Penalties and Interest on Arrears
Non-Payment of Contributions
Where payment is not made by the 15th of the month following the month for which contributions are due a penalty equivalent to 25% of the sum due will be charged to the employer. e.g. contributions due for the month of June 2010 must be paid by July 15th 2010. Payment after this date will attract the penalty of 25%.
How will penalties be applied?
If contributions due for any month are not paid by the 15th of the following month a 25% penalty will apply from the 16th. If contributions totaling $1000.00 are due for January 2010 have not been paid by February 15th 2010 a penalty of 25% will apply from February 16, 2010. Therefore, contributions and penalties totaling $1250.00 will be due from February 16, 2010.
Example: $1,000.00 + 25% = $1,250.00 of which $250.00 is the penalty due from July 16, 2010.
When will interest apply?
If contributions and penalties have not been paid by the 15th of the second month, 15% interest will apply on the total sum. Using the above example, if contributions and penalties totaling $1250.00 have not been paid by March 15, 2010 an interest rate of 15% (pro-rated) will apply from March 16, 2010 until the sum is paid.
How will interest be calculated?
Interest is calculated as follows:
Total of contributions and penalties X 15 X # of days total sum remained unpaid after the 15th of the second month divided by 36500.
Using the above example, if payments are made on March 20, 2010, interest will be calculated as follows:
(1250 X 15 X 5) = 2.57
Effective January 7th 2008, a penalty of 100% will be applied to contributions, penalties and interest due for any periods of five (5) years and over on the total sum as the penalty.
Non-Submission of Contribution data/Submission of Incomplete or Incorrect Data
Contribution data is due on the last day of the month for which contributions are payable. A penalty of $1,000.00 will be charged to the employer who fails to submit contribution data by the 15th of the following month and $20.00 per day from the 16th of the month until submission.
A penalty of up to $1,000.00 will also be imposed for inaccurate/incomplete submission of data.
Outstanding contributions include any amount payable by an employer as a contribution under the Act and deducted or due to be deducted from an employee’s wages or remuneration in accordance with the National Insurance Act.
When Are Contributions Due?
Contributions are due in respect of each week or part of a week that an employee works with an employer. This includes periods of apprenticeship, probation or try-outs.
Where salaries are paid in respect of a fortnight or calendar month, the numbers of contributions due are based on the number of Mondays in the said fortnight or month.
Contributions are to be deducted no later than when the payment of such earnings is made.
Contributions for a month must be paid on or before the last day of the month. However, there is a grace period up to the 15th day of the following month.
Employers must remember that contributions for all employees (including paid apprentices, domestics and casual agricultural workers ) and unpaid apprentices, are due from the start of their employment, apprenticeship or probationary period.