Employers’ PRSI Incentive – Boost or Dole Trap?

The Employers’ PRSI Incentive Scheme  – Is it merely a dole trap for graduates?

Newly-recruited employees can enjoy an exemption from employers PRSI for 12 months, under the Employers’ PRSI Incentive Scheme. This scheme was introduced in Budget 2010 and extended in Finance Act 2011 to continue until the end of 2011.

The incentive is open to employers who create new and additional jobs in 2010 and 2011. If you created a new job in 2010, before the scheme was launched in June 2010, you may still qualify for an exemption of employer’s PRSI for this job.

The 12 months exemption applies from the date you are approved for the scheme.

Rules

Both the job you create and the person you employ must meet certain criteria. While you are waiting to be approved for the scheme, you should operate the standard employee and employer PRSI.

The person you employ must be on the FÁS Work Placement Programme for at least 3 months or be getting one of the following social welfare payments for a continuous period of at least 6 months:

The job must:

  • Be created in 2010 or 2011
  • Be a new and additional post/job – employers will not be allowed to substitute existing employees to avail of the scheme
  • Be for at least 30 hours per week
  • Last for at least 6 months. If the employment ends within 6 months of getting the exemption, you may be liable to pay the employer’s PRSI contributions for that employee.

Exemption limits

You can only get an exemption from employer’s PRSI for up to 5 employees. A higher limit of 5% of their existing workforce applies to large employers.

How to Apply

If you have a new employee and are eligible for the scheme, fill in Form PRSI 20 and send it with a current tax clearance certificate to

Department of Social Protection
Floor 2
Shannon Lodge
Carrick-on-Shannon
Co. Leitrim

Is it enough?

One of the biggest economic problems in Ireland right now is that so many employers are scared stiff of the downturn getting worse. As a result, they are not hiring staff unless absolutely necessary.  Employers PRSI is often (quite correctly) cited as a disincentive to employment.   This incentive aims to address this problem , but in truth it is far too restrictive to do so in any meaningful way.

A Dole Trap?

The fact that it is restricted to workers on social welfare and/or the Fas Work Placement Programme  is a case in point. This would imply that a new graduate must stand in the dole queue or sit on a Fas course for 3/6 months after they graduate before they can take up employment under the scheme.  Are we in danger of creating a ‘dole trap’ for our best and brightest?