Employee Benefits in Ireland

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Irish Employee Benefits

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Ireland might not all be familiar to you yet. By using our PEO and EOR service, we can provide compliant labor contracts for employees in Ireland including local benefits.

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Ireland, benefits can be guaranteed by labor law and national legislation, as well as collective agreements with trade unions or workers’ councils.

What Compensation Laws exist in Ireland?

In Ireland a raft of employment laws and regulations guarantee employees are compensated in various areas. Legislation covers such as minimum wages, social insurance, redundancy, termination, and severance, working hours, vacation leave, maternity, and paternity issues and more. Legislation also guarantees categories such as minimum wages.

Some categories common in other European countries do not apply in Ireland. For example, there is no statutory right to overtime or sick pay and these may be covered contractually or by collective agreements.

Statutory and mandatory minimums cannot be undercut by collective or trade union agreements, although these are less of a factor in the Irish economy than in other European nations. Compensation and benefits include:

  • Social Insurance: Pay Related Social Insurance (PRSI) contributions by both employers and employees finance Ireland’s Social Insurance Fund. Most employees between 16 and 66 years old make contributions.

    The fund is managed by the Ministry for Social Protection and the Ministry for Finance. Contributions are divided into categories or classes, relating to the type of employment. Entitlement depends on the employee’s category and level of PRSI contributions. Available benefits include illness, maternity, paternity, health and safety, invalidity, surviving spouses, guardians, and occupational injuries.
  • National Minimum Wage: Full-time employees over 20 years of age must receive a minimum wage of €10.20 (US$12.10) per hour, which equals €20,685 per year (US$24,563), €1,723 (US$2,946) per month and €397.80 (US$472.38) per week. Lower bands apply to younger ages: 19yrs – €9.18 per hour; 18yrs – €8.16 per hour; under 18yrs €7.14 per hour.
  • Working Hours and Breaks: These are limited to an average 48 a week, including overtime, by the Organization of Working Time Act (1997). Average hours are calculated over a period of months – four months for most employees; six months for employees in sectors such as security, airports, docks, agriculture, and those in the public sector; 12 months when employer-employee agreements are certified by the Labor Court.

    There is no statutory right to overtime pay in Ireland and rates are contractually agreed. A 15-minute break applies for working four-and-a-half hours and a 30-minute break after six hours, which can include the first 15 minutes.

    Payment for the breaks is not mandatory and depends on contractual arrangements. Workers should receive 11 hours continuous rest every 24 hours and two 24-hour breaks in seven days.
  • Holiday / Vacation Leave: Four weeks a year is the statutory minimum, though contracts often stipulate more. Entitlement is based on a ‘leave year’ of April 1 till March 31 and employees can choose how leave is calculated.

    Employers must include all working hours including those spent on maternity, paternity, parental, adoptive leave, other annual leave and the first 13 weeks of leave for caregivers. Holiday pay is in advance or averaged against the previous 13 weeks if weekly pay varies.
  • Maternity / Paternity Leave: The Maternity Protection (Amendment) Act (2004) and the Paternity Leave and Benefit Act (2016) cover statutory rights, including 26 weeks’ maternity leave whether women are in full-time or part-time employment, or self-employed. At least two weeks must be taken before birth and four weeks post-natal.

    Claimants generally need at least 39 weeks’ Pay Related Social Insurance (PRSI) contributions in the 12 months prior to leave starting to qualify for benefits. Benefits are €245 (US$290) each week for 26 weeks or 156 days. Paternity leave allows two weeks’ leave for the employed or self-employed fathers or co-parents during the six months after birth.

    There is no legal requirement for employers to pay paternity benefit, but it may be possible to claim from the state.
  • Parental and Parents’ Leave: Statutory minimum parental leave is up to 26 weeks for each eligible child before their 12th birthday (16th birthday for child with disability). Leave can be taken in one stretch or blocks of at least six weeks. 

    Each parent is entitled to five weeks paid leave if they have sufficient PRSI contributions over 39 weeks in the preceding 12 months before the birth. The standard benefit is €245 (US$290) each week.
  • Redundancy, Termination and Severance: The statutory redundancy lump sum is based on two weeks’ pay for each year worked between 16 and 66 years of age, plus an additional one week’s pay capped at €600 (US$713). Individuals must have been employed by the company at least for two years after the age of 16 and qualified with sufficient PRSI contributions. The sum is tax free.

    Terms are governed by the Redundancy Payments, Protection of Employment and Unfair Dismissals Acts. Notice periods vary according to years of service and employees can serve notice or take payment in lieu of the same amount they would have received had they served notice.

Social Security in Ireland

Ireland’s Social Insurance Fund is partly funded by Pay Related Social Insurance (PRSI) contributions from employers, and employees between the ages of 16 and 66 years. The fund is managed by the Ministry for Social Protection and the Ministry for Finance, with contributions divided into Classes, relating to the type of employment.

Entitlement depends on the employees’ type of employment, Class, and level of PRSI contributions. Available benefits include Illness, maternity, paternity, health and safety, invalidity, surviving spouses, guardian, and occupational injuries.

Those earning less than €352 (US$418) weekly before tax deductions do not pay contributions, with the employer making contributions on their behalf to the social fund. Employees earning more than €352 make a 4% PRSI contribution on their earnings. Unearned income of €5,000 (US$5,940) from such as rents, investments attract an extra 4% charge on PRSI but does not entitle the individual to any extra benefits.

Additionally, employees earning over €13,000 gross income pay the Universal Service Charge (USC) on all their income, which is calculated on a weekly or monthly basis. Married couples or civil partners are assessed individually.

Maternity, paternity, and other state benefits are exempt from being included in the USC. The charge applies to all Irish income and any foreign income paid into Ireland.

Threshold rates for 2021 are:

  • First €12,012 (US$14,274) – 0.5%
  • Next €8,675 (US$10,310) – 2.0%
  • Next €49,357 (US$58,654) – 4.5%
  • Above – 8.0%

Employers make 8.8% of PRSI contributions for a Class A employee on weekly earnings up to €398 (US$473) and 11.05% of contributions for employees earning more than €398.

Statutory Employer Costs in Ireland

  • Minimum Wages: The National Minimum Wage Act stipulates employees over 20 years of age receive a minimum wage of €10.20 (US$12.10) per hour, which for a full-time worker equals €20,685 per year (US$24,563), €1,723 (US$2,946) per month and €397.80 (US$472.38) per week. Lower bands apply to younger ages: 19yrs – €9.18 per hour; 18yrs – €8.16 per hour; under 18yrs €7.14 per hour.
  • Social Security: Employers make 8.8% of PRSI contributions for a Class A employee on weekly earnings up to €398 (US$473) and 11.05% of contributions for employees earning more than €398.
  • Corporate Taxes: Irish resident companies pay Corporate Income Tax (CIT) on their worldwide profits at 12.5% (standard trading rate); 25% (non-trading ‘passive’ rate) and 33% (capital gains rate).