Can you clarify the tax implications of the right to pay in lieu of notice?

Posted in : First Tuesday Q&A ROI on 5 January 2016
Zelda Cunningham
Arthur Cox
Issues covered:

Pay in lieu of notice allows an employer to pay an employee a lump sum payment in respect of their contractual (or statutory) notice period at the termination of employment. Employers are entitled to pay employees in lieu of their notice period provided that (a) there is a provision in the contract of employment to do so, or (b) the employee otherwise agrees to accept pay in lieu of notice.

If the contract of employment or other contractual document with the employer provides that the employer can pay the employee in lieu of their notice period, the pay will be subject to the usual income tax.

If there is no contractual reference to pay in lieu of notice, the payment will be treated as an ex

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Back to Q&A's This article is correct at 05/01/2016

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Zelda Cunningham
Arthur Cox

The main content of this article was provided by Zelda Cunningham. Contact telephone number is +353 1 618 0000 or email

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