# Opting not to take holidays but get paid for them instead - good or bad idea?



## newseeker1 (15 May 2013)

Hi

If I don't take the all of my holiday entitlements but opt to get paid for the untaken ones are there any implication in terms of tax take from viewpoint of am worse off in terms of tax if I don't take the holidays and opt to be paid for them i.e. do I pay more tax 

Its the same situation in terms of tax and my pay cheque regardless of whether I take the holidays or get paid for them - right ?

I am PAYE employee

Am I making sense ?

Thanks


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## Luternau (15 May 2013)

If you get paid for untaken paid leave, thats extra income, so you will pay more tax.

If you dont take the leave, and work as normal, your income stays the same and so does your tax.

Conclusion -bad idea!


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## callybags (16 May 2013)

You need to see how much you value your time off in monetary terms.

You will be taxed at your marginal rate, so if you pay at 41% the total including PRSI and USC will be 52% (?).

This means you will reveive 48% of your gross pay for every day of your holidays you work instead of taking off.

The reverse also works.
If you value your time off more than 48% of your gross pay, then if it's available you could take unpaid leave to add to your holidays.


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## Gervan (16 May 2013)

Do you really have the option of not working holidays time? According to the Organisation of Working Time Act it is illegal to pay an employee in lieu of their statutory holiday entltlements.


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## Sean Bateman (16 May 2013)

Luternau said:


> If you get paid for untaken paid leave, thats extra income, so you will pay more tax.
> 
> If you dont take the leave, and work as normal, your income stays the same and so does your tax.
> 
> Conclusion -bad idea!


 
Applying that logic, accepting a salary increase is a bad idea!


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## Seagull (16 May 2013)

Gervan said:


> Do you really have the option of not working holidays time? According to the Organisation of Working Time Act it is illegal to pay an employee in lieu of their statutory holiday entltlements.



That would only apply if your annual leave wasn't more than the legal minimum.


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## rob oyle (16 May 2013)

Sean Bateman said:


> Applying that logic, accepting a salary increase is a bad idea!


Only to the extent of an opportunity cost - a salary increase or no salary increase is one thing, but the option of a salary increase OR the equivalent value in extra leave would be something for an individual to consider...


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## rob oyle (16 May 2013)

callybags said:


> You need to see how much you value your time off in monetary terms.
> 
> You will be taxed at your marginal rate, so if you pay at 41% the total including PRSI and USC will be 52% (?).
> 
> ...


 
+1

Effectively, this sums it up. All other things being equal, it's up to the individual to decide what's better for them.


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## Luternau (16 May 2013)

Sean Bateman said:


> Applying that logic, accepting a salary increase is a bad idea!



Wrong-the information given was for taking pay in lieu of paid hols.
That's two of my posts that you have sought to twist where no reason exists. If you nothing to add to a thread don't post!


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## WizardDr (16 May 2013)

I think that an employer is not legally obliged to pay for carry forward annual leave - some do - but depending on who you work for either take or get paid - no difference. Depends on your preference for time off v working.


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## LS400 (16 May 2013)

Its important to your employer to note, if you have an accident on the company and you have worked for a long period of time without any time off, ie working through holiday times and getting paid instead of taking a restful period, your employer is left open to be sued for negligence.


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## newseeker1 (16 May 2013)

Thanks All for the replies

I guess im confused still about there difference if any for my pay cheque at the end of the day if I take the holidays or if opt to paid for them and ultimately that's what Im trying to get an answer to 

I get paid monthly so if I work a 40 hour week and there are 4 weeks in the pay month that's a total of 160 hours 

So on my pay cheque my gross pay will be for 160 hours

So, for example say I take 1 week off as annual leave my pay cheque will list 

120 hours worked and
40 hours annual leave

But aint I taxed at the save level and rate for both the 120 hours I worked and also the 40 hours I take as annual leave  - right - theres no difference - im taxed on the holiday hours and taxed at same rate as the hours I worked.  The annual leave hours aren't exempt from tax - right?

So if in the month I was due to take a week off but decided not to take the weeks holidays and work it and get paid for it - im none the worse off in terms of the tax take 

What am I not getting here ?

THanks


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## Luternau (16 May 2013)

It has been answered. You get paid holidays so if you work them, that's like doing overtime, so you would (I assume) be paid again in lieu of taking the hols. For simplicity say 40hr OT in the week-so instead of 160hrs in the month, you have 200, so that should equate to extra pay which is taxable at your normal rate of tax. Financially you are better off, but you forego one weeks hols.
Unless you are proposing not being paid extra then it's no more pay, no extra tax, and one weeks less hols. Surely that's not what you mean?


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## Sean Bateman (17 May 2013)

Luternau said:


> If you get paid for untaken paid leave, thats extra income, so you will pay more tax.
> 
> If you dont take the leave, and work as normal, your income stays the same and so does your tax.
> 
> Conclusion -bad idea!


 


Sean Bateman said:


> Applying that logic, accepting a salary increase is a bad idea!


 


Luternau said:


> Wrong-the information given was for taking pay in lieu of paid hols.
> That's two of my posts that you have sought to twist where no reason exists. If you nothing to add to a thread don't post!


 
I did have something to add - Pointing out that your logic was flawed.  Applying your logic, nobody would work overtime purely because it's taxable.  As for your accusation regarding the twisting of posts, where was the second post? Perhaps you shouldn't be so sensitive...


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## newseeker1 (17 May 2013)

Thanks for reply and clarification
Apologies if i'm asking question already answered 
To clarify from my viewpoint 
If I work 160 hours in a month but am due/entitled to  2 weeks annual leave during that month.  I decide to 1 weeks of that leave entitlement as holidays and  and decide to forgo the other weeks holidays and get paid for it instead am I right that my pay slip should look like

Work Hours = 160 (120 standard hours + 40 hours that I am taking pay for instaed of taking the holidays)
Annual Leave(holidays) = 40 hours 

Am I right?
Thanks


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## Luternau (17 May 2013)

Sean Bateman said:


> I did have something to add - Pointing out that your logic was flawed.  Applying your logic, nobody would work overtime purely because it's taxable.  As for your accusation regarding the twisting of posts, where was the second post? Perhaps you shouldn't be so sensitive...



I answer the question asked-would they pay more tax if they opted to be paid in lieu of hols. (that's the only context you should read it in)
Of course a salary increase equals more tax! That's stating the blatantly obvious! Your post was meaningless in the context of the OP's question as was your other post.


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## Sean Bateman (17 May 2013)

Luternau said:


> I answer the question asked-would they pay more tax if they opted to be paid in lieu of hols. (that's the only context you should read it in)
> Of course a salary increase equals more tax! That's stating the blatantly obvious! Your post was meaningless in the context of the OP's question as was your other post.


 


Luternau said:


> If you get paid for untaken paid leave, thats extra income, so you will pay more tax.
> 
> If you dont take the leave, and work as normal, your income stays the same and so does your tax.
> 
> Conclusion -bad idea!


 
I have zero interest in engaging in a long drawn out argument with you.  The simple fact is that your conclusion is flawed ("if you earn more, you'll pay more tax...Conclusion, bad idea").  Now you're looking to have an argument about it.  No thanks.


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## callybags (17 May 2013)

newseeker1 said:


> Thanks for reply and clarification
> Apologies if i'm asking question already answered
> To clarify from my viewpoint
> If I work 160 hours in a month but am due/entitled to 2 weeks annual leave during that month. I decide to 1 weeks of that leave entitlement as holidays and and decide to forgo the other weeks holidays and get paid for it instead am I right that my pay slip should look like
> ...


 
Hi Newseeker,
While the other pair swing handbags at each other I will try to answer your question.   

You're scheduled work is 160 hours in the month @ €x per hour, so in a normal month without any holiday complications you will be paid €160x Gross and you will be taxed accordingly.

If you are due to take 2 weeks holidays in the month and take them, then your pay will be exactly the same.

If you decide to not take one of the weeks and work it instead, then assuming that you will never take the week off you will be due an additional 40 hours pay so your gross for the month will be €200x (160x for rostered hours and €40x for the week you work which should have been holidays)

Therefore the extra €40x will be taxed at your marginal rate (either 20% or 41%)

Hope this is clear.


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## dub_nerd (17 May 2013)

OP, perhaps the easiest way to think about it is like this:
Suppose you work for you current employer, but while on holidays you take the opportunity to go and work for someone else for extra cash (on which you pay tax, of course). Your current employment/pay stays exactly the same, and you get an extra payment for the second employment.

... Now just imagine the second employer is your current employer and the payments are all merged onto one payslip.


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## Luternau (17 May 2013)

Sean Bateman said:


> I have zero interest in engaging in a long drawn out argument with you.  The simple fact is that your conclusion is flawed ("if you earn more, you'll pay more tax...Conclusion, bad idea").  Now you're looking to have an argument about it.  No thanks.



I am not. You are mis-representing my answer. I merely answered the question asked! Touché and adios!


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## Luternau (17 May 2013)

Minus the handbags...
I believe the question has been answered a few times over now!


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