Payroll requirements are not universal. So, if your company hires employees from around the world, you’ll need to understand payroll regulations for each country. If you employ full-time or contract workers in, for example, Ireland, payroll compliance isn’t only a legal responsibility, it’s an essential part of a positive and long-lasting employee experience.

Let’s look at how to pay employees in Ireland and how Payoneer Workforce Management can help.

Payroll in Ireland: Wages and other payments

Here are the key points to know about payroll in Ireland.

Payroll cycle

• Employees are typically paid on the last working day of the month.
• Ireland’s fiscal year follows the calendar year (January 1st to December 31st).
• Employment law may allow monthly payments.
• While not statutory, employers may pay employees bonuses or 13-month salaries as per contract terms.

Minimum wage

Ireland’s minimum wage is based on the employee’s age:

Age	Minimum Wage (EUR)
20 and over	EUR 12.70
19 years old	EUR 11.43
18 years old	EUR 10.16
Under 18	EUR 8.89

The Irish government regularly reassesses and increases minimum wages, so it’s a good idea to double-check current rates.

While minimum wage is statutory, overtime pay is not. Ireland’s employment laws make no specific case for appropriate overtime pay. Instead, many employers outline their overtime pay policies and payments in employment contracts.

Sick pay

Ireland’s leave policy states that employees are allowed up to 5 days of paid sick leave per year. Sick pay is paid by the employer at 70% of the employee’s salary up to EUR 110 per day.

Maternity pay

Eligible employees can claim 26 weeks (156 days) of paid maternity leave. The statutory rate of maternity pay is standardized for all employees at EUR 289 per week. These statutory Maternity Benefit payments are covered by Pay-Related Social Insurance (PRSI). 

If desired, employers can pay employees directly during their maternity leave and request that their maternity benefit go to the company instead. This should be outlined in employee contracts. 

Employers are not required to continue paying an employee’s regular salary during maternity leave, but can choose to if desired.

Eligibility for Maternity Benefit depends on the amount of time an employee has paid into PRSI before taking their maternity leave. If at least 39 weeks’ worth of contributions have been made in the 12 months before maternity leave starts, then the employee is fully covered for the 26 weeks of Maternity Benefit.

Paternity pay

Ireland’s PRSI also covers paternity pay. New fathers can take up to 2 weeks of paternity leave, also receiving EUR 289 a week.

Severance packages

In the event that you need to make an employee in Ireland redundant, a severance package may be required. Employees become eligible for severance pay after 2 years of service (104 weeks) with a company.

Statutory redundancy payments are made in a lump sum, based on the employee’s length of service. Each eligible employee receives 2 weeks’ pay for every year of service, plus 1 additional week’s pay.

There is a limit to how much severance pay an employee can receive. The maximum weekly salary used to calculate severance pay is EUR 600 per week (or EUR 31,200 / $36,370 per year).

Ireland payroll taxes

When it comes to compliant payroll, Ireland requires several deductions to be made by the employer each month, 2 of which are unique to Ireland: PRSI and USC. 

Ireland payroll taxes include:

Income tax

Ireland has a PAYE (pay as you earn) system for income tax. Employers must deduct tax contributions on behalf of employees each month. Contractors, freelancers, and other flexible non-full-time staff typically take responsibility for their own income tax.

Income tax rates vary; tax contributions are calculated based on the employee’s marital and parental status. 

Pay-Related Social Insurance (PRSI)

In Ireland, the Pay-Related Social Insurance (PRSI) fund is used to cover an employee’s pension, unemployment benefits, and some types of paid leave, such as maternity pay. Both employers and employees make PRSI contributions.

Universal Social Charge (USC)

In addition to PRSI, employees must also contribute Universal Social Charge (USC). USC is a tax on gross income, meaning rates are calculated based on an employee’s salary before other deductions like income tax or PRIS.

Employees do not pay USC on statutory severance packages.

Ireland payroll compliance best practices

Payroll in Ireland can get complicated. The minimum wage is subject to change frequently, and there are specific salary bands to understand for income tax, PRSI, and USC. To run a compliant Ireland payroll, international businesses should:

• Keep an eye on tax law changes, labor laws, and statutory requirements.
• Perform occasional payroll audits to spot and solve any issues or non-compliance.
• Train staff on the importance of payroll compliance and the best practices above.

Payoneer Workforce Management’s expert team supports onboarding and payroll in Ireland, as well as 160+ other countries.

Your options for payroll and HR services in Ireland

Businesses can choose between several routes to hire, contract, and pay employees in Ireland. 

• Set up a legal entity: To build a full-time team in Ireland, you need a legal entity. It’s a process that involves incorporating your business in Ireland, registering with Irish corporation tax, and potentially opening an HQ. It can be a lengthy (and expensive) route to take.
• Hire contractors: It’s possible to hire fixed-term contractors in Ireland without a legal entity. However, contractors must not be employed full-time or for open-ended contracts (companies can be fined and penalized for blurring the lines).
• Hire and pay through a temporary work agency: They offer services to facilitate payroll, and also support with onboarding and employment contracts, without a local entity. 

Payoneer Workforce Management’s unified platform gives you a single dashboard to manage a global workforce.

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FAQs

1) What is the payroll process in Ireland?

Payroll typically runs monthly in Ireland. Payroll taxes include income tax, PRSI, and USC. These must be deducted by the employer each month and paid to the Irish Revenue Commission. 

2) What tax do employers pay for employees in Ireland​?

In Ireland, the employer pays contributions towards Pay-related Social Insurance (PRSI). Income tax and USC are paid for by employees only.