Employee benefits in Ireland go far beyond salary. From statutory entitlements and the Bike to Work scheme to BIK rules and salary sacrifice, this guide covers every benefit type Irish employers need to understand Read more
Employee benefits aren’t just a ‘nice to have’. They’re a key part of how SMEs in Ireland attract, retain, and support their people. But with so many options available, it’s easy to lose focus or fall into the trap of selecting generic schemes that don’t meet your team’s needs.
At PurpleTree, we work directly with business owners to develop clear, compliant employee benefits strategies aligned with the realities of SME life. In this guide, we break down every type of employee benefit available in Ireland and offer practical advice on how to shape a package that delivers real value.
Here’s a quick overview of how employee benefits in Ireland break down. Understanding the distinction between what’s legally required and what’s optional helps employers prioritise their benefits strategy:
| Mandatory (Statutory) Benefits | Voluntary (Supplemental) Benefits |
|---|---|
| 20 days paid annual leave | Private health insurance |
| 10 public holidays | Employer pension contributions |
| Statutory sick pay (up to 10 days by 2026) | Income protection & life insurance |
| 26 weeks maternity leave | Bike to Work scheme |
| 2 weeks paternity leave | Small Benefit Exemption (tax-free vouchers) |
| 9 weeks parent’s leave | TaxSaver commuter tickets |
| 26 weeks unpaid parental leave | Flexible & hybrid working |
| 5 days domestic violence leave | Employee Assistance Programmes (EAPs) |
| 5 days carer’s leave | Professional development & training |
| PRSA pension access | Remote working allowance |
| PRSI contributions | Bonus & incentive schemes |
Before building a voluntary benefits package, you need to understand what Irish law already requires. These statutory entitlements form the baseline all employers must meet under Irish employment legislation:
Under the Organisation of Working Time Act 1997, full-time employees are entitled to a minimum of 20 days (4 weeks) paid annual leave per year. Part-time employees accrue leave proportionally. Employers must ensure employees take their entitlement, or risk a WRC complaint.
Ireland has 10 public holidays per year. Employees are entitled to either a paid day off, an extra day’s pay, an additional day of annual leave, or a paid day off within a month of the public holiday.
Under the Sick Leave Act 2022, employees are entitled to paid sick days at 70% of normal pay, capped at 110 euro per day. The entitlement is increasing annually: 5 days in 2024, 7 in 2025, and 10 by 2026. Employees must have completed 13 continuous weeks to qualify. Read our full guide on statutory sick pay in Ireland.
Expectant mothers are entitled to 26 weeks of paid maternity leave, with an optional 16 weeks unpaid. Partners are entitled to 2 weeks of paid paternity leave. Each parent also gets 9 weeks of paid parent’s leave (with Parent’s Benefit) for each child under 2, plus 26 weeks of unpaid parental leave per child up to their 12th birthday. Maternity Benefit and Paternity Benefit are paid by the Department of Social Protection, though many employers top up the statutory payment.
Under the Carer’s Leave Act 2001, employees with at least 12 months’ service can take unpaid leave (13 to 104 weeks) to provide full-time care. Employees may be entitled to Carer’s Benefit during this time.
Introduced under the Work Life Balance Act 2023, employees affected by domestic violence are entitled to 5 days of paid leave per year. Many employers have yet to update their policies to reflect this.
Employees are entitled to paid leave for urgent family reasons due to the injury or illness of a close family member: 3 days in any 12-month period, or 5 days in 36 months. It covers genuine emergencies only.
Employers who do not offer an occupational pension scheme must provide access to a Personal Retirement Savings Account (PRSA) within six months of starting employment. This is changing with auto-enrolment in 2026.
Both employers and employees make PRSI contributions. Employer PRSI is currently 11.05% of gross pay (Class A), funding social welfare benefits including unemployment, illness, and maternity payments. This must be factored into payroll budgets.
Ireland’s new auto-enrolment retirement savings scheme launches in 2026 and represents the biggest change to Irish pensions in decades:
Our team helps SMEs prepare for auto-enrolment by reviewing payroll systems, calculating cost impacts, and updating employment contracts. Read our complete auto-enrolment guide.
Several employee benefits in Ireland offer significant tax advantages for both employers and employees. Understanding the Revenue BIK (Benefit-in-Kind) rules is key to structuring these correctly:
Employers can give employees up to five non-cash benefits per year, totalling up to 1,500 euro, completely tax-free (increased from two benefits/1,000 euro in Budget 2025). Commonly used for gift vouchers, One4All cards, or Christmas gifts. The benefit must not be cash and cannot form part of a salary sacrifice arrangement.
Through the Cycle to Work scheme, employees can purchase a bicycle and safety equipment up to 3,000 euro (electric bikes) or 1,500 euro (standard bikes) through salary sacrifice, saving on income tax, PRSI, and USC. Available once every four years.
Employers can offer annual bus, rail, or Luas tickets through salary sacrifice, saving employees up to 52% on commuting costs. A high-value, low-effort benefit that’s easy to administer through payroll.
Employer contributions to approved pension schemes are tax-deductible as a business expense and are not treated as a taxable benefit for the employee (subject to Revenue limits). With auto-enrolment launching in 2026, employers who already contribute are ahead of the curve.
Employers can pay remote workers a tax-free daily allowance of 3.20 euro per day for home working costs (electricity, heating, broadband). Not subject to income tax, PRSI, or USC. Given the rise of hybrid working, this is a simple benefit that many Irish employers still underuse.
When an employer provides a benefit other than salary, it’s generally treated as a Benefit-in-Kind (BIK) and is subject to income tax, PRSI, and USC. Employers must report all BIK through payroll using the PAYE system.
Company vehicles are one of the most common BIK items. For cars, taxable rates range from 22.5% (over 48,000 business km) to 30% (under 24,000 business km) of the vehicle’s original market value. Electric vehicles benefit from a reduced BIK rate, with the first 35,000 euro disregarded until the end of 2025. Vans used primarily for business have a flat 8% BIK rate when private use is limited.
The following are generally exempt from BIK in Ireland:
For the full list and current rules, see Revenue’s BIK guidance.
Salary sacrifice (also called salary exchange) is an arrangement where an employee gives up part of their gross salary in return for a non-cash benefit. Because the benefit is deducted before tax, both employer and employee save on income tax, PRSI, and USC. Revenue-approved schemes include:
The Small Benefit Exemption cannot be combined with salary sacrifice, as the benefit must be an additional reward, not a replacement for cash pay. Employers should also ensure salary sacrifice does not reduce the employee’s pay below the national minimum wage.
The most effective employee benefits are the ones people actually use. We always encourage clients to start by asking their staff what matters to them rather than jumping into a one-size-fits-all solution.
According to SD Worx research, employees’ top preferred rewards in Ireland include extra days off (43%), flexible working hours (39%), fixed salary increases (37%), additional health insurance (20%), and meal vouchers or allowances (26%).
Many employers offer private health insurance for faster access to specialists and hospital care. Employer-provided health insurance is a taxable BIK. Common providers include Irish Life Health, Laya Healthcare, and VHI.
EAPs provide confidential counselling and support for employees and their families, covering mental health, financial concerns, and workplace stress. Low-cost for employers but with a significant positive impact on wellbeing and absenteeism.
Income protection provides replacement income if an employee is unable to work due to illness or injury. Group life insurance (death-in-service benefit) provides a lump sum, typically two to four times annual salary, to dependents. Both are commonly provided after the probation period.
These allow employees to borrow through an employer-facilitated scheme, with repayments made directly through payroll. A manageable, often lower-interest alternative to high-street loans.
Performance-related bonuses, profit-sharing, and commission structures motivate employees to achieve company goals. While subject to the usual payroll taxes, they remain one of the most direct ways to reward high performance.
The Work Life Balance Act 2023 gives employees the right to request flexible working. Offering hybrid work, flexible hours, or compressed weeks shows trust and can dramatically improve retention. Employers must consider all requests and respond within four weeks.
Some companies offer extra paid leave above the statutory 20-day minimum for birthdays, volunteering, or personal wellbeing days.
Training opportunities, conference attendance, and tuition support demonstrate long-term commitment to your team. Training directly related to the employee’s role is generally not subject to BIK.
A successful employee benefits package reflects your team’s actual needs, not just what a provider happens to offer. By engaging with your people first, you can design a strategy that attracts the right talent, increases morale, and maximises tax efficiency.
At PurpleTree, we help Irish SMEs build practical, compliant benefits packages that are easy to manage. Our strategic consulting team works with businesses across retail, hospitality, construction, healthcare, and manufacturing to design benefits strategies that fit your industry and budget.
Contact PurpleTree today to talk through your options or arrange a consultation. You can also explore our pricing plans to find the right level of support.
Mandatory benefits include: 20 days paid annual leave, 10 public holidays, statutory sick pay (increasing to 10 days by 2026 at 70% of pay, capped at 110 euro/day), 26 weeks maternity leave, 2 weeks paternity leave, 9 weeks parent’s leave, 26 weeks unpaid parental leave, 5 days domestic violence leave, carer’s leave, PRSI contributions, and PRSA access. Auto-enrolment pension contributions become mandatory for eligible employees from 2026.
The Small Benefit Exemption allows employers to provide up to five non-cash benefits per year, totalling up to 1,500 euro, free of income tax, PRSI, and USC. Common uses include gift vouchers, One4All cards, and Christmas gifts. The benefits must be non-cash and cannot form part of a salary sacrifice arrangement.
The most popular benefits include: extra days off (43% of employees), flexible working hours (39%), health insurance (20%), and meal vouchers or allowances (26%). Tax-efficient benefits like the Bike to Work scheme, TaxSaver commuter tickets, and the Small Benefit Exemption are also highly valued.
BIK is the tax treatment applied to non-cash benefits provided by employers. Most benefits are treated as part of the employee’s taxable income and are subject to income tax, PRSI, and USC. Employers must report BIK through payroll. Some benefits are exempt, including the Small Benefit Exemption, Bike to Work, canteen meals, remote working allowance, and work-related training. See Revenue’s BIK guidance.
Focus on tax-efficient options: use the Small Benefit Exemption for up to 1,500 euro in tax-free gifts, implement the Bike to Work scheme and TaxSaver commuter tickets, offer the 3.20 euro/day remote working allowance, and provide flexible working arrangements (which cost nothing but are highly valued). Survey your team to find out what they actually want. A well-structured employee experience is the most cost-effective retention tool available.
Salary sacrifice is an arrangement where an employee gives up part of their gross salary in exchange for a non-cash benefit. Because the benefit is deducted before tax, both employer and employee save on income tax, PRSI, and USC. Revenue-approved schemes include Bike to Work, TaxSaver commuter tickets, and additional pension contributions. Employers must ensure pay does not fall below the national minimum wage after the sacrifice.
Our team of HR specialists advises Irish employers on exactly these issues every day. Get in touch for a confidential conversation.
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