Introduction – Pay As You Earn (PAYE) system
The Pay As You Earn (PAYE) system is a method of tax deduction under which an employer calculates and deducts any income tax due each time a payment of wages, salary etc. is made to an employee. In addition, employers are obliged to calculate and deduct any liability to Pay Related Social Insurance (PRSI), Universal Social Charge (USC) and Local Property Tax (LPT).
With effect from 1 January 2019, employers are obliged to report their employees’ pay and statutory deductions to Revenue, on or before the date they pay their staff. This is known as ‘real-time reporting’. Real-time reporting makes it easier for employers to deduct, and pay at the right time, the correct amounts of Income Tax, Pay Related Social Insurance, Universal Social Charge and Local Property Tax.
Each employee is entitled to tax credits, tax and cut-off points depending on personal circumstances. The total amounts are outlined on the Revenue Payroll Notification (RPN).
If there is no RPN available for an employee, you must calculate tax on an emergency basis.
Click here to more information on the Universal Social Charge (USC)
Click here for more information on tax credits and cut-off points.
The Revenue Payroll Notification is to be used by employers to ensure the most up to date Revenue information is being applied to their employees’ pay. It will provide employers with the necessary information to deduct the correct income tax, Universal Social Charge (USC) and Local Property Tax (LPT) from each employee every pay period.
PRSI
The PRSI class for privately paid personnel will be the A Class. The Payroll computer system will calculate the correct PRSI once the correct PRSI Class is entered for each employee
However, a small number of employees are insurable at Class J, no matter how much they
earn, such as employees aged 66 or over or people in subsidiary employment.
For employees taken on under the Employer’s PRSI Exemption Scheme and the Employer
Job (PRSI) Incentive Scheme:
- PRSI is fully chargeable on payments by private sector employees in respect of:
- Superannuation contributions
- Permanent health benefit schemes (including income continuance schemes)
- Revenue approved schemes established under irrevocable trusts, overseas pension schemes
- and other Revenue exempt approved schemes
- Personal Retirement Savings Accounts
- Deductions in respect of Revenue approved retirement funds
Taxation of Jobseekers, Illness Benefit and Maternity Benefit
Both Illness Benefit and Jobseeker’s Benefit are considered as income for tax purposes and are taxed from the first day of payment, with the exception of payments for qualified child(ren) which are not taxable. This Department will notify you of the amount of Illness Benefit to be taken into account for tax purposes, where appropriate. Taxation of Jobseeker’s Benefit will still be mainly applied through the tax office.
With effect from 1 July 2013, Maternity Benefit will be taxed in full. No tax is deducted at source by the Department of Social Protection
ASC (Additional Superannuation Contribution)
This new contribution will be in addition to the existing superannuation contribution made by public servants currently and will apply to pensionable remuneration only.
Under the new pension arrangements non-pensionable income such as supervision & substitution, selection committee payments, State Examination remuneration paid by the school, payments to teachers for privately paid hours, un-rostered overtime, etc. will be exempt from ASC.
The rates and thresholds for ASC effective from the 1st of January 2019 are as follows:
Public Servants who are Members of pre-2013 Pension Schemes with Standard Accrual Terms |
| Amount of Remuneration / Threshold | Rate of Deduction |
| Up to €32,000 | Exempt |
| Greater than €32,000 but not over €60,000 | 10% |
| Greater than €60,000 | 10.5% |
Public Servants who are Members of Single Service Pension Scheme |
| Amount of Remuneration / Threshold | Rate of Deduction |
| Up to €32,000 | Exempt |
| Greater than €32,000 but not over €60,000 | 6.66% |
| Greater than €60,000 | 7% |
It is the responsibility of public service employers to ensure that the correct rate of ASC deducted from employees
Holiday Entitlement
Your entitlement to annual leave or holidays from work is set out in legislation and in your contract of employment. The basic annual paid leave entitlement of 4 weeks per annum. Pay in respect of annual leave is paid in advance at the normal weekly rate. Annual Leave should be approved by the Principal.
Holiday pay is earned against time worked. All employees, full-time, part-time, temporary or casual earn holiday entitlements from the time work is commenced.
Holiday pay entitlements are calculated using one of the following criteria:
a) 4 working weeks in a leave year in which the employee works at least 1,365 hours (unless it is a leave year in which he or she changes employment).
b) 1/3 of a working week per calendar month that the employee works at least 117 hours.
c) 8% of the hours an employee works in a leave year (but subject to a maximum of 4 working weeks).
Employers are obliged to keep records of holidays and public holidays for a period of 3 years.
An employee who has worked for 8 months or more is entitled to an unbroken period of 2 weeks’ annual leave.
Part-time work: Generally, the annual leave for part-time workers is calculated using the 8% of hours worked method . If you work full time for some months and the rest of the year you work part time, you should calculate the leave for the full-time and the part-time periods of work separately.
Other Leave: Time spent on maternity leave, adoptive leave, parental leave, force majeure leave and the first 13 weeks of carer’s leave is treated as though you have been in employment and this time can be used to accumulate annual leave entitlement.
Holiday Pay –Term Time
Employees employed for term time in school will be entitled to holidays calculated using the 8% of hours worked method. E.g. if an employee works for 30 hours a week for 42 weeks in a school year the holiday entitlement would be 100 hours ( 30hrs *42wks *8%)
Public/Bank Holiday