Payroll in Ireland 2023 – 4 need-to-know changes.
When it comes to payroll compliance in Ireland in 2023 there’s four things employers need to be aware of, says Caroline Codd, Payroll Manager at Paul O’Donovan and Associates.
Adjustments to the Irish Minimum Wage Requirements
The National Minimum Wage (NMW) in Ireland has increased for all Irish employers, with the minimum full-time wage for an employee over 20 rising to €11.30 per hour. This increase applies from January 1st 2023.
Employers must ensure that they are paying employees at least this rate to lawfully meet their obligations for Irish payroll in 2023. To ensure that the increase in the minimum wage doesn’t result in employers attracting a higher level of PRSI charge solely due to this increase, the employer PRSI threshold has also increased – from €410 in 2022 to €441 from 1 January 2023.
Changes to Statutory Sick Pay (SSP)
Changes to Statutory Sick Pay (SSP), rolling out over the next four years, will bring Ireland in line with other European countries. To be eligible for sick leave, the employee must have worked for their employer for at least 13 weeks.
The daily rate of sick pay is 70% of usual daily income, capped at €110 per day. The amount of sick leave days will increase each year until 2026:
- 3 sick days per calendar year in 2023;
- 5 days in 2024;
- 7 days in 2025; to
- 10 days in 2026.
Section 9 of the Statutory Sick Leave Act states if an employer can prove they already provide a more favourable sick pay scheme to employees, they do not have to comply with the statutory sick pay rules.
Big changes to company car BIK
Many workers with company cars and vans are now seeing increased benefit-in-kind (BIK) bills taken from their pay cheques, as the result of recent changes in how the tax is calculated.
BIK on the use of an employer provided car is now determined based on both the business mileage undertaken and the vehicle’s CO2 emissions. The BIK tax bands give you a percentage of the car’s original market value (OMV) on which employees will be taxed.
In addition, the use of a company van has also increased from 5% to 8% of the OMV of the van and the preferential rate of BIK on electric vehicles is also being phased out. For more, read our recent blog.
On the horizon: Automatic Enrolment Pension changes
The Government is making it mandatory for employers to contribute to an employees’ pension and for employees to be automatically signed up for a pension when they start work. This new auto-enrolment pension scheme will come into force in 2024.
This ambitious scheme has been described as a ‘once-in-a-generation’ pension policy and it’s likely to create challenges for businesses as it rolls out, says Caroline. Payroll, in particular, will need to stay well ahead of the scheme’s introduction and implementation.
Employers will need to match employee contributions and the State will top-up – for every €3 saved by the employee, a further €4 will be invested by the employer and the State combined. Anyone between age 23 and 60 earning over €20,000 a year will automatically be enrolled into the pension scheme unless they have their own pension or access to an occupational pension. Currently this is estimated to be about 750,000 workers.
Launch of the scheme set for the end of 2023 and paid contributions should start from January 2024. Contributions will be raised over 10 years, beginning at 1.5% and increasing every three years until they reach 6%.
Got questions on payroll compliance and your Irish business?
Caroline and our experienced team can assist you in assessing and managing these and any other payroll changes.
Talk to us today, or request a call-back at your convenience, by phoning 021 432 1799 or emailing firstname.lastname@example.org.