Illness Benefit - New Employer Obligations from 1st January 2013

During 2012 Revenue issued notifications advising employers that the treatment of Illness Benefit will change from 01st January 2013.

From 01st January 2013 the employer will be 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 issued
• 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 three consecutive days and start to account for Illness Benefit in this first pay period.  The employer should assume the employee is in receipt of the full €188 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.

2013 Thesaurus Payroll Manager will include an amended Illness Benefit feature to automate the process of taxing the Illness Benefit for the employer.  It is important that employer’s access and use this feature for any Illness Benefit issued to an employee from 01st January 2013 in the very first pay period in order to;

• treat Illness Benefit correctly
• capture the Illness Benefit figure for 2013 Revenue returns (P45, P35, P60)

We are including a wizard in the 2013 payroll software to assist you in calculating the taxable Illness Benefit, the software will treat it accordingly for PAYE thereafter. We will also include a video offering a step by step guide on how to enter Illness Benefit in the payroll.

Despite much speculation throughout the latter half of 2012, a statutory sick pay scheme was not announced in the 2013 Budget.