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Lump sum payments when employment ends

Leaflet Sections

1 Introduction
2 Purpose of this guide
3 Personal Public Service Number
4 What is a PRSI contribution
5 Which employees are covered
6 Who is responsible for deducting paying PRSI
7 Special Collection System
8 How are PRSI rates determined
9 PRSI Free Allowance for employees
10 Health Levy
11 NationalTraining Fund Levy
12 Definition of reckonable earnings for PRSI purposes
13 Benefit in Kind
14 Super annuation contributions
15 Permanent Health Insurance
16 Lump sum payments when employment ends
17 Registration of employers
18 Registration of employees
19 Employees annual PRSI ceiling
20 Employees in two or more employments at the same time
21 Employed and self employed in same contribution year
22 Termination of employment
23 Employees with two or more consecutive employments
24 Voluntary insurance
25 Where a husband and wife are both employed
26 How to decide the Social Insurance contribution class
27 Codes and subclasses within the PRSI classes
28 Part time employment
29 Systematic short time employment
30 Subsidiary employment regulations
31 Domestic employer scheme
32 Employees abroad
33 Paying the correct PRSI class
34 Calculating PRSI contributions
35 Manually calculating PRSI
36 Using the Ready Reckoner

Certain lump sum payments made to employees when they leave their employment are not reckonable earnings for PRSI purposes. Examples of such payments are redundancy payments, gratuities or ex-gratia lump sum payments and payments in lieu of notice to an employee when they retire or leave their employment (see Revenue's information leaflet IT21 Lump Sum Payments on Redundancy/Retirement regarding the tax treatment of such payments).

However, a Health Levy (Class K contribution) is paid on the lump sum payment, or part of such a payment, that is treated as pay for income tax purposes.

Last Updated: 24/09/2008 13:49

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