Agency and temporary workers in Ireland
Reviewed by Mellow Editorial Team, HR & payroll content team
Hiring an agency or temporary worker in Ireland is not the same as hiring a permanent employee, but it carries more legal weight than many employers assume. The rules around who is the employer, what rights the worker holds, and how tax is handled depend heavily on the arrangement you use.
The main types of flexible worker arrangement
Two structures are common in Ireland.
Agency workers are placed with a business (the hirer) by a staffing agency. The agency employs the worker, handles their payroll, and pays employer PRSI at roughly 11.15%. The hirer directs the work day to day but is not the legal employer.
Fixed-term or temporary direct hires are employed directly by the business for a defined period or task. Here, you are the employer in every legal sense — payroll, PRSI, statutory entitlements and all.
The distinction matters because your obligations differ significantly depending on which route you use.
Agency workers: what the hirer is responsible for
Under the Protection of Employees (Temporary Agency Work) Act 2012, agency workers are entitled to equal treatment on core working conditions after day one of their assignment. This covers basic pay, working time, rest periods, breaks, and annual leave — at minimum, the same as a comparable direct employee doing the same job at your site.
As the hirer, you do not run the payroll — the agency does. But you are responsible for the working conditions the worker experiences while on your premises. If your internal policies give employees benefits beyond statutory minimums, you may need to extend some of those to agency workers too, depending on how broadly "basic working conditions" is interpreted in your context.
One practical point: the 4 working weeks of statutory annual leave applies to agency workers, and the agency must ensure it is provided. If your assignment schedule affects when or whether that leave can be taken, it is worth coordinating with the agency early.
Fixed-term workers: what employers need to know
If you hire someone directly on a fixed-term contract, the Protection of Employees (Fixed-Term Work) Act 2003 applies. The core principle is that fixed-term employees cannot be treated less favourably than comparable permanent employees, unless there is objective justification.
There is also a four-year rule worth knowing. If a fixed-term contract is renewed repeatedly and the worker has been employed on successive fixed-term contracts for four years or more, they may acquire the right to a permanent contract — unless the employer can objectively justify continued fixed-term employment. In practice, this means you should track contract history carefully and take legal advice before renewing a fixed-term arrangement beyond that threshold.
From a payroll perspective, fixed-term employees are treated identically to permanent staff. Income tax is deducted through PAYE at 20% up to the standard rate band (around €44,000 for a single person) and 40% above that. PRSI Class A applies — around 4.1% employee contribution, around 11.15% employer contribution. USC is deducted on a banded basis at 0.5%, 2%, 3% and 8% depending on earnings. All of this is reported to Revenue in real time via ROS on or before each payday.
Misclassification risk
A genuine agency arrangement offers flexibility, but there are circumstances where the relationship can be reclassified. If the hirer exercises substantial control over a worker, the work is long-term and ongoing, or the agency is used primarily to avoid employment obligations, Revenue or the Workplace Relations Commission may look behind the arrangement. This can result in the hirer being treated as the employer for tax or employment law purposes.
The practical test is substance over label. Written contracts matter, but so does how the relationship actually operates day to day.
Pension auto-enrolment and temporary workers
Ireland's pension auto-enrolment scheme — My Future Fund — is being introduced from 2026. It will apply to employees aged 23 to 60 who earn above a specified threshold and are not already enrolled in a qualifying pension scheme.
Temporary and fixed-term employees who meet the criteria will need to be enrolled. For agency workers, the enrolment obligation sits with the agency as the employer. If you are the direct employer of a fixed-term worker, enrolment is your responsibility. The scheme is being phased in, so it is worth confirming the current rules with Revenue or your payroll provider as they become clearer.
A note on good practice
Whichever arrangement you use, clarity from the start avoids problems later. Make sure contracts accurately reflect the structure — agency or direct hire — and that both parties understand it. Keep records of contract duration, renewal decisions, and any objective justification for continuing fixed-term employment. And where the line between employee and contractor feels blurry, get advice before the arrangement is already in place.
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