Budget 2024 introduces pivotal changes to payroll in Ireland, many of which are effective from 1 January 2024.

As such, we asked our payroll experts here at Ormsby & Rhodes to provide a concise overview of the key payroll changes that will impact your business in 2024.

1: Increase to Minimum Wage:

Effective 1 January 2024, the minimum wage has increased to €12.70 per hour. All employees aged 20 years and older are entitled to this increased amount per hour. Further details are available here.

Impact on Payroll:

Employers will need to review hourly rates for all employees and ensure the minimum wage rates are applied accordingly, effective from 1 January 2024.

Evolution to ‘Planned Living Wage’:

The minimum wage is set to evolve into the Planned Living Wage in the coming years. We predict that the minimum wage equivalent will continue to increase in line with the cost of living and thus, employers should strategically plan for these changes.

2: Electronic Reporting of Employee and Director Payments

Effective from 1 January 2024, employers are obliged to electronically report payments made to Directors and Employees over and above salary remuneration, such as tax-free vouchers paid under the ‘Small Exemption’ scheme and many others. We shared a short article on this change previously that will be a valuable read.

Impact on Payroll:

This is a new and substantial change that employers will need to manage via ROS, encompassing a myriad of employee and director payments.

3: Income Tax Adjustments:

Contrary to expectation, no third rate of tax was introduced in Budget 2024. The standard rate of 20% and the higher rate of 40% remain.

What changed on 1 January 2024?

The standard rate cut-off point increased by €2,000 (from €40,000 to €42,000 for a single person). Furthermore, employee and earned income tax credits were increased by €100 each to €1,875.

Impact on Payroll:

Employers will need to reflect the income tax band changes effective from 1 January 2024.

4: Universal Social Charge (USC) Modifications:

The middle USC rate band was reduced from 4.5% to 4%. The threshold for the 2% USC rate increased to €25,760, supporting lower-income earners.

Impact on Payroll:

Similar to income tax changes, employers will need to reflect the USC amendments from January 1, 2024.

5: PRSI Rate Increase (effective October 1, 2024):

It was announced in Budget 2024 that all PRSI contribution rates will increase by 0.1% from 1 October 2024.

Impact on Payroll:

Employers will need to prepare for necessary PRSI rate increases before October 1, 2024, either internally or through engaging with your dedicated Payroll solutions provider, such as Ormsby & Rhodes.

6: Company Car Benefit-in-Kind (BIK):

Budget 2024 extended reliefs on E-Vehicles provided for work purposes. The €10,000 temporary reduction in the original market value (OMV) of E-Vehicles (including vans) in categories A-D was extended until 31 December 2024. 

Impact on Payroll:

If you are already reflecting 2023 BIK changes, there will be no change, however, for new vehicles provided in 2024, employers should ensure that BIK is applied correctly.

7: Share-Based Remuneration Consultation:

It was announced as part of Budget 2024 that a public consultation on share-based remuneration and the taxation of same will be undertaken. The consultation began in late 2023 and will continue until 22 January 2024, after which results will be reviewed.

Impact on Payroll:

No immediate changes to Payroll, however, stay tuned for further details and we will endeavour to keep you informed on any planned amendments.

8: Extension to Statutory Sick Pay:

The entitlement for Statutory Sick Pay (SSP) was extended from three to five days from January 1, 2024.

Impact on Payroll:

Employers should ensure the correct assignment of entitlements from the beginning of 2024.

9: Enhancements to Parents Leave (effective from 1 August 2024):

From August 2024, Parents’ Leave will be extended by two weeks, increasing from seven weeks to nine weeks.

Impact on Payroll:

Employers should plan for additional Parental Leave entitlements where employees have children aged 2 years and under. Statutory parent’s benefits will be paid at a rate of €262 per week, however, employers may opt to ‘top up’ this amount if in the position to do so.

10: Pension Auto-Enrolment

Finally, one of the most significant changes Irish employers will face in 2024 and beyond is the introduction of Pension Auto-Enrolment. In the first phase, employees who are aged between 23 and 60 earning over €20,000 per annum and who are not already enrolled in a pension scheme, will be subject to auto-enrolment. Contribution rates will be staggered starting from 2024, to allow for an adjustment period to the new scheme. A valuable Auto-Enrolment Guide for Employers is available here or connect with our experts at Ormsby & Rhodes.

Impact on Payroll:

Eligible employees not currently enrolled in a pension scheme will need to be auto-enrolled from late 2024 (date to be confirmed).

As an employer, how will I manage this myriad of upcoming payroll changes?

Employers have two overarching options when it comes to payroll management: 1) to retain payroll in-house and invest in the necessary training, development, and technology required to ensure all upcoming changes are managed appropriately, or 2) to outsource payroll to a dedicated payroll expert, such as Ormsby & Rhodes, who can offer flexibility, scalability, and assurance that all payroll changes will be managed effectively and compliantly.

Since the announcements, we have seen a marked increase in companies opting to outsource their payroll to Ormsby & Rhodes. Outsourcing payroll to our dedicated experts offers you the opportunity to streamline operations, reduce training and development costs, enlist the expertise of our highly experienced team, and ensure compliance, allowing you time to focus on your core business objectives. Not only that – by enlisting our support, you and your team gain access to the broader benefits offered by Ormsby & Rhodes, such as our established worldwide connections through BKR International, who can assist you in expanding your global footprint.

So, what is next?

Make the change today and elevate your payroll management and more with Ormsby & Rhodes.

Get in touch to arrange an initial consultation at info@ormsby-rhodes.ie