Employer PRSI at 11.40%: What a First Hire Really Costs in Ireland

From 1 October 2026, employer PRSI on most wages is 11.40%, up from 11.25%. It is the third step in a five-step climb that ends at 11.75% in October 2028. On its own, that is €68 a year on a €45,000 wage. The step is not the story, though. What matters is what now sits around it: a €14.15 minimum wage that Budget 2027 lifts to €14.94 in January, a pension auto-enrolment scheme that took its first employer contributions in January, and a Supreme Court test that has quietly turned a lot of “subbies” into employees.

The operator consequence lands on whoever hires their first person this year. A tradesperson who has only ever paid himself is about to discover two things. First, the true cost of a €45,000 employee is closer to €51,000 before a single tool is bought. Second, the lad he has been paying cash on Fridays may already count as an employee for PAYE and PRSI, and possibly for holidays and sick pay, with years of arrears attached. None of that appears on the payslip. All of it, however, appears in a Revenue compliance intervention.

What changed on 1 October, and what Budget 2027 changes in January

The PRSI steps are already law under the Social Welfare (Miscellaneous Provisions) Act 2024, so they do not depend on Budget 2027. Budget 2027, presented on 6 October 2026, moved the two figures around them: a €14.94 minimum wage and a €600 weekly threshold for the lower employer rate, both for 2027.

What a first hire actually costs with employer PRSI on top

Take a qualified tradesperson on €45,000 a year, hired in Dublin in September. The wage is the headline, of course. Employer PRSI at 11.25% works out at €5,063 a year; from 1 October, at 11.40%, it is €5,130 a year. Auto-enrolment adds another €675, assuming the worker has no pension of their own. Statutory sick pay is capped at €550 a year. Four weeks’ paid annual leave and ten public holidays are already inside the salary, but together they take about 30 working days out of your billable calendar. So, before insurance, a van seat, a phone and tools, the person who costs €45,000 on paper costs about €51,000 in cash. More than a tenth of their year is also paid time they are not on site.

That arithmetic is why so many Irish trades operators avoid hiring at all. Instead, they stitch a crew together from self-employed helpers. Since the Supreme Court’s 2023 decision in the Karshan case, that habit has a shorter shelf life than it used to.

The five-step test that decides who is an employee

Karshan set out a five-question framework that Revenue, the Department of Social Protection and the Workplace Relations Commission now apply. Firstly, is there payment for work? Has the worker agreed to provide the work personally? Does the business control how, when and where it is done? Looking at the whole arrangement, is the worker in business on their own account or working for yours? And is there any statute that changes the answer? Against those five questions, the label on the invoice carries almost no weight.

The Tallaght tiler and the helper he never hired

Picture a Tallaght tiler who has had the same helper for three years. The helper drives the tiler’s van and uses the tiler’s tools. He works the hours the tiler sets, has no other customers and invoices €900 every Friday. He calls himself self-employed and pays his own tax. Under Karshan, he is very probably an employee. Consequently, the tiler is exposed to the PAYE, USC and employee and employer PRSI that should have been operated on €46,800 a year, plus interest and penalties. Revenue normally looks back four years, and there is no time limit where it finds neglect.

If the helper is an employee, he may also have been entitled to paid holidays and statutory sick pay, and since January 2026 he would have been auto-enrolled had he been on a payroll. Revenue offered a penalty-free disclosure for good-faith misclassification in 2024 and 2025, but it closed on 30 January 2026, and it never covered a worker who was already an employee under the old Code of Practice, which this helper very probably was. From here on, misclassification found in a compliance intervention carries full tax, interest and penalties.

Our read is that the PRSI rise is the smallest number in this article. The number that decides whether a small trades business survives its first Revenue intervention is different. It is how many people the business has been paying without running payroll at all. Operators who keep every helper’s hours, jobs and payments against the job they worked on can at least show what the arrangement was. SendWork records who was assigned to each job, when, and what was paid, because that is the evidence a status question turns on.

Employer PRSI and payroll: the first-hire checklist

• Register as an employer with Revenue through ROS before the first pay date. You cannot run a payroll submission without the registration.
• Report every pay run in real time. Under PAYE Modernisation the payroll submission goes to Revenue on or before payday. The monthly liability is then due by the 14th, or the 23rd if you file and pay through ROS.
• Apply the rate in force on the payment date. A wage paid on 2 October 2026 carries 11.40% employer PRSI even if the hours were worked in September.
• Check auto-enrolment eligibility on day one. Age 23 to 60, €20,000 or more across all employments, not already in a scheme through payroll. The State enrols them; you match the contribution.
• Report benefits under Enhanced Reporting. Small benefit vouchers, travel and subsistence and remote-working payments have been reportable since 2024.
• Run the Karshan questions on every regular helper. If the honest answers point to employment, put them on payroll now rather than after the intervention.

Employer PRSI: the operator takeaway

The October rise is small, legislated, and not worth a strategy. The cost stack around it is worth one. A first hire at €45,000 is a €51,000 decision, and a helper who fails the Karshan test is a hire you already made without noticing. So price the job accordingly, run the payroll properly, and let the 0.15 point look after itself.

The current and October 2026 employer PRSI rates, thresholds and the legislated steps to 2028 are published by the Department of Social Protection in its PRSI contribution rates guide (SW 14). If the helper question has pushed you toward incorporating before you hire, the sole trader vs limited company decision has its own arithmetic. Payroll obligations, however, are identical under both.

What can wait is modelling the 2027 and 2028 steps. What cannot wait is the employer registration and the first real payslip for anyone who has been working like an employee all along.

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