Ireland & UK Employment Law Compared – 10 Key Considerations
Employment law in Ireland is broadly similar to its UK equivalent, which is good news for employers operating in both jurisdictions, and is particularly attractive to UK businesses looking for a European base as part of their Brexit strategy. There are, however, numerous differences which prospective employers should consider before setting up their Irish operation.
1. Minimum Wage In Ireland vs The UK
The National Minimum Wage in Ireland, as of 1 January 2019, is €9.80 per hour for all employees aged 20 or over. For workers under the age of 20, their entitlement is based on a percentage of the National Minimum Wage – learn more about Irish National Minimum Wage rates here.
In the UK, from April 2019 the National Living Wage is £8.21 per hour for employees aged 25 and over. Under 25s must be paid either the Apprentice rate of £3.90 per hour, or the appropriate National Minimum Wage rate for their age bracket. Learn more about UK National Minimum Wage and National Living Wage rates here.
2. Irish And UK Public Holidays
Ireland has nine public holidays each year (often referred to as ‘Bank Holidays’), while England & Wales have eight. Scotland has nine, although the dates can vary from region to region, while in Northern Ireland there are 10 officially recognised public holidays per year.
3. Annual Leave Entitlements Compared
Under UK law, workers are entitled to 5.6 weeks of paid leave, which equals 28 days for someone who works a standard five-day week. Public holidays can be included in this calculation.
Under Irish legislation, employees have a basic annual leave entitlement of four weeks, which does not include public holidays.
In both countries, part-time workers are entitled to a pro-rata equivalent of the full-time rate.
4. Sick Pay Entitlements In Ireland vs UK
Under Irish employment law, there is no statutory entitlement to be paid by your employer while on sick leave. Instead, Illness Benefit can be claimed from the Department of Employment Affairs and Social Protection.
UK employers are obliged to pay their eligible staff Statutory Sick Pay (SSP) for a period of up to 28 weeks.
Annual leave is still accrued during periods of sick leave in both Ireland and the UK.
5. Differences Between Irish And UK Maternity And Paternity Leave
In Ireland, the maternity leave entitlement is 26 weeks of paid leave, with the option of claiming a further 16 weeks of unpaid leave. This is quite different to the UK, where maternity leave is 52 weeks with 39 weeks paid. Fathers in both countries are entitled to two weeks paid paternity leave.
As with SSP, maternity and paternity pay in the UK is paid by the employer, while Irish employees must claim the equivalent from the Department of Employment Affairs and Social Protection.
6. PAYE Systems
The UK introduced Real Time Information (RTI) for reporting payments and deductions made under the PAYE system in April 2014, with information being transmitted to Her Majesty’s Revenue and Customs (HMRC) each time an employee is paid.
Under the PAYE modernisation programme, the Irish Revenue Commissioners (“Revenue”) launched a similar system in January 2019. Irish workers can now view an up to the minute record of their year-to-date pay and tax information via an online Revenue account.
7. UK vs Ireland Employee Tax Considerations
Company cars are taxed differently in the two countries, with tax in the UK calculated on ‘the value to you of the company car’. Once calculated, the employer must report this to HMRC using an online form P11D.
In Ireland employees pay Benefit in Kind (BIK) through payroll on a percentage of the Original Market Value (OMV) of their company car, with the percentage dependent on the number of business miles travelled.
Medical Insurance purchased by an employer is taxable through payroll as a BIK in Ireland, while this is also reported via the P11D system in the UK.
The amount of tax relief available to an employee in the UK is adjusted to capture the tax due on the benefits reported in the P11D for the previous tax year.
8. Pension Considerations For UK And Irish Payroll
Employers in the UK have to provide a workplace pension scheme and automatically enrol their staff into it. Employees do have the right to opt out, although they must be re-enrolled every three years. Currently in Ireland there is no obligation on employers to provide an occupational pension scheme, although they are obliged to offer staff access to a type of pension known as a PRSA. There are plans to introduce auto enrolment in Ireland along similar lines to the UK, with a proposed launch date of 2022.
9. Gender Pay Gap Reporting
UK employers with over 250 employees are obliged to submit an annual report to the government showing the difference between the average hourly wage of all men and women in their organisation. This information is uploaded to the government via an online portal and must be published on the company’s website. The Irish government is planning to introduce similar legislation and has suggested that it will ultimately apply to all employers with over 50 staff. No implementation date has yet been set in Ireland for this. Learn more about gender pay gap reporting in Ireland here.
10. Useful Tax Relief Opportunities When Moving To Ireland
When setting up an Irish company it is sometimes necessary for an employer to redeploy experienced staff from other countries to Ireland, which can be costly. To assist with this there are tax reliefs available for the employer and employee.
Relocation tax relief allows employers to cover the costs associated with the removal and relocation of inbound employees without incurring a tax liability, while Special Assignee Relief Programme (SARP) is a relief aimed at reducing the amount of PAYE payable by higher earners.
How EisnerAmper Ireland Can Help
At EisnerAmper Ireland, our dedicated team of outsourced payroll professionals possess the knowledge and experience required to provide guidance and advice to employers setting up in Ireland for the first time. We also provide ongoing support and payroll processing services to organisations at every stage of their development.Latest News →
Employee Relocation Tax Relief – Moving to Ireland
Removal and Relocation Expenses Overview for Employers
Workforce Global Mobility is an increasingly common consideration for businesses that operate in multiple jurisdictions and can result in significant increases to staffing costs, over and above the standard payroll and employment tax considerations. Hiring staff from overseas is also increasingly common, which can create challenges for the employer. Covering the costs associated with relocation is standard practice when transferring employees to Ireland. However, there are various tax implications that must be taken into account at the planning stage to minimise potential liabilities.
Revenue’s Tax and Duty Manual Part 05-02-03, Removal and Relocation Expenses, notes:
"The taxation of certain removal and relocation expenses should be relaxed in genuine cases of employees having to incur expenses to move to a new employment location, where the payment made by the employer towards the expenses results in no net overall benefit to the employee." Source: revenue.ie.
Tax-Free Employee Subsistence Expenses
As is the case with all expense reimbursements, Revenue require payments to be matched with receipted expenditure, with the exception of temporary subsistence allowances. Employers are permitted to pay a temporary subsistence allowance to employees while they are looking for accommodation in their new location. The amount allowable is based on 10 nights at the Civil Service Rates (up to €147 per night).
It is important to note that the amount reimbursed cannot be greater than the cost borne by the employee.
Employee Relocation Tax Relief Conditions
According to Revenue, the following are the conditions that must be satisfied to allow removal and relocation expenses to be paid tax-free:
- there are actual removal and relocation expenses; - the expenses are for a reasonable amount; - the payment of the expenses is properly controlled; and - moving house is necessary. Source: revenue.ie.
What Relocation Expenses Can Be Claimed Back?
There is no definitive list of the expenses which can be claimed back tax-free, so it is the responsibility of the employer to ensure that any payments meet the prescribed conditions, however, some of the more common items include:
- Costs associated with moving house, such as auctioneer’s fees, solicitor’s fees & stamp duty; and
- Costs associated with movement of furniture, including storage, transportation, insurance & cleaning.
Travelling expenses may also be included, along with up to three months of vouched rent in temporary accommodation (both rent and temporary subsistence cannot be paid).
What Relocation Expenses Cannot Be Claimed Back?
Payments towards the cost of purchasing or building a house cannot be paid tax-free, and similarly, amounts paid towards either loans or bridging loan interest would also be considered taxable pay.
Records Needed for Employee Relocation Tax Relief
As previously noted, all relocation payments (other than temporary subsistence) must be matched with receipted expenditure, so any relevant receipts, invoices, statements and proofs of purchase must be kept by the employer. All such records must be retained for a period of six years from the tax year-end to which the records refer.
Related payroll insights article: SARP For Employers.
How EisnerAmper Ireland Can Help
At EisnerAmper Ireland, our dedicated team of outsourced payroll professionals possess the knowledge and experience required to assist employers seeking the most beneficial solutions to their global mobility problems. From planning to execution, we can provide expert advice and insight every step of the way.Latest News →
Auto Enrolment – What Employers and Employees Can Expect
What Is Auto Enrolment?
Auto Enrolment is a retirement savings scheme which, if implemented, will be mandatory for all employees between the ages of 23 and 60, earning over €20,000 per annum who do not already contribute to a workplace pension. Launching in 2022 on a phased basis, it is expected that the government will incentivise the scheme by contributing €1 for every €3 saved by the employee.
Why Is “A New Automatic Enrolment Savings System” Being Explored?
According to the government only 35% of Irish private sector employees have a supplementary pension, which means that a significant percentage of the population will not have the adequate savings necessary to sustain their pre-retirement standard of living into old age. The concern is that the pension system in its current form is not sustainable and requires significant reform in order to meet the long-term demands of the working population. Auto Enrolment is one of the measures outlined in the Government’s “Roadmap for Pensions Reform” which sets out the actions required to overhaul the approach to providing for pension income in retirement.
Auto Enrolment – What Employers Can Expect
To minimise the potential increased administrative burden on employers when implementing Auto Enrolment, the Government has announced there will be supports available during the roll-out phase. Employers will be responsible for enrolling their employees into the scheme, and for remitting the pension contributions to a state-run ‘Central Processing Authority’ (CPA), although there are currently no plans to involve employers in the selection of their employees’ Registered Provider or savings fund option. Employers will have to match their employees’ contributions (up to 6% of pensionable pay, with a ceiling of €75,000) and their contributions will be deductible for corporation tax. According to the “Strawman Proposal”, penalties will be levied on employers who fail to implement the scheme, which could lead to prosecution for repeat offenders.
Auto Enrolment – What Employees Can Expect
Under the current proposal, employees can choose a preferred savings option from a range of Registered Providers, however, those who do not exercise this choice will be provided with a fund and provider by default. Although employees will be enrolled automatically, they will be permitted to opt-out at the end of a minimum period, which is currently proposed to be “during the 7th and 8th month of membership” (read the Strawman Proposal for more details). Importantly for employees, there will be a facility to transfer their account between employments.
Expected New Employer Tasks If/When Auto Enrolment Is Introduced
Based on the latest information, employers will be required to:
- Identify the employees eligible for enrolment;
- Arrange the deduction of employee contributions;
- Match the employee contributions; and
- Remit the payments to the CPA.
How EisnerAmper Ireland Can Help
At EisnerAmper Ireland, our dedicated outsourced payroll team combines in-depth knowledge of the Irish payroll landscape with market leading software to create solutions to meet our clients’ unique requirements. We leverage this expertise to support employers through all phases of Auto Enrolment, from initial implementation to the deduction and reporting of employee contributions.Latest News →