Q. I am a self employed individual and have my own business providing repair and maintenance services to individuals and companies. In recent months I have lost several large contracts and the business is no longer viable. I have two employees who have worked with me for the last 15 years. I have been told that my employees will be entitled to jobseekers’ benefit if the business folds but as the owner I have no entitlements. Is this correct?
A. For PRSI purposes, you are a self employed person and are liable to make PRSI contributions under Class S.
Other Class S contributors include:
• Professional people, doctors, dentists, solicitors.
• Sole traders, people in business on their own or in partnership, farmers, contractors, sub-contractors.
• People with income from investments, rents, or maintenance payments.
• Employees who are also self-employed in a trade or profession.
• Company directors, and others, who pay their tax through the PAYE system but who are not regarded as employees for social insurance purposes.
• Artists and childminders who have been made exempt from income tax by the Revenue Commissioners.
• Individuals who make Class S contributions pay PRSI at the rate of three per cent on their reckonable income. They also pay the health levy at the rate of two per cent or 2.5 per cent of their income. These rates were increased to four per cent and five per cent in the April Budget.
Unfortunately, your social welfare entitlements as a self employed contributor are relatively limited. If you meet the required levels of PRSI contributions, you will be entitled to receive the following benefits from the State:
• Widow’s and widower’s contributory pension.
• Guardian’s payment (contributory ).
• State pension (contributory ).
• Maternity benefit.
• Adoptive benefit.
• Bereavement grant.
As you can see from the list above you will not be entitled to receive any form of guaranteed job seekers benefit from the state.
However, you may be able to claim a job seekers’ allowance as opposed to job seekers benefit to which you are not entitled as stated above. The difference in the payments is that job seekers allowance is a means test based payment, whereas job seekers benefit is a guaranteed payment based on your PRSI contributions. The means test will examine all income available to you, including that of your spouse, to determine whether you will qualify to receive the allowance or a reduced payment.
In addition to meeting the requirements of the means test, you must also be:
• Unemployed.
• Over 18 and under 66 years of age.
• Be capable of work.
• Be available for and genuinely seeking work.
• Meet the habitual residence condition.
You do not need to close your business or stop working as self-employed person to get jobseeker’s allowance. You will get the allowance once your income is below a certain level.
As you can see from the above, as a self employed individual you are not guaranteed any unemployment benefit from the Government. You will only receive a payment if your income is at a low enough level to meet the requirement of a means test.
