Essential Guide to Employee Benefits and Compensation in Ireland

Ireland’s high literacy rates and robust social security programs one of the most important reasons why employers should learn about benefits and compensation in Ireland. 

While a high literacy rate enables employees to be well aware of local compensation laws and benchmarks, the social security programs ensure employees are fully covered in vulnerable situations such as unemployment, pandemics, disability, etc. 

Thus employers must understand statutory minimums and competitve landscape concerning employee benefits when employing Irish employees.

Employee benefits are incentives offered to employees over their gross income. Employers design compensation and benefits policies in Ireland to attract and retain competitive talent. These policies encompass paid holidays, maternity and parental benefits, remote work options, and travel allowances.

In Ireland, all full-time employees can receive employment benefits. However, employees also need to pay taxes on these benefits in some cases. 

However, contractors are not entitled to any statutory benefits. Do note that offering certain benefits can lead you to risk employee misclassification.  To avoid these risks, you could partner with a PEO like Multiplier to facilitate compliant employment and management of employee benefits.

When designing a compensation and benefits policy in Ireland, employees need to consider benefits and compensation laws enacted in EU laws, the Irish Constitution, and common law. 

As Ireland does not have a single employment law or labor code to inform benefits and compensation, employers need to be aware of multiple rules to understand statutory requirements. 

Minimum wages

The Payment of Wages Act 1991 governs minimum wages in Ireland and entitles employees to a minimum salary of €10.50 per hour. 

When the employer provides boarding and lodging, the Act entitles employees to:

• 0.94 per hour worked when boarding 
• 24.81 per week or 3.55 per day for lodging

Parental leaves

Parental leaves are governed by the Parental Leaves Act 1998-2019, which entitles employees to 26 weeks of unpaid leave.

Parental leaves are offered to any employee who has children under twelve.

Employees need to have been in service for at least one continuous year before availing of parental leaves.

Maternity leave

According to the Maternity Protection Acts 1994 and 2004, pregnant employees can take maternity leave for 26 weeks irrespective of the length of service or hours worked. Additionally, they are also entitled to take 16 weeks of unpaid maternity leave.

Employees are entitled to an allowance from the relevant State Department if they have paid enough PRSI contributions.

Carer’s leave

Carer’s is availed by employees who wish to care for a specific person. The Carer’s Leave Act entitles the employee to 104 weeks of unpaid leave. Employees need to have worked for 12 continuous months before requesting a carer’s leave.

However, when designing benefits and compensation packages in Ireland, employers are not mandated by law to offer paid leaves or any paid compensation. However, planning for a Carer’s leave in the benefits package can help employers demonstrate empathy and retain employees better.

To apply for the carer’s leave, employees have to explain the cause of the break to the officer at the Department of Employment Affairs and Social Protection. The officer validates reason based on their findings on specific medical information of the affected person.

Social Security in Ireland

Ireland’s Social Security program is funded by employee and employer contributions to the PRSI (Pay Related Social Insurance) fund. Therefore, when planning employee benefits in Ireland, employers need to consider the rates they will contribute to their employees.

According to the type of employment, contributions are divided into classes, with the Ministry for Social Protection and Finance managing the fund. Therefore, the entitlement also depends on the employee’s type of employment and Class of PRSI contributions. 

The PRSI funds pay for the employee’s maternity leaves, paternity leaves, health and safety, invalidity, surviving spouses, guardians, and occupational injuries.

Employers need to keep the following information in mind while making PRSI and USC (Universal Social Charge deductions):

• Employees earning less than  €352 per week before tax deductions do not pay PRSI contributions; employers contribute on their behalf.
• Employees earning more than €352 make a 4% PRSI contribution. 
• Citizens contribute an additional 4% when they source income from rents, investments.
• Employees with an annual salary over €13,000 pay Universal Social Charge (USC) on their income.

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.

Equality in offering benefits

While designing employee benefits in Ireland, employers must understand the regulation laid out in the Employment Equality Acts 1998-2015. The Act protects employees from workplace discrimination, harassment, and preferential treatment.

The law also protects employees from preferential treatment and unfair practices when offering benefits.

Here’s a step-by-step guide for employers must ponder over the following when orchestrating their a benefits and compensation policy in Ireland:

Step 1: Draw out the goals of the organization

Understanding your organization’s goals is essential before planning an employee compensation policy in Ireland. Aligning an employer’s rationale behind a particular benefit creates transparency and accentuates the company culture.

Step 2: Understand local statutory requirements

After seeing the organization’s goals, employers need to understand employment laws in Ireland. The knowledge of these rules, requirements and regulations ensures that your benefits and compensation policies in Ireland are compliant with minimum statutory requirements. Moreover, employers can also treat the statute as a benchmark to create lucrative employee benefits.

For instance, employers need not provide paid vacations for employees on maternity leaves in Ireland. However, offering paid holidays can improve the employer’s brand and help you retain talent effectively.

Step 3: Conduct a competitive analysis

A competitive audit helps employers understand the competitive terrain. This also helps employers get a head start on planning compensation structures in Ireland. 

Moreover, employers eye Ireland’s workforce for its high literacy rate. Thus, employees are past traditional employee benefits such as parking, additional leaves, and pensions. 

Social security is well-funded in Ireland. Thus, health insurance should go up and beyond and cover dental benefits.

Step 4: Conduct a needs and budget assessment

Employers could conduct a need assessment using research techniques such as surveys, focus groups, and interviews to glean quantitative and qualitative insights to build a compensation structure in Ireland.

In cases where employers already have a benefits policy in place, employers could review the usage of existing incentives. For example, employers could determine the frequency of use, past claims, and seasonality to inform their review. 

Step 5: Planning a benefits and compensation policy

Post assessment, employers can compile the needs assessment and develop newer compensation structures.

In this step, employers need to consider the following questions:

• How can existing plans be optimized to save costs?
• How can under-used benefits be removed or modified?
• How will the policy be launched, and what would be the messaging?
• Do employees have the necessary financial resources and awareness to use these benefits?
• How can the effectiveness of these benefits be tracked, optimized, and revised?

The following sections help employers understand the benefits and contributions guaranteed by statutory requirements.

Annual leaves

Annual leaves are a mandatory part of India’s compensation and benefits policy. 

Employees in Ireland and their diaspora are innately passionate about travel and leisure. 

Thus, paid annual leaves are an integral part of a compensation package in Ireland.

Maternity and parental leaves

It is mandatory for expecting mothers to take a leave of at least two weeks before their due date and four weeks after the childbirth. A pregnant employee can take 26 weeks of leave.

Employees can also avail themselves of 16 weeks of additional unpaid leave.

Insurances

All employees above the age of 16 must contribute to Pay Related Social Insurance (PSRI). Each employee pays different contributions based on their income levels. 

An employer must contribute 11.05% of the employee’s income to fund the employee’s PRSI.

All statutory minimums apply to immigrants working in Ireland as well. More importantly, both employers and employees must know that the employment contract terms dictate all conditions about employment and benefits. 

Employers need to be aware of the Equality Acts, which ensure that foreign employees are discriminated against in obtaining employment benefits in Ireland.

Thus, employment benefits offered to expatriates are no different from those availed by resident employees.

Generally, employers offer expatriates:

• Health insurance
• Pension
• Free bicycles (under the Bicycle to work scheme)
• Maternity leaves
• Paternity and parental leaves
• Flexible working arrangements
• Meal vouchers
• Overtime pay

While budgeting for benefits and compensation packages in Ireland, employers need to consider the taxes they must deduct for each benefit. 

In Ireland, benefits are taxed at the source. Thus employers have to deduct all taxes and declare these taxes to the Revenue commissioner.  Employees who receive an annual salary of more than €1905 have to pay taxes on the value of the benefits they receive.

Taxes vary based on the type of benefit – employee benefits and in-kind benefits – in question. 

Employee benefits, such as health insurance, and travel allowances, are taxed based on their value. For example, if employees are given a meal voucher for €100, Revenue treats this as an income of €100 and taxes it accordingly.

Generally, the value of an employee benefit is calculated based on two factors:

1. Cost in providing the benefit
2. The market value of the benefit

In-kind benefits are taxed based on the cost to the employer minus the employee’s contribution to the benefit.

Tax-exempt benefits are:

• Allowances for travel for one month or more
• Bicycles given as per the Cycle to Work Scheme
• Certain Shares
• Certain Profit-sharing schemes
• Meal allowances
• Expenses incurred while dispensing duties on behalf of the company 
• Some types of accommodation 
• Payments that clear redundancy 
• Allowances for work clothes
• Non-cash personal gifts not related to employment
• Employer’s contribution to social insurance and revenue approved pension schemes
• Can or vehicles, internet, computers provided to employees for work purposes

There are no limits or restrictions in offering employee benefits in Ireland. However, employers need to be aware of some conditions when employees avail certain benefits.

Maternity benefits: The employee must have paid contributions for 39 weeks of PRSI twelve months before their break.

Vacation leave: To avail of vacations, employees must have worked for at least 1365 hours in a business year from April 1 to March 31.

Unemployment benefit: Eligible applicants must be under 66 years of age. They must have been: 

• Unemployed for at least four out of seven days 
• Be looking for work 
• Made enough Pay Related Social Insurance contributions

With Ireland being one of the most competitive talent markets, employers go beyond the statutory minimum to offer supplemental benefits to attract talent. 

Below are some examples of supplemental benefits employers can offer:

• Group life insurance: Group life insurances aim to cover an employee’s dependents if they pass away under unfortunate circumstances. Although different in each sector, the premium is four times the base salary. 
• Group income protection: Group income protection enables employees to protect up to 75% of their incomes if they are ill or disabled and cannot return to work.  Although they incur higher premiums, offering this insurance as part of an employee’s benefits and compensation package in Ireland will help employers gain employees’ trust.
• Group medical and dental insurance: Employers can offer medical and dental insurance schemes over any health insurance and employer contributions.
• Flexibility: Post pandemic, flexibility with work hours and location are among the biggest perks to include in your benefits and compensation package in Ireland.
• Subsidized gym membership: Employers usually facilitate a gym on-campus. In other cases, employers offer monetary incentives or partner with a local gym through third-party providers.
• Additional paid leaves: Paid leaves more than the minimum statutory are among Ireland’s most popular employee benefits.

Additionally, these perks can also act as powerful incentives:

• Personal learning budget
• Flexible working hours
• Therapy or coaching allowances 
• Mentorship programs
• Volunteering days
• Birthday leave
• Meal and travel expenses
• Gym or health club membership

In recent times, employers are becoming more aware of their statutory obligations and the value they offer in their workplace. Especially in Ireland, where employees know labor laws, businesses need to ensure their talent is adequately compensated. 

A competitively planned benefits and compensation package for employees in Ireland will go a long way in ensuring the right and best talent work for your company.

Here’s how Multiplier can help. Our SaaS-based solution can enable employers to hire and expand into Ireland and offer compliant benefits management in Ireland. As your global employment solution, we can help you provide homogenous benefits to all employees in Indonesia, which is locally competitive and relevant. Our EOR solution can also help you employ and pay employees in Indonesia without a subsidiary in the country.