Jamaica Statutory Deductions | My Employer Is Not Remitting Them
Dave asked a very topical question we have been hearing these days, and so I decided to publish the response to the benefit of others. It was essentially about deductions not paid over by employer for him to access benefits.
Here is his question (below) with Kesha's response.
RESPONSE: by Wellesley
Where do you go to ensure your salary deductions are paid over by your employer to the Government?
Are there any penalties to my employer if he don't pay over my deductions and I can't access any Government benefits.. example, the COVID-19 Benefit.
I was denied because my boss refuse to give me a letter that I am laid off.
Here's a brief background (to you, and others who might read this)
Jamaica uses a PAYE System for statutory deductions. This is how it works in a nutshell. Your employer deducts and pays over your statutory deductions to the government; No hassle for you.
These deductions comprise payments to the National Housing Trust (NHT), Education Tax (Education), National Insurance Scheme (NIS) and Income Tax. These payments are a predetermined percentage of the employee’s income.
The payment of these deductions are reflected on a specific segment of the pay advice which accompanies each salary payment.
According to the salary cycle (weekly, bi-weekly, monthly etc) the employee may see these specific deductions outlined on the “pay stub”.
Unfortunately, most employees do not follow up with the employer to ensure that these mandatory sums are paid over to the relevant government body in a timely manner.
That was highlighted recently when the GOJ announced a raft of benefits under the CARE programme to bring relief to a number of Jamaicans who have been crippled by the impact of the COVID 19 pandemic.
However, your relief is short lived because in the process of making your claim you discover that you are unable to benefit from the direct cash of JMD 9,000 for six weeks, simply because your employer has not been paying over your statutory deductions :-(
You’re decidedly confused and upset...
Your deductions are being faithfully made, your pay advice says so, but unfortunately the deducted sums are not being remitted to Tax Administration Jamaica (TAJ).
This may be seem surprising but Jamaica’s tax collection system, although much improved over the years, still have much opportunities.
But how can I prevent this from happening? Good question.
My suggestion... don’t just believe (assume) that your employer has been paying over the deductions (deducting and remitting are not the same).
Please, when in doubt check it out and it is quite simple to check with any of the government bodies to see if your deductions are current.
In the past, to check your NHT deductions you would visit any of the offices of the NHT in each parish, present your NIS card number, three consecutive recent pay advices (pay stub) and they would then tell you how current your payments are.
You could then be sure if you need to approach your employer to have your payments regularized. NHT payments must be consistent over a stipulated period before one is able to apply for a mortgage. Which is the primary intention of making the contribution in the first place.
Formerly, the NIS office located in your parish would be a logical place to start making checks about the status of your contribution.
You had to take along valid identification and three recent pay advices to help the clerk serve you better.
The payment of NIS contributions ensures that you can claim for on-the -job injuries and your dependents can claim for death benefits after you have passed on.
Education Tax and PAYE Deductions
The Tax Administration Jamaica (TAJ) is responsible for receipt of the Education Tax. This tax helps to support the budget of the Ministry of Education. The TAJ office in your locale is the place to start checking things out.
Most parishes have a TAJ branch in the parish capital and one or two at other town centers in the same parish. It may be a good idea to call ahead and see where is the best place to go to make your inquiry. It’s a good idea to take along the usual last three pay slips, valid identification and your TRN.
The biggest statutory deduction is of course income tax, aka PAYE, and is paid to the TAJ. It is a fixed rate percentage of your income after a particular threshold. Although we ‘bawl’ (complain) about the ‘exorbitant amount’, how often do we check to see if the government is receiving this money from our employer? Not very often.
In most cases we only do so when certain kinds of business are being done. Jamaicans normally show very little interest in the status of their obligations with the government unless they are self-employed and have to calculate and pay over these sums on their own.
The One-Stop Shop
In fact TAJ
is now a one-stop shop where employers go to make statutory deduction payments. You can make inquiries there as well. In some cases you can request relevant forms from your employer to aid your request. It's also possible to set up online account with TAJ to facilitate faster queries.
Are there specific penalties for employers who fail to remit statutory deductions to the government? Well as you can see there are benefits tied to most of the existing statutory deductions. Failure to do pay over the deductions has negative implications for the employee but what can be done about an employer who does not pay up? It’s a breach of the local tax act and such the resultant penalties would apply.
However since you have a vested interest, you may consider legal advice.
As to whether you will receive your benefit under the GOJ CARE programme despite the unpaid statutory deductions? That is yet to be determined; One sector/entity, The Jamaica Hotel and Tourist Association (JHTA) says it is working with the government to have the matter resolved. A number of the accused employers, we are told, were in the hospitality sector.
KS Wellesley's Note
I hope this helped.
Be sure to read more on The Statutory Deductions In Jamaica
to get an ever greater understanding of the taxes.
For many more questions answered, click here