Lump sum on retirement - how is salary calculated

Final Remuneration may be computed on one of the following bases, viz:

(i) (a) Basic remuneration over any twelve month period of the five years preceding the relevant date (i.e. the date of retirement, leaving service or death, as the case may be),
PLUS
(b) the average of any fluctuating emoluments over three or more consecutive years ending on the last day used in (a) above.

(ii) The average of the total emoluments for any three or more consecutive years ending not earlier than 10 years before the relevant date.

(iii) The rate of basic pay at the relevant date or at any date within the year ending on that date plus the average of any fluctuating emoluments calculated as in (i) above.
Provided that-

(i) Basis (iii) cannot be used where within three years before the relevant date an employee:

(a) Was promoted or received a special increase in basic pay, and
(b) The total increase over the relevant three year period is greater than it would have been if the remuneration on the day of commencement of the period had been increased proportionately to the increase in the Consumer Price Index, or to increase applicable to the employment under a National Wage Agreement, during the same three year period.

However, it is possible to agree beforehand with Revenue that such increases, if given on a recognised scale applicable to defined groups of arm’s-length employees, will not prevent the availability of basis (iii).

(ii) Whenever final remuneration is calculated by reference to a year or years other than the 12 months ending with the relevant date, each such year's remuneration may be increased in proportion to the increase in the cost of living from the last day of that year up to the relevant date referred to as "dynamised" final remuneration. This also applies to fluctuating emoluments so that fluctuating emoluments of a year other than the twelve months ending with the relevant date may be increased as detailed above.

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