The 2019 Budget
The 2019 Budget was the hot topic in early October. It’s a key opportunity for the government to announce policy, and often this will affect employers. This month, it was no different. So let’s take a look at what’s changing.
One of the most important topics covered was the imminent changes to PAYE compliance. The Budget reminded us that in January 2019, real-time reporting of PAYE activity known as PAYE Modernisation will become mandatory.
It’s essential to be preparing for this now. Please refer to our separate article in this newsletter. Bear in mind also that there are some income tax and USC rates changes that may affect your employees, which roughly translate into minor tax cuts.
Employers’ PRSI rates are another payroll change happening on 1 January 2019. Classes A and H rates will increase by 0.1%, and then again by a further 0.1% in 2020. And the weekly income threshold for the higher rate of employer’s PRSI is going up to €386 (from €376).
November 2019 will see the launch of Ireland’s new paid parental leave scheme. It will give an extra two weeks of leave to every parent in a child’s first year. While we’re on the subject of statutory pay, it was reconfirmed that the National Minimum Wage was rising in January 2019 to €9.80.
Finally, there was some fanfare around certain employee benefit tax provisions. The first – concerning the Key Employee Engagement Programme – turned out to be horribly disappointing.
This scheme, known as KEEP for short, had been brought in on 1 January 2018 to help unquoted SMEs attract and keep key staff. This tax-advantaged share option scheme was previously thought to be too restrictive and had had a zero percent take-up. This budget was an opportunity to address this. It has actually become even more restrictive, so we will see where that leaves it in due course.
To end on some good news, the special 0% BIK rate for electric vehicles under €50K will be extended for another three years. Great for the environment and green-minded employers.
Tales from the HR Crypt
‘tis the month of Halloween so to send a shiver down your spine we thought we’d serve up horror stories about nightmare colleagues.
Beware the next time an employee goes on a long-haul holiday. One person described on social media how their co-worker took a month’s leave, and while they were gone a spider infestation broke out in their desk drawers.
If that’s too creepy crawly for you, how about the person who accidentally pepper sprayed their entire office. Described as “weird in an office where 50% of staff were weirdos”, this individual took an electric slow cooker into his work cubicle to make a stew for lunch. As you do. When he removed the lid it decimated the workforce with coughing fits and watering eyes as he’d been cooking a piece of chicken in a confection of hot chilli sauces.
Stay safe this Halloween, and if you find yourself in your own HR horror story, let us know!
Protecting against Brexit
As Brexit looms, the government announced measures in the Budget to protect the economy from the fallout. Most interesting of these to SME businesses concerns the Brexit Loan Scheme. This sets aside €300 million worth of lending for qualifying businesses, in particular those in the food and agriculture sector and SMEs.
There is an application process to go through to get a loan on favourable terms. The money must be used to provide future working capital for the funding of innovation, or altering business operations to protect against the impact of Brexit.
Other measures relating to Brexit include extra money for the PEACE programme; €110 million to bolster government departments, for instance for new customs requirements; and a €300 million investment in higher education between 2020 and 2024.
Further crackdowns on the gig economy
The issue of false self-employment is something that we have advised upon regularly in 2018. This is the practice of classifying someone as self-employed when they are to all intents and purposes employed. The government is legislating on this and the risks to business owners continue to evolve.
Over the summer, it was reported that social welfare inspectors in Dublin carried out more than 1,000 inspections in a single week in order to root out cases of bogus self-employment. Where they identify wrong-doing, they can prosecute.
It is often referred to as the gig economy, and it is not just an Irish problem. In London in September, for example, another risk transpired. UberEATS couriers went on strike bringing traffic in central London to a halt. They are deeply unhappy with their pay structure.
The major concerns with false self-employment follow two lines of argument. First, they erode workers’ rights and their entitlements to state benefits. Holiday pay, rest breaks and protection against unfair dismissal are just some of the rights that may be forfeited. And second, they allow companies who should be paying employers’ PRSI payments of 10.85% to dodge this levy.
In 21st century Ireland, there is certainly a place for flexible working arrangements where they are genuine. But even if you stumble into it, the risks of false self-employment are just as real.
So we would advise you to review your contracts for any workers who cannot be clearly defined as either an employee or a contractor. Talk to us and we can help you get the right classifications for your business needs, whilst staying legally compliant.
So the Budget shone some more light on the new parental leave being introduced in November 2019. The following is helpful for employers to know.
Beyond learning of the two paid weeks that both parents will be entitled to, be aware that this leave is in addition to current parental leave entitlements – various statutory leaves that are unpaid but may qualify for maternity/paternity benefit.
The statutory pay rate from the State for this new leave is expected to be in line with maternity benefit which is €240 per week. It is non-transferrable, so each parent must use it or lose it.
The current intention is for this new leave to be extended from two to seven weeks over time. Complying with equality law and being family-friendly are major areas of risk and opportunity for SMEs, so for advice and guidance in these areas get in touch.
As we’ve highlighted in our leading Budget article, 1 January 2019 will see the introduction of PAYE Modernisation – the real-time reporting of payroll data to the Revenue. This is a huge change from the current system, where such data is reported annually in your P35.
Worryingly, one survey conducted by a payroll provider found that 40% of small businesses are not at all prepared for this change. With the Revenue feeding the new data it receives into its risk analysis system, it’s thought this will lead to more audits for companies that struggle with compliance. Speak to us if you need to catch up.