Pay-Related Social Insurance — PRSI — is Ireland’s social insurance system. Employees contribute employee PRSI, and employers contribute employer PRSI. Together, these contributions fund the Social Insurance Fund, which pays benefits including the State Pension, Jobseeker’s Benefit, Illness Benefit, Maternity Benefit, and a range of other payments.
For employers, the employer PRSI contribution is a direct payroll cost — it sits on top of the gross salary the employee receives and must be budgeted for alongside wages. It is not deducted from the employee’s pay; it is an additional cost to the employer.
Understanding how employer PRSI works — the rates, the classes, the thresholds, and where exceptions apply — is essential for accurate payroll budgeting and hiring cost assessment. This guide is part of our full library of payroll and employment articles.
The Basic Rates: Class A
The vast majority of Irish employees are insured under PRSI Class A. This is the standard class for employees in the private sector who earn more than €38 per week from their employment.
For Class A employees in 2026, the employer PRSI rates are:
8.8% on weekly earnings up to €496 (approximately €25,792 per year). 11.05% on weekly earnings above €496.
The threshold at €496 per week is the dividing line. An employer pays 8.8% on the first €496 of each employee’s weekly pay, and 11.05% on any weekly pay above that amount.
For a full-time employee earning €35,000 per year (approximately €673 per week):
On the first €496 per week: €496 × 8.8% = €43.65. On the remaining €177 per week: €177 × 11.05% = €19.56. Total weekly employer PRSI: €63.21, or approximately €3,287 per year.
For a higher-paid employee earning €60,000 per year (approximately €1,154 per week):
On the first €496 per week: €496 × 8.8% = €43.65. On the remaining €658 per week: €658 × 11.05% = €72.71. Total weekly employer PRSI: €116.36, or approximately €6,051 per year.
The effective employer PRSI rate as a percentage of gross salary increases with salary level, because a larger proportion of earnings falls into the 11.05% band. For lower-paid employees where most of the salary falls below the €496 weekly threshold, the effective rate is closer to 8.8%.
PRSI Classes: When Class A Does Not Apply
Not every employee pays Class A PRSI. The PRSI class determines both the employee and employer contribution rates and the benefits the employee is entitled to.
Class S applies to self-employed individuals, including proprietary directors — company directors who own 15% or more of the company’s share capital. Class S contributors pay 4% PRSI on their income (with no employer PRSI element, because there is no employer in the traditional sense). Class S contributions provide a more limited range of benefits than Class A — there is no entitlement to Jobseeker’s Benefit, for example, and the State Pension entitlement builds differently.
For an owner-managed company where the director-shareholder pays themselves a salary, the correct PRSI class is Class S, not Class A. Using Class A for a proprietary director — which generates an employer PRSI cost where none should apply — is a relatively common error that can result in overpayment of PRSI.
Class J applies to employees earning less than €38 per week, employees over 66 years of age, and certain categories of occupational pensioners returning to work. Class J contributors pay a nominal 0.9% PRSI with no employer contribution. For a small business that employs older workers or very part-time staff, this reduced rate applies.
Class B, C, D, and H apply to certain public sector employees, civil servants, and members of the Defence Forces hired before specific dates. These classes are generally not relevant to private sector employers.
The Impact on Cross-Border Hiring
For employers in the Dundalk area who hire employees who live in Northern Ireland, the PRSI class and rate can be affected by where the employee works.
As I covered in my guides to cross-border employment, social security is generally payable in only one jurisdiction for cross-border workers. An employee who performs all their duties in the Republic of Ireland pays Irish PRSI, regardless of where they live. An employee who performs all duties in Northern Ireland pays UK National Insurance Contributions (NIC), not PRSI.
NIC rates differ from PRSI rates — in 2026, the main UK employer NIC rate is 15% on earnings above the secondary threshold. This is higher than the 11.05% Irish employer PRSI rate on earnings above €496 per week, which is a relevant cost comparison for cross-border employers assessing where to locate staff.
The social security determination for hybrid workers — those who split their time between both jurisdictions — follows specific rules covered in my dedicated dual payroll article. Getting the determination wrong can result in the employer paying social security contributions in the wrong jurisdiction and potentially both.
PRSI and the Employment Incentive
One aspect of PRSI that is worth noting for employers considering hiring from specific groups is the availability of PRSI exemptions or reduced rates under certain employment incentive programmes.
Revenue and the Department of Social Protection have from time to time operated employer PRSI rebates for employers hiring individuals from specific cohorts — long-term unemployed, those under 26, those over 50, or those with disabilities. The specific programmes available in any given year should be checked with Revenue or your accountant, as they change.
For Dundalk businesses engaging with Louth Local Enterprise Office or with Intreo (the social welfare and employment services agency), these programmes are sometimes promoted as part of the recruitment support available to employers.
PRSI in a Hiring Cost Model
Because employer PRSI is a direct cost to the employer rather than a deduction from the employee’s pay, it must be included in any honest modelling of the cost of a hire. An employee offered €40,000 costs the employer approximately €44,400–€45,000 in total employment cost when employer PRSI is included — before any pension contribution, sick pay liability, or other costs are added. I walk through the full breakdown in our guide to the true cost of employing someone in Ireland.
This is not a reason not to hire. It is a reason to model the cost accurately before committing. A business that budgets for gross salary and then encounters employer PRSI as a surprise has not done its numbers properly.
The interaction between employer PRSI and auto-enrolment (which adds a further 1.5% in the initial years, rising to 6%) means that the true total payroll cost in 2026 is meaningfully higher than it was five years ago. Any business plan or financial model that uses old payroll cost assumptions needs to be updated.
What to Check on Your Payroll
A periodic review of your payroll PRSI classifications is a worthwhile exercise, particularly if your workforce has changed — people have been promoted, share ownership has shifted, new categories of employees have been hired.
The questions to answer:
Are all proprietary directors correctly classified as Class S? Are any employees on Class A who should be on a different class given their earnings level or employment type? Are cross-border employees correctly assessed for social security jurisdiction? Are you applying any available PRSI incentives for eligible hires?
These are not complicated questions, but they require checking the facts against the rules rather than assuming the payroll system is correct — something I also cover in our new employer’s guide to setting up Irish payroll. If your payroll has not been reviewed in the last two years, it is worth doing.
Paddy Malone FCA AITI
Paddy is the principal of Malone & Co. Chartered Accountants in Dundalk. A Fellow of Chartered Accountants Ireland and a Chartered Tax Consultant with the Irish Tax Institute, he has been advising businesses across County Louth and the North-East for over 35 years.