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Benefit from state welfare

Every farmer or farm worker is entitled to a range of social welfare supports, depending on their circumstances. A farm worker is entitled to certain payments which are dependent on the number of PRSI contributions which he/she makes and the class of PRSI under which the worker is contributing. Other payments are not based on PRSI contributions.

PRSI classes and benefits

The two principal classes under which farmers normally contribute to the Social Welfare system are class A (generally employees) and class S (generally self-employed persons).

PRSI contributions provide several benefits (see table, below), subject to sufficient contributions having been made.

You will note that a much wider variety of social welfare entitlements are available to employees contributing under class A in comparison to self-employed persons contributing under class S. Perhaps most significantly, Jobseeker's Benefit (formerly known as Unemployment Benefit) is not available to class S contributors. However, Farm Assist, or Jobseeker's Allowance may be available subject to a 'means test'.

The State pension (contributory) is, subject to conditions, available to both employed and self-employed contributors.

'Family Employment Arrangements' not Covered by PRSI

Certain 'family employment arrangements' are not covered by PRSI as they are not regarded as insurable employments. For example, if a farmer's spouse, or other prescribed relative, is employed on the farm or assists in running the farm, this may not be covered by the PRSI system and the associated benefits may not be available to the worker involved.

Family-Owned Companies and Family Partnerships

The treatment in the case of family-owned companies and family partnerships is slightly different. The directors of the company are likely to be insurable under either class A or class S.

Which class they are insurable under will be dependent on whether they are effectively running the company, in which case they are insurable under class S as a self-employed person, or are effectively engaged as an employee, in which case they will be insurable under class A. Factors which may indicate that a company director should be insurable under class S as a self-employed person would include the following:

  • The person has a controlling shareholding in the company;
  • The person does not work set hours;
  • The person does not have a contract of employment;
  • The person is not entitled to sick pay, holiday pay etc.

Under a family partnership structure whereby, for example, each spouse has a 50pc interest in the partnership, the partners are likely to be insurable under Class S as self-employed persons.

Voluntary Contributions

Voluntary contributions may be advisable in order to preserve contributory pension entitlements in instances where PRSI contributions are no longer being made. The principal conditions in order to qualify as a voluntary contributor include that the worker must have paid at least 260 weeks PRSI and apply within 12 months of the end of the year in which he/she last made a compulsory contribution.

Aidan O'Boyle is a manager at Grant Thornton

Indo Farming