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 Teachers PRSI class will be determined by the date the teacher commenced teaching.
Teachers who commenced teaching before the 6th April, 1995 will pay PRSI at the D Class and for all income earned in the school will be subject to PRSI at the J Rate.
Teachers who commenced after the 6th April 1995 will pay PRSI at the A Class and all supplementary income earned in the school will be at the Class a rate.
The Payroll computer system will calculate the correct PRSI once the correct PRSI Class is entered for each employee
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
ASC (Additional Superannuation Contribution)
ASC is payable by public servants on their pensionable pay only. See guideline below which sets out the rates and arrangements for transferring the ASC to the Department.
> Financial Guideline 23-2026 – ASC
Holiday Entitlements
What to include when calculating an entitlement to Holidays:
In calculating how many days’ holidays to which an employee may be entitled, employers should include all hours worked including time spent on statutory maternity or adoptive leave during the school year and public holidays taken during the calculation period. Christmas and Easter leave periods should also be included if employment of the teacher does not cease during these periods.
Pay in respect of holidays to part-time teachers should be made prior to the cessation of employment at the end of the school year. The calculation of holiday pay is determined by reference to the part-time rate which the Department issues to Boards of Management by Circular Letter from time to time.
In the leave year, a part-time teacher’s holiday entitlements should be calculated as follows:
8% of the hours a part-time teacher works in the period 1st September xxx to 31st August xxxx (but subject to a maximum of 4 working weeks).
Public/Bank Holiday
A regular part-time teacher is entitled to be paid for a public holiday.
Part-time employees must have worked at least 40 hours in the 5 weeks ending on the day before a public holiday to qualify for public holiday benefit.
Note: Good Friday is not a public holiday. While some schools and businesses close on that day, you have no automatic entitlement to time off work on that day.
Part-time teachers who are not normally required to work on a public holiday will be entitled to one fifth of the sum paid in respect of the normal weekly hours worked by the part-time teacher before that public holiday.
If the part-time teacher ceases to be employed during the week ending on the day before a public holiday, having worked during the 4 weeks preceding that week, s/he is entitled to receive pay for the public holiday.
In the event that a part-time teacher is required to work on a public holiday s/he will be entitled to a day’s pay for the public holiday.