zippitydooda
Registered User
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Hi everyone,
I'm looking for esteemed opinions on the taxation of payment in lieu of notice when issued as part of a redundancy package.
The facts are as follows:
Employee is made redundant with 2 weeks notice - package is statutory plus €1500 ex gratia and notice period.
For most the notice period could be 3 months which means its the majority of the package. Employer is taxing the notice period as normal pay which means 41% plus levies for most.
The issue surrounds the definition within the 'pay in lieu of notice' in the tax booklets. This is taxable if a contract provides for this upon termination. My understanding is that the spirit of this clause is to capture large termination payments for top executives and not to tax the standard notice clause of employee contracts....is there anyone out there who could clarify?
The notice clause in this case would read something like this:
'Upon early termination, other than for gross misconduct, the employee is required to give 3 months notice. The employer may decide to offer pay in lieu of notice if the employee accepts...' my interpretation of this clause is that it gives the employer the right to put someone on garden leave...BUT it does not give the employee the right to choose pay in lieu of notice NOR does it cover the situation where the employer enforces garden leave (which is the case here)...so I think it should be included in the redundancy calc but employer says No.
Any takers?
I'm looking for esteemed opinions on the taxation of payment in lieu of notice when issued as part of a redundancy package.
The facts are as follows:
Employee is made redundant with 2 weeks notice - package is statutory plus €1500 ex gratia and notice period.
For most the notice period could be 3 months which means its the majority of the package. Employer is taxing the notice period as normal pay which means 41% plus levies for most.
The issue surrounds the definition within the 'pay in lieu of notice' in the tax booklets. This is taxable if a contract provides for this upon termination. My understanding is that the spirit of this clause is to capture large termination payments for top executives and not to tax the standard notice clause of employee contracts....is there anyone out there who could clarify?
The notice clause in this case would read something like this:
'Upon early termination, other than for gross misconduct, the employee is required to give 3 months notice. The employer may decide to offer pay in lieu of notice if the employee accepts...' my interpretation of this clause is that it gives the employer the right to put someone on garden leave...BUT it does not give the employee the right to choose pay in lieu of notice NOR does it cover the situation where the employer enforces garden leave (which is the case here)...so I think it should be included in the redundancy calc but employer says No.
Any takers?