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.
How to Set up
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 above criteria) 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'.
- In payroll, add the number of hours of overtime, and the relevant amount will show in the calculation.
Please note that you may add hours manually and individually per payslip (see below gif), you may add them using the bulk edit function in payroll, or else have the overtime hours added automatically when you approve clockings (you will need the Time and Attendance module for this). 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.
- 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. See Below images:
- Any overtime hours added to a payslip are shown here.
- The total overtime hours and amount are shown in the totals column here.
- The overtime hours and tax on such overtime are shown here.
- On the payslip, the breakdown of overtime hours will show here.
- The tax and the taxable amount will show here.
- For information on how to attach a second document to your employees' payslip bearing a breakdown of their clockings, click here.
Current Employer Income
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. Please note that the same applies to previous income from other employers during the same year: