Thursday, 10 April 2014
Maternity Benefit Issues
I raise this issue in respect of someone who is self-employed and who claimed for maternity benefit only to find that a set of rules applies to her which seriously affected her. The set of rules seems be different depending on what time of the year the baby is born. If the baby is born on 31 December then there is clear evidence that she comes within the qualifying criteria because the turnover in the business and the income will clearly show that she qualifies for maternity benefit. However, if the baby is born on 1 January it appears she must submit an estimate of her income for the following four months. If a woman is in a business or self-employed there are times in the year where income is at a lower level than later in the year, as occurred in this case. The income for the first four months of the year is often at a low level because the turnover is not there at that stage. In May, June, July and August there is a higher turnover for the person, who is able to take her income accordingly.
In this case the person has been told that she is not entitled to claim maternity benefit. She can claim it, however, once she goes back to work and she produces the figures in January 2015. Clearly, they will show that she was within the qualifying criteria for maternity benefit but only at that stage will the maternity benefit be paid. This is altogether unfair for someone who is self-employed or who runs a small business. The woman concerned must bring in someone to cover while she is out when the baby is being born and for several weeks thereafter. She must pay for that person. Therefore, she has no income and is seriously disadvantaged. How was the policy that currently applies devised? Why has the policy not taken into account the seasonal nature of the work of many people who are self-employed or the seasonal nature of income? That does not appear to have been taken into account under the current regulations and I call on the matter to be reviewed.
In a peculiar way this has something to do with me in respect of the equality area. However, it is a social protection matter and I am taking it on behalf of the Minister for Social Protection, Deputy Joan Burton.
Maternity benefit is a payment made for 26 weeks to employed and self-employed pregnant women who satisfy certain PRSI contribution conditions on their insurance record to obviate the need for them to work pre- and post-delivery of their baby.
The original scheme was introduced in 1970 and was extended to include self-employed mothers with effect from June 1997. This year, it is estimated that there will be a weekly average of 22,000 recipients of maternity benefit at a cost of €263.5 million. The main provisions relating to maternity benefit are contained in the Maternity Protection Acts 1994 and 2004, chapter 9 of Part II of Social Welfare (Consolidation) Act 2005 and chapter 2 of Part II of the Social Welfare (Consolidated Claims, Payments and Control) Regulations 2007, as amended.
To qualify for maternity benefit as a self-employed person a woman must be in insurable self-employment. This means she must have sufficient earnings in the year of her confinement to be liable to pay income tax and PRSI. The current threshold for payment of income tax and PRSI is €5,000 per annum. In addition to being in insurable self-employment the woman must also satisfy one of a number of PRSI contribution conditions. She must either have 52 qualifying PRSI contributions paid in the relevant tax year or have 52 qualifying contributions paid in the tax year prior to the relevant tax year or have 52 qualifying contributions paid in the tax year following the relevant tax year. It is not a requirement that this three-year period be the three years immediately preceding confinement.
Self-employment contributions, Class S PRSI, are not awarded for any particular year until all liabilities for that year are paid. It is incorrect to state that benefit is not paid to a self-employed woman where her child is born within the first six months of the year. I accept the Senator did not make such a statement. Where a woman has recently set up as a self-employed person or historically has earnings from self-employment below the €5,000 threshold, it may not be possible for her to qualify for payment until such time as her reckonable income and Class S liability for the year in question can be confirmed. In such instances, the Department can review the insurable status of the woman after she files her tax return to the Office of the Revenue Commissioners for the year in question.
In cases where the Department finds that a self-employed customer has a record of earnings in excess of €5,000 in previous years and has an expected due date early in the tax year, that is, within the first 16 weeks, her earnings in the previous year, if greater than €5,000, can be used as confirmation of her insurable status. All applications for maternity benefit from self-employed women are processed on a case by case basis and every effort is made to qualify the customer for payment, where possible, and in accordance with legislative provisions. The Minister for Social Protection is, therefore, satisfied that current procedures in relation to the processing of maternity benefit claims in respect of self-employed women are fair and appropriate. I accept, however, that the Senator did not claim that the procedures are unfair or inappropriate. I hope the element that applies in respect of the previous year's income and returns for a woman whose due date is within the first 16 weeks addresses the issue raised.
The position the Minister of State outlined is not factual. I telephoned the Department about this issue when the decision was made in the case I raised. Officials informed me that they cannot take into account income from the previous year in making their assessment. The reply provided by the Minister of State does not correspond to the details provided in the letter I received from the woman in question, who is a constituent of the Minister of State. Officials clearly set out in writing that the applicant must provide proof of income for the year in which the baby is born. The problem in this case is that the woman in question cannot have income from 2013 taken into account, which is extremely frustrating. Although she meets the qualifying criteria for the previous two years, she was asked to provide evidence of income for the first 16 weeks of 2014. When she provided an honest answer she was informed she did not meet the qualifying criteria for 2014 and nothing further could be done until January 2015, at which point she can make a full tax return for 2014.
The response I provided was supplied by the Department of Social Protection and cleared by the Minister, as is the norm. I suggest, therefore, that the Senator show a copy of the Minister's response to the official in question. Perhaps it is an issue of interpretation. The Minister clearly views the issue in the manner set out in the reply.