Payroll Compliance: How to Meet Payroll Rules and Regulations

For any business, ensuring compliance with relevant payroll rules and regulations is essential. Doing so maintains financial stability and helps in avoiding legal issues or penalties.   

But what are the goals of payroll compliance and how do you maintain payroll accuracy? In this article, we look at the key aspects of payroll compliance in Ireland. We also provide you with the knowledge and tools to meet all necessary requirements. 

Before getting into payroll compliance, let’s take a quick look at employment law in Ireland and how it affects payroll.  

Employment laws are set out, so employers meet basic employee rights. Here, the term ‘employee’ can refer to two types of workers:  

• A worker on a contract of service (an employee)  
• A worker engaged through a contract for services (an independent contractor)  

Those on a contract of service should receive all protections under employment law. Workers on a contract for services are not guaranteed the same rights, although legal protections exist. In both cases, there are certain payroll essentials to be mindful of.  

 

 

There are some basics to managing payroll. You need to be able to calculate gross pay, taxes and other deductions, and deliver payment to employees directly.  

But where does compliance with payroll regulations being? It begins by providing a new starter with a written statement of the core terms of employment within their first five days. You must provide a written statement of the remaining terms within one month of their start date.  

Then there’s rates of pay. Most employees receive at least the minimum wage of €11.30 per hour. Still, rates differ depending on the employee. For instance, apprentices, people aged under 20, and people employed by close relatives may receive a different rate. You also need to factor in tax Universal Social Charge (USC), and PRSI when calculating pay.   

Don’t forget to account for leave when calculating pay, either. Most employees receive annual leave and public holiday leave. Most employees also get four weeks of paid annual leave for each leave year. Part-time employees are generally entitled to 8% of the hours they have worked, up to four working weeks for each leave year. 

Related Article: National Living Wage in Ireland: What Employers Need to Know

 

Let's look at the legal framework and regulations that govern payroll in Ireland. The key components of payroll compliance include:  

1. Registering as an employer: An obvious inclusion, but vital, nonetheless. Before you can hire employees, you must register as an employer with Revenue. This involves providing relevant business information and obtaining a tax registration number. 
2. PAYE registration: PAYE (Pay As You Earn) is used to collect income tax and other deductions from employees' wages. You must register your employees for PAYE and deduct the appropriate taxes from their salaries. 
3. Reporting payroll information: You must report employee wages and deductions to Revenue on a regular basis. This information must be accurate and reported on time. 
4. Filing PAYE returns: You must file monthly PAYE returns with Revenue and include the total tax liability. 
5. Tax deductions and contributions: You're responsible for deducting income tax, Universal Social Charge (USC), and Pay Related Social Insurance (PRSI) from employees' wages. Again, send these these deductions to Revenue. 
6. Employee benefits and allowances: Certain benefits provided to staff may be subject to tax. These should be included in your payroll calculations. Examples include company cars, medical insurance, and pension contributions. 
7. Keeping accurate records: It’s essential to maintain accurate and up-to-date payroll records. Keep track of employee details, wage information, tax deductions and payment records. These records should be kept for a specified period as per legal requirements. 

Related Guide: Payroll Compliance: How to Avoid Breaches