OK just had a very interesting conversation with SCOPE section in the Dept of Social Protection regarding this issue
Traditionally in Ireland a director was deemed Class S if they were regarded as a proprietory director
Roughly speaking this meant that any director running a company on a day-to-day basis who had a minimum 15% shareholding in the company would be regarded as Class S. This meant that the company paid no Employer's PRSI and the director received no benefits arising from their PRSI contributions except State Pension and Maternity Benefits
However SCOPE are currently not "allowed" to give any determinations in relation to the PRSI class of directors because recent case law in the UK has resulted in the potential for any determinations to be regarded as legally unsound.
The case law in question is
Secretary of State for BERR v Neufeld & Howe (2009) IDS Brief 881 CA
Due to this case:
Obviously there is no case law in Ireland at the moment but it would appear from the above that if a director wished to pay PRSI under Class A (and therefore become entitled to statutory redundancy and/or jobseekers allowance in the event of the company closing up), the burden is on the Irish Revenue/State to disprove the absence of mere employee status.
http://www.bailii.org/ew/cases/EWCA/Civ/2009/280.html
[broken link removed]
http://www.croner-i.croner.co.uk/croner-i/gateway.dll/hra-resources/hra-features/hra-features-content/hra-gold-features-dcam-4711701?f=templates$fn=hra-frameset.htm
Sorry about the last link - it won't "link" properly but is the most informative. If you copy & paste it seems to work
Traditionally in Ireland a director was deemed Class S if they were regarded as a proprietory director
Roughly speaking this meant that any director running a company on a day-to-day basis who had a minimum 15% shareholding in the company would be regarded as Class S. This meant that the company paid no Employer's PRSI and the director received no benefits arising from their PRSI contributions except State Pension and Maternity Benefits
However SCOPE are currently not "allowed" to give any determinations in relation to the PRSI class of directors because recent case law in the UK has resulted in the potential for any determinations to be regarded as legally unsound.
The case law in question is
Secretary of State for BERR v Neufeld & Howe (2009) IDS Brief 881 CA
Due to this case:
- The burden of proof is on the party denying employment status, especially where the person has paid tax and National Insurance as an employee. Where an individual’s employment is in dispute, a tribunal must be satisfied that any relevant document is a true reflection of the claimed employment relationship and what it did under the contract is relevant in determining its true status, rather than the mere fact that there exists a memorandum or board minute purporting to establish an individual’s employment.
- Having a controlling shareholding in the company does not of itself prevent a contract of employment arising, and neither does having de facto control of the company.
- The fact that a person is an entrepreneur, has built the company up from scratch, or will gain financially from the company’s success does not in itself prevent a contract arising.
- If the parties conduct themselves according to the contract, eg where the individual works the stipulated hours or does not take more than the stipulated holidays, that is a strong pointer towards employee status.
- Conversely, where the parties act inconsistently with the contract, or are not governed by it, that is a strong pointer against employment.
- The assertion that there is a genuine contract will be undermined if there is nothing in writing, although tribunals should not seize too readily on the absence of a written term to justify a rejection of the claim.
- While acting inconsistently with a contract of employment is important, taking a loan from or guaranteeing the debts of the company are not normally destructive of the employment relationship.
- Although a majority shareholding and/or control will always be relevant and may be decisive, that fact alone should not justify a finding of no employment.
Obviously there is no case law in Ireland at the moment but it would appear from the above that if a director wished to pay PRSI under Class A (and therefore become entitled to statutory redundancy and/or jobseekers allowance in the event of the company closing up), the burden is on the Irish Revenue/State to disprove the absence of mere employee status.
http://www.bailii.org/ew/cases/EWCA/Civ/2009/280.html
[broken link removed]
http://www.croner-i.croner.co.uk/croner-i/gateway.dll/hra-resources/hra-features/hra-features-content/hra-gold-features-dcam-4711701?f=templates$fn=hra-frameset.htm
Sorry about the last link - it won't "link" properly but is the most informative. If you copy & paste it seems to work