This issue arose in the case of Solecki and J & D Lithuanian Building Services Ltd ADJ-00028513. 

In this case the Adjudication Officer awarded the economic loss in the sum of €420 for Public Holidays and €1,346.80 in respect of Annual Leave entitlements.  The Adjudication Officer also directed a sum of €2,000 as compensation for breaches being a total of €3,766.80.

It is very helpful that the Adjudication Officer has set this matter out in this way.  By doing so, it means that the monies due in respect of Public Holidays and Annual Leave will be subject to tax.  However, the compensation element of €2,000 would be exempted by the provisions of Section 193 Taxes Consolidation Act.  If simply an award of €3,766.80 had been awarded that did not break down the award between the economic loss and the compensation then in those circumstances the full sum would be due.

The Adjudication Officers in cases like this of course have the jurisdiction not to award the economic loss and simply to award compensation for the breach, provided that is clearly set out in the Decision, then in those circumstances then the entire award ends up being exempt from Income Tax.  However, this does create some difficulties and it is always better that an Adjudication Officer, as in this case, will award the economic loss and then any compensation on top, in a way that any Revenue Official looking at the Decision would be able to determine what element related to loss of income, and what element was compensation.  This is an excellent Decision for setting out matters in line with the Taxes Consolidation Act.

*Before acting or refraining from acting on anything in this guide, legal advice should be sought from a solicitor.

*In contentious cases a solicitor may not charge fees or expenses as a proportion or percentage of any award or settlement.

Richard Grogan

Author Richard Grogan

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