Payroll for your first employee in Ireland
Reviewed by Mellow Editorial Team, HR & payroll content team
Hiring your first employee in Ireland means registering as an employer with Revenue, setting up a compliant payroll system, and making real-time submissions on or before each payday. The process has clear steps, and once you understand the structure, it is straightforward to run correctly.
Register as an employer with Revenue
Before you pay anyone, you need to register as an employer with Revenue. You do this through Revenue Online Service (ROS). If you do not already have a ROS account, set one up first — it is the system you will use for all payroll reporting going forward.
When you register, Revenue will set up a PAYE Employer Registration for your business. This is separate from your own income tax or corporation tax registration. You cannot legally pay an employee without it.
Your employee also needs to be registered on your payroll. They do this by adding your employer registration number to their Revenue account via myAccount. Once they do, Revenue will issue a Tax Credit Certificate (TCC) to you. This tells you their tax credits, rate bands and any other adjustments that apply to their pay. Do not guess at these figures — wait for the TCC before running your first payroll.
Understand what you need to deduct
Every time you pay your employee, you are responsible for calculating and deducting three things: income tax, USC (Universal Social Charge), and employee PRSI. You also pay employer PRSI on top of their gross pay.
Income tax uses a two-rate system. For 2026/27, a single employee pays 20% on income up to approximately €44,000 and 40% on anything above that. Ireland does not use a personal allowance — instead, employees receive tax credits that reduce the amount of tax they actually owe. The main ones are the Personal Tax Credit and the Employee Tax Credit. Revenue calculates these and communicates them to you via the TCC.
USC applies in bands: 0.5% on the first portion of income, 2% on the next band, 3% on the next, and 8% on income above the highest threshold. Employees earning below a certain annual threshold are exempt — Revenue will flag this on the TCC if relevant.
PRSI for a standard employee on Class A is 4.1% of gross pay, deducted from the employee. As the employer, you pay an additional 11.15% on top of their gross earnings. This employer PRSI is a cost to your business, not a deduction from the employee's wages, and it is worth factoring it into your total employment cost from the start.
Run payroll and submit to Revenue in real time
Ireland uses a real-time reporting system called PAYE Modernisation. Every time you pay your employee — weekly, fortnightly or monthly — you must submit a Payroll Submission Request (PSR) to Revenue via ROS on or before the actual payday. There is no end-of-year reconciliation in the traditional sense; Revenue sees each payment as it happens.
The PSR includes the employee's gross pay, all deductions, and employer PRSI for that period. Revenue uses this to keep the employee's tax position up to date throughout the year.
Most employers use payroll software to generate these submissions. Manual spreadsheets are error-prone and make real-time filing harder to manage. Even with one employee, using proper payroll software is the right call.
Pay the tax and PRSI to Revenue
Submitting the PSR tells Revenue what you owe — but you also need to actually pay it. Employer PAYE liabilities (income tax, USC and PRSI) are typically paid monthly by the 23rd of the month following the payroll period, if you are paying online through ROS. Staying on top of these deadlines matters: Revenue charges interest on late payments.
Keep records of every payslip, every submission and every payment. You are legally required to give your employee a payslip each pay period, and to retain payroll records for a number of years.
Know your other employer obligations
Tax and PRSI are not the only obligations that come with your first hire. Statutory annual leave is 4 working weeks per year, pro-rated for part-time employees. You must provide a written statement of core employment terms within five days of the employee starting.
From 2026, pension auto-enrolment — branded as My Future Fund — is being introduced in Ireland. Under this scheme, eligible employees will be automatically enrolled into a workplace pension, with contributions from the employee, the employer and the State. If you are hiring now, this is a cost and an administrative responsibility you should plan for even if the scheme has only recently launched.
There is no shortcut to getting the basics right: register correctly, use accurate figures from Revenue, file on time, and keep clean records.
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