Payments to employees

Holiday pay and advance payments

Employers may pay an employee ‘holiday pay’ in advance of their usual pay day.

Advance holiday pay may result in the employee receiving two or three weeks’ pay in one week. The employee then receives no pay in the following two or three weeks. The employer may apply those weeks' tax credits, rate bands and Universal Social Charge (USC) cut-off points to the holiday pay. This cannot be done if the employee is leaving employment immediately after receiving holiday pay.

This procedure can also be applied to payments made to employees where there is a seasonal shutdown of the business. 

The employer must include the date the payment was made to the employee on the payroll submission. 

The employer must use the latest Revenue Payroll Notification (RPN) when the next payment is made to the employees. Any changes made to an employee’s tax credits during this period are then taken into account in their next pay. 

Running your payroll in advance 

The employer must report employees’ pay to Revenue on, or before, the pay date. An employer may need to run their payroll in advance, for example, where their regular payroll staff or provider is on leave. 

Where this happens, the employer must make provisions to ensure that they can report the pay and deductions to Revenue on or before the pay date.

Next: Benefit in Kind (BIK)