What pay includes

Lump sum payments

Payments on retirement or leaving work

An employer might choose to pay a lump sum payment to an employee who is retiring or leaving work. This payment should be treated as pay if it is more than either:

Payment in lieu of notice

A payment in lieu of notice should be treated as pay if it is part of an employee's contract. This payment cannot benefit from tax exemption for termination payments.

Payments to compensate for change in work practices

An employee may be entitled to a lump sum payment as compensation for changing duties. The employer must include these payments as taxable pay and deduct Income Tax, PRSI and USC through payroll.

Next: Salary sacrifice arrangements

Published: 16 June 2026 Print this page

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