Complainant

Respondent

Parties

Stacey  Vernon

Actavo (Ireland) Ltd

Complainant

Respondent

Representatives

Self-Represented

Olivia O'Connor  of IBEC

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00070234-001

24/03/2025

The issue in contention was the Taxation of a Bonus or an Ex-Gratia Payment made to an Employee (A Project Manager) on her voluntary resignation from the Respondent, a Management Company.

The employment began on the 23rd November 2020 and ended on the 29th of November 2024.

The rate of pay was stated, by the Complainant, to have been, initially, circa 45K per annum for a 40-hour week.

The Complainant was Self-Represented. The Complainant gave her notice of resignation to the Respondent on the 6th September 2024. As the Complainant was working on a major Customer contract, the Respondent Operations Director, requested her to defer her resignation until the end of November 2024. This was agreed to on the basis that she would receive an additional two months’ salary. In addition, the Annual 10% Bonus would also be paid to her and in a “Tax efficient” manner- effectively as a Redundancy payment. Her university fees would also be paid.

However, on the running of the standard payroll, after the exit of the Complainant, the Bonus was taxed in a normal PAYE manner. The nett loss to the Complainant by way of Tax was approximately €3,259 in PAYE taxation.

This was in clear breach of the Agreement that had been made with Mr R, the Operations Director, in late September 2024. A copy e mail from Mr R was submitted in evidence.

The Complainant asked that the Respondent Employer honour the agreement with Mr R and pay the amount required to offset the tax on the Bonus.

The Respondent was represented by Ms O’Connor of IBEC, supported by a number of Respondent Managers. A substantial written submission was provided.

The essence of the Respondent case was that there had been a Resignation as opposed to a Redundancy. Accordingly, the Respondent had no legal option but to tax the Bonus in the normal manner. To have done otherwise would have been in clear breach of statutory Taxation & Revenue rules.

In oral testimony the Respondent stated that any alleged “special deal” regarding the Complainant’s final payments would have required sign off from the General HR Manager. This had not happened. The Operations Director was not a Taxation expert and his comments regarding a “Tax Efficient” manner were undoubtedly well meant but effectively carried no standing as regards Statutory Taxation matters in the Company as a whole.

The Complainant can have no merit as in addition Section 5(1) of the Payment of Wages Act,1991, makes specific provision for the Payment of Statutory Deductions -in this case PAYE taxes.

3:1       Legislative Provisions - Payment of Wages Act,1991 Section 5

Regulation of certain deductions made and payments received by employers.

5.—(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—

(a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

(b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or

(c) in the case of a deduction, the employee has given his prior consent in writing to it.

(2) An employer shall not make a deduction from the wages of an employee in respect of—

(a) any act or omission of the employee, or

(b) any goods or services supplied to or provided for the employee by the employer the supply or provision of which is necessary to the employment,

(Underlined by Adjudication Officer)

3:2      In this case there was an unfortunate situation, charitably to be called a misunderstanding, between the Operations Director and the Complainant as to the understanding of “Tax Efficient Bonus Payment”.

This issue should have been clarified by the Operations Manager with the HR Manager and possibly then with the Revenue if an exemption from PAYE was being sought.

This did not happen and PAYE was applied, as required by Law, to the Bonus - ref Section 5(a) above.

Accordingly, and regrettably for the Complainant, her claim under the Payment of Wages Act,1991 must fail.

Payment / Taxation of Bonus on leaving employment.