Jim Higgins (Fine Gael)

I move recommendation No. 9:

In page 14, before section 6, to insert the following new section:

"6.–Section 112 of the Principal Act is amended by the insertion of the following subsections after subsection (2):

'(3) Without prejudice to subsection (2) an award under the provisions of the–

(a) Organisation of Working Time Act 1997,

(b) Maternity Protection Act 1994,

(c) Adoptive Leave Act 2001,

(d) Carer's Leave Act 1998,

(e) Parental Leave Act 1998,

(f) Protection of Employees (Part-Time Work) Act 2001, and

(g)Employment Equality Act 1998,

shall not be deemed to be an emolument except to the extent that a Tribunal, Rights Commissioner, the Labour Court or a Judge of a court so declares.

(4) An award for the purposes of subsection (3) shall include a settlement of an action or proceedings approved by a Tribunal, Rights Commissioner, the Labour Court or a Judge of a court.

(5) An award under the Unfair Dismissals Acts 1977 to 1993 shall be presumed for all purposes to be an award in respect of which tax has been paid and no further liability shall attach to either the employer or employee.'.".

This recommendation sets out the protective legislation relating to workers. The problem I seek to address has arisen as a result of a recommendation, which is now being followed as a general rule by one inspector of taxes, to the effect that an award made under any of the legislation to which the recommendation refers is taxable in toto. Such awards are normally made on a twin basis.

Let us consider the example of a person on maternity leave who wanted, as is her statutory right, to return to work and her employer refused to take her back. That person subsequently has recourse under the maternity legislation and an award will be made to them on two fronts: first, compensation for loss of earnings; and, second, in terms of damages. The normal tax regime applies to the loss of earnings and income tax deductions are made therefrom. However, awards for damages have been brought into the general scope of taxation. That is fundamentally wrong. When a person receives an award in court for injuries sustained in a road traffic or other accident, that award is not taxed. However, we are faced with a situation where the damages element of an award will be subject to tax. That is manifestly unfair and there appears to be a marked lack of consistency in terms of how the Revenue Commissioners apply the law.