HR and payroll for construction in Ireland
Reviewed by Mellow Editorial Team, HR & payroll content team
Running payroll and managing HR in Irish construction is more complex than in most sectors. Construction employers face sector-specific tax schemes, union-registered agreements, subcontractor obligations and safety-critical compliance requirements that simply do not apply in a typical office environment.
The Relevant Contracts Tax (RCT) scheme
If you engage subcontractors — which most construction firms do — RCT applies. This is not payroll in the ordinary sense, but it runs alongside it and Revenue treats it seriously.
Under RCT, you (the principal contractor) must notify Revenue of every contract with a subcontractor before any payment is made. Revenue then issues a deduction authorisation. The withholding rate is 0%, 20% or 35% depending on the subcontractor's compliance record. You deduct that amount and remit it to Revenue. The subcontractor can offset it against their tax liability later.
The practical risk: if you pay a subcontractor without getting a deduction authorisation first, you can be held liable for the full RCT amount yourself, plus penalties. Do this through ROS and keep the process tight.
RCT applies to subcontractors. Employees are different — if someone is actually working as an employee (regular hours, equipment provided by you, integrated into your workforce), they should be on PAYE regardless of what any contract says. Misclassifying employees as subcontractors is one of the most common compliance failures Revenue identifies in construction.
PAYE payroll for construction employees
For employees on PAYE, the standard Irish payroll rules apply. Income tax runs at 20% up to roughly €44,000 for a single person and 40% above that. Ireland uses tax credits rather than a personal allowance, so employees must register for credits through Revenue's myAccount.
USC applies in bands: 0.5%, 2%, 3% and 8% at higher income levels. PRSI Class A applies to most construction employees — the employee contributes around 4.1% and you as employer contribute approximately 11.15%.
You must submit a payroll submission to Revenue on or before each payday via ROS. There is no grace period — late submissions attract interest and potential penalties.
Construction workers are often paid weekly, which is entirely fine, but it means 52 ROS submissions per year rather than 12. If you have crews on different sites with varying hours, your payroll process needs to accurately capture hours worked each week before you run pay.
Sectoral Employment Orders (SEOs)
Construction in Ireland has Sectoral Employment Orders registered with the Labour Court. These set legally binding minimum rates of pay, sick pay entitlements and pension contributions for workers in the electrical contracting and construction sectors.
The Construction Industry Federation (CIF) and SIPTU have historically negotiated these rates, and once an SEO is registered, it applies to all employers in scope — not just those who are union members or CIF members. Paying below the SEO rate is a legal breach, not simply a matter of good practice.
Check the current SEO rates for your specific trade category directly with the Labour Court or Workplace Relations Commission (WRC). Rates are updated periodically and the figures here are not reproduced because they change — you need to verify them before each pay period.
The SEO for construction also sets out pension scheme obligations. Employees covered by the order must be enrolled in the Construction Workers Pension Scheme (CWPS), and both employer and employee contributions are specified in the order. This sits separately from the government's forthcoming My Future Fund auto-enrolment scheme, which is being introduced from 2026 and will eventually cover employees not already in a qualifying pension arrangement.
Holiday pay and working time
Construction employees are entitled to 4 working weeks of statutory annual leave per year. However, calculating this correctly for workers with variable hours requires care — leave entitlement is based on hours worked, not just weeks employed.
Public holidays also apply. Construction sites often operate on tight schedules and some employers assume they can simply pay a premium and keep workers on site during public holidays. This is only permissible if you follow the correct process under the Organisation of Working Time Act — workers are entitled to either the day off, a substitute day, or an additional day's pay, and this must be handled correctly in payroll.
Keep accurate records of hours worked. Construction workers frequently move between sites, work overtime and have irregular patterns. If a WRC inspector asks, you need to be able to show hours records for each employee going back years.
Safety, employment records and GDPR on site
Construction employers are required to maintain a safety statement and site-specific safety plans under the Safety, Health and Welfare at Work Act. While this is not strictly a payroll matter, HR in construction cannot be separated from safety compliance. Induction records, training certificates (Safe Pass, Manual Handling, CSCS cards) and toolbox talk logs all need to be maintained per employee.
From an HR records perspective, treat these the same way you treat payroll records — stored securely, accessible when needed, and retained for the legally required periods. GDPR applies to employee data in construction just as anywhere else, including safety documentation that contains personal data.
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