Employer pays employee while out sick and receives the illness benefit

Illness Benefit is subject to PAYE only, it is not subject to USC or PRSI.

Since 1st January 2018, employers are no longer required to tax Illness Benefit through the payroll.

Instead, Revenue will adjust the employee's tax credits and cut off points via the Revenue Payroll Notification (RPN) . 

RPNs should be checked before every pay period.

EMPLOYER RECEIVES THE ILLNESS BENEFIT PAYMENT AND PAYS THE EMPLOYEE WHILE THEY ARE OUT SICK

Employer pays the employee while they are out sick, employer receives the Illness Benefit payment from DEASP directly or indirectly i.e. from the employee

• Employer reduces the employee's salary by the value of 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 the DEASP Illness Benefit
  
  
• Employer enters the Illness Benefit payment as a non-taxable addition (taxed by Revenue)
  
  
• Employer must import the amended RPN immediately