Participants in certain employment schemes, including community employment schemes (CE), receive a weekly payment which is equal to the social welfare payment appropriate to their family size, plus a top up of €20, subject to a minimum payment of €208 per week. This income is treated in the same manner as earnings from employment for PRSI purposes and accordingly is subject to Class A PRSI. Therefore participants on CE schemes, similar to other private sector employees who pay Class A, can establish entitlement to the full range of short term benefits including jobseeker’s benefit, illness benefit, and maternity benefit and to long term benefits including State pension (contributory).
In Budget 2013 the weekly PRSI-free allowance of €127 was abolished for all Class A contributors. This measure had no impact on Class A contributors who do not pay PRSI where their earnings are less than €352 per week. For those earning in excess of €352 per week and paying PRSI at 4%, this increased the weekly PRSI charge by €5.08. This affected all Class A contributors who were paying 4% PRSI on their earnings. It also affected participants on CE schemes whose income is treated as earnings for PRSI, in the same manner as it impacted the earnings of employees.
At the end of January 2014 there were 1,896 CE participants earning over €352 per week and who pay PRSI. In the vast majority of cases, even taking account of the increased PRSI charge, the amount of the CE payment exceeded their underlying social welfare entitlement. There were only 31 cases where the CE recipient would have been better off financially if they retained their original social welfare payment, when compared with the CE payment.
Any proposal to re-introduce the PRSI-free allowance to address this issue would reduce income to the Social Insurance Fund and could only be considered in a Budgetary context.
