Be wary of the maze of rules and responsibilities as an employer

Being an employer entails a huge raft of responsibilities and legal obligations. Apart from complying with extensive employment legislation, employers are also liable for PRSI at the rate of up to 10.75pc on top of all the employee's earnings.

For these reasons, many farmers wonder if they would be better off just hiring help on a contractor basis, similar to the way the Farm Relief Services operate.

In theory, the distinction between both is very subtle. If the working relationship between the farmer and worker is as an independent contractor, it can be described as a "contract for service", rather than as an employee, which is referred to as a "contract of service". However, it is worth pointing out that the Revenue or the Department of Social and Family Affairs can look behind any contract stating that a worker is an independent contractor rather than an employee and decide that a relationship is that of an employer/employee by looking at the reality of the situation.

There is a code of practice in determining employment status which lists criteria that should be considered when deciding whether a person is an employee or not. Factors which indicate that a worker would normally be an employee include:

•being under the control of another person who directs as to how, when and where the work is to be carried out;

•not being exposed to personal financial risk in carrying out the work;

•not assuming any responsibility for investment and management in the business;

•not having the opportunity to profit from sound management in the scheduling of engagements or in the performance of tasks arising from the engagements;

•Working for one person or one business.

Factors which indicate that a worker is normally self-employed include:

•Being free to hire other people on his/her terms to do the work which has been agreed to be undertaken;

•Providing the same services to more than one person or business at the same time;

•Providing equipment and machinery necessary for the job, other than small tools;

•Providing their own insurance cover.

So if a farmer needs a worker to help him/her for a specific purpose or for a specified period of time, the relationship could to fall within the definitions for a worker to be hired as an independent contractor, rather than as an employee.

It is worth noting that the standard share milking agreement in operation in New Zealand is operated on the basis of a contract for service (self- employed) rather than a contract of service (employee).

There are circumstances which do not lend themselves too easily to operating under an independent contractor basis, and in these circumstances, the relationship may have to be structured as that of employee. The Employment Regulation Order (ERO) 2010 is the legislation governing agricultural employment rights in Ireland, which came into effect on December 31.

It applies to all agricultural employees in Ireland with the exception of those in the mushroom growing industry and grooms already covered by the terms of a separate Registered Employment Agreement.

Wage

The minimum wage was due to be increased for agricultural workers on July 1. However, the Joint Labour Committee (JLC) for the agricultural industry agreed last month to defer an increase in the pay rates until January 1, 2012.

The ERO provides for minimum rates of pay, hours of work per week, holiday entitlements and sick pay. The ERO also deals with other issues in relation to bereavement leave, grievance procedures, disciplinary procedures, bullying and harassment policy and trade union access to agricultural workers.

A copy of the ERO is available at www.employmentrights.ie.

If you are employed by a close family relative, your employment rights will be affected. For example, the national minimum wage legislation does not apply where the employee is a close relative of the employer.

Additionally legislation covering working hours, redundancy and unfair dismissals does not apply where the employee is employed by a close relative, and where the place of work is a private house or farm and both the employee and the employer reside there.

Restrictions on the employment of children and young people do not apply where the employment is by a close relative in a private house or on a farm, where both the employer and employee live.

Conclusion

Farmers face a bewildering array of obligations around employment, with the result that they can be put off hiring workers.

Traditionally, farmers have hired independent contractors for tasks such as silage making, shearing sheep, and professional services such as farm advisory services. The benefits to farmers of hiring workers as independent contractors, if circumstances allow, cannot be overstated. Farmers should examine this in the context of their own farming systems as it has the potential to save a lot of work and money when it comes to compliance with employment regulation.

Disclaimer: The information in this article is intended as a general guide only. While every care is taken to ensure accuracy of information contained in this article, solicitor and tax consultant Aisling Meehan does not accept responsibility for errors or omissions howsoever arising. Tel: 061 368412