Anthony Dinan is chairman of the Cope Foundation, which provides services to people with an intellectual disability in Cork, but has recently cut back on services for its clients.
He said the board told the HSE two years ago it would pay its newly recruited chief executive Collette Kelleher another 25pc on top of her approved public service salary of almost €100,000.
The additional top-up, worth nearly €25,000, is coming from the €43m it is getting from the HSE annually to run the service and not from public donations.
The foundation has had to cut some of its respite and other services in recent years because of a reduction in funding from the HSE.
The revelation about Ms Kelleher's top-up comes as controversy about the issue continues to rage at the highest level.
The Government has insisted that no senior manager in a voluntary organisation, including hospitals and disability organisations, is allowed a top- up in pay – whether publicly or privately funded – unless it has been approved by the Department of Public Expenditure.
But the latest audit of these 44 hospitals and disability organisations showed more than half are paying some form of top-up to senior staff – some privately funded, with others financed from the public purse.
The HSE is now involved in a verification process before releasing the names of the organisations which are flouting public pay rules.
A spokesman for the Cope Foundation told the Irish Independent that it was also paying top-ups to other workers in the organisation, including frontline staff.
Speaking yesterday, Mr Dinan said: "We have declared all the salaries that would not be in line with the HSE, in accordance with their consolidated scales," he told RTE radio.
"At all times we have declared our account to the HSE and notified them about the chief executive's salary.
"As far as we are concerned, we have paid the salary to get a person who is doing an excellent job.
"It is just a question of how much more can you ask somebody to do and how much less can you ask them to take in their salaries."
A spokeswoman for the HSE did not comment directly on Mr Dinan's claim except to reiterate that the HSE recently sought confirmation from all agencies about their compliance with public pay rules, and has now received a response.
There are around 36 different allowances and contributions paid to senior staff in voluntary hospitals and disability organisations funded by the HSE.
Although some are outlawed, a number are approved and can continue. They include, for instance, the clinical director's allowance of over €40,000 which is paid to hospital consultants who take on additional work as team leaders.
The consultants are also entitled to on-call allowances where they are on standby at night and weekends.
And the masters of the Dublin maternity hospitals get an extra allowance which was over €53,000 prior to the Haddington Road cuts.
However, the Government wants to end other allowances for which there is no record of approval, just verbal agreement.
Other allowances, such as those privately funded to enhance a manager's public salary, are no longer allowed. These include privately funded additions of up to €39,000 to managers at the National Maternity Hospital. Other hospitals are using public funds to top-up the public salaries of their managers. This is also no longer allowed.
Anyone who wants to hold on to an allowance must make a case to the Department of Public Expenditure.
The problem is that these staff have contracts with their employer and this raises a host of difficulties when it comes to ending the top-ups.