How does Paternity Benefit affect your business?

More than 40 years ago, Sweden introduced paid paternity leave for fathers and from September 2016 Paternity Benefit was available in Ireland.

It applies to a person in respect of any child born to them or placed with adoptive parents. The person must be in employment/self-employment and covered by PRSI (Pay Related Social Insurance).

Paternity Benefit provides a weekly payment of €240 for two weeks. It must begin on or within 26 weeks of the estimated due date/date of placement and must end no later than 28 weeks from this date.

A report carried out in March 2016 by the Organisation for Economic Co-operation and Development (OECD) stated that more than half of all OECD countries grant aid parental leave but in many countries fathers account for less than one in five of those taking parental leave.

The positive impacts of parental leave include helping the mother recover from childbirth, greater share of the childcare burden, and the support of women’s careers.

Claiming the benefit

In order to claim the benefit, you need to give your employer at least four weeks’ notice and provide proof of the expected date of delivery. You also need to be able to make your application online via MyWelfare.

Your employer then completes a form to confirm that you are entitled to paternity leave for the dates provided.

If you are self-employed, a doctor must certify the due date. For the self-employed person, they will receive a guaranteed income of €240 per week to allow them to enjoy the first few weeks of their newborn’s life at home.

There is no statutory obligation on the employer to continue to pay normal salary during the paternity leave. Some employers may wish to ‘top up’ their employees’ salary during this time as is done in some cases during maternity leave for the mother.

The rule that employees must give their employer four weeks’ notice will allow the employer to plan for the time which the employee is absent.

Employee rights are protected during their leave. Their working conditions cannot worsen and if pay or working conditions improve while the employee is off then they are entitled to these benefits once they return.

Employers need to make sure their company policies take account of Paternity Benefit. Overall, there should be no financial burden on the employer with this change.

Impact on payroll

Paternity Benefit (including any increases for adults and child dependants), payable by the Department of Social Protection (DSP), is liable to tax. USC (Universal Social Charge) and PRSI will not apply.

Revenue will receive details of the benefit payments which will be updated on to Revenue’s records.

Individuals, who pay their tax through the PAYE system, will where possible automatically have their annual tax credits and rate bands reduced by the amount of the Paternity Benefit payment. Employers and pension providers will be advised of the adjusted tax credits and cut-off points on employer tax credit certificates (P2Cs).

The self-employed will include the benefit on their Form 11 at the end of the tax year.

Editor’s note: This post was originally published in October 2016 and has been updated for accuracy and relevance.