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.
  
  
• Employers are no longer required to tax Illness Benefit through the payroll.
  
  
• Instead, Revenue adjust the employee's tax credits and cut off points via the employee's Revenue Payroll Notification (RPN).
  
  
• Therefore, you should ensure that you check for updated RPNs before each pay run.
  
  
• In addition, since 1st January 2018, Illness Benefit letters are no longer delivered to the ROS Inbox.

Action required by the employer in the payroll

Where the employer pays the employee while they are out sick, and the employer also 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 file immediately