You have been running the business yourself, and now you can’t keep up. The workload has outgrown you, or you’ve landed a contract that needs more hands. Either way, you’re about to hire your first employee, and the reality of what that involves is starting to sink in.
Hiring your first employee is one of the biggest steps a small business takes. It’s also one of the most regulated. Ireland has detailed employment legislation, strict payroll obligations, and employer responsibilities that kick in from the moment you make an offer. Get the hiring process right and you’ve built a foundation for growth. Get it wrong and you’re looking at penalties from Revenue, or disputes with the Workplace Relations Commission, before your new hire has finished their first month.
This checklist covers everything you need to do to bring your first employee on board legally and smoothly.
Before You Hire: The Groundwork
1. Decide What You Actually Need
Before you write a job ad, be clear on the role. What tasks will this person do? Is this a full-time position, part-time, or could it be handled by a contractor? The distinction matters because employing someone comes with obligations that don’t apply to contractors, and Revenue takes a dim view of employers who classify employees as contractors to avoid payroll obligations.
If the person will work set hours, use your equipment, and follow your direction on how the work is done, they are almost certainly an employee. The Code of Practice for Determining Employment Status sets out the criteria.
2. Understand the Full Cost of Employment
The cost of a new employee is not just their salary. As an employer, you’ll pay:
- Employer’s PRSI at 11.05% on gross weekly earnings above €441 (8.8% on earnings of €441 or less)
- Pension contributions once auto-enrolment obligations apply
- Insurance, equipment, training, and workspace costs
A new hire on a gross salary of €35,000 will cost the company approximately €38,870 in salary and employer’s PRSI alone. Budget for the full picture.
3. Check Your Insurance
Before any new employee starts, make sure you have employer’s liability insurance. This is a legal requirement in Ireland. It covers you if an employee is injured or becomes ill as a result of their work. Also review your public liability insurance and consider whether additional cover is needed.
Registering as an Employer
4. Register for PAYE with Revenue
If you’re not already registered as an employer with Revenue, you need to do this before your new employee’s start date. You cannot legally pay someone without operating PAYE.
- Sole traders: Register using the TR1 form
- Limited companies: Register using the TR2 form
- Partnerships: Use the TR1 (FT) form
You can register online through ROS (Revenue Online Service) or submit the paper form. Online is faster and gives you immediate access to payroll reporting tools. Once registered, Revenue will issue an employer registration number for all payroll submissions and tax payments.
5. Set Up ROS Access
If you don’t already have ROS access, set it up now. You’ll use it to request Revenue Payroll Notifications (RPNs) for employees in Ireland, submit payroll reports on or before each pay date, make PAYE, USC, and PRSI payments, and file monthly and annual employer returns. You’ll need a digital certificate; allow a few days for the access number to arrive by post.
Setting Up Payroll
6. Choose a Payroll System
You need a way to calculate pay, deductions, and submissions accurately every pay period. Options include:
- Payroll software like Collsoft, BrightPay, or Sage, which integrate directly with ROS
- Cloud payroll services that handle the processing for you
- Your accountant, which is often the simplest approach for a first employee
Whichever route you choose, the system must support real-time payroll reporting to Revenue under PAYE Modernisation, mandatory since January 2019.
7. Request RPNs for Your New Employee
Before your first payroll run, request a Revenue Payroll Notification for your new hire through ROS or your payroll software. You’ll need the employee’s PPS number, start date, and pay frequency. The RPN contains their tax credits, rate bands, and PRSI class, which determine the correct deductions.
If you can’t obtain an RPN before the first pay date, you must apply emergency tax, which results in higher deductions until the RPN comes through.
8. Set a Pay Frequency
Monthly payroll is the simplest to administer, but some industries use weekly pay. Be consistent, as you must submit a payroll report to Revenue on or before each pay date. Whatever frequency you choose, it should be stated clearly in the employment contract so your new employee knows exactly when they’ll be paid.
The Employment Contract
9. Prepare a Written Contract of Employment
Every new employee in Ireland is entitled to a written employment contract. Under the Employment (Miscellaneous Provisions) Act 2018, core terms must be provided within five days of the start date, and a full written statement within two months.
Core terms (within five days):
– Full names and address of employer
– Expected duration of the contract
– Rate or method of calculating pay
– Working hours (per day and per week)
Full written statement (within two months) must also include:
– Job title and nature of work
– Notice periods
– Rest periods, breaks, and annual leave
– Sick pay arrangements
– Pension scheme details
– Reference to the employee’s right to a written statement under the Terms of Employment Acts
Using a solicitor-reviewed template for your first contract of employment is worth the investment. It’s the document both parties will rely on if anything goes wrong.
10. Include a Probation Period
Most contracts include a probation period, typically three to six months. During this time, shorter notice periods usually apply and both sides have a structured window to assess the fit. Employees gain protection under the Unfair Dismissals Acts after 12 months of continuous service (or from day one in specific circumstances, such as dismissal related to pregnancy or trade union membership). A probation period doesn’t remove those legal protections, but it does give you more flexibility if the new hire simply isn’t right for the role. Make sure the contract specifies the duration, the review process, and the notice terms during probation.
Pay and Working Conditions
11. Comply with Minimum Wage
The national minimum wage for an experienced adult employee is €13.50 per hour from 1 January 2025 (Low Pay Commission). Reduced rates apply for new hires under 20. Make sure the rate in your contract meets at least the current minimum, and remember rates are reviewed annually.
12. Know the Working Hours Rules
The Organisation of Working Time Act 1997 sets clear limits:
- Maximum 48-hour working week (averaged over 4 months)
- 11 consecutive hours of daily rest
- 24 consecutive hours of weekly rest
- 15-minute break after 4.5 hours; 30 minutes after 6 hours
You’re legally required to keep records of hours worked.
13. Understand Annual Leave
Full-time employees are entitled to a minimum of 4 working weeks of annual leave per year (20 days for a 5-day week), as set out in the Organisation of Working Time Act 1997. New employees accrue leave proportionally from their start date. All new hires are also entitled to paid leave on the 10 public holidays. Many employers offer more than the statutory minimum as part of a competitive hiring package, so consider what makes sense for the role and the market you’re hiring in.
14. Issue Compliant Payslips
Under the Payment of Wages Act 1991, every employee must receive a payslip on or before their pay date showing gross pay, each deduction and the reason for it, and net pay. Payroll software generates compliant payslips automatically.
Pension Obligations
15. Prepare for Pension Auto-Enrolment
Ireland’s auto-enrolment pension scheme launches on 30 September 2025 under the Automatic Enrolment Retirement Savings System Act 2024. Employees aged 23 to 60 earning over €20,000 who aren’t in a qualifying scheme will be automatically enrolled. Contributions start at 1.5% of gross pay from both employer and employee, with a 0.5% State top-up, increasing over 10 years.
If you’re hiring your first employee in 2025 or 2026, pension auto-enrolment is a day-one consideration. Make sure your payroll system and budget account for it.
Health and Safety
16. Conduct a Workplace Risk Assessment
Under the Safety, Health and Welfare at Work Act 2005, every employer must identify hazards, assess risks, and prepare a written Safety Statement. This applies even with just one employee. The HSA provides templates for small businesses.
17. Display Required Workplace Notices
Employers must display summaries of the Safety, Health and Welfare at Work Act, the Organisation of Working Time Act, and the National Minimum Wage Act in a common area accessible to all new employees.
Onboarding Your New Hire
18. Prepare for Day One
Good onboarding sets the tone. Before the start date, have the workspace and equipment ready, prepare a first-week induction plan, and gather all paperwork (contract, handbook, tax forms, pension information). Confirm that RPNs have been received and payroll is ready to process the first payment on time.
19. Collect Required Information
On or before day one, collect the employee’s PPS number, bank account details, emergency contacts, proof of right to work (if applicable for non-EEA nationals), and a signed employment contract.
20. Create a Basic Employee Handbook
For a first employee, a short handbook covering the essentials is sufficient: working hours, leave policies, grievance and disciplinary procedures, health and safety policies, data protection, and use of company equipment. It complements the employment contract and protects you if issues arise later.
Ongoing Employer Obligations
21. Run Payroll Correctly, Every Pay Period
Once your employee starts:
– Calculate gross pay, deductions (PAYE, USC, employee PRSI), and net pay
– Submit a payroll report to Revenue on or before each pay date
– Pay employer’s PRSI on top of gross salary
– Issue a payslip with every payment
– Pay PAYE/PRSI/USC to Revenue by the 23rd of the following month (via ROS)
22. Keep Proper Records
Maintain employment records for at least six years: hours worked, pay details, payslips, leave taken, contracts, and all correspondence related to the employment. Good record keeping protects you in the event of a Revenue audit, a Workplace Relations Commission complaint, or any dispute with the employee. It doesn’t need to be complicated, but it does need to be consistent.
23. Stay on Top of Revenue Filing
In addition to each payroll submission, you must file an Employer’s Monthly Return and an Employer’s Annual Return at year end. All PAYE, USC, and PRSI liabilities must be paid to Revenue by the 23rd of the month following the pay date (if paying through ROS). Non-compliance results in interest charges, penalties, and potential audit activity. If you’re outsourcing payroll to your accountant, make sure timelines are agreed so nothing slips.
Common First-Hire Mistakes
Not registering as an employer before the start date. You must have PAYE registration and RPNs before you process the first payroll. Allow two to three weeks.
No written contract. Verbal agreements are nearly impossible to enforce. Provide a written employment contract within five days of the start date.
Misclassifying an employee as a contractor. If Revenue determines your contractor is actually an employee, you could owe back-dated PAYE, PRSI, and penalties.
Not budgeting for the full cost. Employer’s PRSI, insurance, equipment, training, pension: these add 15% to 25% on top of the gross salary.
Skipping health and safety. Even with one employee, you need a risk assessment and safety statement. The penalties for non-compliance are significant.
Poor onboarding. A chaotic first week leads to early disengagement. A structured onboarding process, even a simple one, shows your new hire you take the role seriously.
Ignoring the probation period. If your contract doesn’t include a probation clause, you lose the flexibility it provides. Specify the duration and the review process clearly.
Not keeping records from day one. Hours worked, leave taken, pay calculations: if you don’t track these from the start, you’ll regret it when you need them. Employment records must be maintained for at least six years.
Frequently Asked Questions
When do I need to register as an employer?
Before your new employee’s start date. Register through ROS or by submitting a TR1/TR2 form. Allow two to three weeks for processing.
Do I need to provide a pension from day one?
Under auto-enrolment (launching 30 September 2025), eligible new employees will be enrolled automatically. Until then, there’s no legal obligation, although many employers offer a pension as standard.
What is the minimum notice period?
Under the Minimum Notice Acts, employees with 13 weeks to two years of service require one week’s notice. During the first 13 weeks, notice is as agreed in the contract.
Can I hire someone part-time or on a fixed-term basis?
Yes. Part-time employees have the same rights as full-time employees on a pro-rata basis. Fixed-term employees have protections under the Protection of Employees (Fixed-Term Work) Act 2003.
Do I need an employee handbook?
It’s not legally required but strongly recommended. A handbook documents your policies on leave, conduct, and procedures, giving both you and your new hire a reference point.
What if I make a payroll error?
Correct it promptly. Submit corrected data to Revenue through ROS. Persistent errors trigger Revenue attention, so getting payroll right from the start matters.
Ready to Hire?
Bringing on your first employee is a milestone. It means the business is growing, and that’s worth celebrating. But the compliance side needs to be right from day one. Employment law, payroll, contracts, pensions, health and safety: these aren’t things you can figure out as you go.
If you’re about to hire your first employee and want to make sure everything is covered, from PAYE registration to payroll setup to the employment contract, we can help.
Talk to the team at Kinore and we’ll walk you through every step of the hiring process.
The information provided in this article is for general guidance and informational purposes only. It does not constitute professional accounting, tax, or financial advice, and should not be relied upon as a substitute for advice tailored to your specific circumstances. While we take care to ensure the content is accurate and up to date at the time of publication, legislation, tax rates, thresholds, and compliance requirements in Ireland can change.
