Employment Regulations
The employment relationship in the Republic of Ireland is governed by an extensive statutory framework, ranging from common law, statutory provisions and a variety of fundamental rights enshrined in the Irish Constitution. In addition, European Community Directives and European Court of Justice decisions apply to the employment relationship.
For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Ireland.
Key Factors to Consider When Employing in Ireland:
There are several key areas to be aware of within the Irish employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.
Contracts
In Ireland there is extensive freedom of contract between employer and employee. However, employment legislation must be borne in mind. There is no specific form required for a “contract of employment” per se to be issued. However, under the Terms of Employment (Information) Acts 1994 to 2012, employers are obliged to furnish employees with a minimum statement of the main terms and conditions of their employment within two months of commencement such as:
- Place of Work;
- Duration;
- Rate and frequency of the remuneration;
- Working hours (including overtime);
- Paid Leave;
- Period of notice.
Contracts may be for a fixed or indefinite term, or for a specific purpose. Further limitations were introduced by the Protection of Employees (Fixed-Term) Work Act 2003 (which implements EC Directive 1999/70/EC).
Employee Entitlements
Paid Public Holidays
There are nine public holidays in Ireland in respect of which employees are allowed, at the discretion of the employer, to one of the following:
- A paid day off on that day
- A paid day off within a month of that day
- An additional day of annual leave or
- An additional day’s pay.
Medical Leave
In the absence of an express term within the contract concerning a company sick pay scheme, or a term implied as a result of custom and practice, an employee is not considered entitled to receive money from the employer during any period of absence due to sickness or injury. Thus, during such periods of absence, the employee must rely wholly upon social welfare benefits.
Annual Leave Accrual Entitlement
Employees are generally entitled to a minimum of 20 days’ holiday per year. Otherwise holidays are granted on a pro-rata basis.
Maternity Leave in Ireland
The Parental Leave Acts 1998 and 2006 (as amended) give parents the right to 18 weeks of unpaid leave in respect of each child. The leave must be taken before the child is eight years old and may be taken as a continuous period, in portions or, with the agreement of the employer, by working reduced hours.
Female employees, and sometimes also male employees, are entitled to take up to 40 weeks of adoptive leave.
Employees may in certain cases take up to 104 weeks’ unpaid carer’s leave in order to care for an incapacitated dependant.
Female employees are allowed to attend ante-natal appointments during their working hours and to take maternity leave of up to 42 weeks (more precisely 26 weeks of ordinary maternity leave and 16 weeks of additional maternity leave) provided the employer is given at least four weeks of notice of the commencement of it. An employer is not obliged to pay the employee during maternity leave, however the State provides a maternity allowance of 80 per cent of the employee’s gross earnings during the first 26 weeks of leave, subject to a maximum level determined from time to time by the Government. The employee is also entitled to take up to 16 weeks of additional maternity leave, paid entirely at her own expense.
Employment Termination
As mentioned, Under the Unfair Dismissals Acts 1977 to 2007 (the “Unfair Dismissals Acts”) an employee who has worked for more than one year for the same employer is entitled to rely on the mentioned legislation to challenge a dismissal. Dismissals can be justified on:
- The employee’s competence, capability, conduct or redundancy.
- Substantial grounds justifying the dismissal, the employer must show that it acted reasonably in effecting the dismissal. Therefore, an employer planning a dismissal for poor performance should consider to apply fair procedures such as notifying the employee of the dissatisfaction and affording an opportunity to improve before effecting the dismissal.
The following minimum statutory notice periods apply to all employees who have completed a minimum of 13 weeks of continuous service with the employer:
- 13 weeks – 2 years = 1 week
- 2 years – 5 years = 2 weeks
- 5 years – 10 years = 4 weeks
- 10 years – 15 years = 6 weeks
- 15 years or more = 8 weeks
Probation Period
There is no regulation in Ireland that expressly deals with probationary periods. According to contract law, a probationary period will only be effective if expressly mentioned in the contract.
Although there is no statutory limit on the duration of an employee’s probation period, he or she will be covered by the Unfair Dismissals Acts 1977–2007 once 12 months’ continuous service is accrued. Accordingly, the right to be protected against unfair dismissal will be applicable once the 12-month service threshold has been reached, even if the employee is still on probation.
Pension Requirements
Private pension schemes are becoming more common with contributions made to an independent fund by both employers and employees. If a pension scheme is approved under the relevant legislation, it may benefit from various tax concessions, subject to certain limits. Employers must offer access to a Personal Retirement Savings Account (“PRSA”) to “excluded employees” (i.e. those whose employer does not operate a pension scheme or where there is a waiting period of over six months to join the scheme).
Recently, the Irish Government has introduced tax legislation to encourage employees to participate in the ownership of their employer company through share award and share option schemes. There are also further tax incentives available for certain key employees in the Research & Development area as mentioned in the Payroll and Tax section.
Most fringe benefits are subject to income tax as benefits in kind, such as the payment of the employee’s contributions to a private health insurance scheme (operated by VHI or other health insurance providers) for the employee and his or her dependants.
