Section 192A of the Taxes Consolidation Act 1997 provides for an exemption from Income Tax in respect of certain awards made for infringement of an employee’s rights or entitlements or an employer’s obligations under employment legislation.
Examples of infringement of an employee’s rights or entitlements include:
The exemption applies to:
- Payments arising out of claims made under relevant legislation following a formal hearing before a relevant authority( or through mediation). The relevant authority issues a decision or determination based on the hearing or mediation.
- Subject to certain conditions payments made under an out of court settlement which has been agreed between an employee and an employer.
Payments not covered by Section 192A:
- Compensation in general must be worth less than 26 weeks wages
- Actual remuneration and arrears of remuneration
- Termination of an office or employment chargeable under S123 TCA 1997 (eg Claim under the Unfair Dismissals Acts)
- Compensation for a reduction in pay due the reorganisation of a business.
- Compensation under a court order under Section 2B of the Employment Permits Acts 2003