Getting your staff properly set up on payroll before the season kicks off in earnest can avoid stress and tension and will ensure that the payroll runs smoothly
It’s a busy time of year on farms and the silage season is about to get underway. A lot of farmers and contractors will be taking on temporary staff for the summer and it is important that these employees are registered and pay-rolled correctly.
A penalty of up to €4,000 can be levied for each breach of PAYE regulations. Since 2019, Pay as You Earn (PAYE} has moved to real-time reporting. Along with those changes, the responsibility shifted to the employee rather than the employer to register their employment with their employer.
As such, when an employer now wishes to make a payment to an employee they must effectively get pre-clearance from Revenue and first download details of the the employee’s tax credits and tax bands called a Revenue Payroll Notification (RPN) and follow suit with a Payroll Submission.
Where the employee hasn’t registered themselves as being employed with the particular contractor or farmer in sufficient time ahead of making payments to them emergency tax will need to be operated.
Where an employee does register their employment through their online MyAccount portal via Revenue with the contractor or farmer usually their tax credits and tax band will automatically be assigned to that employer. But where the individual has other ongoing employments or hasn’t ceased previous employments, the tax credits and tax bands will not switch over to the new employer, meaning emergency tax will need to be applied at the point of operating payroll.
Worse still in these cases, the tax credits and tax band are usually given on what is known as a Week 1 basis meaning the credits and tax band changes only become live from the point at which the employee updates Revenue’s system and if emergency tax has operated for a week or two, or even a month or two in the case of employees paid monthly, that withheld tax can get trapped in the system and it can be difficult to get it refunded within the calendar year.
Registration
As such, the advice is to advise employees at the earliest possible opportunity of their obligations to register their employment, secondly to make sure to inform the employee to switch credits and tax bands accordingly in advance of payday and inform the employee that it is their responsibility to have themselves properly set up or that tax will be withheld which is outside of the employer’s responsibilities.
Unfortunately, a lot of the workers who will help out farmers and contractors are not adept at adding in new employment via their MyAccount portal, and indeed many have not even registered to use Revenue’s Myaccount portal previously. Usually, it takes at least a week to get a password to register for MyAccount as the pin numbers are typically issued by post.
When a prospective employer is employing someone for the first time, they themselves will need to register as an employer before the employee can even begin making arrangements on their side, which can add yet another few days, or even longer.
Employer Obligations
Along with meeting the requirements for operating payroll correctly, farmers and contractors should be aware of their obligations vis-a-vis holiday pay and the Working Time Act. The true cost of employing staff is often hidden as these extra costs, along with employers’ PRSI, get added to the baseline figure.
Prospective employers should also be aware of the national minimum wage rates, including the rise in the minimum wage for adult workers to €11.30 per hour. A standard employee working 40 hours per week earning the minimum wage of €11.30 per hour has a cost of €14.17 per working hour after factoring in employer’s PRSI, holiday pay and bank holiday pay, and that’s before factoring in any illness pay.
One of the costliest ways to employ an individual is to agree a set net wage per hour, this adds all of the employee’s taxes onto the employer. A standard employee getting say €15 per hour into the hand for a 40-hour week has a true cost of over €20.13 per hour after factoring in employee taxes, holiday pay and employer’s PRSI.
Getting your staff properly set up on payroll before the season kicks off in earnest can avoid stress and tension and will ensure that the payroll runs smoothly.
(Source – Irish Examiner – Farming – Kieran Coughlan – 09/05/2023)