How to calculate employees’ wages in Ireland?

If you’re looking to calculate employees’ weekly pay, then you’ve come to the right place. In this article, we’ll walk you through the process of calculating employees’ weekly pay in Ireland.

We’ll also cover how to calculate employees’ hourly rates, overtime rates and annual salaries.

Step 1 – Determine your employees’ gross weekly earnings

Gross weekly earnings Hourly Rate x Hours Worked

Example: An employee earns €10/hour and works 40 hours per week for 4 weeks, this equates to €400/week.

Step 2 – Deduct any deductions

National Insurance Contributions

Tax

Social Welfare Payments

Pension Contribution

Total Deductions

Example: A deduction of €100 was deducted from the gross weekly earnings.

€100 / 52 €2.08 per day

Step 3 – Convert to a monthly salary

Employee’sgross weekly earnings ÷ 52 Average Full-Time Weekly Earnings Index

Example: AFTE €2.08 ÷ 52 €0.38 per day

Step 4 – Multiply by 12

Employee’s Monthly Salary Gross Weekly Earnings × 12

Example: Gross Weekly Earnings of €400 × 12 €4800

Step 5 – Subtract any statutory holidays

If statutory holidays fall within the period covered by the payroll cycle, they must be included in the calculations.

If statutory holidays fall outside the period covered by the payroll cycle, they should not be included in the calculations.

Example: Statutory Holiday Period 30 days

Statutory Holidays Outside Period 0 Days

Step 6 – Add any bonus

Bonuses are usually paid once a year but may be paid more frequently if agreed with the employee.

Bonus Amount Paid ÷ 365

Example: Bonus of €300 ÷ 365 €8.33

Step 7 – Total

Payroll Year-End Balance

Add all figures together to get the total

Example: Gross Weekly Earnings + Bonuses €4800 + €8.33 €4933.33

Step 8 – Divide by 12

Divide the figure obtained in Step 7 by 12

Example: Gross Weekly Earnings + Bonuses ÷ 12 €49 33.33 ÷ 12 €41.67

Step 9 – Round up to nearest cent

Round up the result obtained in Step 8 to the nearest cent

Example: Gross Weekly Earnings + Bonuses ÷ 12 €4933 .33 ÷ 12 €50 €42.83 rounded up to €43.00

Step 10 – Pay the employee their wage

Calculate the pay rate by multiplying the number obtained in step 9 by the hourly rate (see example above).

Example: Gross Weekly Earnings + Bonuses ÷ 12 €42.83 * €10/hr €4200

Step 11 – Deposit the money

Deposit the amount calculated in Step 10 into the bank account of the employee.

Step 12 – Repeat Steps 1 – 11 until end of year

Repeat Steps 1 – 11 until the end of the calendar year.

Step 13 – End of year

At the end of the year, add up all figures and divide by 12 to obtain the final balance.

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.