Cost of an employee in Ireland Calculator | IE Payroll (2022)

Whether you are the Director of a multi-million organisation, setting up a new company inIreland , or have a business venture in Ireland, knowing where your money goes and how much you spend on employment resources is essential. Staff costs in Ireland are one of the biggest expenditures for a company, but it isn't just wages that cost the business money, there are additional expenditures, known more commonly as 'on-costs' or 'onboarding-costs'.

The True Cost of an Employee in Ireland in 2022 Calculator is designed to provide insight into the full costing model for employing a new employee in Ireland and, together with iCalculators Ireland Payroll calculator for 2022, provide the gross employment costs of your current staff in Ireland, help you budget employment costs in Ireland for your financial year, anticipate staff costs for future expansions in Ireland and review past costs in order to gauge future employment costs in Ireland.

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How to calculate the 'True Cost of an Employee in Ireland'

Cost of an employee in Ireland Calculator | IE Payroll (1)

Calculating the true cost of an employee in Ireland can seem very complex but, as with most financial calculations with multiple elements, they can each be placed into simple cost buckets which allow us to provide a simple working formula:

tce = sc + bc + oc + fc

where:

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  • tce = The True Cost of an Employee in Ireland
  • sc = Salary Costs in Ireland
  • bc = Benefit Costs in Ireland
  • oc = Onboarding Costs in Ireland
  • fc = Facilities in Ireland

Each of these costs includes a number of sub elements which are defined within the calculator where you can enter specific amounts or a percentage rate for benchmarking expenditure.

The True Cost of an Employee in Ireland Calculator is similar to the Cost Per Hire Calculator with the addition of live income tax and salary deductions for an employee working in Ireland.

A guide to the 'True Cost of an Employee in Ireland' Calculator

The 'True Cost of an Employee in Ireland' calculator is designed to encompass all possible financial cost factors that are generated when hiring a new member of staff in Ireland. The calculator is geared towards senior staff and allows for the hire and set up of the staff member in a new office in Ireland with no existing resource. Whilst not essential for static companies in Ireland, this enables more flexible companies to cost for the set up and establishment of new offices in new locations with in Ireland or for the setup of a new company branch in in Ireland etc.

In order to simplify first time use, the calculator has been pre-populated with sample percentage rates and or sample costing fees. These figures provide an initial benchmark for your costing analysis and can be edited as required. We welcome your feedback and suggestions to help further improve the 'True Cost of an Employee in Ireland' calculator.

Annual Basic Salary in Ireland

The Annual Basic Salary in Ireland is the amount you pay your member of staff each year before any benefits or benefits in kind are included. i.e. Without any deductions for tax, social security, pension schemes etc. and any bonuses, dividends, shares, etc have not been added. It should not be confused with 'gross pay', which would include all money earned in Ireland for the year.

Annual Bonus in Ireland

Annual Bonuses in Ireland are a great incentive to keep staff on board and encourage loyalty, greater output and commitment. Many companies in Ireland give an annual monetary bonus, but any form of payment is considered a bonus or 'benefit'. When a gift is given instead of a financial award, it is deemed a 'benefit in kind' and a monetary value must be awarded to the item, to enable the relevent income tax in Ireland to be paid on the gift.

Taxable Income in Ireland

Not all of the money a person earns in Ireland is taxable. Personal allowances, tax credits and tax relief schemes can factor the way taxable income is determined in in Ireland, we factor each of the relevent elements into this calculation and provide a breakdown of how we calculated the salary with a supporting salary example for Ireland.

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True Salary Cost in Ireland

The true salary cost in Ireland is the total amount of the basic pay, bonuses and employer payroll costs that the company pays out each year for wages in Ireland.

Company Pension in Ireland

Company pension schemes in Ireland are becoming more and more popular. Company pension schemes vary in in Ireland but we include this as a factor as you may operate a standard company pension scheme which you wish to extend to your new employee in Ireland in addition to any private pensions they may have in Ireland or state pensions in Ireland.

Private Medical in Ireland

Private medical insurance is popular is the US and is becoming increasingly popular in Ireland. It is one of the 'benefits in kind' an employer can offer. A benefit in kind is an award given by the employer that is not financial, though usually will have some monetary value. Private Medical Treatment in Ireland is complicated in terms of taxation in Ireland, Private (Company) Medical plans can include dental care, ocular needs (eye tests, contact lenses, spectacles, etc) and general health cover ( in Ireland and when travelling outside Ireland). For simplification, we treat medical costs in Ireland as a flat employee cost for the directional calculation within this tool, this is something that you would have to discusses with your payroll service provider in Ireland.

Shares Equity in Ireland

An employer can elect to give employees in Ireland shares and some benefits may be realised by the employee, such as tax relief. The company will bear the cost of providing the shares to the employee, but may be eligible for tax relief in Ireland in some circumstances.

Total Employee Benefits in Ireland

Total Employee Benefits is the total amount of any provision an employer gives to an employee in Ireland, as a benefit, that is not part of a salary agreement or bonus. This is what the company pays out each year for pensions, medical insurance, company car, shares/equity, etc.

Advertising Costs in Ireland

This is one of the unknown/unpredicted costs that a company in Ireland can face if not planning an recruitment advertising campaign in Ireland appropriately. Anything that costs money when advertising for staff in Ireland should be included in this budget, this includes all media methods (hoardings, T.V., radio, telephone, internet, mobile, presentations, etc). You could also add hospitality and meeting costs in Ireland, for planning the advertising campaign, otherwise place them in the management administration costs. There is a danger that these costs can escalate if not tracked effectively, so it is wise to have a budget cap for advertising and decide exactly what it will cover.

Agency Fees in Ireland

Agency fees in Ireland are what the company pays to another business to manage a particular aspect of work, in this instance, it refers to the recruitment of staff in Ireland and forms part of the 'onboarding' costs.

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Recruiters Costs in Ireland

Recruiters costs are what the business pays for individuals to manage the hiring of staff in Ireland. It can include wage/fee for recruiters in Ireland, location costs for interviews, stationery, administration, interview time, travel to or within Ireland and subsistence, etc.

Employee Referral Costs in Ireland

Employee referral costs are the costs associated with providing a finder's fee or recognition reward when an employer recommends a friend etc. who subsequently is hired by the company in Ireland.

Travel Costs in Ireland

It is important to anticipate and understand what travel costs have been incurred or are likely to be incurred in the future. It can be difficult though. Decide who is eligible to be reimbursed, what rate will be paid and whether there is a cap on the total amount paid. Some travel costs in Ireland can be subject to tax relief.

Relocation Costs in Ireland

Relocation costs are what a business pays to an individual who is required to move home permanently to a new location in Ireland, in order to accommodate work needs. When considering relocation costs in Ireland, remember to include the actual physical cost of the move, plus any paid leave and additional benefits, such as contributing to furnishing the new home, storage of furniture, etc.

Management Admin Costs in Ireland

Management administration costs can include meetings, hospitality, staff to carry out checks, arrange timetable, stationery, etc

Payroll Costs in Ireland

Payroll costs in Ireland are the expenditure a company bears for preparing and distributing pay to staff. It includes net pay and the materials used to calculate that pay, as well as labour costs to complete the payroll work and legislative costs associated with Ireland payroll management .

Legal Costs in Ireland

Legal costs in Ireland can include insurances, assurances and legislative requirement costs. When recruiting internationally it is important that you have any contracts checked by a specialist international employment lawyer and is familiar with employment law in Ireland.

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Total Onboarding Costs in Ireland

'Onboarding costs' are the total amount of the one off costs associated with hiring a new staff member in Ireland. On-boarding costs are limited to the hiring process only, they are not ongoing financial commitments like salary or office space costs etc.

Office Setup in Ireland

Office and business space costs in Ireland can vary substantially dependent on the desired office location.

Communications Setup in Ireland

Communications setup costs include Internet, mobile telephone, FAX and fixed landline telephone costs.

Line Manager Resource in Ireland

The Line Manager Resource costs in Ireland are those associated with managing the individual in a traditional hierarchical model. This include HR (Human Resource), Health and Safety, Finance and pastoral care. As a baseline cost, a figure of 10% is recommended.

Total Facilities and Other Costs in Ireland

Total Facilities and other costs are the sum of the office set-up in Ireland, communications systems and line management. Office set-up is simply the initial member of staff in and initial organisation. Communications systems include telephone, mobiles, faxes, internet, etc.

Training Costs in Ireland

In order to have an effective workforce, it is essential to have 'knowledgeable in their field' members of staff and therefore wise to have an appropriate training programme in Ireland. Some training is required by Law, such as Health and Safety (H&S) awareness. Training also includes orientation/induction periods, shadowing, in-house skills updates and external courses, as well as professional qualifications.

True Cost of an Employee in Ireland

The true cost of an employee in Ireland is the overall amalgamation of all the costs listed above. It is quite staggering when you take into consideration how much a member of staff in Ireland can cost during the first year of employment. It is essential to maintain a happy workforce to keep stability as this avoids churn and in turn, drive down recruitment costs in Ireland. After the initial year, staff costs should come down, onboarding costs in Ireland are experienced in the first year of employment only.

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We also provide Cost of Employment and Payroll Calculators for Ireland for the following Tax Years

FAQs

How do you calculate employee payroll cost? ›

The cost of labor per employee is their hourly rate multiplied by the number of hours they'll work in a year. The cost of labor for a salaried employee is their yearly salary divided by the number of hours they'll work in a year.

How much does an employee cost an employer in Ireland? ›

Yearly cost for payroll process might be around €60 per year for each monthly paid employee or €156 yearly for each weekly paid employee.

What is the total cost of an employee? ›

This includes the dollars and cents over and above the basic wage or salary you agree to pay. There's a rule of thumb that the cost is typically 1.25 to 1.4 times the salary, depending on certain variables.

How much tax does an employer pay per employee Ireland? ›

The employee pays Income Tax at 40%, PRSI at 4% and Universal Social Charge (USC) at 5% on the benefit. The Pay As You Earn (PAYE), PRSI and USC for €110 will add 51% to the value: 100% - (40% + 4% + 5%) = 51%. The grossed-up amount is €110 x 100/51 = €215.67.

How is work cost calculated? ›

To calculate direct labor costs, identify how much it costs you per hour in labor and multiply that rate by how many hours were worked. For example, if a job takes 20 hours for an employee paid $17 per hour to complete, then the direct labor cost for that job is $17 x 20, or $340.

What percentage of cost is labor? ›

Labor, which can account for as much as 70% of total business costs, include employee wages, benefits, payroll and other related taxes. Yet, according to a Paycor survey, HR professionals only spend 15% of their time managing the cost of labor.

What is the employer PRSI rate for 2022? ›

From 1 January 2022 onwards, a reduced rate of employer PRSI of 8.8% applies where earnings are below the threshold of EUR 410. Self-employed persons whose income from all sources is less than EUR 5,000 per year are not liable to PRSI.

How is employee PRSI calculated? ›

First, calculate one-sixth of your earnings over €352.01. Then subtract this from the maximum credit of €12 to get your PRSI credit. Then calculate the basic PRSI charge at 4% of your earnings. Finally, deduct your PRSI credit from the PRSI charge.

How much is employer payroll tax? ›

The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total.

What is the average cost per hire in 2022? ›

The average cost per hire in the United States is around $4,000. Besides the actual hiring process, you have to calculate the recruiting, onboarding, and training costs.

How much should you charge for an employee? ›

Calculating Employee Cost

While there's no one-size-fits-all solution to calculating total employee cost, the formula most commonly used (and a safe estimate if you're trying to budget for a new employee) is that the average total cost for an employee is between 1.25 and 1.4 times the employee's base salary.

What is fully loaded cost of employee? ›

Fully Loaded Costs means all direct expenses and, with respect to time spent on a project by employees, an hourly rate which equals salary plus benefits plus fifty percent (50%) allocated overhead.

How is PAYE calculated Ireland? ›

Basically, if you're paid monthly and make less than €2,941 gross a month or are paid weekly and make less than €735 gross a week, 20% of your income is taken in tax. If you make anything over €35,300, 40% of the excess amount is also taken.

How do I do payroll in Ireland? ›

The following are 5 key steps which must be taken ensure that your first pay run goes off without a hitch:
  1. Step 1: Company Incorporation. ...
  2. Step 2: Employment Tax Registration. ...
  3. Step 3: Become Familiar With Irish Employment Law. ...
  4. Step 4: Choose In-House Or Outsourced Solution. ...
  5. Step 5: Assess The Suitability Of Your Bank Account.
6 Mar 2019

How does PAYE work in Ireland? ›

PAYE stands for 'Pay As You Earn'. If you are an employee, you normally pay tax through PAYE. Every time your salary is paid, your employer deducts Income Tax (IT), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) and pays the amount deducted to Revenue.

What is the formula of total cost? ›

Consequently, total cost is fixed cost (FC) plus variable cost (VC), or TC = FC + VC = Kr+Lw.

What is a labor cost example? ›

Example of labor cost

One example of a direct labor cost is the hourly salary of a quality assurance inspector adjusted to include healthcare benefits and short-term disability. Another example could be the annual salary of a welder who works on the production line of a steel parts manufacturing company.

How do you calculate direct labor cost? ›

The Direct Labor Cost Formula

The pay rate multiplied by the time spent working on the project yields the direct labor cost, or Direct Labor Cost= Pay Rate * Project Time. Thus a project that required 2 hours of work at a rate of $20 per hour would yield a direct labor cost of $40.

What percentage of gross profit should be payroll? ›

The rule of thumb is that between 15% to 30% of your gross sales should go to payroll. However, this can vary by industry.

How much is employer PRSI in Ireland? ›

The maximum PRSI credit of €12 per week applies to gross weekly earnings of €352.01. A person earning €352.01 pays €14.08 PRSI (4%). After the €12 credit is deducted they will pay PRSI of €2.08. For people earning between €352.01 and €424, the credit of €12 is reduced by one-sixth of earnings over €352.01.

What are the income tax rates for 2022? ›

When it comes to federal income tax rates and brackets, the tax rates themselves didn't change from 2021 to 2022. There are still seven tax rates in effect for the 2022 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

How much should PAYE tax be? ›

How is PAYE worked out? If you earn over the personal allowance pay cap, you'll be charged 20%, 40% or 45% of your earnings, depending on whether you fall under a basic rate, higher rate, or additional rate tax band. This is determined based on your annual income.

What is the employers PRSI rate for 2021? ›

In line with the increase in National Minimum Wage the upper threshold for paying the 8.8% Class A rate of employer PRSI is increasing from €395 to €398 from 1 January 2021.

Is PRSI calculated on gross income? ›

Class A employee PRSI is calculated at 4% of gross weekly earnings. PRSI Credit. The amount of the PRSI Credit depends on your gross weekly earnings. At gross weekly earnings of €352.01, the maximum PRSI Credit of €12.00 per week applies.

How much tax will be deducted from my salary? ›

How to calculate TDS on Salary?
Income Tax SlabTDS DeductionsTax Payable
Up to Rs.2.5 lakhsNILNIL
Rs.2.5 lakhs to Rs.5 lakhs5% of (Rs.5,00,000-Rs.2,50,000)Rs.12,500
Rs.5 lakhs to Rs. 6.33 lakhs20% of (Rs.6,33,000-Rs.5,00,000)Rs.26,600

How is tax calculated on salary? ›

The year during which your income tax is calculated for the previous financial year is called the assessment year.
...
Components for calculating the income tax.
Income SlabTax Rate
2.5 lakhs – 5 lakhs10% of exceeding amount
5 lakhs – 10 lakhs20% of the exceeding amount
Above 10 lakhs30% of the exceeding amount
1 more row
3 Aug 2022

How do I know if my employer is taking out enough taxes? ›

Use the Tax Withholding Estimator on IRS.gov. The Tax Withholding Estimator works for most employees by helping them determine whether they need to give their employer a new Form W-4. They can use their results from the estimator to help fill out the form and adjust their income tax withholding.

What do payroll taxes include? ›

There are four basic types of payroll taxes: federal income, Social Security, Medicare, and federal unemployment. Employees must pay Social Security and Medicare taxes through payroll deductions, and most employers also deduct federal income tax payments.

How do you calculate overhead cost per employee? ›

How to Calculate Overhead Rate per Employee
  1. Calculate the labor cost which includes not just the weekly or hourly pay but also health benefits, vacation pay, pension and retirement benefits paid by the employer.
  2. Compute the total overheads of the business.
  3. Divide the overhead costs by the number of billable hours.
16 Jun 2022

What is fully loaded cost of employee? ›

Fully Loaded Costs means all direct expenses and, with respect to time spent on a project by employees, an hourly rate which equals salary plus benefits plus fifty percent (50%) allocated overhead.

What are on costs payroll? ›

(also oncost) us. HR, ACCOUNTING. a cost that an employer has when they employ someone, in addition to the cost of paying the person's salary or wages: On-costs include pension contributions and payroll tax.

What do employers pay in payroll taxes? ›

Social Security and Medicare taxes

The total due every pay period is 15.3% of an individual's wages – half of which is paid by the employee and the other half by the employer. This means that each party pays 6.2% for Social Security up to a wage base limit of $147,000 and 1.45% for Medicare with no limit.

What is the formula of total cost? ›

Consequently, total cost is fixed cost (FC) plus variable cost (VC), or TC = FC + VC = Kr+Lw.

How do you charge Labour costs? ›

Calculate Your Hourly Rate

Business schools teach a standard formula for determining an hourly rate: Add up your labor and overhead costs, add the profit you want to earn, then divide the total by your hours worked. This is the minimum you must charge to pay your expenses, pay yourself a salary, and earn a profit.

What is the average cost per hire in 2022? ›

The average cost per hire in the United States is around $4,000. Besides the actual hiring process, you have to calculate the recruiting, onboarding, and training costs.

How do you calculate fully loaded labor cost? ›

That calculation is: Employee's Fully Burdened Labor Rate or total employee cost = (Labor Burden Costs PLUS gross payroll labor cost) DIVIDED BY the number of hours (production).

How are employee benefit costs calculated? ›

By taking each employee's base salary and multiplying it by 1.25 or 1.4 (depending on the comprehensiveness of the package you offer), you can ballpark the employee's labor cost.

What are on costs examples? ›

On-costs are labor costs in addition to salaries and wages; that is, payroll tax, workers' compensation and other liability insurance, the cost of subsidized services to employees, training costs, and so on.

What is the average cost of payroll processing? ›

What Will My Total Price Be? As you can see, there are many factors that can impact the total cost of payroll processing. While the general rule of thumb is that it will cost around $200-$250 per employee per year, your total price will be based on the scope of your engagement with your vendor.

What should payroll percentage be? ›

What percentage of your revenue should go to payroll? The rule of thumb is that between 15% to 30% of your gross sales should go to payroll.

What is the payroll tax rate for 2022? ›

For 2022, the Social Security tax wage base for employees will increase to $147,000. The Social Security tax rate for employees and employers remains unchanged at 6.2%. The combined Social Security and Medicare tax rate for employees and employers remains unchanged at 7.65%.

How do I calculate payroll taxes? ›

Current FICA tax rates

The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. Combined, the FICA tax rate is 15.3% of the employee's wages.

How do you calculate payroll tax expense? ›

To determine each employee's FICA tax liability, multiply their gross wages by 7.65%, as seen below. These are the amounts you withhold from employee wages and send to the IRS.

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