What is the full cost to an employer for an increase in the minimum wage to Euro 9.55?

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What is the full cost to an employer for an increase in the minimum wage to Euro 9.55?

In addition to the wage cost increase of 0.30 per hour, employers PRSI must also be taken into account.

Consequences for an employer of an increase in the naional minimum wage

For an employee working on minimum wage on a 40 hour week the consequences for an employer:

 

  • Paying out an extra €12 per week in wages
  • Increased employers PRSI payment of €9.61.

Total extra cost per week: €21.61.
 

national minimum wage increase

 

The reason for the substantial increase is that the rate of employers PRSI jumps from 8.5% to 10.75% on earnings over €376.

For an employee working a 40 hour week at the increase hourly rate of €9.55 this threshold will be reached and result in the additional cost to an employer of  €9.61 per week on top of the €12 wage increase.

The figures in the Commission on Low Pay Recommendations for the National Minimum Wage 2017  demonstrate that for an employee working 39 hours the employers PRSI will be €31.66, rising to €41.06 for an emploee working 40 hours and €43.12 for an employee working 42 hours.

These increased costs for an employer will need to budgeted for if the recommendation to increase the national minimum wage to €9.55 per hour is accepted and implemented in January 2018.

Employers will need to start planning now.

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Disclaimer

The material in this article is for general information purposes only and does not constitute legal or taxation advice. Specific legal and taxation advice should be sought before acting. All information and taxation rules are subject to change without notice.

No liability whatsoever is accepted by M. McLoughlin & Co. for any action taken in reliance on the information in this article

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