Employer of Record (EOR) Ireland

An Employer of Record (EOR) acts as the legal employer for workers in Ireland, often referred to as a Global Professional Employer Organization (Global PEO). This service oversees key aspects of employment, ensuring strict adherence to local labor laws and regulations. Responsibilities include managing payroll, taxes, statutory benefits, and employment agreements.

Key Responsibilities of an EOR:

• Legal Compliance: Ensuring the worker’s employment complies with Irish labor laws.
• Payroll Management: Overseeing the local payroll process.
• Tax Filing: Handling employment-related taxes and necessary paperwork.
• Payslip Provision: Supplying workers with payslips.
• Salary Distribution: Managing salary payments to workers.

Streamline your global expansion with our Global PEO services – a hassle-free solution without the need for entity setup. Our Employer of Record (EOR) in Ireland ensures a legal presence, compliance, and intellectual property (IP) protection, allowing your business to focus on its core operations. Facilitate seamless global mobility and work visas while building a diverse and efficient global workforce. Partner with Mercans, your Employer of Record in Ireland, for a compliant and efficient employment experience for your global workforce.

Things you need to know before hiring in Ireland

Employment Contracts in Ireland

Employment Contracts

As an employer, when you hire an individual for a regular wage or salary, you establish a ‘contract of employment’ with them. This contract delineates both your rights and responsibilities as an employer and those of your employees.

Legally, you are not required to provide the entire contract in writing; however, you must issue a ‘written statement of terms of employment’ to your employees, outlining the key terms of their employment.

Employment contracts can be categorized into open-ended or fixed-term types. Most employment contracts are open-ended, meaning they continue until either you or the employee decides to terminate the contract, typically by providing notice. Alternatively, you may offer fixed-term or specified-purpose contracts that end on a particular date or upon the completion of a specific task.

Your employment contract with employees may include:

• ‘Express’ Terms: These are clearly communicated to the employee either verbally or in writing.
• ‘Implied’ Terms: These are not explicitly stated but are understood as part of the employment relationship (e.g., the expectation for employees to perform their job to the best of their ability).

Employer Responsibilities for Providing Terms of Employment

As an employer in Ireland, you are required to provide a written statement of the core terms of employment within the first five days of an employee starting their job. This written statement should outline both the employer’s and employee’s rights and responsibilities, establishing a clear ‘contract of employment.’ While the entire contract does not need to be in writing, this written statement is essential.

Core Terms of Employment

You must provide the following core terms in writing within five days of the employee’s start date:

• Full names of both the employer and the employee.
• Employer’s address.
• Place of work.
• Start date of employment.
• Job title or a description of the nature of the work.
• Duration of the contract, if it is temporary or fixed-term.
• Pay rate or method of calculation, and the pay reference period.
• Expected working hours and days.
• Probation period duration and conditions, if applicable.
• Terms related to working hours, including overtime.

Remaining Terms of Employment

You must provide a written statement of the remaining terms of employment within one month of the employee’s start date. This should include:

• Pay intervals.
• Paid leave entitlements, including annual leave and public holidays.
• Sick pay provisions.
• Pension schemes.
• Notice periods for termination.
• Details of any collective agreements.
• Training provided by the employer.
• For temporary agency contracts, the identity of the hiring person or firm.
• For unpredictable work patterns, information about guaranteed hours, required working hours and days, and minimum notice for assignments.
• Social security contributions and protections.

If an employee is required to work outside Ireland for at least one month, you must also provide a written statement of the terms and conditions of their employment before they leave.

Working Hours

In Ireland, the standard maximum average working hours is 48 per week, calculated over a reference period. This excludes time spent on annual, sick, and other statutory leave. Some roles, like Gardaí and Defence forces, are exempt from this limit. Young workers have specific regulations, and reference periods for calculating average hours vary based on industry and agreements, ranging from 4 to 12 months. For guidance on managing working hours and compliance, Mercans is here to assist.

Probation Period

In Ireland, a probationary period is commonly included in employment contracts to evaluate a new employee’s performance. As of August 1, 2022, probation periods cannot exceed 6 months, though in exceptional cases, such as extended leave or specific job requirements, this may be extended by up to another 6 months, totaling 12 months. During probation, the Unfair Dismissals Acts 1997–2015 generally do not apply, provided the probation is within the specified period and clearly stated in the contract. However, protections exist for dismissals related to trade union activities, pregnancy, and statutory leave entitlements. Employees dismissed during probation for misconduct are entitled to fair procedures, while wrongful dismissal claims may arise if contractual terms are breached.

13th Month Salary

There is no legal requirement to provide a 13th or 14th month’s salary.

Termination, Severance Pay and Notice Period

Termination of Employment

In Ireland, the termination of employment must follow specific procedures and legal requirements:

• Notice Periods: Both employees and employers are required to provide a notice period before ending a contract of employment. The length of notice depends on the employee’s length of continuous service:
  • 13 weeks to 2 years: 1 week
  • 2 to 5 years: 2 weeks
  • 5 to 10 years: 4 weeks
  • 10 to 15 years: 6 weeks
  • More than 15 years: 8 weeks
• Employees must also provide at least one week’s notice if they have been continuously employed for 13 weeks or more. If a contract specifies a longer notice period, the contract terms must be followed.
• Waivers and Payment in Lieu: Both parties may agree to waive the notice period or accept payment in lieu of notice. If the employee is not required to work during their notice period, the employer must compensate them accordingly.
• Dismissal for Misconduct: Employers can terminate employment without notice in cases of serious misconduct. However, even in such cases, the principles of natural justice should be observed, ensuring fair procedures are followed.

Severance Pay

• Statutory Severance Pay: In Ireland, there is no statutory requirement for severance pay unless specified by a collective agreement or employment contract. However, employees dismissed due to redundancy may be entitled to statutory redundancy payments. This payment is calculated based on:
  • Two weeks’ pay for each year of service.
  • One week’s pay as an additional amount.
• The maximum weekly pay for redundancy purposes is capped, and employees must have been employed for a minimum period to qualify.
• Contractual Severance Pay: Some employment contracts or company policies may provide additional severance benefits beyond the statutory requirements. These provisions vary by employer and should be reviewed in the individual employment contract.

Notice Period

Under the Minimum Notice and Terms of Employment Acts, 1973-2005, both employees and employers must adhere to minimum notice periods for terminating a contract of employment:

• Employees: Must provide at least one week’s notice if they have been continuously employed for 13 weeks or more. If the contract specifies a longer notice period, that must be followed.
• Employers: Must give notice based on the employee’s length of continuous service:
  • 13 weeks to 2 years: 1 week
  • 2 to 5 years: 2 weeks
  • 5 to 10 years: 4 weeks
  • 10 to 15 years: 6 weeks
  • More than 15 years: 8 weeks

Employees vs Independent Contractors

In the modern workforce, it’s crucial to correctly classify workers as either independent contractors or employees. Misclassification can lead to legal issues and unintended liabilities. The distinction between these two types of work arrangements primarily hinges on the nature of the contract and the relationship between the individual and the organization.

Independent Contractors operate under a contract for services and are generally considered self-employed. They have control over their work, bear financial risks, and are responsible for their own business operations.

Employees, on the other hand, work under a contract of service and are entitled to employment protections, benefits, and rights.

Here’s a comparative look at the key differences between an Independent Contractor and an Employee:

Key Points for Employers:

• Contractual Clarity: Ensure clear contractual terms defining the nature of the relationship. Independent contractors should have detailed contracts specifying their commercial role.
• Legal Compliance: Misclassification can lead to legal issues and financial consequences. Adhering to the correct classification helps avoid breaches of employment legislation.
• Financial and Legal Responsibilities: Understand the financial and legal responsibilities associated with each type of worker to ensure compliance and proper management.

Social Security in Ireland

Pay-Related Social Insurance (PRSI) is a mandatory contribution on employment income, including taxable non-cash benefits. If an individual’s weekly earnings are below EUR 352, they are exempt from PRSI for that week.

PRSI also applies to income from trades, professions, or investments. Self-employed individuals with income below EUR 5,000 for the year 2023 are exempt from PRSI. For those who are liable, the self-employed PRSI rate is 4%, consistent with the employee rate.

Upcoming Changes: Effective 1 October 2024, the PRSI rates will increase by 0.1% for both employers and employees, with the new rates as follows:

Additional Information

• Self-Employed PRSI: Individuals with annual income under EUR 5,000 are not subject to PRSI.
• Employee PRSI: Applies to share-based remuneration, including restricted stock units (RSUs), restricted stock awards, and performance share awards. It is collected through the PAYE system and also applies to Revenue Approved Profit Sharing (APSS) and Save As You Earn (SAYE) schemes.

Payroll in Ireland

Minimum Wages

The National Minimum Wage Act 2000 establishes the minimum amount employees must be paid. As of 1 January 2024, the national minimum wage is €12.70 per hour. While employers can offer more, they cannot legally pay less than this rate, except in specific circumstances.

Minimum Wage Rates

• 20 and over: €12.70 per hour (100%)
• 19: €11.43 per hour (90%)
• 18: €10.16 per hour (80%)
• Under 18: €8.89 per hour (70%)

Key Points:

• Exemptions: The minimum wage does not apply to employees working for close relatives, statutory apprentices, or those under 20 years old, who are entitled to sub-minimum rates.
• Pay Calculation: Minimum wage calculations include all gross pay, such as basic pay, bonuses, and certain allowances. It excludes overtime premiums, special duty allowances, and payments during absences.
• Working Hours: Working hours for wage calculation include time spent working, available for work, and approved training, but exclude periods like standby time and travel to and from work.

Payroll Cycle 

In Ireland, payroll regulations require employers to process payroll either on a weekly or monthly basis. Employees must be paid by the end of each month. There are no regulations governing the payment of a 13th-month salary.

Overtime Pay 

Overtime refers to work performed beyond your regular working hours. Legally, there is no entitlement to extra pay for overtime, nor are there statutory requirements for overtime rates. Nevertheless, many employers offer higher pay rates for overtime hours. To understand your entitlements, review your employment contract to confirm if overtime is required and, if so, the applicable pay rates. Additionally, certain industries may offer increased overtime pay compared to regular hours.

Mercans’ payroll capabilities

• Payroll Cycle: Optimize your payroll management with Mercans’ expert services tailored for Ireland. We handle timely and accurate payments to both employees and contractors, ensuring transactions are processed in the local currency. Trust Mercans to make your payroll cycle efficient and compliant with local standards.
• Payroll Setup, Processing, and Administration: Mercans delivers a full suite of payroll services, from meticulous setup to precise processing and effective administration. Our end-to-end approach guarantees accurate payroll management and adherence to local regulations, allowing you to concentrate on your primary business activities.
• Statutory Filings and Payments: Stay compliant with Irish regulations effortlessly with Mercans. Our dedicated team takes care of all statutory filings and payments, ensuring that your business meets all legal requirements. Rely on Mercans for accurate and timely submissions, ensuring your statutory obligations are consistently fulfilled.
• Pay Employees and Contractors in Local Currency: Experience seamless payroll operations with Mercans, where payments to employees and contractors are made in the local currency. This ensures compliance with Irish financial regulations and simplifies the payroll process for your business.

Personal Income Tax in Ireland

In Ireland, personal income tax is applicable based on residency and domicile status. Individuals who are both resident and domiciled in Ireland are taxed on their worldwide income. For those who are resident but not domiciled in Ireland, they are taxed on Irish-source income, foreign employment income earned while performing duties in Ireland, and other foreign income only to the extent it is remitted to Ireland. Non-residents are generally taxed solely on Irish-source income.

Personal Income Tax Rates (2024)

• Single and Widowed Persons (no dependent children):
  • 20% tax rate on income up to €42,000
  • 40% tax rate on income exceeding €42,000
• Married Couple (one income):
  • 20% tax rate on income up to €51,000
  • 40% tax rate on income exceeding €51,000
• Married Couple (two incomes):
  • 20% tax rate on income up to €84,000
  • 40% tax rate on income exceeding €84,000

Ireland Employee Hiring Cost

Employing Individuals in Ireland: Employer Costs Breakdown

Employing individuals in Ireland involves several employer costs, including social insurance contributions and other mandatory benefits. Let’s break down the employer costs for an employee with a Gross Annual Salary of €240,000:

• Social Insurance Contributions: Employers in Ireland are required to contribute to the Pay-Related Social Insurance (PRSI) scheme. For an employee with a gross annual salary of €240,000, the total annual employer cost for PRSI contributions amounts to €26,520.
• Total Annual Cost: When factoring in additional expenses such as potential pension contributions, private health insurance, and other benefits, the total annual cost of employing an individual with a Gross Annual Salary of €240,000 is estimated to be €266,520.

For more detailed calculations and information about employer costs, you can refer to the latest guidelines on employment regulations and benefits in Ireland.

Employee Benefits in Ireland

Mandatory Employee Benefits in Ireland

Employing individuals in Ireland involves several mandatory employee benefits that employers must offer. Here’s a summary of the key benefits:

• PRSA Facility: Employers are required to provide access to a Personal Retirement Savings Account (PRSA) Facility for excluded employees—those not offered an occupational pension scheme within 6 months of starting employment. While employers are not obligated to contribute to the PRSA, they must facilitate the arrangement for employees who wish to contribute to their own retirement savings and ensure tax relief is provided at source through payroll.
• Statutory Sick Pay Scheme: As of January 1, 2024, employees are entitled to 5 days of statutory sick pay per year, up from 3 days in 2023. Sick pay must be paid at 70% of the employee’s normal wage, up to a maximum of €110 per day. This entitlement will increase to 7 days in 2025 and 10 days by 2026.

Supplementary Employee Benefits

• Group Life Assurance / Death-in-Service Schemes: Many employers offer group life assurance, which provides financial protection to an employee’s dependents in the event of death. Premiums paid for approved plans are not taxed as income for employees. Typically, the benefit amount is around 4 times the employee’s base salary and can be set up under trust for quick payout outside of probate.
• Group Income Protection: Although less common due to higher costs, this benefit provides a replacement income for employees who are long-term ill or disabled. It can cover up to 75% of salary, including state disability benefits. Payments commence after a deferred period (usually 26 weeks, but adjustable) and can continue until retirement age if the employee remains unable to work. Premiums are tax-free for employees, but claim benefits are taxable as income.
• Group Medical & Dental Insurance: Private medical insurance is popular among employees when partially or fully funded by the employer, though premiums are subject to Benefit-In-Kind taxation. Options include a range of plans with various coverage levels, including access to general practitioners, specialists, and hospital services. Dental insurance is less common but is growing in popularity. Employers can also provide wellness programs through these plans.
• Occupational Pensions / Group PRSA / Master Trusts: For employers offering pensions, various structures are available depending on business needs and practices. Average employer contributions are around 6%, with employees contributing 5%. Additional voluntary contributions are possible up to revenue limits.
• Pension Auto-Enrolment: Draft legislation for a national auto-enrolment scheme is pending, which aims to automatically include employees not already in a retirement plan. Details on implementation are still emerging.

Employee Perks

• Subsidized Food / Social Events: Employers may offer subsidized food options, such as onsite cafeterias or vending machines, and sponsor social events, enhancing employee engagement.
• Additional Paid Leave: Some employers offer extra paid leave or flexible working arrangements as additional perks.
• Tax-Saver Commuter Benefits: Employers can pre-purchase transit tickets for employees, who then repay the cost from pre-tax salary, offering savings on commuting expenses.
• Subsidized Gym Membership / Fitness Supports: Employers may partner with gyms or provide discounts on memberships, fitness classes, and organize sports activities to support employee wellness.
• The Cycle-to-Work Scheme: Employers can purchase bicycles and safety equipment, which employees repay from pre-tax salary, reducing the cost of cycling to work.

State-Funded Employee Benefits

• Death Benefits / Widow/Widower’s Pension: State pensions are available to the spouse of a deceased individual if contribution conditions are met.
• Illness Benefit: Provides financial support for employees unable to work due to illness, subject to PRSI contributions.
• Invalidity Pension: Available for individuals unable to work long-term due to incapacity, following 12 months of illness benefit.
• Public Health Services: Access to the public health system varies by income level, with options for private care available.
• The State Pension: Available to individuals aged 66 who meet the contribution requirements.
• Maternity Benefit: Paid to employed and self-employed women meeting PRSI conditions, typically for 26 weeks.
• Leave Periods: Various leave entitlements include maternity, parental, paternity, parent’s, adoptive, force majeure, and carer’s leave, alongside a new entitlement to 5 days of paid sick leave.

Work Permit in Ireland

Overview of Employment Permits

In October 2014, the Irish government established the Employment Permits (Amendment) Act 2014, which introduced nine categories of employment permits. These permits are designed to regulate the employment of non-EEA nationals in Ireland. The categories include the Critical Skills Employment Permit, Intra-Company Transfer (ICT) Permit, General Employment Permit, Contract for Services Employment Permit, Dependent/Partner/Spouse Employment Permit, Internship Employment Permit, Graduate Employment Permit, Sports and Cultural Employment Permit, and Reactivation Employment Permit. Each permit type has specific eligibility criteria and conditions. The Department of Enterprise, Trade and Employment (DETE) is responsible for issuing these permits.

Critical Skills Employment Permit

The Critical Skills Employment Permit is aimed at attracting highly skilled professionals to Ireland. To qualify, an individual must have an employment contract with an Irish employer and be paid directly from an Irish payroll. The minimum salary requirement is EUR 64,000, or EUR 38,000-63,999 for roles listed on the Critical Skills Occupations List, with the threshold set to rise to EUR 44,000 by January 2025. The applicant must hold at least a third-level qualification. The permit is initially valid for two years and requires a fee of EUR 1,000. Spouses or de facto partners of permit holders may apply for work permission directly from the Immigration Service Delivery (ISD) unit upon arrival in Ireland.

General Employment Permit

The General Employment Permit is intended for non-EEA nationals seeking employment in Ireland in roles not listed in the Ineligible Categories of Employment. The applicant must be employed under an Irish contract and paid directly from an Irish payroll. The minimum salary for this permit is EUR 34,000, with an increase to EUR 39,000 by January 2025. For specific roles, such as healthcare assistants and positions in the horticulture and meat processing sectors, different salary thresholds apply. Employers must advertise the position with the Department of Social Protection’s employment services to demonstrate that no EEA national is available for the role. The permit is initially available for six months or up to two years, with a fee of EUR 500 or EUR 1,000, respectively.

Intra-Company Transfer (ICT) Permit

The Intra-Company Transfer (ICT) Permit allows for the transfer of senior management, key personnel, or trainees from an overseas company to an Irish branch or subsidiary. The transferee must remain on the foreign payroll, and the minimum salary requirement is EUR 46,000, rising to EUR 53,000 by January 2025. The permit can be issued for an initial period of six months or two years, with possible extensions for an additional three years. The fee for the ICT Permit is EUR 500 for six months, EUR 1,000 for two years, and EUR 1,500 for a three-year extension. For trainees, a Training ICT Permit is available with a maximum duration of 12 months.

Atypical Working Scheme

The Atypical Working Scheme caters to short-term employment scenarios (15 to 90 days) where a standard permit is not applicable. This scheme is designed for situations where employment does not fit into existing permit categories. Applications must be submitted before travel to Ireland, with a fee of EUR 250. Typically, only one application per individual is allowed within a 12-month period, though exemptions may apply based on business needs.

Permit Exemptions

Certain individuals are exempt from needing employment permits in Ireland. These include non-EEA nationals with specific permissions from the DJE, individuals granted international protection, those under the Immigrant Investor/Start-up Entrepreneur Programme, registered students working less than 20 hours per week, Swiss nationals, and UK nationals.

EOR Solutions in Ireland

• Streamlined EOR Services in Ireland: Mercans delivers top-notch Employer of Record (EOR) services in Ireland, simplifying the employment process from candidate selection to onboarding. Our solutions cover payroll management, benefits administration, tax compliance, and HR administration, ensuring a seamless and legally compliant transition. With a deep understanding of Irish labor regulations, we handle employment contracts, salary disbursements, and benefits with precision, ensuring full legal compliance and operational efficiency.
• EOR and Recruitment Expertise in Ireland: Mercans offers exceptional Employer of Record (EOR) services in Ireland, facilitating the recruitment and integration of top talent. Our skilled team manages the entire process, from candidate selection to smooth assimilation. We take care of employment contracts, payroll management, benefits administration, tax compliance, and HR administration, ensuring a smooth and compliant transition for your workforce.
• Expat Visa Sponsorship and Global Mobility Facilitation: Mercans provides comprehensive Employer of Record (EOR) services, simplifying the visa sponsorship process for expatriates and enhancing global mobility. We navigate the complexities of visa procedures and ensure full compliance with local regulations. Our specialized services bridge the gap between international talent and opportunities, ensuring a smooth transition for expatriate employees.
• Agent of Record (AOR) Services in Ireland: As an “Agent of Record,” Mercans ensures compliance, documentation, and legal requirements in contractor payments. Our EOR services in Ireland excel in this role, offering seamless, compliant, and efficient contractor payment solutions in the region.
• Converting Independent Contractors to Permanent Employees in Ireland: Mercans’ EOR services in Ireland facilitate the smooth conversion of independent contractors into permanent employees, expertly navigating the complex regulatory landscape. Leveraging our experience and technology-driven efficiency, we ensure a seamless transition, prioritizing compliance and precision throughout the process.
• HCM Integration in Ireland: Integrate Mercans’ EOR services seamlessly with your Human Capital Management (HCM) system in Ireland to enable real-time data exchange, enhance compliance, and optimize cost-efficiency. Trust our expertise to provide a unified, compliant, and efficient approach, elevating your workforce management and payroll operations to a higher level of effectiveness.