Through the publication of Legal Notices 245 and 246 of 16 June 2020, Tax on Overtime Rules and amendments to the FSS Rules were enacted. Legal Notice 68 of 2022 updated these rules.
Employees falling within the below criteria are eligible for the Overtime concession tax scheme:
- Are employed on a full-time basis;
- Do not occupy a managerial role; and
- earn a basic weekly wage of no more than €375 (per week), excluding Government Bonuses
The overtime concession rules (as per the 2022 Budget) state that employees falling within the above criteria are eligible to be taxed at a flat rate of 15% tax for the first €10,000 of overtime earned in a year.
To set up an employee's position with overtime concession, you will need the View/Manage All Employee Data and Manage Employee Position History permissions.
Setting up Overtime Concession
The setting to enable overtime concession can be found in the employee's position history. By default, newly added employees have this setting switched on. Talexio will then determine whether they are eligible for the concession, based on the criteria shown in the Overview, when the employee is added to payroll with overtime hours.
If you want to switch this setting off - or if you have switched it off in the past and want to switch it on again - follow the below steps:
- Go to the People section and click on the relevant employee.
- Go to the employee's employment tab, edit the latest position and go to 'Other Payroll Information'.
- Here you will see 'Use Overtime concession'.
- The employee will need to be registered with Jobsplus as being a Full Time employee. They will qualify for the special overtime rates even if they are on reduced hours. The employee's Job Schedule must also reflect that they work Full Time.
- The Overtime concession is applicable on overtime which is between the rate of 100% to 200%. Anything above or below this rate is not subject to the concession.
- A maximum of €10,000 worth of overtime will be considered as the Overtime Concession Amount and this is taxed at 15%.
- If data is added to the income from current employment section in the Employee Details, this data will also be used for the Overtime Concession Calculation. Please refer to the below section for more information.
- The Overtime Concession Amount and the Overtime Concession Tax will show separately on the payslip calculation and also on the payslip sent to the employee.
When there are Overtime hours included in the Payroll, these will automatically be calculated with the correct tax rate for Overtime Concession.
- If you do not have the Time & Attendance module, that you may add hours manually and individually per payslip or you may add them using the bulk edit function in payroll
- If you have the Time & Attendance module, overtime hours can be added automatically when you approve clockings. For information on how to set employees with time and attendance overtime hours up, click here. For information on how to approve such hours and send them to payroll, click here.
If you started using Talexio mid-year and will not be generating all payrolls (from January onwards) using Talexio, you may upload income earned by employees in bulk. This information will be stored in the employee's details page:
Any information added here will be used for future payrolls calculated on Talexio and will feature on FS documents. This includes:
- Gross emoluments from full time or part time
- Tax projections for the year
- Overtime Concession Amount and Tax
- Social security weekly wages and Maternity Leave Fund
- Fringe Benefits
For detailed instructions on this, click here.
The same applies to previous income from other employers during the same year.