Persons between 16 and 66 years old are subject to compulsory social insurance. They are referred to as being in insurable employment. The rates and categories applicable to employees differ from those with respect to self-employed persons.
The age limit, social welfare pensionable age, was due to be increased to 68 years by 2028. This change was later reversed.
Insurable employment includes service / employment
- in the State under a contract of service, whether written or oral, express or implied, whether paid by the employer or another; whether paid in monies or otherwise; and whether measured by piece or by time.;
- under a contract of service as master or a member of crew of a ship registered in the State;
- in the civil service of the Government or the State;
- in the Defence forces;
- in local or public authorities;
- the court offices;
- in the Garda Síochána;,
- in various capacities in the health services / HSE including probationers;
- under certain labour market schemes including Community Employment;
- under arrangements with employment agencies whereby persons are provided to a third party in the course of business to perform work or services (whether or not third person pays the wages or salary);
- in Holy Orders as a member of a religious community or member thereof.
The later categories above included many offices or positions established by law, and they are insurable, irrespective of the existence of a contract or service. They are offices or are in the nature of offices and are not technically employment arrangement.
Excepted Employments are not compulsorily insurable.They include service or employment
- in the service of the husband and wife of the employer;
- of a casual nature other than for the purposes of the employer’s trade or business and – otherwise than for the purposes of any game or recreation where the persons employed are engaged or paid through a club;
- by a prescribed relative of the employee being employment in the common home of the employer and the employee or employment specified by regulations as corresponding to employment in the home; prescribed relatives include, close immediate relatives as prescribed by law. The category covers persons working on a family farm;
- which is specified in regulations as being of a nature that it is ordinarily adopted as subsidiary employment only and not as a principal means of employment. The categories prescribed may involve additional employments, in respect of persons who are otherwise full-time employees in the public sector;
- Employments of inconsiderable extent as specified by regulation; earnings week of less than €38 are insurable in Class J covering occupational injuries only;
- certain social / labour market activisation schemes.
The extent of exemptions may be varied by Ministerial order.
A wide range of persons in the public service pay PRSI at a lower rate than those in the private sector. They do not enjoy rights to unemployment benefit or old age contributory pension. The relevant public authority pension scheme substitutes in the latter case. There is an expectation of permanence of employment in the positions. However, since 1995 most new entrants in the public service pay Class A social insurance in the same way as private sector employees.
Regulations may vary the obligations of certain categories of employed contributors. These includes certain of the persons in the above insurable category, in particular the various public sector insurable positions. It does not apply to persons employed under contracts of service, persons employed in public transport, education sector and employees in certain voluntary hospitals.
Regulations may also modify the obligations of persons who are employed in certain public sector employment’s prior to 6th April 1995 who cease to be so employed but are reemployed in another employment prescribed which provides that he is continuously employed in a permanent and pensionable capacity and for payment during illness on the basis prescribed by the Minister.
This covers employment in a range of public sector employment, master or crews of ships, defence forces, Gardai, nurse, midwife, employment in as a minister for religion and ass member of religious community.
The employer is liable to pay both the employer’s and employee’s contribution, in the first instance. However, the employer may recoup the employee contribution from the employee’s remuneration. The employer’s contribution may not be deducted.
Contributions are based on reckonable earnings. Reckonable earnings means emoluments derived from employment, in the case of an employee. In the case of the special contributor it includes remuneration, salaries and wages and non-pecuniary remuneration derived from insurable employment.
As and from 2011, reliefs, allowances and expenses are not deductible from reckonable earnings, irrespective of whether they are deductible in respect of the computation of income tax. After January 2011, superannuation pension contributions and contributions to permanent health insurance schemes were not exempt from PRSI.
Income from approved profit-sharing schemes, share awards unapproved options, approved SAYE schemes, are within the definition of reckonable earnings and are subject to employee’s PRSI.
Since 2006, persons who exercise an employment in Ireland, notwithstanding that it is under a foreign contract of service, are subject to income tax and PRSI on their salary which are derived from duties exercised within the State. PRSI is to be deducted through PAYE.
Employee who has a certificate confirming Social Security coverage in another state with which Ireland has an agreement, or from an EU EEA state may be exempt from PRSI and may enjoy a reduced USC rate.
Share-based remuneration includes benefits received from the exercise of shareholding rights, which are taxable as benefits in-kind. This covers rights under convertible shares, restricted shares, profit-sharing schemes( the initial market value of appropriated shares), emoluments received in the form of shares or stock in the company in which the employee or director holds his employment or office, or a company which is in control of that company..
Share-based remuneration does not include gains, amounts and values received, acquired or appropriated subject to a prior contract or shares acquired, before commencement of the legislation which applied social insurance to benefits in kind, on 1st January 2011.
Employer’s PRSI did not apply to remuneration in shares, stock options etc. After 2004, reckonable earnings effectively includes benefits in-kind, which is defined as non-pecuniary emoluments. The employer must deduct PRSI contributions on gains arising from exercise of share-option under the PAYE system.
The rate of PRSI contribution is 4% for an employee. It is 10.75% (11.05% 2023) for the employer. This included 0.7% for the National Training Fund.
Formerly, there were ceilings on employee contributions. They are no longer applicable, as of 2010.
A PRSI free allowance of €137 per week applies for classes A, E, and H. The allowance for classes B, C and D allowance is €26 per week.
Lower rates of PRSI apply between earnings thresholds. Between €38 and €252(€352 – 2023) a week employees, employee’s PRSI is at 0%. Employee PRSI is 4% on the balance of €127 per week.
A PRSI credit was introduced in 2016 which reduces the amount of PRSI payable between €352.01 and €424 per week. The credit is tapered and the maximum credit is €12. Between €352.01 and €424 per week, the maximum credit of €12 is reduced by one-sixth of the amount of your weekly earnings over €352.01.
Employers pay 8.8% Class A employer PRSI on weekly earnings up to €441. Employers pay 11.05% Class A employer PRSI on weekly earnings over €441.
Employers must give itemised particulars of deductions to employees, showing details of each contribution, contribution class and the number of weeks of insurable employment in the year.
Records must be kept for six years from the end of the tax year. They may be inspected by officers of the Revenue Commissions and Department of Social and Family Affairs. It is an offence to fail to keep the relevant records.
Where an employee fails to make the requisite deductions and payments, liability to interest arise. The general mechanisms for collection of tax apply.
Where a person agrees with an agency to perform work for a third party, the person who works, is deemed to be an employee for PRSI purposes. This is so, notwithstanding that he may not be an employee at law.