Hi If a sign on bonus received through payroll and the employee subsequently leaves during the period that the sign on bonus needs to be repaid , how can employer recoup the sign on bonus as it was taxed through payroll at higher rate.
There is no further pay due to employee to deduct it from.
Is an employer going to put themselves in this situation? i.e. giving a full sign on bonus up front before employee has completed X weeks / months in employment?Hi If a sign on bonus received through payroll and the employee subsequently leaves during the period that the sign on bonus needs to be repaid , how can employer recoup the sign on bonus as it was taxed through payroll at higher rate.
There is no further pay due to employee to deduct it from.
Revenue would view Brendan's solution as tax fraud.
It is not a fraud, it is a breach of contract. The ultimate resolution is to sue the employee for the money back. First steps would obviously be to ask for it back, if they refuse, send a solicitor's letter outlining what will happen if they don't return the money and then bring them to court. Whether it is worth the cost of bringing them to court depends on the size of the payment.I am surprised at that.
Whose is the bigger fraud - the employee in not returning the sign-on bonus or the employer in correcting the employee's salary?
Brendan
Yep, just like top-up maternity pay which is contingent on returning to work for a specified period of time. We've a 50% breach of contract rate on that but we look at the bigger picture; it's better to be rid of employees who are dishonest and have no personal ethical standards than having them working here in the longer term.All you can do is ask the employee to return the bonus, his tax affairs are his business. Realistically, he/she are going to tell you to get stuffed so you'll probably need to write it off unless you are prepared to sue him.
Unclear how this will work from payroll , can the employer amend the payroll and then request the difference between net pay received and net pay per amended payroll?
Did you really expect that anyone would repay more than they were paid?However the employee received net bonus after tax so only 52-54% of bonus and therefore does not want to repay the gross bonus.
Just think it's unfair to employee to pay back gross bonus when they only received net amount. Or is there a method of claiming the tax back?
Not at all just trying to figure out how any refund can be fair and reflected in the employees income for tax purposes correctlyDid you really expect that anyone would repay more than they were paid?
The repayment is clearly going to have to be reflected in payroll. Your payroll provider may be able to advise how this can be done, otherwise you'll have to seek clarification from this from Revenue via MyEnquiries.The contract stated the sign on bonus (which was paid up front in total with first pay) is repayable if employee leaves within 1 year on pro-rata basis. The employee left after 3 months and therefore is due to repay 3/4. However the employee received net bonus after tax so only 52-54% of bonus and therefore does not want to repay the gross bonus. Unclear how this will work from payroll , can the employer amend the payroll and then request the difference between net pay received and net pay per amended payroll?
Thanks for your views.
Of course they won't. And nor should they have to repay more than they were paid, that would mean they are paying a fine for leaving a job. I'm sure there is no issue in doing a payroll adjust to reflect the money being refunded. I imagine that it is quite easy to do and any payroll software can do it. For example, what if someone is overpaid overtime rates by accident? I'm sure these adjustments happen all the time.The contract stated the sign on bonus (which was paid up front in total with first pay) is repayable if employee leaves within 1 year on pro-rata basis. The employee left after 3 months and therefore is due to repay 3/4. However the employee received net bonus after tax so only 52-54% of bonus and therefore does not want to repay the gross bonus. Unclear how this will work from payroll , can the employer amend the payroll and then request the difference between net pay received and net pay per amended payroll?
Thanks for your views.
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