An illness benefit is payable by the Department of Social Protection (DSP) when a person is unable to work due to an accident or illness, subject to that person having made the appropriate PRSI contributions. Regardless of whether or not an employee receives payment from their employer, they are still entitled to claim an illness benefit if they have made the qualifying PRSI contributions.
SimplePay has a built-in item to accommodate the special tax and reporting requirements related to an illness benefit.
To add the illness benefit item, you should follow these steps:
- Go to an employee’s profile and click on Add (next to Payslip Inputs) > Illness Benefit.
- Enter the Amount of the illness benefit.
- You can tick the box to indicate that the illness benefit is Paid directly to employer.
- If the box is left unticked, the amount of the illness benefit will simply be added to the employee’s taxable income, and there will be a corresponding increase in PAYE – with a resulting decrease in nett pay.
- If the box is ticked, the employee’s taxable income and PAYE will also increase – with a resulting decrease in nett pay. Additionally, the employee’s nett pay will increase with the gross amount of the illness benefit – since the employer received the illness benefit from the DSP and has to pay it over to the employee. The overall effect of this method will be an increase in the employee’s nett pay – equal to the after-tax amount of the illness benefit.
- Click Save.