In the recent 2016 Budget, Minister Michael Noonan announced significant changes in the calculation of Class A PRSI which take effect from January 1st 2016. Class A is the most common PRSI class for employees in the private sector aged over 16 and under 66 years of age.

The main changes in Class A are as follows:

1) The weekly threshold above which the 10.75% high rate of Employer PRSI applies will increase from €356 to €376. This €20 increase in the threshold gives employers a saving of 2.25% on those earnings between €356.01 and €376.00 where total gross earnings do not exceed €376.00

2) A new tapered weekly PRSI credit will apply to employees earning between €352.01 and €424.00 per week.

Calculation of the Weekly PRSI Credit:

The maximum weekly PRSI Credit of €12.00 applies at gross weekly earnings of €352.01.

For earnings between €352.01 and €424.00, the PRSI credit is reduced by one-sixth of the excess of weekly earnings which are over €352.01.

e.g. if an employee earns €390 per week:

PRSI @ 4% = €15.60

Less Credit of €12.00 minus ((390.00-352.01) divided by 6) = €12.00 – (37.99/6) i.e. €12.00 – €6.33 = €5.67

Weekly Employee PRSI = €15.60 minus €5.67 Credit = €9.93.

This will have a significant positive impact on employees earning between €352.01 and €424.00 per week.

No credit applies once weekly earnings exceed €424 per week and the full Employee PRSI rate of 4% becomes payable.

What needs to be done?

Employers should review the impact of this change on their payroll cost, particularly those with large numbers of part-time employees who may be affected.

Further Information:

Further information is available on Department of Social Protection website or you can contact OPTiM Payroll

 

 

Section 86(1) of the Workplace Relations Act 2015 came into effect on August 1st 2015. This section makes amendments to the Organisation of Working Time Act 1997 and results in the following changes:

• Statutory annual leave entitlement accrues during a period of certified sick leave.
• An annual leave carryover period of 15 months after a leave year will apply to those employees who could not, due to illness, take annual leave during the relevant leave year or during the normal carryover period of 6 months.
• On termination of employment, payment in lieu of untaken accrued annual leave will apply to leave which was untaken as a result of illness in circumstances where the employee leaves the employment within a period of 15 months following the end of the leave year during which the statutory leave entitlement accrued.

This brings the Organisation of Working Time Act into line with recent rulings of the Court of Justice of the EU.

For further information, contact us or check Department of Jobs, Enterprise & Innovation