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Payroll and benefits in Ireland

Managing payroll can be a tedious and time-consuming task for companies looking to hire talent in Ireland. From calculating wages and deducting taxes to ensuring compliance, running your own payroll requires accuracy, attention to detail, and a solid understanding of regulatory requirements.

In this guide, we will explore the ins and outs of managing payroll in Ireland compliantly, covering various topics such as how to do payroll, statutory and other employment benefits, payroll services in Ireland you can rely on, and more.

What is the minimum wage in Ireland?

The national minimum wage in Ireland is €12.70 per hour as of January 1, 2024. This minimum wage doesn’t prohibit employers from offering higher wages. Employees, on the other hand, must not agree to be paid below the minimum wage or engage in unpaid work unless they are working for a close family relative or are on a recognised apprenticeship programme. 

There are different rates for those under 20 years of age. As of January 2024, the following are the current minimum rates per age group:

  • Aged 20 and above: €12.70
  • Aged 19: €11.43
  • Aged 18: €10.16
  • Aged under 18: €8.89

Failure to pay the minimum wage in Ireland can put your company at risk. The Workplace Relations Commission (WRC) and the Labour Court have the power to investigate and prosecute employers for non-payment or underpayment of wages. If companies fail to pay workers correctly, they face fines ranging from €500 to €20,000 per underpaid worker.

Payroll in Ireland

Payroll cycle

Employee salaries are typically paid on a weekly or monthly basis. Employers in Ireland must ensure that employees are paid by the last day of the month.

Payroll taxes, on the other hand, consist of various deductions that employers are required to withhold and remit on behalf of their employees. These include:

  • Income Tax: Employees are subject to income tax, which is calculated based on their income, including bonuses and benefits.
  • Universal Social Charge (USC): The USC is a tax on income that funds social welfare benefits, healthcare, and free education. Most types of income, including salaries and self-employment earnings, are subject to this tax.
  • Pay-Related Social Insurance (PRSI): PRSI contributions go towards funding social welfare benefits such as pensions, illness, and maternity benefits. Both employees and employers in Ireland are required to make PRSI contributions.

13th Salary

Unlike in some other countries, there are no specific legal provisions in Ireland regarding 13th salaries. This means that employers are not obligated by law to provide an additional month’s salary, commonly referred to as a 13th salary. However, businesses may choose to offer bonuses or additional pay during certain periods as part of their incentive or reward programs.

How to do payroll in Ireland

When you opt to manage payroll in-house, here are the processes you need to keep in mind

  1. Register as an employer. Before running your payroll operations, you must register your business with the Revenue Commissioners and obtain an employer tax registration number (ERN) to ensure compliance with tax and social welfare requirements.
  2. Collect employee information. Gather employees’ Personal Public Service (PPS) numbers. For individuals in Ireland, PPS is a unique reference number to access social welfare benefits, public services, and information. Collect their tax registration details, and banking information if necessary.
  3. Accurately calculate gross pay. Determine an employee’s gross pay, including regular wages, overtime, bonuses, and other forms of compensation. Keep in mind that underpayment could lead to penalties for non-compliance.
  4. Deduct taxes and PRSI. Withhold income tax, USC, and PRSI contributions from employees’ wages, following applicable rates and thresholds.
  5. Process Payroll. Use a robust payroll system to help you avoid costly mistakes. Accurately calculate net pay, taxes, and deductions in compliance with laws and regulations.

Don’t forget the necessary taxes and returns. You need to file them on time with the Revenue Commissioners to remain compliant.

Outsourcing payroll in Ireland

Given the complexities of managing payroll, more and more companies in Ireland are opting to outsource payroll. Some companies in Ireland are entrusting their payroll responsibilities to a reliable third-party global payroll provider, like CXC, to streamline their operations and ensure compliance.

Here are some of the factors you need to consider when evaluating your options for outsourcing payroll.

  • Data security. Choose a payroll provider with robust data security measures and standards to protect sensitive payroll information and ensure compliance with data protection regulations.
  • Flexibility. Look for a payroll provider that can provide tailored services to accommodate specific requirements, including managing complex payroll structures and running payroll in multiple countries.
  • Customer support. A trusted payroll provider must provide good customer service to help you address concerns or issues promptly.
  • Reputation and experience. Select a payroll provider with a solid track record, positive client reviews, and extensive experience in managing payroll in Ireland.

At CXC, we have a proven track record supporting business with their global workforce management needs. With 32 years of industry experience, we have a deep understanding of the intricacies involved in managing payroll for companies across various industries.

What is considered statutory benefits in Ireland?

Statutory benefits in Ireland cover different types of payments that are mandated by Ireland’s laws to protect and support employees. The social welfare system in Ireland consists of three main categories of payments:

  • Social insurance payments: This is based on social insurance contributions and includes benefits such as illness benefits, maternity benefits, jobseeker’s benefits, and contributory state pensions.
  • Means-tested payments: This is designed for individuals who do not meet the required social insurance contributions for equivalent insurance-based benefits.
  • Universal payments: This is disbursed regardless of income or social insurance record and is based on specific personal conditions. One example of a universal payment in Ireland is the child benefit.

In addition, the statutory benefit for paid annual leave in Ireland is a minimum of four weeks per year. There are also parental leave provisions in Ireland, which include maternity, paternity, parental, and adoption leave.

Other benefits in Ireland

Offering other benefits on top of statutory benefits can help companies attract and retain top talent in Ireland. Common non-statutory benefits in Ireland include:

Private pension

Many employers in Ireland offer pension schemes to help employees save money for their retirement. Employers are required to provide a Personal Retirement Savings Account (PRSA) facility for their employees, even though they are not legally required to offer a private pension plan. It’s not required for employers to contribute to this, but rather to set up the facility for the employee.

Flexible work arrangements

Many companies in Ireland are offering flexible work options for employees, such as remote work, flexible hours, or compressed workweeks.

Healthcare benefits

Some employers provide private health insurance or additional healthcare benefits, such as dental or vision coverage.

These are just a few examples of the non-statutory benefits commonly offered by employers in Ireland. The specific benefits provided can vary depending on the company’s size, industry, and resources.

Streamline your global payroll with CXC

At CXC, we understand the challenges involved in managing global payroll. That’s why we’re committed to making international payroll as smooth and seamless as possible. Whether you need to manage your entire workforce across several countries or just a handful of international remote workers, we provide payroll services tailored to meet your unique needs.

Get in touch with us today and discover how you can streamline your global payroll to ensure international success.

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