Employer has (wrongly) deducted employers PRSI from my pay..

badboyblake

Hi everyone I would really like some advice as the best course of action to my particular problem.

Last year I noticed from my payslip that my employer was deducting employers PRSI from my pay. I found out that this was not correct - Employers are supposed to pay employers PRSI contributions not deduct them from employees pay.
I emailed the employer and he confirmed that he had deducted Employers PRSI from my pay and said that it was a condition of my employment i.e. it stated this was the case on his agency website.
I sent my P60's and payslips with an accompanying letter explaining the situation to the scope section of the Dept of family and social affairs to try and resolve the situation.
here is what they said;

"THE SCOPE SECTION OF THIS DEPARTMENT HAVE FORWARDED ON TO PRSI
REFUNDS YOUR ENQUIRY REGARDING YOUR PRSI DEDUCTIONS IN RESPECT
OF YOUR EMPLOYMENT WITH <company name removed>. I HAVE EXAMINED THE
DOCUMENTS SUPPLIED INCLUDING YOUR P60 AND YOU HAVE RETURNED PRSI
CLASS A0 WHICH MEANS AS AN EMPLOYEE YOU WERE UNDER THE THRESHOLD
FOR PAYING PRSI AND NO PRSI WAS DEDUCTED FROM YOUR SALARY. YOUR
EMPLOYER HAS TO PAY A CONTRIBUTION WHICH IS NOT TAKEN FROM YOUR
SALARY, CONSEQUENTLY THERE IS NO REFUND DUE AND THE CORRECT
PROCEDURES WERE TAKEN."

To me it seems they have completely missed the point of my enquiry - Employers PRSI was illegally deducted from my pay (the payslips and confirming Email correspondance from the employer prove this)
I would really appreciate any advice as to what to do next to try and resolve this issue
I have Emailed the scope section back but they have not replied to my Email.
It's begining to feel like the the dept of social and family affairs are trying to fob me off.
Many thanks in advance

J. Ramone

You would need to be clear whether the deduction is employer's or employee's PRSI as you refer to it as employees PRSI in the the title amd employer's PRSI in the text. No company with morals this side of the maffia would have a condition of contract to make a deduction of employers PRSI. From their response it sounds like the contract contains the usual clause regarding lawful deductions from pay.

If you were below the threshold for employee's PRSI and it was incorrectly deducted, I would be amazed if any company did not immediately take steps to rectify the mistake, perhaps the are still ignorant of the fact that employee PRSI was incorrectly deducted. If I were you I would ask somebody who is well versed on PAYE matters to contact the company on your behalf. If you do not get a satisfactory response then you should notify them in writing of the facts you have that indicate to you that an error was made on thir part. I would also succinctly note the details of the verbal dealings you had with them in the letter. If they then failed to deal with the matter you should contact The National Employment Rights Authority. I believe they would get it sorted pronto.

badboyblake

Thanks Ramone for your advice I have amended the thread title, It was definately employers contribution PRSI that was deducted from my pay.

jor el

I have removed your employer's name from your post. Publishing that here could be very bad for all concerned.


I don't think your issue has anything to do with the Scope Dept or the Dept of Social and Family affairs. Your issue is that your employer is deducting their PRSI payments from your wages, not that the PRSI is wrong, over paid or in the wrong class, which is all the dept will deal with.

Whether it's legal for them to impose such a condition on your employment or not, I don't know, but I wouldn't have thought it was.

http://www.citizensinformation.ie/categories/social-welfare/irish-social-welfare-system/social-insurance-prsi/employer-s-duty-to-pay-social-insurance-prsi
Here is a lot of information on PRSI, so it might be worth contacting Citizens Information to find out if what your employer is doing is legal or not. If it's not, they may be able to tell you who to contact about this.

Mrs OBumble

jor el wrote: »

I don't think your issue has anything to do with the Scope Dept or the Dept of Social and Family affairs. Your issue is that your employer is deducting their PRSI payments from your wages, not that the PRSI is wrong, over paid or in the wrong class, which is all the dept will deal with.

+1

jor el wrote: »

Whether it's legal for them to impose such a condition on your employment or not, I don't know, but I wouldn't have thought it was.

It probably depends on what your pay-rate is.

I don't know what the jargon used here is, but at home some employers talk about salary in terms of "total remuneration package", which is basically gross salary plus all the things like employer-PRSI.

I suspect that provided your gross pay (ie TRP minus employer contributions) is above minimum wage, and provided you've agreed to it in your contract, then it won't be illegal. I could be wrong of course, but suspect I'm not.

What this approach does is make it harder to make a meaningful comparison of pay rates at company X vs Y.

Clauric

The law is clear on this matter. Under no conditions may an employer deduct EMPLOYER PRSI from an EMPLOYEE's wages. Even if it is in the Terms of Employment/Contract, it would be considered an illegal deduction from your wages. This is because:

It is a form of "payroll tax" - and therefore an obligation on the employer only (you pay your own form in employee PRSI, whether through exemption or 4% over a certain amount)

You can not sign away your legal rights in an illegal act. e.g. you can't agree to have less holidays than what your are statutorily entitled to.

This is the same case. You are entitled to your wages, without having to pay for your employer's PRSI.

In your case, I would email your employer, and the HR/Payroll dept, informing them that you believe the deductions are illegal. Tell them you want the money restored to your accounts immediately. If you get no satisfaction, go to NERA and Revenue. (Before anybody complains, Revenue collect the money on behalf of Dept of Social Protection, and then remit the record of payments, but not the money)

I would also suggest that you send a copy of all emails to an external email as well as your employer.

Jim2007

badboyblake wrote: »

Thanks Ramone for your advice I have amended the thread title, It was definately employers contribution PRSI that was deducted from my pay.

I think we need to rewind a little and ask what was the nature of your employment? You mention 'agency website' in your first post, were you in fact a contractor working under an umbrella company, rather than 'real' employee? because if so then all bets are off!

In these situations the real nature of the agreement is that the agency gets it's commission and then simply acts as a payroll agency for you, meaning that you carry all the employer costs as well as the employee costs. The legal contracts will have been drawn up to make that happen, while at the same time appearing to be a standard employment contract from the outside, which might explain the reaction you got from officialdom!

Good luck with that,

Jim

badboyblake

Jim2007 wrote: »

I think we need to rewind a little and ask what was the nature of your employment? You mention 'agency website' in your first post, were you in fact a contractor working under an umbrella company, rather than 'real' employee? because if so then all bets are off!

In these situations the real nature of the agreement is that the agency gets it's commission and then simply acts as a payroll agency for you, meaning that you carry all the employer costs as well as the employee costs. The legal contracts will have been drawn up to make that happen, while at the same time appearing to be a standard employment contract from the outside, which might explain the reaction you got from officialdom!

Good luck with that,

Jim

I not a contractor I was an employee - paying PRSI, tax etc. The revenue in other communications have treated other workers in my situation categorically as employees not as contractors.

badboyblake

Jim2007 wrote: »

I think we need to rewind a little and ask what was the nature of your employment? You mention 'agency website' in your first post, were you in fact a contractor working under an umbrella company, rather than 'real' employee? because if so then all bets are off!

In these situations the real nature of the agreement is that the agency gets it's commission and then simply acts as a payroll agency for you, meaning that you carry all the employer costs as well as the employee costs. The legal contracts will have been drawn up to make that happen, while at the same time appearing to be a standard employment contract from the outside, which might explain the reaction you got from officialdom!

Good luck with that,


Jim

The revenue have categorically said that all workers in my situation are to be treated for tax purposes as regular Employees not contractors.

flash harry

badboyblake wrote: »

i.e. it stated this was the case on his agency website.

link to this may solve some problems as it seems so unlikely.....

Jim2007

badboyblake wrote: »

I not a contractor I was an employee - paying PRSI, tax etc. The revenue in other communications have treated other workers in my situation categorically as employees not as contractors.

Yes, but the question is were you or were you not working for a contacting agency???

badboyblake

Jim2007 wrote: »

Yes, but the question is were you or were you not working for a contacting agency???

It's a moot point, the agency paid me etc and deducted employers PRSI
revenue treats me as an employee.
How would I go about finding out for sure the answer to your question?

carbsy

badboyblake wrote: »

It's a moot point, the agency paid me etc and deducted employers PRSI
revenue treats me as an employee.
How would I go about finding out for sure the answer to your question?

It sounds like your both and employee and employer (contractor) , i.e. the agency has you set up under an umbrella scheme.Is it a 6month/1yr contract? Also, if it was a non contractor position the agency would not be paying you surely? You would be receiving your wages direct from the payroll of company you are working for. Someone correct me if I'm wrong.

badboyblake

carbsy wrote: »

It sounds like your both and employee and employer (contractor) , i.e. the agency has you set up under an umbrella scheme.Is it a 6month/1yr contract? Also, if it was a non contractor position the agency would not be paying you surely? You would be receiving your wages direct from the payroll of company you are working for. Someone correct me if I'm wrong.

I did odd days here and there for different companies don't do any business with that agency anymore. As i have said before revenue has categorically stated that I was an employee for tax purposes.

Clauric

It depends. A contractor does not pay employee PRSI for themselves, only employer PRSI. If the agency is taking both, then there is something wrong. If they are deducting employee PRSI, I would view that you are an employee., whether or not they are deducting employer PRSI.

I would go to Revenue and/or Nera and ask them

carbsy

Clauric wrote: »

It depends. A contractor does not pay employee PRSI for themselves, only employer PRSI.

A contractor who is set up as an umbrella company pays both Employee PRSI and Employer PRSI.I can verify this as I was one myself.

censuspro

An employer cannot deduct employers PRSI from their employees salary. Only the employer is liable to pay for employers PRSI, the same way an employer can't deduct corporation tax from an employees salary. Employers PRSI is a tax levied on the employer and not the employee.

Agency fees should be disclosed and deducted seperately.

Jim2007

censuspro wrote: »

An employer cannot deduct employers PRSI from their employees salary. Only the employer is liable to pay for employers PRSI, the same way an employer can't deduct corporation tax from an employees salary. Employers PRSI is a tax levied on the employer and not the employee.

Agency fees should be disclosed and deducted seperately.

In these kind of situations you normally get two things - The standard employee payslip that meets the Revenue requirements done up in the normal way. And a second statement showing how the figures in the first statement were arrived at, this shows gross fees from the client, agency fees, double insurance and pension deductions etc... the net figure on both will be the same. There is actually nothing wrong with this, the company is just showing you how the fees from the client were broken down. All employer/employee deductions will have been made and paid over correctly.

At this stage we have no idea which type of statement the OP is talking about.....

Jim.

flash harry

flash harry wrote: »

i.e. it stated this was the case on his agency website.

link to this may solve some problems as it seems so unlikely.....

so I guess this link does not actually exist?

badboyblake

flash harry wrote: »

so I guess this link does not actually exist?

The website has been changed in the last few weeks he no longer deducts Employers PRSI from employees payslips.
I am not posting a link here as the mods have already removed the name of the company in question.
I have Emailed the agency requesting my money back I have not received a reply.

angeldelight

I have worked for the same agency - and also have an email confirming that he deducted employer's PRSI from the rate I agreed to work for. The website has changed in the past month to take out the section on employer's PRSI but 100% genuinely it happened.

While we were working for an agency, we were employees of said agency. Revenue has explicitly stated (unfortunately) that all people carrying out our line of work must be treated as an employee of each company we work for rather than as self-employed or contractors.

I am registered with 4 or 5 agencies and this agency is the only one to do it. I have ceased working for him. However in my last paycheck it looks like instead of deducting employer's PRSI he is now deducting 5 euro per hour instead but I have to look into it.

I'd be interested in hearing how you get on, as I will be doing something similar myself once I've finished the last few days I have organised with the agency

badboyblake

Update: I have received a letter from the department of social protection PRSI refunds section with the effect that they are going to refund me the PRSI that was improperly deducted from my pay.