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.
Employer does not pay 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 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, 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
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 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
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:
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