Illness Benefit - Employer Responsibilities

Since 1st January 2013, the employer is responsible for collecting PAYE due on Illness Benefit issued to employees, without exception.  There is no alternative treatment or option but for the employer to calculate and collect the PAYE regardless of whether or not:

  • the employer receives confirmation, from either the employee or the Department of Social Protection, of the Illness Benefit issue

  • the employee retains the Illness Benefit

  • the employer receives the Illness Benefit (either directly or indirectly)

  • the employer continues to pay the employee when they are on sick leave.

The employer should assume the employee is in receipt of Illness Benefit once the period of illness exceeds six consecutive days and must start to account for Illness Benefit in this first pay period.  The employer should assume the employee is in receipt of the full normal rate of illness benefit until notified otherwise.

In the majority of cases the employee’s tax credit and SRCOP will cover the PAYE payable on the Illness Benefit within each pay period.

Thesaurus Payroll Manager continues to cater for these measures in the 2017 version of Thesaurus Payroll Manager, featuring an Illness Benefit tool to automate the process of taxing the Illness Benefit for the employer.  It is important that employers access and use this feature for any Illness Benefit issued to an employee from 01st January 2017 in the very first applicable pay period in order to:

  • treat Illness Benefit correctly

  • capture the Illness Benefit figure for 2017 Revenue returns (P45, P35, P60)

A wizard is included in the 2017 payroll software to assist you in calculating the taxable Illness Benefit. The software will treat it accordingly for PAYE thereafter. 

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