Hire and Pay in Ireland (Everything You Need to Know)

If your company is considering doing business in Europe, Ireland might be a great location to start. Known for its startup friendly environment, excellent tax incentives and flexible approach to business, Ireland was rated as best in Europe and 11^th in the world for doing business by Forbes, and the easiest location to start a business by the World Bank.

While the Irish government continues to pursue pro-business economic policies, global hiring and payroll always come with a unique set of challenges. Even if you’re only planning to build a small workforce overseas, businesses are not exempt from employment laws and compliance requirements in their target country. This guide will ensure you have realistic expectations as you plan to hire and pay in Ireland.

In this article, we’ve compiled the most relevant and helpful guidelines to be successful during the expansion process. No matter where your business is in its growth journey, use this content as a reference when you’re ready to hire and pay in Ireland.

Throughout the pandemic, Ireland was one of the few countries that maintained a stable, reliable economy. In the last few decades, their skilled labor market has become a popular destination for companies seeking top-tier talent overseas. As employers look to acquire this talent, they’ll need to decide between hiring independent contractors and full- or part-time employees. Deciding what your team needs is an important first step, as your Irish workforce will need to meet the standards of the classification you choose.

Employers planning to hire and pay in Ireland will need to choose between three options:

1. Do-it-Yourself: Hire and Pay Contractors
2. Do-it-Yourself: Hire and Pay Employees
3. Outsource: Professional Employer Organization

We’ll break down everything you’ll need to know for each of these options to ensure you’re making the best growth decisions for your business.

DIY Hire and Pay in Ireland – Contractors

When you choose to hire and pay independent contractors in Ireland, understand that this choice is likely to cause the most legal challenges because there’s a lot of potential for things to go wrong. If mistakes are made, it can result in expensive fines and legal penalties. To ensure they’re being treated fairly by employers, Irish law categorizes contractors under a different set of employment rules. Here are some of the general guidelines to be aware of:

• Contractors are allowed to work for multiple companies at the same time – they cannot be restricted to only working for your business.
• Contractors are responsible for their working status and schedule – the business cannot dictate specific hours of operation.
• Contractors must be project-based, or they must work for shorter periods of time. If a contractor extends their time with a company, they run the risk of being classified as an employee.

We’ve heard many clients’ horror stories when it comes to hiring contractors abroad. For instance, if a worker in Ireland doesn’t meet the above criteria, it’s considered a misclassification by the government. When this happens, the worker can sue the company for benefits, overtime, holiday pay, and more. If there isn’t clear documentation of the employment agreement, or if the agreement is not followed, the government will almost always side with the contractor. In addition to these costs, the company may also face fines and penalties for the violation.

U.S.-based companies paying international contractors in Ireland should have them fill out IRS Form W-8BEN , which certifies their foreign worker status in the eyes of the U.S. government. Although this step will resolve tax compliance for the employer in the U.S., the business will still need to abide by Irish employment law. If a worker is classified as an independent contractor but fails to adhere to the guidelines listed above, the worker can file suit for benefits, overtime and more. This is a problem because government historically side with employees if there are any disputes without proper documentation from the employer. If the above guidelines are met, hiring an independent contractor in Ireland can be an efficient method of employment.

DIY Hire and Pay in Ireland – Employees

If you are planning to hire and pay full- or part-time employees in Ireland, you will need to establish a legal entity there. Setting up a legal entity is typically a costly and time-consuming endeavor, which can take anywhere from three to six months to complete.

Legal entities are the foundation of all operations within a country, meaning they can impact every aspect of a business, including finance, accounting, IT, and other supply chain functions. If this is the route your business decides to pursue, it’s highly recommended that you work with an expert during this process so you can ensure that the structure isn’t inefficient or costly to maintain.

In general, there are three primary components to incorporating a business in Ireland:

1. Incorporation and Registration
   • This includes preparing the right registration documentation, corporate governance structure, business licenses, tax ID, and more.
2. Post Incorporation
   • The work doesn’t stop once the legal entity is created. After incorporation comes the payroll setup, benefits registration, account setup, banking, and more.
3. Corporate Annual Compliance
   • Finally, after all the setup work is complete, the entity will need to be reviewed on an annual basis. This includes tax, payroll and statutory returns, along with other important financial statements.

Outsource to a PEO Provider

If the DIY approach sounds like too much of a burden, many companies looking to hire and pay in Ireland opt to engage with a Professional Employer Organization (PEO). Sometimes referred to as an Employer of Record (EOR), this option creates a partnership, where a PEO/EOR leases employees to a business while leveraging its own legal entity and operations in the designated jurisdiction of operation. A PEO shoulders much of the administrative burden related to the HR function of a business, in turn reducing potential risks and liabilities. One of the most significant advantages of using a PEO is the fact that the company will still have control over its employees’ daily activities, freeing up time and resources for the business to focus on other priorities.

By leveraging an existing network of legal entities, employers can rely on a PEO to ensure faster hiring, employee benefits, payroll administration, and more, without sacrificing compliance. Here are a few of the administrative services a PEO provides:

• Fast international hiring
• Global payroll management
• In-country compliance
• Reduced risks with international contractors
• Global talent acquisition
• Best-in-class HR technology for international workforces
• Irish employment contracts

Working Hours

As a general rule, the maximum number of hours an employee can work is 48 hours. However, employees can exceed this amount if the average working week never exceeds 48 hours. In this instance, the average is more important than any single working week. The 48 hours of work do not include time spent on annual leave, sick leave, maternity leave, adoptive leave, or parental leave.

Irish employees are entitled to be put in a band of hours (also called banded weekly hours). This is a step that will need to be included when the employer creates the international employment contract. The contract should reflect the number of hours an employee works over a 12-month period. If this request is refused by an employer with a dissatisfactory explanation, the employee can make a complaint to the Workplace Relations Commission (WRC). It’s also important to note that the Irish government is considering implementing a 4-day working week in the future.

Leave Requirements

Annual leave (also called holidays from work) is paid time off work. All employees are entitled to annual leave, including full-time, part-time, temporary, and casual workers. In most situations, employees are entitled to four weeks of annual leave each year. Of course, they could have more depending on the specifications of their employment contract. In addition to annual leave, here are some additional requirements businesses should be aware of:

• Maternity leave or additional maternity leave
• Adoptive leave or additional adoptive leave
• Paternity leave
• Parental leave
• Parent’s leave
• Health and safety leave

Record Keeping

Employers in Ireland are required to keep extensive records of their employees. Violation of any of the following could cause compliance violations and legal penalties. Here are a few requirements you’ll need to implement as you hire and pay in Ireland:

• The number of hours employees work on a daily and weekly basis
• The amount of leave granted to employees in each week as annual leave or as public holidays
• Details of the payments in respect of this leave
• Employees’ start and finish times

Employment Rights

Irish employees have the right to report to the government if they feel like they’re being mistreated by an employer. Before an employee can do this, they will need to notify their employer of their intentions to contact the WRC. This rule was established to encourage companies to resolve employee-related disputes internally.

Employee complaints against the workplace can be resolved by the WRC itself, or through mediation. Mediation is a confidential process which aims to resolve workplace disputes and disagreements, particularly between individuals or small groups. A mediator will work with employees and employers to find a mutually agreed solution to the problem.