To determine which legislation applies (i.e. UK or Irish) it is important to establish where the employee will be carrying out their duties. In certain circumstances, if your company is based in Ireland and employs a Northern Ireland resident to carry out duties in Northern Ireland, a special scheme known as a Direct Contribution of National Insurance (DCNI) scheme has to be operated in the UK. This is an NIC only Scheme. NIC will be payable by both the employer and the employee and the employee will need to register for Self-Assessment and pay tax on his salary via Self-Assessment. However, if the Irish company has a tax presence in Northern Ireland e.g. through having a branch or agency in the UK, then the branch or Agency would need to register for UK PAYE and National Insurance and operate same on the payments to the Northern Ireland employee. You should seek professional advice in relation to this area.
This is a complex area. If an Irish employer, who does not have a permanent or deemed permanent establishment in Northern Ireland, is sending Irish resident employees into Northern Ireland to work and they spend more than 183 days per year working in Northern Ireland, those employees must be on a UK payroll.
As the UK have a new statutory residence test, employees who exceed 183 days in the UK may need to take separate advice in respect of their overall tax position.
Where an Irish employer has RoI resident employees working in Northern Ireland for more than 60 days for a permanent establishment or branch the Irish employer must register for UK payroll. However, there is no requirement to operate UK payroll between 60 – 183 days where certain conditions are met.
The Irish employee may be entitled to transborder workers relief and therefore no Irish tax will arise on the UK earnings. If it is a temporary secondment to Northern Ireland i.e. less than 2 years, the employee and employer can elect to continue paying Pay Related Social Insurance (PRSI) in Ireland instead of UK NIC. An application can be made to obtain an A1 certificate of continuing liability.
This could result in employees receiving less takehome pay than they would if their salary was only subject to the Irish / UK PAYE system. This is likely to cause great complications and labour relations problems for employers whose employees are regularly assigned to work in the other state. For this reason, you are strongly advised to consult your professional adviser if these rules are likely to impact upon your business.
Bear in mind that if you employ someone in Northern Ireland to work for you, that employee can avail of rights under Northern Ireland Employment legislation. Specific legal advice should be taken with regard to the employment contract. While Ireland and Northern Ireland employment legislation are broadly similar, there are specific areas where the legislation differs between the two jurisdictions e.g. Disciplinary and Grievance procedures.