Employer's duty to pay social insurance (PRSI)

Introduction

Most employed people over 16 years of age contribute to Social Insurance. The amount you pay is based on your earnings and the type of work you do.  For this reason it is called Pay Related Social Insurance (PRSI).

In fact, the law makes your employer responsible for PRSI, though you may have to pay an employee's share. The amount of PRSI paid by you and your employer depends on your social insurance class.  Your social insurance class is in turn determined by your earnings and the type of work you do. More information can be found on our website about different social insurance classes.

Your employer deducts your PRSI contribution directly from your wages.  It is then collected by the Revenue Commissioners and a record of your contributions is kept by both your employer and the Department of Social and Family Affairs.  In Payment of Wages Act 1991, you must be given a pay slip when you are paid. Often, the deduction of PRSI is noted on your pay slip.

Your employer also pays PRSI contributions for you.  This money (contribution) is not deducted from your pay.  It is your employer's contribution to the national Social Insurance Fund. Again, this is collected by the Revenue Commissioners and a record of the contribution is kept by the Department of Social and Family Affairs. The Department publish information to assist employers - Employers' guide to the Pay-Related Social Insurance (PRSI) contribution system - SW 3 

Employees posted abroad

In some cases, PRSI contributions from employees who are insurable under Irish social security legislation but do not come within the PAYE system are collected by the Special Collection System operated by the Department of Social and Family Affairs. 

EU Regulations and Bilateral Social Security Agreements allow posted workers, who are sent by their employer on short work assignments from Ireland to the other country, to remain subject to Irish PRSI instead of transferring to the social security system of the other country. For example, if you are employed in Ireland and your employer sends you to work temporarily abroad in another EU state you will remain subject to the Irish PRSI system and will continue to pay PRSI. The period covered is normally 12 months but this can be extended to cover a longer period. Your employer must complete an E101 certificate (available from PRSI Special Collection) for inspection by the Social Security Authorities in the Member State where you are sent to work. More information is available on the Special Collection System (SW 63).

If an employer sends you to work temporarily in a country not covered by EU Regulations or to a country with which Ireland does not have a Bilateral Social Security Agreement, you remain liable for Irish PRSI contributions for up to 12 months. If the employment exceeds 12 months, it may be possible to remain liable for Irish PRSI for longer than 12 months. Employees working abroad who are not subject to the Irish PRSI system may opt to pay voluntary contributions.

Rules

Your employer needs your correct 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 received.

PRSI inspections

Every year, Department of Social and Family Affairs Inspectors visit up to 10,000 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.  The employers' PRSI Exemption Scheme means that employers do not have to pay the employers' portion of the PRSI contribution for the first two years when they employ additional workers. People who are recruited to fill existing vacancies are not covered by the scheme.

To qualify, the employer must take on an employee who is getting the Back to Work Allowance or Revenue Job Assist for the first time on the day he or she starts work with the company. More information is available on the Employer's PRSI Exemption Scheme (SW 73).

A new Employer Job (PRSI) Incentive Scheme will be launched in 2010. Full details of scheme have yet to be announced. However, the provisional criteria for the scheme are as follows: 

• The employee concerned must have been unemployed and on the Live-Register for at least 6 months
• The job must be a new and additional full-time job – employers will not be allowed to substitute existing employees to avail of the scheme
• The employer will be required to furnish an up-to-date Tax Clearance Certificate Employers will be limited to a maximum participation rate of 5% of their existing workforce or, for smaller companies, a maximum of 5 new jobs 
• The job must last for 6 months or more. If it does not, the PRSI exempt amounts will have to be repaid by the employer.

Eligible jobs created in 2010, before the scheme is launched, can still benefit from the scheme from its launch date. Jobs created after the scheme is launched can avail of the exemption immediately.

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 and Family Affairs. In this case, your employer only pays a PRSI contribution on the amount of sick pay minus the amount of Illness Benefit. However, you will continue to pay your usual rate of PRSI even though your employer's rate may reduce.

If your employer pays you when you are ill and allows you to keep your Illness Benefit payment, your employers 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.

The first six weeks of Illness Benefit in any tax year and any payments for dependent children are non-taxable. Employers must make certain adjustments to their normal PAYE procedures to take account of the taxable portion of the Illness Benefit. 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.

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 or by 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
• 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 who carries out book-keeping work for the business - but is not an employee)

Points to note:
Even though you may not be insurable for social insurance purposes PRSI Class K the health levy may be payable.
PRSI Class M is used to record situations in which there is no liability whatever to either Social Insurance or health levy.

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).

Rates

The amount of PRSI both you and your employer pay will depend on your earnings and the social insurance class you are insured under. Here is an example:

If you are an employee insured under Class A earning less than €352 gross per week (before tax is deducted), you will not pay any social insurance. This does not mean that you are not getting a contribution. You are still covered by Class A social insurance. Your employer is paying social insurance on your behalf.  Your employer will pay a contribution of 8.5% on your earnings.

If you earn between €352 and €500 per week, the first €127 of your earnings will be ignored and you will pay 4% on anything over that amount. If you are earning over €75,036 you will not pay social insurance on the income above this amount. Your employer will pay 8.5% on your earnings up to €365 and 10.75% on your earnings above this amount.

If you earn more than €500 per week and pay a Class A1 contribution, you will pay 2% on the first €127 of your earnings and 6% on anything over that amount up to a maximum of €75,036. You will pay 2.5% on any earnings above €75,036. Your employer will pay 10.75% on your earnings.

More information can be found about the amount of PRSI paid in each Class.

The amount of your earnings deducted under the PRSI system also includes an amount called the health levy which has nothing to do with the social insurance scheme.

How to apply

Your employer deducts your PRSI contribution from your wages. As an employee who pays PRSI contributions, you are entitled by law to inspect the PRSI record kept by your employer about you or you can get a statement of your record from your employer every three months.

You can also contact the Records Section in the Department of Social and Family Affairs to check you PRSI record.

Where to apply