All you need to know about HR!
Supporting Business Owners, Directors and HR Professionals with the latest in HR trends and news.
June 2015
Redundancy Explained
Without a doubt redundancies can be required to keep a business viable. Employers need to ensure that they make their decisions based on what is best for the business - not because they want to get rid of Danny the storeman who they feel hasn't done a tap for years.
Before making people redundant, Employers must look at the overall business and see what areas are suffering a downturn, what areas are picking up, and how best they can react to changed circumstances.Employment Appeals Tribunal Awards €8,500 to Former Employee
Unfair Selection for Redundancy Claim succeeds leading the Employment Appeals Tribunal to award €8,500 in compensation. After hearing statements from the former employee (the claimant) and the respondent (a car dealership), the Tribunal was satisfied that a redundancy situation existed, however, the Tribunal concluded that the process was defective and, therefore, determined that the claimant was entitled to a significant award.
The respondent failed to consult the claimant about his redundancy and did not appear to properly consider alternatives before finalising the decision to make the employee redundant – For instance, the employee could have suggested that he work a shorter working week/reduced hours or that he take a reduction in pay. The respondent is obliged to consider these suggestions over a period of consultation, however, the claimant was not afforded this entitlement and was only told the reasons behind the decision to select him for redundancy after asking for these.
The Tribunal found that the claim under the Unfair Dismissals Acts, 1977 to 2007 was justified which is why the claimant walked away with €8,500. This sum was in addition to the redundancy lump sum that he had received when the redundancy first occurred.
Details of this case can be found on the Workplace Relations Website (Case No. UD450/2012) - http://www.workplacerelations.ie/en/Cases/2013/November/UD450_2012.html
This case stresses the importance of following the approved procedures when it comes to redundancy. Not only do you have to prove that a redundancy is required in order to keep the business viable – you must also be able to justify why you made one employee redundant over another. The employer must be able to show that the redundancy process was not flawed. Employers should use a Selection Matrix so he or she cannot be accused of subjectivity (which is what the employee claimed in the above-mentioned case). The employer is obliged to invite the employee to a meeting making them aware that it concerns redundancy. Employers are obliged to give the employee notice of the redundancy and the reasons why the redundancy scenario came about along with why they were selected. Constructive Dismissal leads to €9,000 Award for Former Employee
Constructive Dismissal is the term used when an Employee terminates his or her employment based on the conduct of the Employer. Unlike in an Unfair Dismissals case where the dismissal is deemed to be unfair unless proven otherwise and justified by the Employer - in Constructive Dismissal instances the onus is on the Employee to prove that their resignation was based on poor Employer conduct.
If it is found that the Employee has been Unfairly or Constructively Dismissed then he or she could either be awarded compensation for the loss of earnings suffered as a result of the termination of employment or could be placed back in their original role. Reinstatement is not common practice (particularly in Constructive Dismissal cases) due to the expected tension/ strained relationship between the Employer and the former Employee and due to the amount of time that is likely to have lapsed between the termination of the employment contract and the resolution of the case. The Employee has often entered in to a new employment contract elsewhere.
It is important for Employers to be aware of everything that occurs in their workplace as even other Employees’ behaviour that goes unchecked by the Employer could contribute to a Constructive Dismissal case. These can be extremely costly.
Here is an example of a case where the Employee (the Claimant) was awarded €9,000 after the Employment Appeals Tribunal found that he had been Constructively Dismissed.
The Claimant in this case started working for the Respondent in 2007. There were no issues until late 2010 when a Technician was promoted to Technical Manager. This immediately created a hostile environment and relationships became strained. The Claimant experienced problematic scenarios in the workplace as a result of the Technical Manager’s temper on numerous occasions.
The final occurrence led to the termination of employment for the Claimant. On the Claimant’s final day working for the Respondent the Technical Manager, a physically intimidating individual, entered the shop where the Claimant and his colleague were working. The Technical Manager lifted the Claimant up from his chair by his arm and proceeded to shout at him. The Claimant, who was frightened, attempted to avoid confrontation and turned away. The Technical Manager again grabbed the Claimant, this time by his shoulder, and spun him around while demanding that he not complain. The Claimant said that he didn’t complain, he just answered questions. The Claimant was pulled closer and then told to leave by the Technical Manager.
The Claimant did as he was told but the Technical Manager proceeded to follow him, grabbing him by the neck. At this stage the Claimant was in a state of shock and told the Technical Manager that he was simply working his way through college. The Claimant’s shirt was torn, there were marks on his neck and his hand was bruised after the incident.
After the event, the Claimant called a Senior Manager and told him what had happened. The Claimant returned his keys to the shop and arranged to collect his jacket from his colleague. A series of meetings with the shop Manager and other Senior Managers were arranged. The Claimant was offered a transfer to another shop, however, this other shop was located far
from the Claimant’s home and, therefore, was not a suitable alternative – he could not accept this transfer proposal.
As a result of the meetings the Claimant was given a written warning, however, as no arrangements were made for him to return to a safe workplace he had no option but to resign.
The Claimant established loss for the Tribunal and it was determined that the Claimant was Constructively Dismissed. The Respondent failed in its responsibility to the Claimant by not responding adequately.
Under the Unfair Dismissals Acts, 1977 to 2007, the Claimant was awarded €9,000 as compensation for being Constructively Dismissed.
The appeal was heard at Dublin on 14th October 2013. Case Number: UD669/2012.
How to avoid an unfair dismissal claim when making someone redundant
Redundancy is a minefield if you take chances. You must remember that employees now know their rights better than ever before. They have lived through a time when friends, family and work colleagues have been laid off - there is also a lot of information readily available for them online.
Employees have picked up a great deal of information about their rights. We say to Employers "your employees know their rights - do you?" Some businesses are now facing into a second phase of redundancies. In that instance, you can be guaranteed that staff know their entitlements even better than they did for the first phase. If you don't follow process, or if you make a false move, it could cost you - you could quite easily end up in the Labour Courts with an Unfair Dismissal case on your hands.
Unfair Dismissal cases are very common these days and they are very difficult for employers to win as the onus is on the employer to prove that he or she made the correct choices when letting someone go. Proving that a redundancy, for instance, was necessary is essential - making the position, not the person, redundant is crucial - an employer cannot make an employee redundant and then hire a new staff member to carry out the same tasks the following week. Commissioners will scrutinize every detail and decision and will want to see that the employer has dotted every "I" and crossed every "T".
Employers have a 50/50 chance of leaving Labour Court hearings with a large figure to pay out - it is important to remember that a huge number of cases are also settled prior to court proceedings so the odds are heavily stacked against the employer coming away from the Court with no fine on their hands.
Without a doubt redundancies can be required to keep a business viable. Employers need to ensure that they make their decisions based on what's best for the business - not because they want to get rid of Danny the storeman who you feel hasn't done a tap for years. Before making people redundant, look at the business overall and see what areas are suffering a downturn, what areas are picking up, and how best you should react to changed circumstances.
A Selection Matrix will help to clarify your thoughts and take the personalities out of the decision - and also ensure that no-one can accuse you of using redundancy simply to remove people you don't like from your company. As a business owner or manager, you are entitled to make decisions that make business sense. So establish the logic of any decision before you make it.
Arm Your Company with the Best Human Resources Support
Since 2001 The HR Company, B2E Ltd. has been successfully providing a cost-effective HR and advice support service(s) for small to medium sized businesses (SMEs) across Ireland. The HR Company also assists several large corporations and multinationals with their HR operations. With so many pieces of employment legislation in place in Ireland it is a challenge for companies to ensure that they are fully compliant on all counts. The HR Company is an Irish-owned company headed up by Philip Carney, former head of HR for Microsoft’s European Operations Centre, and Angela O’Grady, former Staffing and Recruiting Manager. A team of 20 HR specialists provide peace of mind for Employers by guiding them on all aspects of Irish Employment Law.
The HR Company provides a very affordable 24/7 protection service to those who wish to offload the burdens and risk associated with HR activities. Whether it relates
to disciplinary procedures, annual leave, redundancy or anything in between; a dedicated account manager is at the end of a phone to guide Employers and help insulate companies whenever a query about best practices in HR arises.
Not only does The HR Company provide bespoke employment documentation to ensure companies pass a National Employment Rights Authority (NERA) inspection, tailored disciplinary letters and any other relevant material are prepared by dedicated account managers to ease the load on the Employer. The HR Companyacts as the eyes and ears of the Employer on all HR related issues – protecting companies by keeping them informed on any relevant legislation updates.
In this era of increased employee litigation employees know their rights – companies should shield themselves against the risk of a costly dispute by arming themselves with the best on-call
support.
Searching Employee Belongings Appropriately
Many employers have experienced theft by an employee in the workplace and, consequently, need to put certain measures in place in order to protect the profits of the company. It is the policy of some companies to search employees’ personal belongings when they are leaving the work premises. Employers can also reserve the right to search employee lockers and vehicles if this is agreed with the employee in advance.
If the employer wishes to have the option to carry out personal searches then it is crucial that all details surrounding these searches are clearly communicated to the employees in the contract of employment. Employees sign this contract and by doing so agree to the policies and procedures contained therein.
If an employer reserves the right to search an employee’s belongings then he or she must do so in a dignified manner – giving the employee appropriate levels of privacy. There are several significant procedures to observe when performing a personal search. The individual carrying out the search should be in a management position and, in the interest of clarity; the employees should be made aware in advance who it will be.
The location of the search is also something that should be considered very carefully – it is important to maintain consistency and to carry out searches in an area that offers privacy to the employee involved. Employees should be notified of the location of the search and, ideally, it should be out of the view of customers and other employees. The shop floor is not appropriate search setting – the canteen is not suitable either.
Ideally the area should be covered by CCTV in order to prevent a “he said she said” situation from arising. If this is not possible then a witness should be present so that this scenario is avoided. Either way discretion is of cardinal importance.
As is procedure with airline security screening a male should search a male and a female should search a female, although, as the searches
should not involve body contact this is less of a priority. It is essential
that the employee is asked to open his or her bag, for instance, and that the person performing the search doesn’t breach privacy by putting their hands into the employee’s bag or on the employee’s person.
Employees should be asked politely to remove any suspicious items from their bag for further inspection – the item/items should be placed on a clear surface in order to ensure that there is no confusion over what was actually in the bag. The searching employee (management/security where possible) should never assume that an item has not been paid for. If the item in question was from the store then the employee should be asked to produce a
receipt for same.
Further action can be taken if the employee cannot furnish proof of purchase. When an employee purchases an item in the store during the working day it is good practice for companies to put in place a policy where the bag is sealed and the receipt is attached to the bag. This removes any ambiguity.
Some companies will carry out spot checks on employee belongings rather than checking them on a daily basis – it is vital to be fair and to ensure that the same employees are not targeted all the time.
Not following appropriate procedures can lead to employees being awarded large sums of money.
Average Award in Unfair Dismissal Cases on the Rise
According to the Employment Appeals Tribunal Annual Report 2011 the number of cases annually referred to the Tribunal increased three fold during the Irish economic recession (to a high of 9,458 cases in 2009).
The average number of annual referrals before the recession had plateaued at approximately 3,500.
Statistics for Unfair Dismissals cases:
The average compensation awarded by the Tribunal in Unfair Dismissal cases has risen dramatically in recent years.
For the year ended 31st December 2009 the average compensation in Unfair Dismissals cases was €11,476. In 2010 it was €16,064.05 and in 2011 it was €18,047.85.
This is a trend that employers really need to pay attention to as large sums of money like this can seriously damage a company.
It is crucial to stay up-to-date with employment legislation and to follow appropriate procedures when dealing with employee matters.
Why Companies are choosing to Outsource their HR
The number of cases annually referred to the Employment Appeals Tribunal increased three fold during the Irish economic recession and the average compensation awarded by the Tribunal in Unfair Dismissal cases rose from €11,476.00 to €18,047.85 between 2009 and 2011.
During this time of economic hardship Employers must pay even closer attention than ever before to their expenditure. Many organisations are forced to downsize and - in this era of increased Employee Litigation - making sure you follow appropriate procedures in redundancy or disciplinary scenarios, for example, is growing in importance.
It is at times like these that Companies need to concentrate on their Human Resource functions even more. Some elements of HR, however, can be both complicated and time consuming – an enormous burden on Employers. In recent years the focus has moved towards legal compliance (which can be a minefield with all of the pieces of Employment Legislation currently in operation) and administrative processes that can slow down the productivity of the firm.
For SMEs in particular, it makes a lot of business sense to outsource HR tasks as firms specialising in the field can improve efficiency dramatically. Outsourcing allows Companies to offload work that isn’t part of their core business. It also saves money. At a Company that doesn’t have the funds to hire specialists outsourcing can allow it to gain access to a vendor’s services when required as well as the expertise and wealth of experience that they have accumulated – all at an affordable price.
While SMEs don’t have the same number of Employees as larger corporations and multinationals they still require the same HR elements on a smaller scale. For instance, they still need to recruit staff, they still need to abide by the vast array of Employment Laws and still require Employment Documentation (Contracts of Employment etc.).
Dignity at Work – Workplace Racism at an Alarming Level
Employers - Did you know that you can be held accountable for bullying or harassment in the workplace?
……..Not being aware of it does not get you off the hook!
Bullying in the workplace is any recurring inappropriate conduct that undermines a person’s right to dignity at work. Bullying can be carried out by one person or by several people - it is aimed at an individual or a group where the objective is to make them feel inferior or victimised. Bullying can come in the form of a verbal or physical assault and can also take place over the internet – this is known as cyber bullying and can be performed via many methods - Mobile phones, social networking sites, emails and texts are all common vehicles for cyber bullying.
Cyber bullying is becoming more and more prevalent in society.
Keep in mind that harassment based on civil status, family status, sexual orientation, religion, age, race, nationality or ethnic origin, disability or membership of the Traveller community is considered discrimination.
Harassment in the workplace is prohibited under the terms of the Employment Equality Acts, 1998 to 2007. The Act of harassment - whether direct or indirect, intentional or unintentional - is unacceptable and should not be tolerated by any company. Any allegations should be dealt with seriously, promptly and confidentially with a thorough and immediate investigation. Any acts of harassment should be subject to disciplinary action up to and including dismissal. Any victimisation of an employee for reporting an incident, or assisting with an investigation of alleged harassment and/or bullying is a breach of equality legislation and should also be subject to disciplinary action.
Bullying or harassment isn’t always obvious – in fact it can come in many shapes and forms – some examples are:
•Social exclusion or isolation
•Damaging someone’s reputation through gossip or rumour
•Any form of intimidation
•Aggressive or obscene language or behaviour
•Repeated requests for unreasonable tasks to be carried out
Employers Beware:
Under current Irish employment legislation (The Employment Equality Acts 1998-2011) companies are accountable when it comes to bullying and harassment in the workplace or workplace disputes. It is vital for employers to be mindful of the legislation as companies are answerable for the actions of employees, suppliers and customers even in cases where the company is not aware that bullying or harassment is taking place.
To defend itself a company must illustrate how it did everything reasonably practicable to prevent bullying and / or harassment from taking place in the workplace. The company must also show that when an instance of bullying or harassment occurred the company took immediate, fair and decisive action.
There is a huge risk of exposure if companies do not adhere to the strict Regulations. Those found in violation of the Act may be liable for fines and in severe circumstances imprisonment on summary conviction. Companies can also end up paying out large sums in compensation.
Bullying creates a very hostile work environment and can negatively affect employee performance – It can lead to disengagement and low levels of morale. It can also cause a company to lose key members of staff. Bullying can affect both the safety and the health of employees – this violates the Safety, Health and Welfare at Work Act 2005.
It is abundantly clear that it is in the best interest of all stakeholders to prevent bullying or harassment of any form in the workplace.
In order to avoid bullying and harassment an employer should include harassment-related policies and procedures in the Employee Handbook – A Dignity at Work Policy should be communicated clearly to employees. This will clarify what is expected of employees and what the protocol/repercussions are if bullying/harassment does occur.
Last week the Immigrant Council of Ireland (ICI) brought our attention to a shocking statistic – The ICI revealed that the number of racist incidents reported in Ireland over the last 12 months had jumped to a staggering figure – They dealt with 120 individual racism cases in the past
year. 52 of these instances were reported in June/July of 2013 alone marking a huge increase when compared to the same period in 2012 when just 3 incidents were reported.
The racism reported related to alleged discrimination, written harassment, verbal harassment and physical violence.
The most commonly reported setting for racism was the workplace – where a massive 20% of reported incidents occurred.
Employers need to be vigilant and need to make more of an effort to consciously crack down on this type of activity.
Labour Court Ends Zero-Hours Contracts For HSE Home Helps
The Labour Court has issued a recommendation giving improved terms and conditions to Home Help workers employed by the Health Service Executive (HSE).
The recommendation, which is binding under the terms of the Haddington Road Agreement, was issued on 18th September, 2013, and will affect the employment terms and conditions of approximately 10,000 workers. It is important to note that this agreement only applies to Home Helps who are employed by the HSE. Individuals employed by private companies or not-for-profit providers are not covered by this Labour Court recommendation.
Services Industrial Professional and Technical Union (SIPTU) has been campaigning since 2009 in a bid to secure adequate contracts and security of earnings for its members. The Union has welcomed the Labour Court decision which brings an end to the extensive system of zero-hour contracts. Paul Bell, SIPTU Health Division Organiser, stated that the agreement put the terms and conditions of Home Helps on a “firm and binding platform for the first time since the community service was established thirty years ago”.
A Zero-hours contract is a type of employment where an employee must be available for work but does not have specified or guaranteed hours or a formal roster. This can cause challenging circumstances for employees where the hours of work as well as earnings are unpredictable.
This Labour Court agreement provides for the issuing of annualised contracts guaranteeing a minimum of seven to 10 hours of work per week for each Home Help. Caroline Jenkinson, Labour Court Deputy Chairman, explained that “the number of hours to be allocated to each person will be based on 80 per cent of their actual hours worked in the six-month reference period between October 1st, 2011, and March 31st, 2012, with a minimum guarantee of seven hours”.
In addition to welcoming the removal of the zero-hours system Mr. Bell of SIPTU applauded a HSE effort to reorganise and manage the Home Help hours on a county by county basis.
Those who choose not to work under the annualised hour scheme may be entitled to receive compensation of between €2,000 and €3,000 under an exit deal.
Drugs and Alcohol Free Workplace
So far as is reasonably possible, employers are legally obliged to ensure the safety and welfare at work of all employees. Likewise, employees have a responsibility to themselves and to their colleagues. The use of alcohol and/or unauthorised drugs may disturb the safe and efficient running of a business. It can hinder the health and safety of employees within the organisation as well as the customers and other stakeholders.
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The use of drugs or alcohol by an employee can lead to performance/productivity issues. It can make concentration very difficult for the person in question. Work related tasks can take more time and the number of mistakes can often increase, potentially costing the Company, individual concerned and other employees dearly.
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Another common consequence of alcohol or drug use is the loss of faculties. This may lead to an inability to properly assess danger which can, in turn, bring about higher accident levels when driving to or from work, or being more prone to having an accident or causing an accident when at work.
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Absence from work is another likely outcome when using alcohol or drugs in an excessive or irresponsible manner. Other related lapses such as lateness and disproportionate levels of sickness, etc. are also common.
Leave Entitlements After Surrogacy
Paid leave of absence for mothers, whose babies are born through surrogacy arrangements, falls outside the scope of the law.
In September 2013 The European Court of Justice found that an Irish teacher (Ms. Z), whose child was born through surrogacy, did not have an automatic right to either paid Adoptive Leave or Maternity Leave from her employment. When Ms. Z’s application for paid Adoptive Leave was denied she brought a complaint to the Equality Tribunal. The woman, who has no uterus as a result of a rare medical condition, claimed that she was discriminated against on the grounds of sex, family status and disability.Probationary Periods in the Irish Workplace
Employment references for prospective employees can be great indicators of employee skills or characteristics and they should always be thoroughly vetted. However, for various reasons, they may not always give a true and present reflection of the candidate or they may reflect what the employee’s capabilities were at a different time and this may not necessarily match their current skills. References can also depict suitability for a role that is dissimilar to the one being filled. For this reason it is advisable for employers to engage new members based on multiple evaluations to protect themselves and to ensure not to waste any time or resources on someone who is not adequately equipped for the role.
An applicant’s cover letter and curriculum vitae, as well as the resulting interview(s), can tell an employer a lot about the potential new employee - it is not uncommon, however, to ask shortlisted candidates to perform competency-based assessments or aptitude tests so that the employer can acquire a full picture of the candidate’s abilities and determine whether or not he or she is the right fit for the vacancy. It is customary for employers to hire new members on a probationary period of 6 months or a term not dissimilar to this.
This probationary period does not prejudice the Company’s right to dismiss in accordance with the notice provisions contained in the employee’s individual statement of main terms of employment, or without notice for reasons of gross misconduct, should this be necessary.
This period should be used by the employer to fully assess the employee’s work performance and establish suitability. If the work performance is not up to the required standard or the employee is considered to be unsuitable the employer should either take swift remedial action or terminate the employment, without recourse to the disciplinary procedure.
At the end of the probationary period the employee should again be reassessed. If he or she has not reached the required standard the employer should, at their discretion, either extend the probationary period in order that remedial action can be taken or terminate the contract of
employment.
The probationary period should not in any case exceed eleven months in total. The employee should receive notice of the Company’s intention to extend the probationary period before or at the end of the initial 6 month probationary period.
A clause should allow that any continuous period of absence of four weeks or more would suspend the probationary period until the employee’s return to work.
To avoid any risk of discrimination, policies (like the probationary period outlined above) should be fair and consistent and should apply to all new employees throughout the Company. In disciplinary proceedings, when dealing with employees on probationary periods, progressive steps can be skipped but it is a common misconception that fair procedures and natural justice need not be adhered to during the probationary period.
The Unfair Dismissals Acts 1997-2007 will not apply to the dismissal of an employee during a period at the beginning of employment when he/she is on probation or undergoing training provided that:
•the contract of employment is in writing
•the duration of probation or training is one year or less (including annual leave) and is specified in the contract
It is important to bear in mind that this exclusion from the Acts will not apply if the dismissal results from trade union membership or activity, pregnancy related matters, or entitlements under the maternity protection, parental leave, adoptive leave and carer's leave legislation.
Former Employee Awarded €58k for Unfair Dismissal
On the basis of a decline in sales within an exhaust business the Finance Director decided that a redundancy was required. There were 4 employees who generated sales for the company. The Finance Director believed the company only required 3 people to perform the sales roles.
The 4 individuals were informed that their positions were at risk and they were given a copy of the selection matrix that was used to determine who would be made redundant. The 4 employees all agreed that the matrix (after a slight amendment suggested by one of the employees concerned) was a fair and equitable way of assessing them. The sales director scored the matrices. The employee who scored the lowest was informed that he was to be made redundant.
The employee who was made redundant contended that the selection process had not been fairly operated. The Finance Director had not raised the issue of the exhaust centre’s declining profitability with him before deciding to make someone redundant. He was not told his sales were down.
The employee who was made redundant was at a disadvantage because the 3 other employees had a closer affinity with one another than with him and therefore he scored lower on team work.
While the employee who was made redundant did not object to the selection matrix – he did, however, feel as though it had not been scored fairly. His extensive product knowledge was not taken into account. Also not taken into account was his City & Guilds qualification.
After his redundancy the employee learned that the company had a new operation in Cork. A former employee was recruited to manage the new operation. The claimant was not told about the new operation or asked to apply for any of the jobs there.
The claimant established loss for the Tribunal.
The Tribunal carefully considered all evidence in the case. It was clear that management did not speak to the employee when they determined that his position was not profitable.
When it came to the process of selecting an employee for redundancy, the method chosen put the employee at a distinct disadvantage.
The Tribunal found that the selection process was unfair and therefore the dismissal of the claimant was unfair. The claim under the Unfair Dismissals Acts 1977 to 2007 succeeded and the claimant was awarded the sum of €58,000.00 in addition to any payment he had already received.
Update on Employers Deducting Local Property Tax (LPT) at Source
Some companies have recently received correspondence threatening legal proceedings if they deduct Local Property Tax (LPT) from employees’ salaries. The Revenue Commissioners, however, have confirmed that any legal proceedings will be strenuously contested by the State.
Section 65 of the Finance (Local Property Tax) Act, 2012, states that employers are statutorily obliged to comply with any direction that may be issued to them to deduct tax in accordance with the below statutory provision.
“Where a liable person is in receipt of emoluments ... the Revenue Commissioners may direct an employer to deduct, in a period specified in the direction, local property tax payable by the liable person from the net emoluments payable to the liable person by the employer”
Further clarification of what Employers need to know regarding LPT:
Any employee who has not yet paid, or started to pay, their applicable Local Property Tax (LPT) will have mandatory deduction at source from salary or pension imposed. Those who failed to submit their LPT return on time or failed to meet the relevant payment obligations by 1st July 2013 are under scrutiny.
Employers and occupational pension providers alike are obliged to ensure deduction at source. Revenue should have notified the employers/ pension providers of the outstanding sums via the P2Cs (The P2C is the employer copy of the tax credit certificate in respect of the individual employee).
The relevant sum is to be deducted from the employee’s net pay.
The employer is to commence deducting the LPT after receipt of the relevant P2C (after July 1st 2013). The relevant P2Cs should have been issued to most employers by mid June 2013. The LPT to be deducted is illustrated at the bottom of the P2C. The deductions must be made on a consistent basis over the 6 month period between July and December 2013. If the employee is paid weekly then the LPT deduction should be made weekly and if the employee is paid monthly then the deduction should be applied monthly.
For example if the LPT to be deducted is €300 then an employee who is paid weekly will see €300/26=€11.538 deducted from their weekly net salary (Any rounding should be in favour of the employee) - If an employee owing €300 is paid monthly then he or she is due to pay €300/6=€50 on a monthly basis.
Any refunds of LPT will be dealt with by Revenue – Employers are not to make any refunds of this kind.
If the employer receives the P2C detailing LPT after the July payroll has run then the total LPT should be deducted from August through December - the remaining 5 month period.
Employers are obliged to keep a record of the applicable LPT that they deduct for Revenue and are required to account for the figures on the Forms P30 and P35 in respect of the employees concerned. The employer is also responsible for recording the appropriate LPT data for employees on their payslips as well as P60’s and P45s.
Where there is a Court Order on file prior to the issuance of the P2C this must take precedence over the LPT deduction. However, if the P2C is issued prior to a Court Order being made then the LPT deduction will preside. Where the Court Order and P2C are issued or made effective from the same date the Court Order takes precedence. The LPT payment, however, takes precedence over all non-statutory deductions like Health Insurance.
The Employer/Pension provider cannot take an instruction from the employee to stop deducting LPT from his or her salary – the employer is obliged to deduct the applicable LPT until the P2C shows that no further payment is due. If an employee would like to pay the relevant tax via a different method he or she should contact the LPT Branch and make these arrangements – then the employer will be issued with an updated P2C telling them to stop the deduction from pay/pension. Similarly if the employee feels as though there is a discrepancy in the amount of LPT they are being charged he or she should discuss this with the LPT Branch not the employer. If an adjustment needs to be made to the P2C then a revised directive will be issued to the employer – until such a directive is received the employer should continue to deduct the original LPT figure.
According to Revenue “Where there are shortfalls due to insufficient net salary in a particular pay period(s) the employer should adjust the amount of LPT to be deducted per pay period (for the remaining pay periods in the year) to ensure the full amount of LPT is collected by the end of the year. Once this is done, the employer will not be required to notify Revenue about the shortfall. However, employers must notify Revenue in writing (e.g. by Secure Email to employersLPT@revenue.ie) where there will be insufficient income to satisfy the employee’s full LPT liability for the year, based on the expected income for the employee.”
Revenue has established a helpline for employers and pension providers alike to assist with their queries on how this LPT deduction at source will operate.
The Employer Helpline is 1890 25 45 65.