Employer pays Employee while out sick

All employers must deduct PAYE from any Illness Benefit received by the employee, from the Department of Social Protection, regardless of whether or not the employer pays the employee while they are out of work on sick leave.


If you do not know how much Illness Benefit the employee is receiving then you must make a best estimate and deduct PAYE from it in the week it is due to the employee.  The below fields must be used in order to allocate the correct PAYE treatment to the Illness Benefit.

  • No payment is made for the first six days of Illness or for any Sunday during the sick period.

  • From the 1st January to the 10th March 2017, the normal weekly rate of Illness Benefit is €188.00 (or €31.33 per day). The DSP will implement a new weekly rate of €193.00 during the week of 10th March - 17th March 2017.

  • Employees will receive the 6 day payment even if they normally work 5 days.
 
 
Illness Benefit is subject to PAYE only, not USC or PRSI.  It is taxable from the first day of payment by the employer.
 
There are three scenarios that an employer must deal with in considering the treatment of Illness Benefit:

  1. Employer does not pay the employee while they are out sick

  2. Employer pays the employee while they are out sick, employee retains the Illness Benefit payment from DSP (does not give it to his employer)

  3. Employer pays the employee while they are out sick, employer receives the Illness Benefit payment from DSP

 

 
 

EMPLOYER PAYS THE EMPLOYEE WHILE THEY ARE OUT SICK

 

Employer pays the employee while they are out sick, employee retains the Illness Benefit payment from DSP (does not give it to his employer.

  • Employer reduces the employee's salary by the Illness Benefit they are receiving so he is merely topping up the employee salary to their normal periodical salary or the alternative as dictated by company sick pay policy.

  • Employee claims and retains the DSP Illness Benefit of €188.00 per week. (€193.00 per week from 10th March 2017).

  • The employer must collect the tax on the Illness Benefit that the employee is receiving from DSP and record that he has taxed the Illness Benefit

 
 

 

To tax the Illness Benefit in Thesaurus Payroll Manager

Payslips> Weekly/Monthly Input>  Select the employee

  • Reduce the employee's paid hours or basic pay in accordance with the company sick pay scheme.

  • Select the Illness Benefit tab

  • Indicate that "... the employee is on sick leave for more than 6 days"

Illness Benefit - 6 day flag

 

Illness Benefit Calculator

A built in Illness Benefit calculator will help you to calculate how much Illness Benefit the employee is eligible for in the pay period.

  • To access the calculator select the "?"

 

  •  

  • Enter the first date of sick leave (not the start date of Illness Benefit)

  • The calculator will predict the Illness Benefit that the employee is eligible for in this pay period and all future pay periods for as long as the sick leave continues.

  • The calculator will determine start dates from the date of the last pay period.

 

 

Enter the Illness Benefit

  • Enter the amount of Illness Benefit the employee is entitled to in this pay period (regardless of whether they have actually received it or not)
  • Click Update File

 

 

 

The payslip - collection of PAYE if due
 

The Illness Benefit will be added to the employee's periodic salary and PAYE deducted accordingly. 

As the employee is continuing to be paid while they are out of work sick then the PAYE will be deducted as part of the salary, a situation of insufficient pay to cover the PAYE due for the period should not occur.

Employers must use the dedicated Illness Benefit feature in order to isolate the Illness Benefit figure from the employee's normal pay as it must be declared to Revenue on all employee related Revenue returns:

P45

P35

P60

Need help? Support is available at 01 8352074 or support@thesaurus.ie.

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