Holiday Pay Mistake and Tax

J

jkenefick

Registered User
Messages
6
Hi,
I have a friend who is entitled to holiday pay (she works part time and is not earning enough per week to pay tax). Now she went on holiday and informed her employer that she would like her holiday pay paid the week after she was away (as she is paid 1 week in arears anyway, so everything would be as if she wasn't away). The employer agreed to this.

Now the employer forgot to pay her holiday pay and said they will add it to her wages next week. But the wages she will get next weeks will be the combined wages of holiday week and this week. This will bring her into the tax net and she will effectively lose money because of the employer's mistake.

Is the employer at fault here? Can they be made to gross up her wage next week so she doesn't lose any money in net pay? Is there another solution?

Thanks.
 
Tax is charged on a cumulative basis. This basically means that in the second week, when she receives the double payment, she will get double the normal credits and rate band as the allowances from the first week weren't used. So, if she wasn't in the tax net in a normal week, she shouldn't be in the tax net receiving this double payment.

Although, she may pay more PRSI than usual. This shouldn't leave her out of pocket by much but the employer should be willing to address it on principle alone.
 
Could it be she is on a week one basis?

That means that each week is dealt with in its own right.
She could claim any overpaid tax back at the end of the year or maybe a call to the Tax office now would switch her to cumulative and she would be refunded in her next pay packet.
 
Hi guys,
Thanks very much for your replies. From what I'm hearing it seems that that if she is cumulative then she won't be taxed and if she's not, then she can reclaim it at the end of the year. So either way no one loses. That is great news.

Thanks very much again!
 
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