Boyle Payroll Project Management

Payslip
PPS Number Ireland3
Employers Registered Number (ERN)
Gross Pay
   Overtime
   Premium Pay
   Company Share-Based Remuneration
   Benefit-in-Kind
  Sick Pay or Illness Benefit
  Maternity Benefit
  Paternity Leave
  Net Pay5
  Pay as You Earn (PAYE) Ireland
    Income Tax
    Taxable Pay. 6
    Tax Credit and Universal Social Charge Certificate
    Tax Rate Bands. 6
    Tax Credit
. 7    Offset Against PAYE
    Band 1 Credit Reduction
      Tax Credits Reduced by DSP Payment
    Week 1/Month 1 Basis
    Emergency Tax Normal Rules
    Income Tax Return8
    Statement of Liability
      Year-end Tax Underpayments
      Year-end Tax Overpayments & Tax Rebates Ireland
      Working from Home Tax Relief
    Employment Detail Summary (Formerly P60)
    End of Year Certificate (P60)
    Revenue Payroll Notification Number (RPN)
    P2C11
    Week 53
    Cessation Certificate (Formerly P45)
  Pay Deductions
    Voluntary Deductions
    Statutory Deductions
  Pay Related Social Insurance (PRSI) Ireland
    Employees PRSI
    Employers PRSI
    PRSI Class
    PRSI Subclass
  Universal Social Charge (USC)13
  Paid Leave
    Annual Leave
      Calculating Annual Leave
    Public Holidays16
      Public Holiday Dates in Ireland
      Qualifying Rules for Public Holidays Entitlement
      Public Holidays Falling on a Weekend. 18
      Public Holidays Entitlement for Part-time Employees19
  Force Majeure Leave
  Bank Holiday. 20
  Breaks and Rest Periods Ireland
  Collective Agreements
  Contract of Employment. 21
  Wages
    Minimum Wage
    Living Wage22
  Employment Permit
  Redundancy
  Gross Weekly Pay for Redundancy Calculation
  How to Apply for Redundancy Payment
  Pay Frequency
  Pay Date24

All employers are required to register with the Office of the Revenue Commissioners for PAYE purposes. Employer Registered Numbers vary depending on the sector in which PAYE workers are employed. PAYE workers need to know their Employer Registered Number for tax purposes. Workers need to ensure that Revenue issues a current tax certificate to their correct Employer Registered Number. Employers Registered Number can also be referred to as ERN on the DSP website when making benefit claims. The best place for a PAYE worker to find their Employers Registered Number is on their “myAccount” page on Revenue's website. Once a PAYE worker clicks into “Manage Your Tax” on their MyAccount they will see their active employments. They then need to select view beside the employment they need. Once they do this the number required will be directly across from this. In some circumstances Employer’s Registered number may also be displayed on payslip. This number is Alpha Numeric, meaning that it will have numbers and letters, like a PPS number.

Offset against PAYE on your statement of liability means that a refund due is reduced by any money owed for a previous year. This situation arises for many PAYE workers following their Income Tax Return for 2021 because many people overpaid tax because of PUP or Illness benefit payments which were subject to tax in real time. The process used by revenue for this real time tax resulted in PAYE workers been overtaxed in 2021. Tax underpaid in 2020 on PUP and TWSS was to be collected by reducing tax credits over a four-year period commencing in 2022. Howeve, a note was included on the 2020 Statement of Liability stating that all future refunds will be automatically offset against this underpayment until it is fully collected.

Band 1 Credit Reduction

A person’s standard rate cut-off point, and credits can be reduced by Revenue, and depending on the amount of the reductions, they may also have a band 1 credit reduction. This arose in 2021 for thousands of recipients of the Pandemic Unemployment Payment PUP. A message shows on their Tax Credit as follows: “Tax Credits Reduced by DSP PUP Payment”. When the tax credit reduction is greater than the tax credits a person has, this will end up as a negative tax credit and a further reduction of the tax band. If an employee is still on the week 1 basis at the end of the year, they must submit an Income Tax Return via PAYE Services in myAccount. Revenue will then review their tax position for the year.

Tax Credits Reduced by DSP Payment

In 2021 with the process of taxing Social Welfare benefits in real time The Department of Social Protection notifies Revenue of Social Welfare benefit amounts paid to recipients. Revenue reduces the person’s tax credits and 20% standard rate cut-off point SRCOP, by the weekly amount of PUP multiplied by 52. So, for example someone paid €350 per week benefit will have their Tax credit reduced by €3,640 and SRCOP is reduced by €18,200 (350*52). €18,200 * 20% = €3,640. The adjusted tax credits and the 20% SRCOP are applied on a Week 1 / Month 1 basis. For those seeing a Band 1 Credit Reduction of - €340 means that Revenue is attempting to reduce their Tax Credits by €3,640 when they only gave them €3,300. It is like Revenue gave them 3 apples and are trying to take 5 back from them.

Week 1/Month 1Basis

A PAYE worker may receive a Tax Credit Certificate (TCC) on the week 1 basis also known as the “non-cumulative basis”. This means that their employer will deduct Income Tax (IT) from their pay on a week-to-week basis. Yearly tax credits and rate bands are not backdated to the 1^st of January and do not accumulate for each pay period. Employer cannot make any refunds of IT that may be due until a ‘cumulative’ TCC is issued.
If an employee is still on the week 1 basis at the end of the year, they must submit an Income Tax Return via PAYE Services in myAccount. Revenue will then review their tax position for the year.

Emergency Tax Normal Rules

The emergency tax system and standard rate cut-off operates as follows:
Weeks 1–4 or Month 1 [if paid monthly]
Tax is calculated on the gross pay* at the standard rate of tax up to an amount equal to 1/52nd of the standard rate cut-off point for a single individual if weekly paid or 1/12th if monthly paid and any balance at the highest rate of tax.
*Gross pay, after deduction of superannuation contributions and permanent health contributions where relevant.
Each subsequent Week after week 4 or Month 1 [if paid monthly]
Tax must be calculated on the gross pay at the higher rate of tax with no tax credits due.

On receipt of an RPN employers will remove employees from emergency tax basis and will calculate the correct amount of tax that those employees should have paid since the start of the year (January). The employer will refund any tax and USC overpaid by employees in their next pay day.
Emergency tax basis for an employee who does not provide a PPS Number is operated different than the normal process.
Where, on taking up employment, an employee does not provide the employer with his or her Personal Public Service Number (PPSN), and a Revenue Payroll Notification (RPN) in respect of the employee has not been made available to the employer, the employer is obliged to calculate the tax due on the employee’s emoluments at the higher rate of tax with no tax credits due.

Income Tax Return

An income tax return is a form filed with Revenue that reports income, and other tax information. Tax returns allow taxpayers to calculate their tax liability, schedule tax payments, or request refunds for the overpayment of taxes. All Pay As You Earn (PAYE) customers must complete an Income Tax Return to:

claim additional tax credits or reliefs, for example medical expenses

declare additional income, for example rental income or income from casual work.

obtain a Statement of Liability for the year

claim refunds of any tax or USC overpaid.

confirm any liability of any tax or USC underpaid.

The quickest and easiest way to complete an Income Tax Return is through PAYE Services in myAccount. Income Tax Return submissions must be made within four years after the end of the tax year to which the return relates. For all years, an Income Tax Return must be completed to claim additional tax credits or declare additional income. This can be done by following these steps:

sign in to myAccount.

click the Review your tax 2017 - 2020 link in PAYE Services.

select Submit Income Tax Return’ for the appropriate year.

If a person is unable to use myAccount they must complete and submit a paper Income Tax Return to receive a Statement of Liability.

Statement of Liability

The Statement of Liability is a final review of a PAYE worker’s tax liability for a tax year. It was previously known as the P21 End of Year Statement. Since 1st January 2020, PAYE workers must complete an income tax return to request a Statement of Liability.

Year-end Tax Underpayments

This can happen if one has taxable earnings during a year which have not been taxed at source or that one has been allocated tax credits that they are not entitled to. Revenue will usually seek reimbursement over the course of the following year by making an adjustment to tax credits.
In the case of Tax due on TWSS and PUP in 2020, Revenue will not be reducing credits and tax bands until 2022 and repayments will be spread over 4 years.
This means PAYE workers take-home pay will be reduced until the underpayment is settled. Sometimes underpayments go unnoticed by Revenue for several years and the taxpayer is then faced with a much bigger underpayment.

Year-end Tax Overpayments & Tax Rebates Ireland

An overpayment of tax happens when a person paid more tax than they were liable to pay. If a person has overpaid tax, they will get a tax refund. PAYE workers may have overpaid tax if they become unemployed or are out of work sick. Taxpayers may also have overpaid tax if their tax credits are incorrect, or they have not claimed tax relief for certain eligible for tax relief expenses. PAYE taxpayers must claim a tax refund within 4 years of the end of the year in which the overpayment arose or you will not get a refund.
There are some items that have been eligible for claiming tax rebates on for many years such as medical expenses and certain dental expenses, and some are new like working from home.

Working from Home Tax Relief

The COVID-19 emergency has had a big impact on working life in Ireland. Companies are asking staff where possible to work from home to prevent the spread of the virus. Working from home or e-working is where an employee works from home for substantial periods on a full-time or part-time basis.
Taxpayers may be able to claim tax relief on the additional costs of remote working, including electricity, heat and broadband.

Employment Detail Summary (Formerly P60)

An Employment Detail Summary is available to PAYE workers through Revenue’s myAccount service. It contains details of pay as well as the income tax, PRSI and Universal Social Charge (USC) that has been deducted by a person’s employer and paid to Revenue.

P60 End of Year Certificate (P60)

The P60 was a certificate providing a summary of the tax, PRSI and USC deducted by your employer in the tax year. It was an important document which was required when one was applying for grants or benefits. Every employer was obliged to deduct tax based on the tax-free allowance certificate issued to them by Revenue. Up until 2019, employers issued P60’s to their employees at the end of the year. But in 2019, P60's were abolished and replaced with an online End of Year Statement, which you can access using Revenue's myAccount service.

Video on “How to get your Statement of Liability for 2020”.

https://www.revenue.ie/en/jobs-and-pensions/end-of-year-process/the-statement-of-liability.aspx

Video on “How to get your Statement of Liability for 2020 where you received Pandemic Payments”.

https://www.revenue.ie/en/jobs-and-pensions/end-of-year-process/the-statement-of-liability.aspx

Revenue Payroll Notification Number (RPN)

This is the Notification from Revenue made available to employers and is used to calculate deductions. The RPN replaced the P2C. An up-to-date RPN is retrieved from Revenue for each employee before employers run their payroll. This ensures employers are using the correct credits and cut-off point for their employees.The RPN provides employers with the necessary information to deduct from the employee the correct:
Income Tax (IT)
Universal Social Charge (USC)
Local Property Tax (LPT).

The RPN shows:
- Tax credits
- Income Tax and USC cut-off points
- Any previous pay, tax and USC deducted from 1 January (unless the certificate is on a week 1 or month 1 basis)
- Income Tax and USC exemptions
- The amount of LPT to be deducted, if applicable.

P2C

A P2C was the employer copy of employee's Tax Credit Certificate. It showed the total amount of tax credits and tax and Universal Social Charge (USC) cut-off points assigned to this employment. any previous pay, tax and USC deducted from 1st January (unless the certificate is on a week 1 or month 1 basis).

Week 53

This applies when there are 53 weekly pay days in the year and occur infrequently. This occurs when a pay day falls on 31st December. In the case of a leap year, on 30th or 31st December.
Additional pay days can apply to employees who are paid on a weekly, fortnightly, or 4-weekly basis. It does not affect monthly-paid employees.
Regulation provides that the employer should use the latest Revenue Payroll Notification (RPN) to deduct income tax on a Week 1 basis.

Cessation Certificate (Formerly P45)

If an employee left their job before 2019, their employer would give them a P45 form giving details of pay, tax, USC and PRSI contributions deducted from the start of the tax year to their last day of the job. In 2019, P45's were abolished and replaced with an online system called PAYE Modernisation. From January 2020, when an employee leaves a job their employer will enter their leaving date and details of their final pay and deductions into Revenue's online system and the employee can access these details through Revenue's myAccount.

Pay Deductions

The difference between Gross Pay and Net Pay is withheld deductions. Payroll deductions are amounts withheld from an employee’s pay each pay period. There are both statutory and voluntary deductions.

Voluntary Deductions

Voluntary deductions include health, life insurance, unions, retirement plans etc, Voluntary deductions may be Revenue approved and not included in taxable pay or taxable deduction which are not taken off gross prior to tax calculation.

Statutory Deductions

Statutory Deductions are required by law. The types of payroll deductions that are statutory include income taxes, and PRSI.

Pay Related Social Insurance (PRSI) Ireland

Pay Related Social Insurance means the social insurance contributions deducted from wages. The term “insurable employment” is used to describe employment that is liable for PRSI contributions. PRSI is “Pay Related Social Insurance” contributions which go towards Social Welfare benefits and pensions and enable people to qualify for social welfare payments such as Old Age Pension, Illness Benefit and Maternity Benefit.
Revenue collects PRSI contributions in most cases through the Pay-As-You-Earn (PAYE) income tax system. Most people working in Ireland must pay this with few exceptions. PRSI is a payment made by employers and employees. The value of this payment is based on the amount of employee's pay. PRSI is the main source of funding for social welfare payments. Pay Related Social Insurance (PRSI) contributions go to the Social Insurance Fund (SIF) which helps pay for Social Welfare benefits and pensions.
Most employers and employees (between the ages of 16 and pensionable age, currently 66 years) pay social insurance (PRSI) contributions into the national SIF. The SIF consists of monies collected from people in employment. This money is then used to fund social insurance benefits. The investment account is a savings account that is managed by the Minister for Finance.

Employees PRSI

An Employee's share is the amount of PRSI an employee pays on their own pay. The total amount paid for an employee in one pay period is called a PRSI contribution.

Employers PRSI

Employer, record and pay PRSI contributions for all employees aged 16 and over. The employer’s share is the amount of PRSI employers pay based on employee's pay.

PRSI Class

PRSI contributions are divided into different categories, known as PRSI classes. This determines the rate of PRSI, or rate of contribution employees are liable to pay.
The class and rate of contribution paid is determined by the nature of the employment and weekly earnings. For example, a person employed in a supermarket earning less than €38 per week will be insured under Class J. If that person earned over €38, they would probably be insured under Class A. Most private sector workers are liable to pay Class A PRSI. There are a variety of PRSI classes (A, B, C, D, E, H, J, K, M, S, and P) and subclasses (such as A1, J0, CX, etc.).
Each employee has a PRSI contribution class. The Department of Social Protection provides details of each PRSI class, and the PRSI contribution rates. The class of PRSI paid determines the social welfare benefits for which a person may qualify. The range of benefits include the likes of the State Pension (Contributory), Jobseeker’s Benefit and Illness Benefit. An entitlement to a benefit is dependent on a person meeting specific criteria.

PRSI Subclass

There are currently 11 different PRSI classes in 2021. Each PRSI class is in turn divided into different subclasses. These subclasses do not affect entitlements under the social insurance system. They only relate to the amount of PRSI which employees or their employers must pay.

Universal Social Charge (USC)

USC or the ‘Universal Social Charge’, is a tax that has replaced the income levy and health levy. USC is a tax payable on total income, but there are some types of income that are exempt. All payments from the Department of Social Protection (DSP) are excluded from gross pay for USC purposes. This includes PUP and Illness Benefit. USC is at the standard rate or the reduced rate, dependant on one’s circumstances.

If a person’s circumstances change, for example, being granted a medical card, Revenue must be contacted as there is a reduced rate of USC for Medical Card Holders and only Revenue can apply it to peoples Tax Certificates.

Paid Leave

Absences from work can be split into two types paid leave and unpaid leave. Entitlement to paid leave from work is set out in legislation and in an employee’s contract of employment. Legislation gives various entitlements to leave from work, including annual leave and public holidays. Maternity leave, paternity leave, adoptive leave, carer's leave, parental leave, and other types of leave from work can have an element of pay from an employer included. It is also important to note that the periods of leave provided for by legislation are the minimum entitlements only, employees and employers may agree to additional entitlements.

In the case of agency employees, the party who pays the wages (employment agency or client company) is the employer for the purposes of the Organisation of Working Time Act 1997 and is responsible for providing the entitlement.

Annual Leave

A holiday is paid time off work for rest and recreation. It can mean either annual leave or a public holiday. Entitlement to annual leave or holidays from work is set out in legislation and in your contract of employment. The Organisation of Working Time Act 1997 provides for a basic annual paid leave entitlement of 4 weeks, although an employee's contract could give greater rights. For example, companies in the Construction Industry Federation which is the Irish construction industry’s representative body have 21 days annual leave which are often referred to as Builders Holidays.

Calculating Annual Leave

Under Section 19 (1) of the Act full time employees are entitled to a basic annual paid leave entitlement of 4 weeks. There are 3 different ways of calculating your annual leave entitlement:

1.     Based on the employee's working hours during what is called the leave year, which runs from April to March. An employee who has worked at least 1,365 hours in a leave year is entitled to the maximum of 4 working weeks paid annual leave unless it is a leave year in which they change employment. Many employers use the calendar year (January-December) instead of the official leave year to calculate entitlement.

2.     By allowing 1/3 of a working week for each calendar month in which the employee has worked at least 117 hours.

3.     8% of the hours worked in the leave year, subject to a maximum of 4 working weeks.

An employee may use whichever of these methods gives the greater entitlement. When calculating the entitlement, employers should include all hours worked including time spent on annual leave, **certified sick leave, maternity leave, parental leave, force majeure leave, adoptive leave or the first 13 weeks of carer’s leave. **Statutory annual leave entitlement accrues during a period of certified sick leave. If an employee normally works a minimum of 1,365 hours in a leave year (i.e., the minimum threshold set out in the Organisation of Working Time Act 1997 for entitlement to the maximum 4 weeks’ statutory annual leave) and, if that employee has been on certified sick leave for a full leave year, then the employee will accrue 4 weeks’ statutory annual leave in respect of that leave year. If the employee is, due to illness, unable to take the 4 weeks’ annual leave during the normal 6-month carryover period after that leave year then the employee will have up to 15 months after the leave year to take the annual leave. The statutory annual leave entitlement of part time workers in this situation will also be calculated by reference to the hours they normally work.
An employee who has worked for at least 8 months is entitled to an unbroken period of 2 weeks' annual leave. Generally, the annual leave for part-time workers is calculated using the 3rd method, that is, 8% of hours worked. If a person works full time for some months and the rest of the year works part time, they should calculate the leave for the full-time and the part-time periods of work separately.

Public Holidays

Public holidays may commemorate a special national day or other event, for example, Saint Patrick's Day (17th March) or Christmas Day (25th December). There are currently 10 public holidays in Ireland in the year. On a public holiday many businesses and schools close. Most businesses in the hospitality sector will remain open on public holidays. Other services, for example, public transport still operate but often with restricted schedules.

Public Holiday Dates in Ireland

Qualifying Rules for Public Holidays Entitlement

A person’s entitlement to public holidays and the appropriate rate of daily pay is set out in the Organisation of Working Time Act 1997. Most employees are entitled to paid leave on public holidays. One exception is part-time employees who have not worked for their employer at least 40 hours in total in the 5 weeks before the public holiday.We have a Frequently asked Questions video about this topic on our YouTube Channel.

 If an employee qualifies for public holiday benefit, they are entitled to one of the following:
A paid day off on the public holiday.
An additional day of annual leave.
An additional day's pay.
A paid day off within a month of the public holiday.

Employees may ask employers at least 21 days before a public holiday, which of the alternatives will apply. If the employer does not respond at least 14 days before the public holiday, employees are entitled to take the actual public holiday as a paid day off.

Public Holidays Falling on a Weekend

If a public holiday falls on a weekend, workers do not have any automatic legal entitlement to have the next working day off work. If a public holiday falls on a day that is not a normal working day for a business (for example, on Saturday or Sunday), employees are still entitled to the benefit for that public holiday by one of the following.

A paid day off within a month of the public holiday.
An additional day of annual leave.
An additional day’s pay.

Public Holidays on a Normal Working Day

Where the public holiday falls on a day on which the employee normally works, the employee is entitled to a full day’s pay for the public holiday, if they do not work on the day i.e., as if they had done their normal hours on that day. If they work on the holiday, they should also get their usual pay on top of the public holiday entitlement.

Public Holidays on an Employee Non-Working Day

Where the public holiday falls on a day on which the employee does not normally work, the employee is entitled to one-fifth of his/her normal weekly wage for the public holiday. If weekly pay varies, then the employer uses an average of the weekly pay over the last 13 weeks prior to the public holiday and divides it by five.

Public Holidays Entitlement for Part-time Employees

An employee whose normal hours of work are less than the normal hours of work of a comparable full-time employee. When an employee has worked for an employer at least 40 hours in the 5 weeks before the public holiday and the public holiday falls on a day the employee normally works, the employee is entitled to a day's pay for the public holiday. If they are required to work that day, they are entitled to an additional day's pay.

Qualifying part time employees who do not normally work on the public holiday should receive one-fifth of their weekly pay. Even if they are never rostered to work on a public holiday, they are entitled to one-fifth of their weekly pay as compensation for the public holiday.

Force Majeure Leave

The Parental Leave Acts 1998 and 2019 give an employee a limited right to leave from work known as force majeure leave. Force majeure leave is absence from work for an employee for urgent reasons because of the illness or injury of a family member a family crisis. It arises where, for urgent family reasons, the immediate presence of the employee is indispensable owing to an injury or illness of a close family member. Force majeure leave does not give any entitlement to leave following the death of a close family member. A close family member is defined as one of the following:

A child or adopted child of the employee.
The husband, wife, or partner of the employee.
Parent or grandparent of the employee.
Brother or sister of the employee.
Person to whom the employee has a duty of care (that is, he/she is acting in loco parentis).
A person in a relationship of domestic dependency with the employee.
Persons of any other class (if any) as may be prescribed.

The maximum amount of leave is 3 days in any 12-month period or 5 days in a 36-month period. A person is entitled to be paid while on force majeure leave subject to the approval of their application by their employer.

Bank Holiday

Bank holidays are sometimes referred to as public holidays and vice versa which causes endless debate and confusion about pay, especially at Easter and Christmas time. There is already enough confusion about entitlement to bank holiday pay in Ireland and what days are bank holidays. For example,  many people are unsure if Christmas Eve and New Year’s Eve are bank holidays. Christmas Eve and New Year’s Eve are not bank holidays or public holidays.
All public holidays are bank holidays, but all bank holidays are not public holidays. While some schools and businesses close on bank holidays, there is no automatic entitlement to paid time off work on these days unless it is included as a paid holiday in the employees’ contract of employment, e.g., companies in the Construction Industry Federation.

Breaks and Rest Periods Ireland

Short periods of time for rest and refreshment taken during working hours. All workers are entitled to have breaks while they are at work and rest periods between working days or nights. The Organisation of Working Time Act 1997 sets out employee’s statutory minimum entitlements for the working week, annual leave, night work, breaks and rest periods. A break allowed to an employee at the end of the working day shall not be regarded as satisfying the requirements of the Act.

Work Breaks:

Greater Than or Equal 4.5 Less Than 6 hour shift:     15 minutes
Greater Than or Equal 6 Less Than 10.5 hour shift:    30 minutes
Greater Than or Equal 10.5 Less Than 12 hour shift:  45 minutes
Greater Than or Equal 12 Less Than 13.5 hour shift:  60 minutes

The most popular work schedule is an 8-hour shift for which an employee is entitled to a 30 minute or half an hour break. Employees are entitled to a 15-minute break where 4.5 hours or more have been worked and a 30-minute break where 6 hours or more have been worked, which may include the first break. The provisions of the Organisation of Working Time Act 1997 on breaks and rest periods do not apply to all employees in all sectors in the same way. Although many do in some way employers are not statutorily obligated to pay for breaks.

Collective Agreements

Collective Agreements are negotiated between unions and employers about terms and conditions of employment. In addition to arrangements such as the national minimum wage or living wage, some employees are covered by agreements such as “A Registered Employment Agreement” (REA) which is a collective agreement between a trade union or unions of workers and employers on the pay or conditions of specified workers, which is registered with the Labour Court and is only binding on the parties that subscribe to it.

Contract of Employment

A contract of employment exists if a person is offered work in return for wages and accepts the offer. An employee is a person who works for another person in return for payment. The employment status of a person is generally determined by Revenue or the Department of Social Protection.

Wages

Wages are the monies paid by employers to employees for the time they are working. Wages are also known as pay, salary, emoluments, or remuneration.

Minimum Wage

This is a minimum hourly rate of pay. Most employees have a legal right to the national minimum wage (NMW). The national minimum hourly rate is set by Government and is amended to take account of changes to cost of living.