical order is at the back of this book)*
Introduction	1
Purpose of this Guide	2
Section one - PRSI contributions
Personal Public Service Number (PPS No.)	3
What is a PRSI contribution?	4
Which employees are covered?	5
Who is responsible for deducting/paying PRSI?	6
Special Collection System	7
How are PRSI rates determined?	8
PRSI-Free Allowance for employees	9
Health Levy	10
National Training Fund Levy	11
Definition of reckonable earnings for PRSI purposes	12
Benefit-in-Kind	13
Superannuation contributions	14
Permanent Health Insurance	15
Lump sum payments when employment ends	16
Registration of employers	17
Registration of employees	18
Employees' annual PRSI ceiling	19
Employees in two or more employments at the same time	20
Employed and self-employed in same contribution year	21
Termination of employment	22
Employees with two or more consecutive employments	23
Voluntary insurance	24
Where a husband and wife are both employed	25
How to decide the Social Insurance contribution class	26
Codes and subclasses within the PRSI classes	27
Part-time employment	28
Systematic short-time employment	29
Subsidiary employment regulations	30
Domestic Employer scheme	31
Employees abroad	32
Paying the correct PRSI class	33
Calculating PRSI contributions	34
Manually calculating PRSI	35
Using the Ready Reckoner	36
Retrospective payments	37
Change of contribution class on reaching age 66	38
Contribution class in the case of more than one employment	39
Paying PRSI contributions during illness	40
Permanent health benefit schemes (Income Continuance)	41
Weeks of insurable employment	42
Contribution week	43
Worksharing - effect on PRSI contributions	44
Worksharing - effect on amount of PRSI due	45
Week 52	46
Recording the correct number of weeks of insurable employment	47
Counting weeks of insurable employment where a change of PRSI class occurs	48
What weeks are not weeks of insurable employment?	49
Section two - paying PRSI contributions to the Collector-General
Monthly remittance to the Collector-General	50
Submitting "Nil" returns where no PAYE tax or PRSI is due	51
Interest on overdue payments	52
Separation of PRSI contributions from PAYE income tax	53
Small monthly remittance	54
Section three - recording PRSI details and end-of-year procedure
Recording PRSI details	55
Details to record during the year on the Tax Deduction Card	56
Change of contribution class	57
Completing end-of-year returns	58
How to complete the form P35L	59
Two or more changes of contribution class in an income tax year	60
Lodging end-of-year returns	61
Importance of end-of-year returns	62
Certificate to employees (form P60)	63
Casual employees	64
Section four - end-of-year returns on P35L, checklist, general
Underpayments	65
Overpayments and refunds	66
Keeping records	67
Allowing employees to inspect their records	68
Penalties for failing to remit PRSI contributions	69
Where to get further information	70
◊ Index

Employers Guide to PRSI Contributions - SW3

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