The legal basis for the operation of the Pay As You Earn (PAYE) system by employers is the Income Tax (Employments) (Consolidated) Regulations, 2001. Regulation 20 provides that an employer must issue a Form P45 immediately an employee ceases employment. Section 987 of the Taxes Consolidation Acts 1997 provides for a penalty of €4,000 where an employer fails to issue a P45. If the employer is a body of persons, the secretary is liable to a separate penalty of €3,000.
I have been advised by the Revenue Commissioners that employers obligations in this regard are included in their Employers Guide to PAYE. A notice from Revenue to employers in June 2014 highlighted the importance of giving an employee a Form P45 immediately on cessation.
I am informed by the Revenue Commissioners that instances where an employee has not been provided with a Form P45 should be brought to their attention through the employee's local Revenue District. If the Deputy has specific information in relation to non-compliance with the obligation to issue a Form P45 upon cessation of employment, he may wish to follow-up directly with Revenue in that regard.