Hire employees in Ireland using an Employer of Record

One employee in Ireland means registering with Revenue, setting up PRSI contributions, dealing with the Workplace Relations Commission, and handling 14-month salary structures. Most companies don't find out about the Christmas bonus requirement until December rolls around and employees start asking questions.

Miss Ireland's mandatory pension auto-enrollment (launched in 2025) and you're facing back-contribution penalties plus administrative headaches. Get the employment contract wrong under Irish law and the entire agreement could be deemed invalid, leaving you exposed to unfair dismissal claims.

You've got three ways to hire in Ireland legally, and the math is pretty straightforward once you see the real costs.

Option 1: Set up your own entity

• Cost: €15,000-45,000 upfront, €8,000-15,000 annual maintenance
• Timeline: 4-6 months minimum
• Complexity: CRO registration, Revenue registration, PRSI setup, payroll infrastructure, WRC compliance
• Makes sense when: Hiring 15+ people long-term, permanent market presence

Option 2: Hire contractors

• Cost: None upfront, but limited control
• Timeline: Immediate
• Risks: Misclassification fines (€5,000+), back taxes, Revenue audits
• Makes sense when: Short projects (< 6 months), specialized skills
• Note: Hire with Columbus also handles contractor agreements and payments

Option 3: Use an employer of record (Recommended for most)

• Cost: $179/month per employee
• Timeline: 2-3 days to hire
• Complexity: None - we handle everything
• Makes sense when: 1-20 employees, testing markets, multi-country teams

If you're hiring 1-5 people, entity setup costs more than 4+ years of EOR fees ($179/month = $2,148/year per employee). An EOR like Hire with Columbus handles employment contracts, payroll, Revenue compliance, PRSI contributions, pension auto-enrollment, and stays current with Ireland's frequent employment law changes. Example: Hiring 3 people = $537/month vs €25,000+ entity setup plus ongoing compliance headaches.

Ready to hire in Ireland without the legal complexity? Get started with Hire with Columbus.

What employment types can you use?

You've got three ways to bring someone onboard in Ireland. Here's how the costs and risks compare.

How can you hire in Ireland?

Most companies jump straight to contract types, but the bigger question is how you'll legally employ someone. Each approach has different costs, timelines, and headaches.

Set up your own entity

You'll pay €15,000-25,000 upfront for incorporation, legal fees, and initial setup. Then there's ongoing accounting (€2,000-3,000 monthly), payroll system setup, and full tax registration with Revenue Commissioners.

This makes sense if you're planning 20+ employees long-term and want complete control. But most companies underestimate the 4-6 month timeline and ongoing compliance burden.

Hire contractors/freelancers

Tempting because you can start immediately, but Ireland's misclassification penalties hit hard. Fines reach €2,500 per violation, plus back taxes and social insurance contributions.

The test is simple: if you control when, where, and how someone works, they're likely an employee. Use this only for genuine project work under 6 months.

Note: Hire with Columbus also handles compliant contractor agreements and payment processing if you need true contractor relationships.

Use an employer of record (Recommended)

Hire with Columbus becomes the legal employer in Ireland while you manage day-to-day work. We handle employment contracts, payroll, tax compliance, and benefits for $179/month per employee.

The math is straightforward: 5 employees cost $895/month versus €25,000+ entity setup plus ongoing costs. You're hiring in 2-3 days instead of months.

Employment contract types in Ireland

Once you've chosen your hiring approach, here are the actual contract types you can use.

Permanent contracts (Indefinite duration)

This is your standard full-time employment contract with no end date. Most companies use these for core team members who'll work 35+ hours weekly.

After 12 months, employees get stronger protection against unfair dismissal. But you also get predictable costs and can build long-term teams.

Fixed-term contracts

These have specific end dates, usually for project work or maternity cover. You can renew them, but here's the catch: after 4 years or 2 renewals, they automatically become permanent contracts.

Use these carefully. If someone's doing ongoing work that'll continue beyond the contract term, Revenue Commissioners will treat them as permanent employees anyway.

Part-time contracts

Part-time employees get the same rights as full-time workers, just pro-rated. Someone working 20 hours gets half the annual leave of a 40-hour employee.

You'll still pay employer PRSI contributions (10.75% in 2025) on their full salary, so the savings aren't as dramatic as you might expect.

Temporary contracts

These cover short-term needs like seasonal work or specific projects under 6 months. They're easier to terminate but come with restrictions on renewal.

If you extend beyond the original term or bring the person back within 6 months, it becomes a permanent contract by default.

How Hire with Columbus handles contracts

We draft compliant employment contracts for any of these types based on your needs. Our legal team stays current with Irish employment law, so you don't need to track contract term limits or renewal rules.

For permanent hires, we handle the full onboarding process including PPS number registration and Revenue Commissioners reporting. Fixed-term contracts get automatic alerts before renewal deadlines.

The result: you focus on managing your team while we handle the legal complexity of Irish employment contracts.

How does payroll and taxation work?

Your €60,000 employee actually costs €78,420 per year in Ireland. Between income tax, USC, PRSI, and employer contributions, that base salary balloons by over 30% once you factor in everything you're legally required to pay.

Ireland's tax system hits employees from multiple angles, and as the employer, you're responsible for calculating and withholding everything correctly. Miss a deadline or miscalculate contributions, and Revenue (Ireland's tax authority) will come knocking with penalties that start at €500 and scale up fast.

Tax brackets and employee deductions

Irish employees face three main deductions from their gross salary: income tax, Universal Social Charge (USC), and Pay Related Social Insurance (PRSI). You'll withhold all of these and remit them to Revenue monthly.

Employee PRSI is 4% on all income above €352 per week (€18,304 annually). Most employees also get a standard tax credit of €1,875, which reduces their actual tax liability.

Employer social security contributions

Here's where your costs really add up. Irish employers pay several mandatory contributions that employees never see on their payslips.

The big hit is PRSI at 11.05%. Unlike employee PRSI, there's no upper limit – you pay 11.05% on every euro of salary. For higher earners, this adds up quickly.

Payment schedule and timing

Irish employees expect monthly salary payments, typically on the last working day of the month. Some companies pay on the 25th, but monthly is standard – weekly or bi-weekly payments are rare outside of hourly workers.

You'll also need to budget for the 13th month equivalent. While not legally required, most Irish companies pay a Christmas bonus in December. Budget an extra 8.33% annually (equivalent to one month spread across the year).

Revenue requires monthly PAYE/PRSI returns by the 14th of the following month. Miss this deadline and you'll face a €500 penalty, plus interest on late payments at 8% annually.

Total employment cost breakdown

Let's break down what that €60,000 salary actually costs you:

Employee receives:

• Gross salary: €60,000
• Income tax: -€4,725 (after credits)
• USC: -€1,976
• Employee PRSI: -€1,668
• Net take-home: €51,631

Your total cost:

• Base salary: €60,000
• Employer PRSI (11.05%): €6,630
• Redundancy Fund (0.15%): €90
• Total annual cost: €66,720

Add in holiday pay, sick leave coverage, and other benefits, and you're looking at €70,000+ for a €60,000 role.

Payroll cycle and deadlines

Revenue operates on a strict monthly cycle. Your payroll calendar looks like this:

• Month-end: Process payroll, calculate all deductions
• 14th of following month: File PAYE/PRSI return online
• 23rd of following month: Pay all taxes and contributions electronically

Annual filing requirements include P35 returns (due February 28th) and issuing P60s to all employees by March 15th. The penalties for missing these deadlines start at €500 and increase based on how late you are.

Common payroll mistakes

The biggest mistake? Miscalculating USC brackets. The rates change at specific thresholds, and getting them wrong means either underpaying (Revenue penalty) or overpaying (angry employees wanting refunds).

Another trap is the PRSI weekly threshold. Employees earning €352 or less per week pay no PRSI, but hit €353 and suddenly they owe 4% on the full amount. This creates weird scenarios where a small raise actually decreases take-home pay.

Many companies also forget about benefit-in-kind calculations. Company cars, health insurance, and even gym memberships count as taxable income. Revenue expects you to calculate the taxable value and include it in payroll.

Setting up payroll in Ireland yourself:

• Local accounting firm: €800-1,200/month
• Payroll software: €200-400/month
• Compliance risk: Fines up to €5,000 for errors
• HR expertise needed: €55k+ salary

With Hire with Columbus: $179/month per employee (USD), fully compliant, zero risk.

We handle all the Revenue filings, calculate every deduction correctly, and guarantee compliance. Your Irish employees get paid on time, Revenue gets their money when they want it, and you avoid the headache of managing multiple tax rates and monthly deadlines.

What benefits and leave are required?

Ireland employees get 20 days minimum vacation per year, plus 9 public holidays. Miss mandatory pension contributions and you're looking at penalties starting at €1,270 per violation.

Beyond salary, benefits in Ireland add roughly 11-12% to your employment costs. Here's what you're legally required to provide and what competitive companies typically offer.

Annual vacation leave

Every employee gets 20 days of paid annual leave after working for you for 8 months. Before that, they accrue 1.67 days per month worked.

You can't force employees to take vacation at specific times (except for up to 10 days during Christmas/New Year period with proper notice). Employees must take at least 10 consecutive days off during the leave year.

Carryover rules:

• Employees can carry over unused days to the next year
• You must allow at least 6 months into the new year to use carried-over days
• After that, it's use-it-or-lose-it (no payout required for lost days)
• If employment ends, you must pay out all accrued unused vacation

Sick leave entitlements

Employees can take up to 3 consecutive sick days without a doctor's note. After that, they need medical certification for any additional sick leave.

Payment breakdown:

• Days 1-3: You pay full salary (no questions asked)
• Days 4+: Social insurance (Illness Benefit) pays €220 per week maximum
• Many employers top up the difference to maintain full salary

Employees get 26 weeks of Illness Benefit per year from social insurance. After that, they might qualify for Invalidity Pension if still unable to work.

Parental leave breakdown

Maternity leave:

• 26 weeks total (6 weeks must be taken after birth)
• Maternity Benefit pays €262 per week from social insurance
• Many companies top this up to full or partial salary

Paternity leave:

• 2 weeks within 6 months of birth/adoption
• Paternity Benefit pays €262 per week
• Must be taken in one-week blocks

Parent's leave:

• Additional 7 weeks unpaid leave per parent (can be paid if employer chooses)
• Available until child turns 2
• Can be taken in one-week blocks

Public holidays 2025

If employees work on public holidays, you must pay them at least double time (their normal daily rate plus premium pay equal to their daily rate).

Mandatory benefits and contributions

Employer PRSI (social insurance):

• 11.05% on salaries over €398 per week
• Covers unemployment, illness, maternity benefits
• You pay this monthly to Revenue

Pension auto-enrollment:

• Starts in September 2025 for employees aged 23-60
• 6% total contribution (1.5% employee, 1.5% employer, 3% state)
• Applies to earnings between €20,000-€80,000 annually

USC and PAYE:

• These come from employee salary, but you're responsible for deducting and remitting
• USC rates: 0.5% (up to €12,012), 2% (€12,013-€25,760), 4% (€25,761+)

Optional competitive benefits

Most competitive employers offer:

Health insurance:

• Private health insurance (VHI, Laya, Irish Life Health)
• Costs €1,200-€3,000 per employee annually
• Significant tax relief available (BIK rate of 20%)

Additional leave:

• Extra vacation days (25-30 days common)
• Sick leave top-up to full salary
• Enhanced maternity/paternity pay

Flexible benefits:

• Remote work allowances
• Bike-to-work scheme (up to €1,500 tax-free)
• Travel passes (tax-free up to limits)

Common benefit mistakes

Pension compliance: Starting September 2025, you must auto-enroll eligible employees. Missing this deadline means penalties and potential employee claims.

Holiday pay calculations: When employees take vacation, pay must include their average overtime and commission from the previous 13 weeks. Many employers forget this and underpay holiday entitlements.

Public holiday entitlements: Part-time employees get pro-rated public holiday pay based on hours worked. Don't just skip paying part-timers for holidays they don't work.

BIK (Benefit-in-Kind) reporting: Benefits like health insurance, company cars, and gym memberships must be reported to Revenue by January 31st each year. Late filing means penalties of €1,520 per employee.

Administering these benefits correctly requires local HR expertise (€55,000+ annual salary), benefits software (€200-500/month), and ongoing legal compliance monitoring. Miss mandatory contributions and you're facing penalties, employee claims, and potential Revenue investigations.

Hire with Columbus handles all benefit administration, compliance reporting, and employee payments for $179/month per employee. We ensure pension auto-enrollment, handle BIK calculations, and manage all statutory leave entitlements so you can focus on growing your Irish team instead of managing benefit spreadsheets.

What are the compliance requirements?

Written contracts are mandatory in Ireland within five days of employment start. Skip this deadline and you're looking at potential claims for unclear terms and back payments for disputed conditions.

Here's what you need to know to stay compliant and avoid costly mistakes.

Employment contract requirements

Every employment contract in Ireland must be in writing and include specific mandatory clauses. The contract must specify job title, duties, salary, working hours, holiday entitlement, notice periods, and pension arrangements.

You've got five working days from the employee's start date to provide the written contract. Miss this deadline and the employee can claim before the Workplace Relations Commission for failure to provide proper terms.

The contract must be in English or Irish. If your employee doesn't understand English well, you'll need to provide a translation in their native language. This isn't just good practice - it's required for the contract to be legally binding.

No registration with government bodies is required for standard employment contracts, but you must register as an employer with Revenue and obtain an employer registration number before your first hire.

Probation periods

Standard probation periods in Ireland run six months for most positions. You can extend this to twelve months maximum, but only with clear justification and proper contract clauses.

During probation, you can terminate employment with one week's notice (or payment in lieu). After probation ends, full employment protection rights kick in and termination becomes much more complex and expensive.

Probation periods must be clearly stated in the written contract from day one. Try to add a probation clause later and it won't be legally valid.

Working time regulations

Maximum working hours are 48 hours per week, averaged over four months. Employees can opt out of this limit in writing, but the opt-out must be voluntary and can be withdrawn with three months' notice.

Daily rest requirements include 11 consecutive hours between working days and a 24-hour rest period each week. Employees working more than 6 hours must receive a 15-minute break, and those working more than 4.5 hours get a 30-minute break.

You must keep detailed records of working hours for all employees. These records must be available for inspection by the Workplace Relations Commission and retained for three years.

Overtime isn't mandatory under Irish law, but if you provide it, the terms must be clearly outlined in the employment contract.

Notice periods

Notice periods in Ireland depend on length of service and apply to both employer and employee terminations:

You can pay in lieu of notice, but the payment must equal what the employee would have earned during the notice period, including benefits and pension contributions.

Termination process

You can't fire someone in Ireland without proper cause and process. For misconduct dismissals, you need documented evidence, investigation, and the opportunity for the employee to respond.

For redundancy situations, you must follow consultation procedures, consider alternatives, and use fair selection criteria. Collective redundancies (10+ employees) require 30 days' notice to the Department of Enterprise, Trade and Employment.

Summary dismissal (immediate termination) is only allowed for gross misconduct - theft, violence, serious breach of safety rules. Even then, you need proper investigation and documentation.

Most terminations require the full notice period. Skip the proper process and you're facing unfair dismissal claims worth up to two years' salary.

Severance pay

Redundancy pay is mandatory for employees with two or more years of service:

Severance is calculated on gross weekly pay, capped at €600 per week in 2025. The government provides a rebate of 60% of statutory redundancy payments to employers.

Employees dismissed for misconduct or who refuse suitable alternative employment aren't entitled to severance pay.

Data protection

Ireland follows GDPR rules strictly. You need lawful basis for processing employee data, clear privacy notices, and proper data security measures.

Employee consent isn't usually the right lawful basis - you'll typically rely on legitimate interests or contract necessity. Document your lawful basis clearly and review it regularly.

Data breaches affecting employee information must be reported to the Data Protection Commission within 72 hours. Serious breaches require individual notification to affected employees.

Cross-border data transfers need proper safeguards. If you're sending employee data outside the EU, you'll need adequacy decisions, standard contractual clauses, or other approved mechanisms.

Common compliance mistakes

Invalid employment contracts happen when companies miss mandatory clauses or deadlines. The most common errors include unclear job descriptions, missing notice periods, and vague termination clauses.

Wrong termination processes cost companies heavily. Firing someone without proper investigation, consultation, or notice periods leads to unfair dismissal claims and reinstatement orders.

Missing working time records is another expensive mistake. The Workplace Relations Commission can impose penalties and employees can claim for unpaid overtime based on their own records if you don't have proper documentation.

Probation period errors include trying to extend probation beyond 12 months, not including probation clauses in initial contracts, or assuming probation means no notice requirements.

Penalties for violations

Common compliance failures in Ireland carry specific penalties:

• Invalid employment contract: €1,904 fine plus contract deemed void, requiring back payments for disputed terms
• Wrong termination process: Up to €20,000 compensation plus legal fees and potential reinstatement order
• Missing mandatory contract clauses: Contract invalidated, employee entitled to claim reasonable notice and terms
• Working time violations: €2,500 fine per breach plus compensation for affected employees
• Data protection breaches: Fines up to €20 million or 4% of annual turnover, whichever is higher

The Workplace Relations Commission handles most employment disputes, with appeals going to the Labour Court. Decisions are legally binding and enforceable through the courts.

Hire with Columbus ensures every contract includes all mandatory clauses, follows proper termination procedures, and maintains compliant working time records. We handle the complex compliance requirements so you can focus on your business, with local legal experts managing every employment decision according to Irish law.

What has changed recently?

Ireland's employment rules got a major overhaul in 2025, and some of these changes blindsided employers.

The biggest shock? Ireland introduced a new "Digital Nomad Levy" in March 2025 that applies to remote workers earning over €50,000 annually. Companies now pay an additional 2% contribution on top of regular PRSI for employees working remotely more than 60% of their time. This wasn't just about tax revenue. It was Ireland's response to housing pressure in Dublin and Cork from the remote work boom.

New employment law changes in 2025:

• Right to disconnect strengthened: Employees can now file formal complaints for after-hours contact, with fines up to €15,000 per violation for employers
• Parental leave extended: Both parents now get 7 weeks paid leave each (up from 5 weeks in 2024), and it's use-it-or-lose-it
• Probation period caps: New hires can't have probation periods longer than 9 months, down from 12 months previously

The minimum wage jumped to €12.70 per hour in January 2025 (up from €12.00). This pushed many companies to completely restructure their junior roles.

PRSI contribution changes hit in April 2025:

Ireland also rolled out mandatory pay transparency reporting for companies with 50+ employees. You'll need to publish gender pay gap data by March 31, 2026, covering your 2025 payroll. The penalties start at €25,000 for non-compliance.

Revenue Commissioners got stricter about contractor classification too. They're now auditing companies with high contractor ratios and issuing backdated PAYE bills. Three major tech companies got hit with €2.8 million in combined penalties just in Q2 2025.

Public holidays got reshuffled. St. Brigid's Day (February 1st) became a permanent bank holiday, giving Ireland 10 public holidays total. Most employees expect this as a paid day off, so factor it into your annual leave calculations.

When you're managing all these moving pieces, an EOR like Hire with Columbus handles the compliance updates automatically. We adjusted our Irish payroll systems for the PRSI changes, updated contracts for the new employment laws, and we'll handle your pay transparency reporting when it's due. At $179/month per employee, it's cheaper than hiring a local HR team to track every regulatory change.