Employer PRSI Rises Again on 1 October: What a First Hire Really Costs in Ireland

Employer PRSI goes up again on 1 October 2026, from 11.25% to 11.40% on most wages. 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, 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 employer PRSI, holidays and sick pay, with four years of arrears attached. None of that appears on the payslip. All of it, however, appears in a Revenue compliance intervention.

What changed, and what changes on 1 October

Item	January to September 2026	From 1 October 2026	Why it matters to a small employer
Employer PRSI, Class A, higher rate	11.25% on weekly pay above €552	11.40%	No ceiling and no allowance. It applies to every euro of gross pay, and it rises again in 2027 and 2028
Employer PRSI, Class A, lower rate	9.0% on weekly pay of €552 or less	9.15%	The threshold was lifted in January so a full-time minimum-wage worker stays on the lower rate
Employee PRSI	4.2%	4.35%	Deducted from the employee, but you still calculate and remit it
Auto-enrolment, My Future Fund	1.5% employer, 1.5% employee, 0.5% State, since 1 January	Unchanged; rises to 3% each in 2029	Automatic for staff aged 23 to 60 earning €20,000 or more who are not already in a scheme, on pay up to €80,000
National minimum wage	€14.15 an hour from 1 January	Unchanged until Budget day	A 39-hour week is €551.85, which is why the PRSI threshold moved to €552
Statutory sick pay	5 days a year at 70% of pay, capped at €110 a day	Unchanged; the planned rise was paused	Payable after 13 weeks’ service with a medical cert

The PRSI steps are already law under the 2024 social welfare legislation, so they do not depend on Budget 2027. What Budget 2027, due in October, can still move is the minimum wage and the threshold beneath it.

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% adds €5,063 for the part of the year before October, rising to €5,130 a year at 11.40% after it. 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 is already inside the salary, but it takes 20 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. About 8% 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 owes employer PRSI on €46,800 a year going back up to four years, plus interest. The helper has also been entitled to holidays, sick pay and auto-enrolment the whole time. Revenue ran a disclosure window for exactly this situation that closed at the end of January 2026. 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. 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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