Overview

With a population of 4.9 million people, Ireland offers a talented and diverse workforce with over 50% holding a  third-level degree, making it one of Europe’s most highly educated countries. This, combined with its modern and flexible employment law framework, creates an attractive business climate for both local and international companies.

It has a thriving technology sector and is home to many of the world's leading tech companies, including Facebook, Google, and Apple. The country's reputation for innovation and favourable business climate has helped establish it as a hub for technology and pharmaceuticals, two of its top industries.

Ireland's well-developed and sophisticated financial services industry combined with its favourable business climate and highly educated workforce has helped to establish it as a hub for international business and finance.

Capital                                                 Dublin

Languages spoken                             English, Irish

Population size                                    5.06 million as of 2023

Payroll frequency                                Weekly/monthly

Currency                                             Republic of Ireland – Euro (€)

                                                            Northern Ireland - Pound sterling (£)

VAT                                                      23%

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For more economical and fiscal information on Ireland, visit the dedicated section.

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Payroll and taxes in Ireland

Employer contributions in Ireland

In Ireland, employers are responsible for making several mandatory contributions as part of the payroll process. These include
Employer PRSI (Pay-Related Social Insurance) contribution.

This contribution is a percentage of the employee's gross earnings and funds the country's social insurance program. The rate varies depending on the employment type and the employer’s size.

The current employer PRSI rate in Ireland is 10.75% for most classes of employers. However, there are different PRSI classes for employers, and the specific rate that applies to an employer will depend on the type of business and the number of employees. For example, the PRSI rate for Class A employers (which includes most private sector employers) is 10.75%. In comparison, the PRSI rate for Class J employers (which includes employers in the fishing and agricultural industries) is 4.85%.
PRSI rates are subject to change, and employers should regularly check the Irish government's Revenue website for the most up-to-date information on PRSI rates and requirements.

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Pension contributions

Employers must provide a pension scheme for their employees and contribute to this scheme on their behalf.. The requirements for pension contributions depend on the type of pension scheme the employer has chosen to provide.

There are several types of pension schemes that employers can offer in Ireland, including defined benefit (DB) schemes, defined contribution (DC) schemes, and group personal pension (GPP) schemes.

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Note: The contribution rate for Defined Benefit (DB) schemes can vary depending on the specific scheme and may be based on factors such as length of service, salary, and age. The rates listed for Defined Contribution (DC) and Group Personal Pension (GPP) schemes are general guidelines and can vary depending on the scheme and the employer's and employee's contributions.

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Income Tax

Employers are also responsible for deducting income tax from their employee’s pay and for remitting this tax to the government on behalf of their employees. The income tax deducted depends on the employee's income level and is calculated based on a progressive tax system, which will be explained in the next section.

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Employee contributions in Ireland

Employees have several payroll and tax obligations as part of the employment process. These obligations include:

Employee PRSI (Pay-Related Social Insurance) contribution

This contribution is a percentage of the employee's gross earnings and funds the country's social insurance program. Please take a look at the PRSI tables in the previous section for more details.

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Income tax

Employees in Ireland are required to pay income tax on their earnings. The tax amount depends on their income level and is calculated using a progressive tax system.

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Universal Social Charge (USC)

The USC is a tax on an individual's income calculated based on a progressive tax system, and its rate depends on their income level. For incomes of  €13,000 or less, there is no Universal Social Charge (USC).

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Reduced rates of USC apply to:

• People aged 70 or over whose total income for the year is €60,000 or less

• Medical card holders aged under 70 whose total income for the year is €60,000 or less

Total income for USC purposes does not include payments from the Department of Social Protection.

 

Minimum wage in Ireland 

In Ireland, the minimum wage is reviewed annually by the government, and it is currently set at €11.30 per hour for all employees over 18 to ensure fair compensation. Employers must pay their employees at least the minimum wage and can face penalties and fines if they fail to do so. Employees can claim underpayment through the Workplace Relations Commission.

Overtime pay in Ireland is typically higher than the employee's standard hourly rate and varies based on the employee’s employment contract terms. Some common overtime rates in Ireland are time and a half (1.5 times the employee's standard hourly rate) or double time (2 times the employee's normal hourly rate).

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Employee Benefits in Ireland

Mandatory Benefits in Ireland

Employers must provide several mandatory employee benefits as part of the employment relationship. These benefits include:

Paid annual leave

Employees in Ireland are entitled to a minimum of 20 days of paid annual leave per year, although some employers may offer more generous leave entitlements as part of the employment contract.

Statutory sick pay

• From 1st January 2023, employees in Ireland are entitled to 3 days of sick pay per year.

• The sick pay provided by the employer is 70% of the employee's normal pay.

• The maximum amount paid per day is €110.

• Employees must have worked for their employer for at least 13 weeks before they can receive statutory sick pay.

• Employers can provide a more generous sick pay scheme, but they cannot provide less than the statutory amount.

Pensions

Employers must provide their employees with access to a pension scheme. However, the specific pension scheme and the level of contributions will depend on the terms of the employee's employment contract.

Supplementary/Optional Benefits

In addition to the mandatory benefits outlined above, many employers in Ireland provide their employees with a range of supplementary or optional benefits. These benefits can include the following:

Health insurance

Some employers offer health insurance as a benefit to their employees, which can help cover medical treatments and procedures costs.

Life insurance

Can provide financial protection for employees and their families in the event of the employee's death.

Private health care

Some employers offer private health care as a benefit to their employees, which can provide access to private hospitals and medical treatments.

Employee discounts

Many employers offer their employees discounts on products or services, including gym membership, travel, and more.

Bonus schemes

Some employers offer bonus schemes to their employees, which can provide additional financial rewards for meeting specific performance targets or working certain hours.

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Types of leave available in Ireland

Annual leave 

• In Ireland, full-time employees are entitled to a minimum of four weeks of paid annual leave annually

• This entitlement is based on the employee's normal working hours and includes any regular overtime that the employee works.

• Part-time employees are entitled to a pro-rata annual leave based on their hours worked.

• Annual leave can be accrued pro-rata throughout the year or given as a lump sum at the beginning of the year.

• Employers can set the timing of annual leave but must consider the employee's preferences and business needs.

• If an employee leaves their job, they are entitled to be paid for any annual leave they have not taken.

• Employees can also take leave for public holidays, but there is no statutory entitlement to pay for this time off.

Note: Entitlement is based on standard working hours and includes regular overtime. Part-time entitlement is based on hours worked.

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Sick leave 

In Ireland, employees are entitled to a certain amount of paid sick leave each year, depending on their length of service and the sick leave policy of their employer. The length of an employee’s sick leave will vary depending on their employment contract and company policies.

Some employers may offer more generous sick leave entitlements as part of their employee benefits package. Reviewing the terms of your employment contract or company policies is essential to determine the sick leave entitlement that applies.

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Maternity/paternity leave 

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• Parents who apply for additional unpaid parental leave are entitled to up to 26 weeks of leave per child until the child is 12 or 16 years old if the child has a disability.

• Employers may offer additional benefits beyond the statutory requirements, so employees should check with their employer to see if additional benefits are available.

 

Background checks in Ireland

Background checks are optional in Ireland for all employees, but some employers may conduct them for specific circumstances. For example, employers in particular industries like finance, healthcare, or education may require background checks for employees in sensitive positions.

In Ireland, background checks can include various information such as criminal record checks, employment history checks, and credit checks. Employers must ensure that background checks are legal and fair and comply with data protection legislation, such as the General Data Protection Regulation (GDPR).

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Termination of employment in Ireland

In Ireland, the termination of employment is governed by several rules and requirements, including severance pay, probationary periods, and notice periods. The following provides more specific details on each of these:

Severance pay

Under Irish law, employees who have worked for an employer for at least 104 weeks are entitled to severance pay if the employer terminates their employment. The amount of severance pay an employee is entitled to equal two weeks' pay for each year of service, with a maximum payment of €600.

Probationary period

The probationary period for employees in Ireland can range from six months to two years, depending on the terms of their employment contract. During this period, the employer can assess the employee's suitability for the role and terminate the employment without providing a reason.

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Do you need to hire employees in Ireland?

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Talk to us

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Contact

Mrs. Emanuela Ferina

Head of Global Payroll

emanuela.ferina@studio-bcs.com

Phone 0039 0 363 360254

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