Social security contributions in detail

Nearly all employers and employees pay what is known as PRSI into the Social Insurance Fund in Ireland. Social insurance payments such as Jobseeker’s Allowance and State Pension are then paid from the Social Insurance Fund.

The amount of social insurance an employee pays depends on their earnings and the type of work they do. Social insurance contributions are divided into different categories, known as classes of contribution. The class of contribution employees pay is determined by the nature of their work. PRSI contributions give employees an entitlement to claim monetary benefits or social insurance payments such as Jobseeker’s Benefit, Illness Benefit and State Pension. The types of benefits an employee is entitled to depends on what PRSI contribution class they belong to. The majority of private and public sector employments in Ireland fall into Class A.

PRSI contributions are deducted at source by the employer and collected by the Revenue Commissioners under the PAYE system. As set out above, employers are responsible for deducting PRSI at source.

Employees, whether full-time or part-time, and self-employed workers who are aged 16 or over and under pensionable age will pay a PRSI charge calculated as a percentage of their reckonable earnings. Employers pay 8.8% employer PRSI on weekly earnings of EUR 38 up to EUR 395, and 11.05% Class A employer PRSI on weekly earnings over EUR 395.

If an employee earns EUR 352 or less per week (before tax is deducted), they will not pay any PRSI. The employer will pay social insurance contributions on their behalf and the employee will continue to be covered for the benefits and pensions appropriate to their PRSI class.

Once earnings exceed EUR 352 per week, both employee and employer PRSI is charged. However, employees whose earnings are between EUR 352.01 and EUR 424 per week are also entitled to a EUR 12 PRSI credit. There is no PRSI credit once earnings exceed EUR 424.

Reckonable earnings for PRSI purposes are gross pay, including notional pay (or benefit in kind) if applicable, plus superannuation and permanent health insurance contributions made by the employee.

There is no PRSI contribution liability for employees over the pension age of 66 or people in subsidiary employment (i.e. employment which is not the principal means of earning a living and is not insurable) unless the employee falls under the Class J rate. Class J is defined in legislation and includes for example, attendants at state examinations held by the Department of Education and members of Army Reserve or Naval Service Reserve who serve for up to 21 consecutive days a year. Subsidiary employment is insurable at Class J regardless of earnings.

Hide note

Author: Lewis Silkin LLP Ireland

Date: April 2020

Note: All currency conversions into EUR were made on 1 February 2019, using a mid-market rate.