Definitive Guide to Hiring in Ireland

Hiring in Ireland

For companies that want to hire employees and run payroll in Ireland without first establishing a business entity or subsidiary, Global Expansion provides Employer of Record services (EOR Ireland).

Our EOR services streamline and simplify the global hiring process. We handle the core global HR tasks - compliance, contracts, payroll, global benefits, and more - so that you forgo hours of ongoing admin, human error, and risky compliance.

In Ireland, companies would historically establish a subsidiary or branch office to legally hire in that country. With Global Expansion, this step is no longer necessary. We have subsidiaries all over the world and therefore can legally hire on your behalf. The employees are ours only on paper and report directly to managers within your company.

Labor Laws in Ireland

Employment laws in Ireland are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Irish employment laws and policies here.

Employment Contracts

There are 5 types of employment contracts in Ireland.

1. Permanent contract

   A permanent contract is a full-time, long-term position. This full-time employment agreement has no specified end date. If either the employer or the employee wish to terminate the contract, either party must provide notice. The length of the notice period for resignation or termination is determined by contract or legislative requirements. Employers in Ireland have the right to terminate an employee's contract for reasons such as redundancy, misconduct, or other grounds for dismissal under Irish labor laws.

2. Fixed-term contract

   In Ireland, contracts with a set length or goal are called "fixed-term contracts." When the date set by the employer and employee for the end of the contract comes, the contract is over. The contract is also over if the employee has done what he or she was hired to do. Either the employer or the employee can end the contract by giving the other party notice or if certain things make their agreement invalid.

3. Contract of indefinite duration (CID)

   The contract is in effect until either the employer or the worker decides to end it. People who have worked on more than one fixed-term contract in the past 4 years can get a CID. For an employee to be eligible for a CID, they must continue to work under the same terms and conditions as their previous fixed-term contracts. Even if the employee is eligible for a CID, the employer must explain in writing why they would rather give them a fixed-term contract instead.

4. Part-time contract

   Part-time workers, such as apprentices and casual workers, are legally protected under this type of contract. In terms of employment contracts, employers must treat part-time and full-time employees equally. This is based on the Protection of Employees (Part-Time Work) Act of 2001, which governs the rights and working conditions of part-time employees.

5. Zero-hour contract

   This contract applies to individuals who are available for work but do not have set hours. The Organization of Working Time Act of 1997 and the Employment (Miscellaneous Provisions) Act of 2018 protect the rights of people with this type of contract. It is intended for specific purposes, such as casual work, emergencies, and temporary replacement for absent employees.

Probation Period in Ireland

The duration of a probationary period can range from 3 months to 11 months but should not exceed 12 months, regardless.

Annual Leave

Employees are normally entitled to 20 vacation days in Ireland each year in addition to public holidays.

Holidays in Ireland

The following is a comprehensive list of public holidays observed in Ireland:

Maternity Leave in Ireland

Employees who are eligible for maternity benefits must take at least 2 weeks of unpaid leave and no more than 16 weeks before the baby's due date. Female employees are entitled to 26 weeks of paid maternity leave and 16 weeks of unpaid maternity leave, which can be divided however they see fit.

The amount of maternity pay in Ireland varies depending on whether the individual is eligible for a full or partial payment. Those eligible for the full weekly rate of EUR 250 will receive this benefit for 156 days beginning 2 weeks before the baby's due date.

Paternity Leave in Ireland

Employers are not required to pay employees during paternity leave, but employees may be eligible for state paternity benefits. Fathers are entitled to paid paternity leave for the first 6 months following the birth or adoption of their child. The entitlement is 2 weeks of leave, and the intended dates must be communicated to the employer at least 4 weeks before the leave is scheduled to begin.

Ireland Sick Leave

Employees have a maximum period of sick pay entitlement in a given period, i.e. one month's pay in any 12-month period, but there is no law requiring them to be paid while on sick leave. The company's specific rules for sick pay leave should be clearly outlined in the employment contract.

Working Hours in Ireland

According to Ireland’s Labor Law, the average working week is 40 hours, with a legal maximum of 48 work hours. The typical Irish work day lasts from 9 a.m. to 5:30 p.m., with a minimum half-hour lunch break. Many businesses, including government agencies, are closed between 12:30 and 2 p.m.

Overtime Pay in Ireland

The employment contract of an employee should state whether they are required to work overtime and the rates of pay for doing so. Overtime pay is not a legal requirement nor are there any overtime laws in Ireland, but many employers do pay more for working more than 40 hours per week or more than 90% of the time.

Termination of Employment in Ireland

Those who are terminated or made redundant may be entitled to certain benefits, including notice and payment for annual leave earned but not taken. Regardless of length of service, an employee must provide at least one week's notice to terminate an employment contract. The amount of termination notice owed to an employee depends on the length of service.

Employees who are laid off are entitled to two weeks' gross salary for every year of service, in addition to one week's pay. The weekly payout computation is subject to a cap of EUR 600.

Notice Period in Ireland

The following table breaks down the right to a notice period based on length of service:

Severance in Ireland

Employees who are laid off are entitled to 2 weeks' gross pay for every year of service, in addition to one week's pay. The payment calculation is subject to a weekly cap of EUR 600.

Ireland Salary and Wages

Accurately estimate your costs when employing in Ireland in 2023. Includes base salary, dependents, benefits, taxes, social contributions, and payroll costs. Monthly or yearly calculation period.

Minimum Salary in Ireland

The Irish minimum wage is EUR 10.50 per hour, which will increase to EUR 11.30 per hour starting 1st Janary, 2023.

An employee's gross minimum wage includes the following:

• Basic salary
• Shift premiums
• Bonuses
• Service charges

Workers who are not entitled to minimum wage include:

• Employees hired by a close relative
• Employees in a mandatory apprenticeship
• Employees aged under 20

13th Month Salary in Ireland

There is no legal obligation to pay the 13th or 14th month's salary. On a discretionary basis, employers may also award a variety of other bonuses or incentives.

• Individual performance-based bonuses
• Company performance bonuses
• Goal-based bonuses
• Holiday or end-of-year bonuses

Pay Related Social Insurance (PRSI) taxes are levied on all employment income in Ireland, including most benefits. Individuals who are employed are generally subject to PRSI on their earnings from employment, including benefits in kind. Employers must pay a contribution based on each employee's salary and benefits.

Individuals who are self-employed (or chargeable persons; an individual is a chargeable person if he or she has PAYE source income and either net assessable non-PAYE income of EUR 5,000 or more in a tax year or total gross income from non-PAYE income of EUR 30,000 or more in a year) must pay social insurance contributions on their total income, including investment and rental income.

Employees earning between EUR 352.01 and EUR 424 per week are eligible for a PRSI credit, which reduces the amount of PRSI payable. The credit is calculated by deducting one-sixth of the employment income in excess of EUR 352.01 from the maximum credit of EUR 12.

PRSI is levied on the unearned income of the following people:

• Employed contributors under the age of 66
• Individuals under the age of 66 who receive a taxable pension

Deductible Expenses in Ireland

Personal Deductions

Individuals are eligible to claim several deductions against their taxable income. Some of the main deductible expenses are as follows:

1. Pension Contributions

   Deductions against pension contributions are subject to an age related limit and an earnings limit. The age limit varies between 15% (for individuals under 30 years old) and 40% (for individuals over 60 years old). Individuals can claim tax relief against contribution to the following pension schemes/plans:

   • Occupational Pension Schemes
   • Personal Retirement Savings Accounts (PRSAs)
   • Retirement Annuity Contracts (RACs)
   • Qualifying overseas plans
2. Education Expenses

   Individuals can benefit from reimbursement for educational expenses paid for third level education. Scholarship expenses in general are accounted for in this estimate, as well as fees paid for foreign language and Information Technology courses.

   This type of deduction is subject to a maximum limit of EUR 7000 per course/person or academic year. Additionally, a single claim for deduction against the aforementioned education expenses are subject to a singular disregard amount of EUR 3000 or EUR 1500 per tax year (depending on whether a student is enrolled on a full time or part time basis).

3. Investment

   Investment in qualifying companies via the following incentive schemes:

   • Employment Investment Incentive (EII)
   • Start-up Capital Incentive (SCI)
   • Start-Up Relief for Entrepreneurs (SURE)

   The maximum investment on which individuals can claim a relief in a year is:

   • EUR 150,000 for the years up to and including 2019.
   • EUR 500,000 in respect of the years after 2019, subject to those shares being held for a minimum period of seven years
   • EUR 250,000 for years after 2019, where the shares are held for a minimum of four years only
4. Donations and Covenants

   Claims for deductions against charitable donation are subject to a minimum donation of EUR 250 and a maximum donation of EUR 1,000,000 per year

   Individuals can only claim tax relief against covenants to the following: -

   • Permanently Incapacitated minors
   • Permanently Incapacitated adults
   • Donation of heritage items/properties
   • Individuals who are 65 years or older

Standard Deductions

Individuals are eligible to claim certain tax credits based on their marital status, children or age.

Some of the main tax credits available to individuals in 2022 are as follows:

Business Deductions

Individuals can claim tax relief for expenses directly related to the operation of their business. Some of the main business deductions that can be claimed against their taxable income are as follows:

• Purchase of products for the purpose of resale
• Salary of employees
• Rent and utility bills pertaining to the use of an office/building for business purposes
• Costs associated with using vehicles and machines for business related activities
• Lease payments pertaining to the use of vehicles and machines for business related activities
• Accountancy costs
• Financing costs (i.e. interest costs associated with borrowing capital to fund business operations)

Immigration Ireland

Learn about immigration requirements in Ireland, work visa requirements, work permits and more.

Critical Skills Employment Permit

To obtain a Critical Skills Employment Permit, an individual must be employed under an Irish employment contract and paid directly from an Irish payroll for over 2 years. An initial permit is available for a fee of EUR 1,000 and a period of 2 years.

An individual who is granted an employment permit for the first time in Ireland is expected to stay with the initial employer for a period of 12 months. No more than 50% of employees of an Irish employer may be from non-EEA countries.

The minimum remuneration requirement is EUR 64,000. Starting on October 1, 2014, remuneration can be made up of a basic annual salary (equal to at least the Irish National Minimum Wage) and health insurance payments. Individuals in all occupations, except those that are harmful to the public interest, may be eligible for a Critical Skills Employment Permit. The individual must have a third-level qualification (at least a degree) and the role must be on the Highly Skilled Occupations List.

Visa requirements Ireland overview

Learn about the visa policies in Ireland and all the ways to obtain a regular or a work visa for Ireland.

Value Added Tax (VAT) in Ireland

Ireland, like all EU member countries, adheres to the EU VAT Directive in terms of VAT compliance. It may, however, continue to set its own standard (upper) VAT rate. The only stipulation is that it is greater than 15%. Suppliers of goods or services VAT registered in Ireland must charge the appropriate VAT rate and collect the tax for payment to the Irish tax authorities via a VAT filing.

Withholding Tax in Ireland

Dividends

• Dividends paid to another company are exempt from withholding tax
• Dividends paid to a nonresident company or an individual (whether resident or nonresident) are subject to a 25% withholding tax, unless the rate is reduced under a tax treaty or the dividends are exempt from withholding tax under the EU parent-subsidiary directive or under a specific exemption under domestic legislation

Interest

• The withholding tax on annual interest paid to a resident/nonresident company or individual is 20%, unless the tax rate is reduced under a treaty or the interest is exempt from withholding under the EU interest and royalties’ directive or under a specific exemption under domestic legislation.
• Interest paid to deposit holders of certain Irish banks is subject to withholding tax at 33%, unless an exemption under domestic legislation applies

Royalties

• The withholding tax rate is 20% on patent royalties
• All other royalties are exempt
• The rate may be reduced under a tax treaty or the payment may be exempt from withholding under the EU interest and royalties’ directive or under a specific exemption under domestic legislation

Mandatory Benefits in Ireland

It’s important to understand the legal requirements of hiring employees in Ireland (whether it’s remote or in-office) so that your business remains compliant. As part of Global Expansion’s International PEO and Employer of Record (EOR) solution, we guarantee employees are registered with the appropriate government agency, and that they receive mandatory benefits.

Additionally, all tax deductions associated with the employee are processed at the source, meaning our in-country entity will be responsible for paying all taxes to the authorities on behalf of the new hire.

Additional common employee benefits in Ireland

• Personal Retirement Savings Account (PRSA) Facility
• Life insurance or death-in-service schemes
• Income protection
• Medical insurance
• Dental insurance
• Pension schemes
• Subsidized food
• Additional paid leave
• Transportation allowance
• Gym memberships
• Cycle-to-work schemes

Payroll In Ireland

Here’s everything you need to know to run payroll in Ireland.

Payroll Administration

Payroll taxes are usually managed by a PAYE (Pay As You Earn) system, whereby employers are responsible for deducting tax at source. In other words, employers pay employees' salaries after deducting income tax, Pay Related Social Insurance, Universal Social Charge (USC), and any other expenses that qualify as deductions.

In Ireland, the calendar year serves as the fiscal year. The deadline for filing preliminary income tax returns is October 31st of each year.

Payroll Accrual in Ireland

Country Accruals Additional Information

Description

Employer PRSI contributions are uncapped and levied at a rate of 11.05 percent on all taxable employment income including benefits-in-kind (but excluding certain share related benefits).

In the case of a foreign employee resident but not domiciled in Ireland and not covered by a reciprocal social security agreement, the employee PRSI contribution is payable at 4 percent on all employment income whether or not remitted to Ireland.

Employer Accruals Additional Information

Accrued Benefits in Ireland

Why use Global Expansion to hire your employees in Ireland

Establishing a branch office or subsidiary in Ireland can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Irish labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Irish law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Ireland. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything.Our International Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.