Joe McHugh (Donegal, Fine Gael) | Oireachtas source

Ba mhaith liom mo bhuíochas a ghabháil leis an Teachta fá choinne an t-ábhar seo a ardú. Tá mé ag obair ar an ábhar seo agus tchím na deacrachtaí agus tá mo chomhghleacaithe ag obair le chéile fá choinne réiteach a fháil. Ar dtús, labhróidh mé faoi chúlra an ábhair seo.

I am taking this issue very seriously. I am very glad the Deputy raised it. A large cohort of people has been affected. I would like to give some background, as the Deputy asked for, and then I will outline to the House what we are doing to rectify this situation.

The Revenue Commissioners introduced pay as you earn, PAYE, modernisation systems from 1 January 2019. PAYE modernisation involves the most significant reform of the PAYE system since its introduction in 1960. From 1 January 2019 employers are required to report their employees’ pay and statutory deductions to Revenue for each payroll issue. The new real-time reporting regime is operational for all employee payments made from 1 January 2019. Employers, agents and payroll providers have to have new business processes and practices in place to meet the new requirements. This involved major changes to most payroll systems in the country. The aims of PAYE modernisation are to improve the streamlining of business processes and to reduce the administrative burden previously experienced by employers in meeting their PAYE reporting obligations.

My Department issues 120,000 payments per fortnight to teachers, non-teaching staff, retired staff and casual and non-casual substitute staff. The serving staff are employed by the managerial authorities of schools and their salaries are paid by my Department on behalf of the managerial authorities. The salary issue that has arisen and has been referred to relates to the taxation of the substitute staff. It is confined to substitute staff who were paid in the first payroll of 2019 and in the case of post-primary substitute teachers in the second payroll also. The first payrolls of 2019 were on 3 January 2019 for post-primary teachers and on 10 January for primary teachers, non-teaching staff and retirees. The second payroll for post-primary staff was on 17 January.

The claims for the payment of substitute staff are submitted by the managerial authorities of schools using an automated system referred to as the on-line claim system, OLCS. The records of employment are submitted through the OLCS for casual and non-casual substitute staff. The details of each period of employment transfer to the Department where the appropriate rates of pay are applied, statutory deductions are calculated and the payment issues in the regular payroll run for the sector. The OLCS ensures that service history for casual and non-casual substitute staff is accurately recorded regardless of the number of schools a person may teach in and ensures accurate service history and accurate incremental progression.

In the first payrolls of the new year, in which the new system was applied for the first time, the payroll files that transferred to Revenue inadvertently included an end date for casual and non-casual substitute staff which informed Revenue that these staff would not be paid under this employer number in the future. This notification immediately caused Revenue to reduce the tax credits and cut-off points to zero for this cohort of staff. This meant that when they were next paid there were no tax credits available to be applied to the salary if they were paid on our payrolls in the next payroll issue. When Revenue is notified by an employer that an employment has ceased, the credits at that employment are available for reallocation to an existing employment or to a new employment. This has affected the substitute staff paid in the payrolls I mentioned, a group which represents 8% of payees on the payrolls. This has meant that substitute staff who were paid on the payrolls of 3 January, 10 January and 17 January and who have continued to be employed since are being taxed at a very high rate. Substitutes employed or paid after these dates for the first time in the 2019 tax year are not be affected by the issue.

The payroll software has been amended to prevent an end date transferring to Revenue for future payments. This means that casual and non-casual substitute staff being paid for the first time in the 2019 tax year since the payroll of the 17 January will not have problems with tax credits. However, this software amendment did not correct the issues that arose for the substitute staff paid in the first payrolls of the year. That is the issue that has been raised tonight. Within my Department the highest priority is being accorded to addressing the problem for the substitute staff affected and to ensuring that the correct tax credits apply and that refunds of tax that have been deducted in error will issue to the people in question.

The introduction of the PAYE modernisation systems by Revenue means the resolution of the issue is not completely within the control of the Department of Education and Skills. It requires collaboration with the Revenue Commissioners to address the issue and reach a technical solution. My Department is actively working with the Revenue Commissioners to bring about a resolution. I have just left a meeting on this very issue and I wish to let Deputy Byrne and the House know that we are using all our efforts and capacity to find a solution for this. A technical solution is needed, but this requires effort at a human level as well. I am conscious that there are teachers out there who have faced deductions and are facing pressure with the everyday realities of living, having expected a certain amount and then not received it. I wish to give an assurance that when this is rectified, the deductions that were made will be reimbursed.

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