tax on a Labour Court award

hi guys,
im posting this on behalf of mt wife. nearly two years ago she left a company but was never provided with a bonus of 5000euro she was entitled to, so she took up the issue with the union and it got settled in the labour court. The employer , who is a large retailer from the uk, was ordered to provide a suitable reference and the bonus she was entitled to. She received her ref but she was sent two cheques one totaling2950 euor made out to herself and a second one for 2050euro made out to the Collector General. This is seen as the tax she would have paid as calculated by the employer. Know she has send a couple of emails over the past 8 months to the tax office without reply...

my question is what can she do about this cheque? is there anyway she can cash it for herself as we cant understand why the employer has done this in the first place? is it in their rights to decide what tax should have been paid if any?

any help or advice would be great.
THanks

Re: former employer made cheque out to Collctor General?

It seems to me that the retailer should have sent it dorectly to the Revenue.

Any (unlikely) refund of tax from the Revenue will be got from submitting your income tax return for the relevant year also detialing the gross bonus amount i.e. €5,000.

When submitting your cheque, write your wife's PPS number on the back together stating that its PAYE/PRSI and the relevant year.

Re: former employer made cheque out to Collctor General?

excuse the ignorance, but are you saying that we shopuld post the cheque to the tax office with an acompanying note giving my wifes pps number and letting them know what date this money was awarded to her? should we enclose anything else in the note?
thanks for the advice

Re: former employer made cheque out to Collctor General?

They have paid her €5,000. They have given her the amount net of 41% tax, i.e. €2,950 and they have made another payment of the 41% tax i.e. €2,050 out to Revenue. This is a strange way of doing it as the employer is, in the first instance, responsible for remitting tax due to Revenue, not via an employee. However your wife is liable for tax on €5,000 . That may be at 20% or 41% depending on overall circumstances. When her tax return is filed the tax on that needs to be on record with Revenue or they will show her as underpaid.

Was she an employee or a "contractor" i.e. did they previously handle and deduct her taxes/PRSI on pay before this?

Re: former employer made cheque out to Collctor General?

Return the cheque and say that the Labour Court settlement agreed a payment of €5,000 to her, and it on the face of it they have only paid her €2,950 which is less than the settlement amount. If they fail to pay the remaining amount to her, she retains the right to re-enter proceedings.

It's up to her to make her tax return, not them. It seems a spiteful way of doing business to me - my view is that if it was paid this year it is part of 2009 earnings, and the tax need not be paid until 2010.

Re: former employer made cheque out to Collctor General?

I agree with Graham 07. Awards from the LC are liable for tax etc unless otherwise stated so its seems correct. Not sure why they didn't send it directly to the CG though.

She won't be able to cash it so she may as well send it to the CG.

Re: former employer made cheque out to Collctor General?

thanks guys. The cheque was awarded in aug 2008 but she had left over a year before then. She was an employee and never had top deal with any tax payments during her time with bthe company as she was PAYE.
If any of you could just clarify what should be sent accompanying the cheque to the Collector General id really appreciate it.
thank you so much for your help thus far.

According to www.revenue.ie

4. Out of Court settlements

Claims concerning the infringement of employees’ rights and entitlements and claims concerning employers’ obligations to employees may sometimes be settled by agreement without referral to a relevant authority. A payment made under such an agreement will also qualify for the exemption where all of the following conditions are met -

• the agreement in settlement of a claim is evidenced in writing;
• the agreement is not between ‘connected persons’ (e.g. employer and relative, employer and director);
• the claim would have been a bona fide claim under a relevant Act had it been made to a relevant authority ( e.g. sufficient grounds for the claim; claim is within the scope of one of the relevant acts; claim made within specified time limits, etc.);
• the claim is likely to have been the subject of a recommendation, decision or determination by a relevant authority that a payment be made to the person making the claim; and
• the payment does not exceed the maximum amount which could have been awarded under relevant legislation by the Rights Commissioner, Director of Equality Investigations, Employment Appeals Tribunal or Labour Court as appropriate (e.g. the maximum amount of compensation arising from a claim made under the Employment Equality Act, 1998 for acts of discrimination cannot exceed a sum calculated as being not greater than 104 weeks pay).

So it would depend under what legislation the claim was made, whether or not it should be subject to tax.