It is important that labour costs are considered first, before taking on a full-time employee, financial specialist with Teagasc, Kevin Connolly has said.
“Not looking at these costs beforehand could have serious financial consequences,” Connolly explained.
Connolly was speaking at the ‘Managing Labour On Your Dairy Farm’ conference at the Horse & Jockey Hotel on Thursday of last week.
He was focused on the financials of hiring additional labour and how to manage this additional labour.
Here, AgriLand highlights five key points from the conference that farmers need to consider when employing staff.
1. Hire the right person
Connolly said that hiring the right person is very important.
“I’ve heard horror stories in the past where farmers hired a person and, a couple of months down the line, they discovered that the person just wasn’t fitting the job,” Connolly explained.
He continued: “Fertility performance, for example, can suffer as a result of this and it leads to reduced farm profit.”
2. Don’t fall into ‘net pay trap’
Connolly warned of the ‘net pay trap’.
If you allocate wages through ‘net pay’ and sort the employees taxes for them, the employee can actually allocate the tax credits to their spouses, reducing the spouse’s tax bill. This adds to the employer’s cost.
Connolly added: “Always pay the gross amount due to the employee.”
3. ‘Non-cash benefits are important’
Non-cash benefits include use of a car or a farm vehicle for private use, subsidised or free accommodation, bills paid for, etc.
Connolly said: “I’ve received advice from accountants on this subject and I must admit that it is a tricky issue. Non-cash benefits can be important when the wage is already competitive.”
He also said that appropriate work-wear should be provided to staff.
4. Almost €6,000 non-work cost
- Payment for public holidays;
- Annual leave of 21 days;
- PRSI cost.
This figure can make up nearly 25% of the total wage paid to the employee, Connolly added.
5. Hiring staff: The manager’s benefits
One of the biggest benefits of hiring staff is that the manager’s time is freed up, Connolly explained.
“The manager can step back from the business and see if there is any room for improvement. Areas such as breeding and grassland management can receive more focus,” Connolly concluded.