Employment Law Awards and Settlements in Ireland-Important Tax Issues

Employment Law Awards and Settlements in Ireland-Important Tax Issues


if you’ve ever involved in an employment
law case or claim and there’s going to be either an award or settlement then
there are some very very important income tax considerations you should
bear in mind that’s why you should watch this video it could be in for a rude
awakening if you get it wrong in terms of the income tax treatment of whatever
payment you either receive or make depending on whether you’re an employer
or an employee there is an exemption from income tax for awards or
settlements for certain breaches of employments or employees rights for
example discrimination or harassment whoever there’s no exemption from income
tax in respect awards for remuneration or in respect of remuneration for
example holiday pay or arrears of pay so if the claim or the settlement is in
respect of income basically holiday pay or arrears of paid and there’s no
exemption from income tax in the normal tax and PRS I and so on shall be paid
payments that are exempt then from income tax in these situations would
include payments made under a relevant act on sort of a decision or
recommendation of a relevant authority and subject to certain conditions
out-of-court settlements arising out of the trains under a relevant act that
leads onto the question of what is relevant act well the employment
Equality Act the maternity protection act the parental leave act payment of
wages act terms of employment Information Act minimum notice and the
other acts that you see there on the screen these are all relevant acts and
so payments arising from any of these would indicate that the payment or
settlement is for a breach of an employment rate and therefore is exempt
from income tax a relevant authority then is either the civil court or the
workplace relations commission or the labour court payments that are not
exempt would be payments in respect of remuneration or arrears of remuneration
this would include holiday pay for example
payments that are not exempt would also include payments for successful claim
for unfair dismissal and non-exempt is compensation for a reduction in income
or future reduction in income due to restructure reorganization change in
work methods change in location and so on so these are all compensations that
would be paid in respect of income basically the employees income and their
further not exempt from income tax an out-of-court settlement then may be
exempt if the settlement agreement is in writing and it is not between connected
persons and if the train would have been a born feed it claimed under a relevant
act if it was made to a relevant authority this covers the situation
where there may be a shame it doesn’t actually get into the workplace
relations commission or the labour court or the civil courts and is settled so
it’s an out-of-court settlement it may be exempt if these conditions are met
it’s also a condition or criteria that the same was likely to be successful if
put in front of the relevant authority in other words it cannot be a claim that
you just put in and it has no prospect of success and then it’s settled and you
get an exemption it’s also a requirement that the amount does not exceed the
maximum amount that could have been ordered if was decided upon by a
relevant authority so that’s the important thing to check what is the
legislation provides for by way of the maximum award that could be awarded to
the employee this whole area is a pretty complex area and as I say you could be
in for a very rude awakening if you’re an employer or an employee and you’re
settling a chase or making a settlement because there could be a real kicker in
tax to be paid to the Revenue Commissioners either by employer or
employee afterwards if you don’t be careful to begin with and get tax advice
I would recommend that you get advice from a member of the Institute
I think it’s the Institute of Taxation and Ireland or something of that nature
but basically you need good tax advice as I say it’s complex area my name is
Terry gari I’m a solicitor in enfield in County Meath I do quite a bit of
employment law along with other law other areas of law as well if you find
this video useful you might just give us the thumbs up below low the video or
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