Ex Gratia Payments

Heisenburg81

I know I am correct when I have the belief that an employee who leaves employment voluntarily is not entitled to Ex Gratia Termination payments.
However, I need legislative or e brief to back up this belief and I can't find anything.
Legislation doesn't define "termination" so I need to be able to rule out voluntary termination.
Any help would be greatly appreciated.

gerrybbadd

Heisenburg81 wrote: »

I know I am correct when I have the belief that an employee who leaves employment voluntarily is not entitled to Ex Gratia Termination payments.
However, I need legislative or e brief to back up this belief and I can't find anything.
Legislation doesn't define "termination" so I need to be able to rule out voluntary termination.
Any help would be greatly appreciated.

It's not really a taxation issue. Start with the Citizens Information website, they will point you to the legislation

dogsears

NB - to be "ex gratia" it cannot be an entitlement whether the employee leaves voluntarily or not.

Peregrinus

Heisenburg81 wrote: »

I know I am correct when I have the belief that an employee who leaves employment voluntarily is not entitled to Ex Gratia Termination payments.

You are correct. Nobody is entitled to ex gratia payments. That's what 'ex gratia' means.

Heisenburg81 wrote: »

However, I need legislative or e brief to back up this belief and I can't find anything.
Legislation doesn't define "termination" so I need to be able to rule out voluntary termination.

You won't find a legislative statement that a voluntary leave is not entitled to something. The simple absence of a legislative statement that they are entitled to something means that they have no entitlement to it.

Heisenburg81 wrote: »

Any help would be greatly appreciated.

I think there may be some confusion here. You may be using the term "ex gratia payment" to refer to something that is an entitlement. Can you explain exactly what payments you have in mind?

Heisenburg81

Thanks for the reply.
An employee is leaving a client company voluntarily and the employer wants to pay them a severance payment - ie - give them a tax free payment as a thank you.
Client is reading the TCA Sections and says "termination" doesnt specifically say terminated by employer.
I can only say that I know that it only applies to employer terminated payments.
I want to be able to conclusively show that only employer terminated payments are eligible for the TCA relieving provisions and not where the employee leaves of their own accord.  
The problem is I cant definitively prove this by showing relevant legislation or guidance.

dogsears

I don't think you will find anything in the TCA to support your view primarily because I don't think it is right. In the legislation, think of the word "termination" as meaning "coming to an end" rather than as a more directed meaning i.e. termination by the employer.

In practice I've never seen Revenue ask whether the termination was voluntary or employer directed in the context of claiming exemption on an ex gratia payment. There are many situations where the termination comes about as a resulted of a negotiated settlement, or in an owner managed situation, where it would be impossible to say who took the decision, employee or employer.

If you want some support for this (albeit not statutory) look at Resolute Management Services Ltd vs Revenue and Customs Commissioners 2008 STC (SCD) 1202 - a UK case and not appealed further so far as I know, but based on substantially similar legislation and likely to be persuasive in Ireland.

Heisenburg81

Thanks for that.
I thought the case you referenced dealt with where an employee received a payment in exchange for irrevocably waiving rights to statutory redundancy.
It seems unjust that a person could receive payments tax free on voluntarily leaving employments and could theoretically do so up to a lifetime level of €200,000 whereas other tax payers would have to earn €400,000 to make the same because they stayed in the same employment.
Thanks again for the assistance - much appreciated.