Both the Department of Social and Family Affairs and the Department of Finance have agreed to review the 10% PRSI levy being imposed on lump sums received by former Waterford Crystal workers.
As a result of questions raised by Waterford Fine Gael TD John Deasy, the Department of Social and Family Affairs has agreed to review the imposition of PRSI on money paid to ex-‘Glass’ employees by KPS Capital Partnership and will contact the Department of Finance accordingly.
The situation arose when the Waterford Crystal receiver David Carson of Deloitte Ireland refused to pay the employer’s PRSI on the combined payment of €10 million being made to former workers at the Kilbarry factory.
“I’ve been in contact with the PRSI section at the Department of Social and Family Affairs as I didn’t believe it was absolutely clear why these workers are being forced to pay their employer’s PRSI,” Mr Deasy said this week.
“The Department has responded by requesting that I withdraw the parliamentary question so that they can consult with the Department of Finance on the matter. I’ve agreed to do that in order that both Departments consult and look into the matter more thoroughly before they give a definitive ruling.”
According to Mr Deasy, in most cases lump sum payments made to employees when they leave employment are not subject to PRSI. These would include redundancy payments, gratuities, ex-gratia payments and pay in lieu of notice.
“It’s a question of determining how this lump sum is classified and whether or not it is then exempt from tax. I’ve made the argument that if the payment is exempt from tax it is then automatically exempt from PRSI. The Department of Social and Family affairs have promised to revert back to me with a definitive ruling this week once they have consulted with the Department of Finance.
“In many cases,” he added, “these workers have lost almost the entire worth of their pensions, never mind their jobs. This is situation where a little understanding and common sense on the part of the Government wouldn’t go astray.”