# SCSB Calculation - Break in service



## 1dave123 (17 Mar 2014)

Hi Folks

In the SCSB formula is the multiplier based on continuous service or can  broken service be taken into account. 

Here's an example 

*    A person works for 5 years for Company A then leaves and works for Company B for 3 years

*    They return to Company A for 9 years before being made redundant by Company A 

In the SCSB formula is the multiplier 9 ? .......... or is it 14 (5+9) ?  

There is no relationship between Company A and Company B. 

My suspicion is that it is 9 ..... but I have been unable to find anything definitive so far that says the service with Company A has to be continuous.  

I have seen references to 'career break' and the suggestion is that the pre and post career break service can be added together ...... but 'career break' is not defined in this context

Has anyone encountered this particular scenario who may shed some light

Many thanks


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## Sophrosyne (17 Mar 2014)

I may be wrong and you should check out Revenue, but I don’t think that the scenario you present would be considered a “break in service” with Company A.

I would consider the first and second periods with Company A to be completely separate offices or employments.

The first employment with Company A terminated after 5 years.

Three years later, the second employment, in respect of which the termination payment would apply, lasted for 9 years.

On that basis, I think 9 years service would be used.


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## mandelbrot (18 Mar 2014)

SCSB is calculated by reference to the service in respect of which the termination payment is made. In this case that would be 9 years.


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## BertieBowel (18 Mar 2014)

When applying years service to the formula, does it have to be 'full years completed' or could you put in partial e.g. 12.5 years service


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## mandelbrot (18 Mar 2014)

BertieBowel said:


> When applying years service to the formula, does it have to be 'full years completed' or could you put in partial e.g. 12.5 years service



The legislation (or rather Schedule 3 to the Act) stipulates "complete years", so no unfortunately.


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## elacsaplau (18 Mar 2014)

Thanks Mandelbrot

What Act please?!


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## mandelbrot (18 Mar 2014)

elacsaplau said:


> Thanks Mandelbrot
> 
> What Act please?!



*THE ACT!* 

The Taxes Consolidation Act 1997.

http://www.taxworld.ie/legislation/TCA1997/past/sch3


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## elacsaplau (19 Mar 2014)

Mandelbrot

Please count to 10 or maybe 11 before reading!! I don't mean to annoy you and I know the chances of you being right are very very very high but......

(a) where does it say specifically in the Act that only the latter period of service counts?
(b) what happens if the ex-gratia severance was based on combined service?
(c) what happens if pension was granted on a DB basis for the combined service?
(d) what if the Tax Free Lump Sum (and its present value) was based on combined service?


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## Sophrosyne (19 Mar 2014)

TCA 1997, *Sch 3* provides reliefs from the charge to income tax imposed under *section 123.*

*Section 123 *imposes a charge to income tax in respect of certain payments received on the termination of an _office or employment._ 

Opinions were given based on the circumstances presented by the original poster.

In _that_ situation, it is difficult see how the second period with Company A could be considered a resumption of the _same_ office or employment.

“Continuous service” is really determined by employment law and associated case law.


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## mandelbrot (20 Mar 2014)

^^^

What that guy said. In the case outlined by the OP it is quite clearly 2 distinct employments separated by a period of time spent in other employment.


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## mandelbrot (20 Mar 2014)

elacsaplau said:


> Mandelbrot
> 
> Please count to 10 or maybe 11 before reading!! I don't mean to annoy you and I know the chances of you being right are very very very high but......
> 
> ...



(a) has been addressed - it will be a question of fact what office or employment the payment is made in respect of;
(b),(c) & (d) all stem from (a), if they're based on what you call "combined service" it must be because there was only one office or employment.


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## 1dave123 (20 Mar 2014)

Hi Folks - thanks for all the comments and feedback.


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## JoeRoberts (20 Mar 2014)

mandelbrot said:


> (a) has been addressed - it will be a question of fact what office or employment the payment is made in respect of;
> (b),(c) & (d) all stem from (a), if they're based on what you call "combined service" it must be because there was only one office or employment.



Many old style DB schemes Trust Deeds allow different periods of service to be combined as long as benefits had not been taken at the previous leaving of service.
 I think this is what is confusing the OP.


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