Taking on labour brings real responsibilities for employers
Many of you employ labour in some shape or other on your farms throughout the year. Most of this labour is employed in the spring and I am always encouraging dairy farmers to take on labour in the February, March, April period.
Employing someone on your farm has implications for you, the employer and you, the employee. Whether you employ someone on a casual or full-time basis, it doesn't matter, the same law applies to both.
If you have someone for two days a week, he/she has the same entitlements as if they were working full-time for you.
If you want to get it right from the start, once you employ someone to work on your farm, the employee should be handed a written document outlining the 'terms and conditions' of employment. This is a legal requirement.
Included in the terms and conditions are the name of the employer and employee, address of employer, place of work, job title, nature of work and start-up date. In addition, the duration of contract, rate of pay and pay interval, hours of work should be outlined.
The terms and conditions of employment document doesn't have to be a complicated document. After all, you haven't a human resources department behind you. You are just trying to get through the day.
However, your requirements just don't end there. Once you pay someone, that person must be handed a payslip with their wages.
Again, this is a legal requirement as defined in the Payment of Wages Act, 1991. To be honest, I don't see too many payslips out there. The employee is only interested in how much money he/she has in their fist at the end of the day. In other words, the net pay or take home pay. This is where a big shift in mind-set is needed.
Net pay should never be mentioned when it comes to employing someone on the farm. The term gross pay should only be used. By agreeing a net pay with your employee, then in effect, the employer is agreeing to pay the employees PAYE/PRSI contributions for them. (See table right).
As an employer, you have an obligation to administer the collection and transfer of the above taxes to Revenue.
The law makes the employer responsible for PRSI and the employee may have to pay an employee's share as well. The amount 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.
The employer deducts your PRSI contribution directly from your wages. It is then collected by Revenue and a record of your contributions is kept by both your employer and the Department of Social Protection.
Your employer also pays PRSI contributions for you. This contribution is not deducted from your pay. It is your employer's contribution to the Social Insurance Fund. Again, this is collected by Revenue.
For instance, if you, the employee, receives a gross weekly wage of €400, the cost to the employer is €443. This is because the employer's PRSI contribution is 10.75pc of the gross wages. That's an additional €43 which the employer must return to Revenue.
Every employee also has tax credits and a figure for this will also appear on the payslip. And what about the Universal Social Charge (USC). In addition to paying PAYE, the employee must also pay the USC.
Writing up a payslip for your employee is not a simple task. It demands expertise in a number of areas, i.e., correct rates of PRSI, knowledge of tax credits, correct bands of PAYE, and correct rates of USC. These are areas in which very few farmers are comfortable.
So, how do you fulfil your legal requirements if you have someone employed on your farm for a short or long-term period? You have to buy in expertise in payroll services.
There are people who specialise in this area and you can buy in the expertise for less than €200 per year, VAT included. Your accountant may also provide this service.
Would it be much simpler to go to the Farm Relief Services? Perhaps, but they can't cover every eventuality.
John Donworth is a dairy specialist and a Teagasc area manager in Limerick and Kerry
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