PRSI
The Social Insurance system provides cover for a wide range of social welfare payments to workers and their dependents, benefits to the unemployed, employment assistance and pensions. Pay Related Social Insurance (PRSI) contributions, which are collected mainly through the income tax system, provide the main source of funding for the system.
As an employer, you pay, Pay-Related Social Insurance (PRSI) contributions for all employees aged 16 and over. PRSI contributions are also paid by self-employed people and by certain other categories of people who are not engaged in insurable employment. As an example, people getting occupational pensions.
Revenue collects PRSI contributions in most cases through the PAYE income tax system and the self-assessment system for the self-employed.
WHO PAYS PRSI
From an employment perspective, with very few exceptions, nearly all employees pay PRSI contributions:
CONTRIBUTION WEEK
The contribution year runs from 1 January to 31 December.
A contribution week (which in practice is the same as an income tax week) is each successive period of seven days starting on 1 January each year. So week 1 is the period from 1 to 7 January inclusive; week 2 is the period from 8 to 14 January inclusive and so on. If 1 January falls on a Wednesday, the contribution weeks and weeks of insurable employment for that year will continue to begin on a Wednesday and finish on the following Tuesday.
For PRSI purposes, any overtime, commission, BIK or bonus is treated as pay at the date of payment, regardless of the period over which the employee earns it or to which it relates. The same rule applies to arrears of pay and other retrospective adjustments. So, payments made in the current tax year for periods of work in a previous year are subject to a PRSI contribution in the current income tax year. The contribution class that applies to payments of this type is the class that applies at the time the payment is made, not the class that applied at the time covered by the payment.
However, if you make a payment to an employee after they leave their employment, the employee must also make a PRSI contribution. The contribution class that applies, in this case, is the class that applied to the former employment. The rate of contribution that applies is the rate appropriate to that contribution class in the year you make the payment.
The maximum number of weeks of insurable employment that any employee can have in any income tax year is 52. However, if two paydays occur from the beginning of week 52 until the end of the income tax year, PRSI contributions will be paid on each payment as normal.
Remember, for PAYE purposes, an income tax year can have 53 tax weeks if there are 53 paydays in the year.
WHAT IS A WEEK OF INSURABLE EMPLOYMENT (PRSI WEEK)
A week of insurable employment is any contribution week during the whole or any part of which:
A week can count as a week of insurable employment even if you do not pay reckonable earnings during the week of employment, sickness or holidays. It is sufficient that the payment relates to that week.
WHAT IS NOT A WEEK OF INSURABLE EMPLOYMENT
The following are examples of weeks that are not weeks of insurable employment:
HOW IS THE PRSI CLASS DETERMINED
In general, PRSI contribution classes are decided by the nature of a person's employment.
The PRSI contribution classes are further divided into subclasses attached to which there is a rate of contribution – the subclass is determined by the amount of employee's weekly gross reckonable earnings*.
The class of PRSI you pay determines the social welfare payments for which an employee may qualify.
*Reckonable earnings for PRSI purposes are gross pay including notional pay (benefit in kind) plus superannuation and permanent health insurance contributions made by an employee. In determining an employees pay subject to PRSI the same rules as applied for determining pay subject to income tax and/or USC DO NOT apply.
WHO IS RESPONSIBLE FOR PAYING PRSI
The employer is responsible for paying PRSI on each payment made to an employee, at the time of making payment.
The PRSI calculation is split into an employee share and an employer's share, each share having it's own rate of deduction in accordance with the PRSI class/subclass to which the employee is categorised.
An employer may deduct the employee's share of PRSI from their wages at the time of making payment of the wages. An employer is ultimately responsible for the PRSI contribution, therefore, any under-deduction of PRSI in a particular pay period becomes the employer's liability and may not be recouped from future payments made to the employee. Therefore, it is in the employer's interest to make the correct deduction at the time of payment of wages.
REMITTING PRSI DEDUCTIONS
PRSI must be remitted to the Collector General, by the employer, in the P30 return subsequent to the date of payment and deduction.
Refer to Remitting PRSI to Revenue.
As an employer, you pay, Pay-Related Social Insurance (PRSI) contributions for all employees aged 16 and over. PRSI contributions are also paid by self-employed people and by certain other categories of people who are not engaged in insurable employment. As an example, people getting occupational pensions.
Revenue collects PRSI contributions in most cases through the PAYE income tax system and the self-assessment system for the self-employed.
WHO PAYS PRSI
From an employment perspective, with very few exceptions, nearly all employees pay PRSI contributions:
- all employees whether full-time or part-time earning €38 or more per week
- employees who are aged 16 or over and under pensionable age
- self-employed workers with an income of €5,000 a year or more (including proprietary directors)
CONTRIBUTION WEEK
The contribution year runs from 1 January to 31 December.
A contribution week (which in practice is the same as an income tax week) is each successive period of seven days starting on 1 January each year. So week 1 is the period from 1 to 7 January inclusive; week 2 is the period from 8 to 14 January inclusive and so on. If 1 January falls on a Wednesday, the contribution weeks and weeks of insurable employment for that year will continue to begin on a Wednesday and finish on the following Tuesday.
For PRSI purposes, any overtime, commission, BIK or bonus is treated as pay at the date of payment, regardless of the period over which the employee earns it or to which it relates. The same rule applies to arrears of pay and other retrospective adjustments. So, payments made in the current tax year for periods of work in a previous year are subject to a PRSI contribution in the current income tax year. The contribution class that applies to payments of this type is the class that applies at the time the payment is made, not the class that applied at the time covered by the payment.
However, if you make a payment to an employee after they leave their employment, the employee must also make a PRSI contribution. The contribution class that applies, in this case, is the class that applied to the former employment. The rate of contribution that applies is the rate appropriate to that contribution class in the year you make the payment.
The maximum number of weeks of insurable employment that any employee can have in any income tax year is 52. However, if two paydays occur from the beginning of week 52 until the end of the income tax year, PRSI contributions will be paid on each payment as normal.
Remember, for PAYE purposes, an income tax year can have 53 tax weeks if there are 53 paydays in the year.
WHAT IS A WEEK OF INSURABLE EMPLOYMENT (PRSI WEEK)
A week of insurable employment is any contribution week during the whole or any part of which:
- an employee works and gets a payment of reckonable earnings
- the employee is absent from employment due to illness, maternity, holidays or special paid leave and gets or will get a payment of reckonable earnings (payments for holidays are always due as a separate PRSI contribution)
- you pay the employer's share of the contribution but you do not deduct a PRSI employee contribution because the employee's reckonable earnings:
a) have previously reached the prescribed ceiling or
b) are less than the weekly, fortnightly or monthly social insurance threshold for PRSI for that period - you make a payment for holidays due when the employment ceases.
A week can count as a week of insurable employment even if you do not pay reckonable earnings during the week of employment, sickness or holidays. It is sufficient that the payment relates to that week.
WHAT IS NOT A WEEK OF INSURABLE EMPLOYMENT
The following are examples of weeks that are not weeks of insurable employment:
- all complete income tax weeks during which the employee is absent from work and does not get, and is not due, a payment of reckonable earnings,
- any income tax week after an employee leaves their employment for which you make a payment in lieu of notice,
- arrears of pay (other than basic pay) - regardless of whether the employee has left the employment or still remains with the employer (in this instance no additional contribution week should be recorded but PRSI is still due to be paid on the arrears of pay).
HOW IS THE PRSI CLASS DETERMINED
In general, PRSI contribution classes are decided by the nature of a person's employment.
The PRSI contribution classes are further divided into subclasses attached to which there is a rate of contribution – the subclass is determined by the amount of employee's weekly gross reckonable earnings*.
The class of PRSI you pay determines the social welfare payments for which an employee may qualify.
*Reckonable earnings for PRSI purposes are gross pay including notional pay (benefit in kind) plus superannuation and permanent health insurance contributions made by an employee. In determining an employees pay subject to PRSI the same rules as applied for determining pay subject to income tax and/or USC DO NOT apply.
WHO IS RESPONSIBLE FOR PAYING PRSI
The employer is responsible for paying PRSI on each payment made to an employee, at the time of making payment.
The PRSI calculation is split into an employee share and an employer's share, each share having it's own rate of deduction in accordance with the PRSI class/subclass to which the employee is categorised.
An employer may deduct the employee's share of PRSI from their wages at the time of making payment of the wages. An employer is ultimately responsible for the PRSI contribution, therefore, any under-deduction of PRSI in a particular pay period becomes the employer's liability and may not be recouped from future payments made to the employee. Therefore, it is in the employer's interest to make the correct deduction at the time of payment of wages.
REMITTING PRSI DEDUCTIONS
PRSI must be remitted to the Collector General, by the employer, in the P30 return subsequent to the date of payment and deduction.
Refer to Remitting PRSI to Revenue.
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