The question of taxation of awards under labour legislation is a matter for my colleague, the Minister for Finance, in the first instance. In this regard, I understand that the Minister for Finance responded to a parliamentary question – Ref: 18359/02 – from you on this similar issue on 15 October 2002 wherein he stated that while the facts of each case must be examined to determine whether a specific award is taxable, in general these types of awards, awards for damages due to discrimination, sexual harassment, are liable to income tax.
Under employment protection legislation compensation awards may be made in favour of employees by the rights commissioner service of the Labour Relations Commission, the Employment Appeals Tribunal or the Labour Court as provided in the legislation, whether the legislation is administered by my Department or by the Department of Justice, Equality and Law Reform. In this context, the Deputy may wish to note that under the Unfair Dismissals Acts, which are administered by my Department, compensation awards by the tribunal are based on net pay, exclusive of income tax.
If employees who have taken cases under labour legislation have concerns regarding tax deductions from their compensation awards, they should pursue the matter directly with the Revenue Commissioners.