Serious obligations with casual labour
Typical sources of summer labour include young family members who may be finished school or college for a period or other workers looking for seasonal work.
Taking on such extra labour can take pressure off the day to day work load and help get a lot of the once-off projects and “big jobs” underway. Unlike the old days, the taking on of an employee requires a bit more structure than dragging the local young fella off for a day’s work. Mostly, it is relatively easy to determine whether the person is considered an employee or an independent self-employed contractor.
In Revenue’s guide for determining the Characteristics of an Employee, the following conditions are influential in deciding a person’s employment status. Does the individual:
Work for a set wage, hourly or piecemeal rate?
Use their own tools?
Work under the direction and control of another person?
Have possession of their own insurance?
Bear financial risk?
Supply labour only?
Carry on a business working for other persons?
On a practical basis, the relief milker who works full time on multiple farms in a non-routine manner would be regarded as self-employed.
In contrast, an individual who works every weekend for a local farmer is treated as that farmer’s employee regardless of whether that person has other employment income or the duration of that employment.
Where the individual is regarded as an employee then the employer is required to register with Revenue within nine days. All payments to the employee must be made after deduction of the appropriate amount of income tax, PRSI and USC.
At the lowest rates, the amount of deductions for taxes may only be a couple of percent, indeed for some family employments it may be a case that no taxes will be due on the wages paid, particularly in cases where the salary is below €8,250 per year, however in some cases where the employee has other employments the amount of tax to be withheld from an employee’s wages can be up to 52%.
After registering an employee, Revenue will issue a certificate of tax credits setting out the exact amount of tax deductions to be made.
Paying an individual cash or expecting an individual to pay their own income tax is no excuse when it comes to an employer’s obligations to withhold tax. In fact, in the event that Revenue subsequently challenge the situation, the payments to the individual may be treated as net payments.
As a result, the underpayment of tax together with penalties can potentially add up to multiples of the actual payment made to the employee.
With effect from July 18, 2012, all employers are required to keep a Register of Employees in paper or electronic format showing the name, address, Personal Public Service number and date of commencement/cessation of all employees.
An employer is obliged to register as an employer with Revenue and indeed is required to register any new employees within nine days of commencement or payment.
Failure to register as an employer or failing to register employees carries hefty penalties with Revenue having the ability to apply on the spot fines of up to €4,000 for each breach of the regulations.
Beyond the registration and operation of PAYE, all employers are required to adhere to the Organisation of Working Time Act.
This Act sets out the working and rest hours that should be adhered to as a minimum — employees are entitled to:
A daily rest period of 11 consecutive hours per 24 hours.
A weekly rest period of 24 consecutive hours per seven days, after a daily rest period.
A 15-minute break if working 4.5 hours.
A 30-minute break if working six hours hours or more.
The Minimum Wage Act is also relevant. The standard minimum wage is €8.65, however since 1 July 2011 the following sub-minimum rates may also be relevant:
An employee who is under 18 is entitled to €6.06 per hour (this is 70% of the minimum wage).
An employee who is in the first year of employment since the age of 18 is entitled to €6.92 per hour (80% of minimum wage).
An employee who is in the second year of employment since the date of first employment over the age of 18 is entitled to €7.79 per hour (90% of the minimum wage).
There is a whole other range of regulations which also apply including obligations in relation to health and safety in the workplace.
In short, the employment of additional labour on the farm now carries significant responsibilities for any would-be employer and appropriate advice should be sought to reduce any potential liabilities.
