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Ireland – Employer of Record
AVASO provides employer of record services for customers that want to hire employees and run payroll without first establishing a branch office or subsidiary in Ireland. Your candidate is hired via AVASOs’ Ireland PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Table of Contents
- Hiring in Ireland
- Employment Contracts in Ireland
- Working Hours in Ireland
- Holidays in Ireland
- Vacation in Ireland
- Sick Leave in Ireland
- Maternity/Paternity Leave in Ireland
- Health Insurance in Ireland
- Additional Benefits in Ireland
- Bottom Line on Benefits in Ireland
- Bonus in Ireland
- Termination/Severance in Ireland
- Tax in Ireland
Our comprehensive solution and Global PEO service enables customers to run payroll in Ireland while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Ireland.
Your new employee is productive sooner, has a better hiring experience and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. AVASO allows you to harness the talent of the brightest people in 187 countries around the world, quickly and painlessly.
Hiring in Ireland
Ireland occupies the southern 5/6ths of an island in the North Atlantic Ocean off the west coast of Great Britain. The northern 1/6th of the island, known as Northern Ireland, is part of the United Kingdom.
When negotiating terms of an employment contract with an employee in Ireland, it may be useful to keep the following standard benefits in Ireland in mind:
Employment Contracts in Ireland
Employment contracts are mandatory. All employers must provide new employees with a written contract within 2 months of starting employment, and the contract must be signed by both parties.
The contract should be in the local language and spell out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Ireland should always state the salary and any compensation amounts in euros rather than a foreign currency.
This information is provided as generally accepted information and is not intended as advisory services.
Working Hours in Ireland
While hard-working, the Irish generally are not workaholics and appreciate a good work-life balance.
The standard Irish work day is from 9 am until 5:30 pm with a minimum half-hour lunch period. Many offices, including government departments, are closed between 12:30 and 2 pm.
The average working week is 40 hours and the legal maximum average is 48 hours.
Working hours are governed by EU directives which stipulate that employees are entitled to a minimum of 11 hours’ continuous rest in every 24 hour period and at least one rest period in a working day of more than 6 hours. Employees are also entitled to at least 24 hours’ continuous rest every week.
Employers are required to provide additional compensation to employees that are required to work on Sundays.
Overtime pay is not a statutory obligation for employers. However, many employers pay employees higher rates of pay for overtime. The employment contract should state whether the employee is required to work overtime and the associated rates of pay for doing so.
Holidays in Ireland
Ireland celebrates 9 public holidays for which employees are given the day off, including:
- New Year’s Day
- Patrick’s Day
- Easter Monday
- May Day
- First Monday in June
- First Monday in August
- Last Monday in October
- Christmas Day
- Stephens Day
Contrary to popular belief, Good Friday is not a public holiday in Ireland. If any of the public holidays fall on a weekend, employees do not have any automatic legal entitlement to have the next working day off. However, the employee is entitled to a paid day off within a month of the public holiday, an additional day of annual leave, or an additional day’s pay.
Vacation Days in Ireland
Employees are normally entitled to 20 days of annual holiday leave each year in addition to public holidays.
Statutory annual leave is calculated based on the number of hours an employee works in any given year. Statutory annual leave can be calculated based on one of the following methods:
Four working weeks in a leave year in which the employee works at least 1,365 hours, unless it is a leave year in which he/she changes employment; or1/3 of a working week per calendar month in which the employee works at least 117 hours; or 8% of the hours worked by an employee in a leave year, subject to a maximum of 4 working weeks. For employees covered by 2 or more of the above calculations, he/she is entitled to use whichever calculation results in a greater amount of annual leave.
Ireland Sick Leave
In general, there is currently no specific right under Irish employment law for employees to be paid while on sick leave. As a result, it is at the discretion of the employer to decide the company policy on sick pay and sick leave, subject to the employee’s employment contract terms.
Most employment contracts have a maximum period of sick pay entitlement in a specific period, i.e. one month’s sick pay in any 12-month period. The specific company rules regarding sick pay leave should be clearly outlined in the employment contract.
As of 2022, the Irish government will begin to implement a new sick pay scheme for workers who have worked for at least 6 months for their employer. Sick leave is to be paid by the employers at a rate of 70% of the employee’s normal wages, up to a maximum of EUR 110 per day. Under this new legislation, the amount of sick leave employees receive will increase in phases:
- 2022 – 3 paid sick days
- 2023 – 5 paid sick days
- 2024 – 7 paid sick days
- 2025 – 10 paid sick days
Maternity/Paternity Leave in Ireland
Female employees are entitled to 26 weeks of maternity leave and 16 weeks of additional, unpaid maternity leave to being immediately after the end of maternity leave.
- 2 weeks of leave must be taken before the due date and 4 weeks after.
- The remaining weeks can be divided as the employee chooses.
- Employees who qualify for Maternity Benefit must take at least 2 weeks and no more than 16 weeks must be taken before the baby is due.
Maternity leave payment is dependent on the employee’s contract terms.
- Employers are not obliged to pay women on maternity leave
- Employees who have enough PRSI contributions may qualify for Maternity Benefit from the Department of Social Protection
- Employee contracts can provide for additional rights to payment during the leave period
An additional 16 weeks’ maternity leave can be taken after the first leave.
- This leave is not covered by Maternity Benefit
- The employer does not have to make any payments unless otherwise stated in the employee’s contract
Paternity leave: new parents (excluding mothers) are entitled to paid paternity leave within the first 6 months following birth or adoption. Employers are not obliged to pay employees during paternity leave but employees may be eligible to avail of paternity benefit from the state. The entitlement is 2 weeks’ leave and the intended dates must be notified to the employer at least 4 weeks before the leave is expected to commence.
Health Insurance in Ireland
All residents in Ireland are entitled to receive health care through the public health care system (Health Service Executive), funded by general taxation.
In addition to the public health care system, there is also a large private healthcare system. Wait lists for those without private insurance can be extremely long and can often stretch into years. Therefore, most employees will request private health insurance.
Private health insurance is taxable and should be considered when calculating an employee’s net take-home pay. For clients using our employee leasing solution, we suggest providing an allowance or a gross salary inclusive of all of these costs, or a base salary plus allowances as appropriate.
Ireland Supplementary Benefits
In Ireland, benefits-in-kind, such as private use of a company car, free or subsidized accommodation and preferential loans received from an employer are taxable if the employee earns more than €1,905 per tax year. Where the employee receiving such benefits is a director of the company, the benefits are taxable regardless of the annual earnings.
Stock options are often requested by executives working for US technology companies in Ireland. There are benefits to both the employer and employee with the introduction of a share incentive scheme. The complexities of issuing options to employees in Ireland are intricate and subject to tax; most US companies prefer to offer cash bonuses tied to profitability rather than stock options. Globalization Partners cannot manage stock options issued to designated managers hired through our employee leasing program in Ireland.
Generally, we recommend budgeting 20% for benefits cost on top of the gross salary to determine the total employer’s cost including benefits in Ireland.
Performance-based bonuses, either monetary or in shares, are common incentives in Ireland.
Termination/Severance in Ireland
There are no specific rules or requirements surrounding the use of probationary periods.
- Many employers do put a probationary period in place and if so, the terms must be included in the employment contract, including the length of the probationary period.
- A typical probationary period ranges from 3 to 6 months.
- Probationary periods can be extended but cannot exceed 11 months in aggregate.
The amount of notice due to an employee for termination depends on the employee’s length of service. The length of service notice entitlement is broken down as follows:
- For 13 weeks to 2 years of service, 1 week notice is required
- For 2 years to 5 years, 2 weeks’ notice is required
- For 5 years to 10 years, 4 weeks’ notice is required
- For 10 years to 15 years, 6 weeks’ notice is required
- For 15 years and beyond, 8 weeks’ notice is required
When a company closes its business or there is a reduction in the number of staff, this is known as redundancy.
- Typically employees are entitled to two weeks statutory redundancy payment for every year of service, plus a bonus week.
- A week’s payment is subject to a maximum ceiling called a statutory ceiling, which currently stands at €600 per week.
- All statutory redundancy payments are tax-free.
At minimum, an employee has to give the employer one week’s notice to terminate an employment contract, regardless of their length of service. However, most companies put a longer term contractual notice clause into the employment contract, typically 3 months for a more senior role or 1 month for a more junior role. The employer has the option of payment in lieu of the notice period.
Paying Taxes in Ireland
Employers are legally obliged to inform employees of any pension arrangements or personal retirement savings account (PRSA) schemes provided by the company. Employees are legally entitled access to a PRSA where there is no pension scheme in place.
- Employees’ and employers’ social insurance contributions are paid into the Social Insurance Fund, known as PRSI (Pay Related Social Insurance). The social insurance schemes are financed by this Fund, which is administered by the Department of Social Protection.
- The social insurance rate contributions are:
- 4.0% from the employee if they earn more than 352€ per week
- 8.5% from the employer on incomes up to €356 per week or
- 10.75% on all earnings where weekly income is in excess of €356
- There is no ceiling cap
- The social insurance rate contributions are:
- The Universal Social Charge (USC) is a tax that must be paid if an employee’s gross income is more than €13,000 per year, subject to certain exemptions. As of 2021, the rates are:
- 0.5% for income of up to €12,012.00
- 2% for income between €12,012.01 and €20,687.00
- 4.5% for income between €20,687.00 to €70,044.00
- 8% for income above €70,044.01
- The PSRI and USC charges cover employees for various Social Welfare Benefits, State Old Age Pension, and Medical Benefits.
- Maternity leave is paid at a weekly rate of €245 for a maximum of 26 weeks. This is paid by the Department of Social Protection (DSP). Employers do not have to pay workers while on parent’s leave.
Employees pay Pay-As-You-Earn (PAYE) taxes based on their income, less certain allowances. Employees pay progressive income tax in Ireland. The top rate is approximately 40 percent and applies to income earned over €33,800.