SHOULD I PANIC ABOUT AN NERA INSPECTION?
Q: I run a small business and have just received notice of an inspection from the National Employment Rights Authority (NERA). I’m extremely worried as I had a Revenue audit a few years back and, while I was eventually found to be compliant, it was a pretty long process involving quite a bit in accountancy fees. I’ll struggle to pay legal fees if this turns into something similar.
While I believe I’ve done everything by the book, there are a couple of matters I’m concerned about. Some employees have been paid in cash and, while their tax and social insurance was paid, I didn’t have them sign for their payment. The company also has had a lot of staff turnover down the years, and I can’t be certain that everyone was issued with a written contract.
I’m worried that we made an honest mistake in relation to an employee, who’s decided to contact the Authority rather than sort the issue with me. Should I be trying to set aside a budget to deal with the fall-out from this – either in fees or fines – or am I overreacting?
A: You might be overreacting. While an NERA inspection shouldn’t be taken too lightly, the process is relatively straightforward, and the NERA officials will give businesses an opportunity to get their affairs in order.
The inspection could have arisen from the complaint by the employee. However, NERA also conduct inspections based on random selection, and expect employees to try and resolve issues with their employers before calling them in – in other words, unless there’s an outstanding dispute, the Authority won’t let itself be used as a stick to beat innocent entrepreneurs. Rather, they will look for an example of your contracts and a list of employee names and addresses with PPS numbers and pay rates. They’ll also write to about 10% of these with a standard questionnaire. They’ll study payments over a set period of four weeks, which will typically include a bank holiday and ask for copies of payslips for all staff for that period. They’ll also want holiday records and details of how people are paid for holidays.
Based on the experience of our clients, we can tell you that the NERA are thorough but extremely fair. Unless they believe you’re deliberately short-changing your employees, they will simply look to ensure that all employees have been fairly remunerated, and advise you of any changes you need to make.
From what you’ve told us, though, it sounds like you really need to implement a more robust payroll system to make sure you have the proper paperwork in future. We assist many clients in this process, so just contact us if you want to find out more.
Eamonn Garvey
Do you have a question for the DCA experts? Contact us or connect with us on Twitter.
