Vol. 569 No. 5
3 Mr. F. McGrath asked the Minister for Social and Family Affairs her views on the fact that job sharers have to change their pattern of work to accommodate the tax system, particularly in relation to PRSI contributions for job sharers and if she will intervene to resolve this issue. [18125/03]
I thank the Deputy for this nice, hard question. The social insurance system, by linking the payment of social insurance contributions to individual entitlement for short-term and long-term benefits, guarantees basic pensions in retirement, invalidity and widowhood, as well as providing a range of payments during working life. The concept of weeks of insurable employment plays a key role in the operation of the PRSI system. An employer and employee must make their respective PRSI contributions in respect of any week of insurable employment where the employment itself meets the definition of insurable employment and the weekly earnings are in excess of €38. In return, the employee is entitled to a PRSI contribution for any contribution week or part thereof that he or she is rostered to work and-or payment is due in respect of that work, regardless of when payment is made.
A contribution week is defined as each successive period of seven days starting on 1 January each year. Work sharing arrangements are agreed between an employer and an employee and examples can include a four day week, a three day week, a week on, week off, mornings only etc. In many cases, the attendance pattern will overlap with the pattern of contribution weeks and work sharers will receive contributions in respect of 52 weeks, as is the case with full-time workers provided their weekly earnings exceed €38. My Department recently published an information booklet which specifically deals with the issue of the interaction of the pattern of weeks of insurable employment and attendance patterns.
It is recognised that there may be work sharing patterns where, in some years, the employee may be awarded only 26 weeks contributions or 39 weeks contributions. The attendance patterns and the years when this might occur are identified in the booklet. The type of work sharing involved may affect the amount of PRSI the employer and the employee pay and may also affect the number of PRSI contributions the employee is awarded. The exact effect depends on the attendance pattern worked and the level of earnings in any given week. Employees are not obliged to change their attendance patterns in these circumstances, although they may do so if they wish to increase the number of contributions they are awarded in that year to 52 contributions.
A change in the present PRSI contribution arrangements based on weeks of insurable employment would have major implications and could adversely affect the position of certain categories of employees. As the Deputy will appreciate, central to this issue from the perspective of the employee is whether a smaller number of contributions would affect entitlement to benefit at some future date. For longer-term benefits, such as old age contributory and retirement benefits, it is most unlikely that entitlement would be adversely affected by the work attendance pattern given that it is the person's contributions over their entire working life that determine entitlement to benefit.
Additional InformationQualification for long-term benefits requires that employees have a minimum number of paid contributions to qualify as well as reaching a yearly average of paid and credited contributions over an extended period.
In the case of short-term benefits, the contribution conditions for short-term benefits such as unemployment and disability benefit were changed recently. In such cases, the condition whereby 26 paid weeks in the governing qualification tax year and 26 contributions paid in the prior tax year will mean that the employee who has been awarded only 26 contributions in a year is fully covered for short-term social welfare benefits.
I thank the Minister for her detailed response to my question. I will spend a great deal of time tonight reading it to understand it.
The Deputy is not the only one.
Does the Minister acknowledge the massive contribution of job sharers to the family and wider economic society? Will she ensure that their rights are respected? Does she accept that the information technology age and the major workplace changes it implies mean that job sharers and their needs must be part of any system? The system should change to assist them. I urge the Minister to make this a priority issue to enhance and develop equality in our society. As her main brief covers social and family affairs, will the Minister ensure that the tax system suits the family, where possible, to improve family life?
I will forward the information booklet to the Deputy. No more than the Deputy, I have had to brief myself on the matter. It comes down to the differential between one's calendar week and the contribution week. If the calendar week begins on 1 January on a Wednesday, the contribution week will be the following Wednesday. A person who works on Monday and Friday or Monday and Tuesday, will find themselves in a vacuum with only 26 weeks of contributions. They will have to change their work practices. A complex methodology is involved, but it does not affect people's long-term benefits while the short-term benefits require 26 weeks' contributions. In the main people will not be affected.
Following submission of the Deputy's question, I analysed whether it would be appropriate to change the methodology, but discovered that the consequences for other schemes would be hugely negative. Over the years, we have examined and changed the number of contributions needed in a certain period to benefit from schemes. Reviews of the changes are ongoing. I agree that work sharing is very important and beneficial to the employee who may wish to get out of the house to do a few hours work. In the main, the employee is not expected to change and 26 weeks of contributions constitutes the usual baseline for short-term benefits. The long-term benefits are not affected. There are some who might get caught in the loop which is why we advise them of the methodology of the calculation. In consultation with their employer, they may have to change their work practices in order not to lose out on benefits. The additional information in the Official Report will explain the matter even more fully. I will forward a copy of the booklet to the Deputy when it is available.
