Pay Related Social Insurance (PRSI)
Pay Related Social Insurance (PRSI) is a payment made by you and your employee. The amount of PRSI depends on your employee's pay. It is the main source of funding for social welfare payments.
This article explains more about PRSI and how to enter it in Sage Payroll.
Employer legal obligations
As an employer, you pay PRSI contributions for all employees aged between 16 and 65. In general, the payment is compulsory. In most cases, Revenue collects PRSI contributions through the PAYE income tax system.
There are currently 11 different PRSI contribution classes and each PRSI class is divided into different subclasses. These subclasses determine how much PRSI contributions your employees must pay.
You can find further information about PRSI rates, bands and calculations, from the Gov.ie website
As part of the Budget 2023 announcements:
The upper threshold for AX will increase from €410 up to €424
The Lower threshold for AL will increase from €410.01 to €424.01
How does PRSI calculate?
PRSI is non-cumulative and calculates based on a period-by-period basis. This means that all calculations are based purely on an employee’s reckonable earnings that they receive in the current pay run only. Pay that accumulates from the beginning of the tax year isn’t included in the calculation.
Reckonable earnings for PRSI purposes are gross pay minus superannuation or PRSA and approved permanent health insurance.
Reckonable earnings includes:
- Christmas boxes.
- Pay during sickness.
- Holiday pay.
- Pay in lieu of holidays.
- Benefit in kind, such as a company car.
PRSI classes and subclasses
|Contribution class||Who belongs to this class?||Contribution subclasses|
|A||Employees under the age of 66 in industrial, commercial and service-type employment who have reckonable pay of €38 or more per week from all work, as well as civil and public servants recruited from 6 April 1995.
In the case of subclasses A8 and A9, community employment participants who have reckonable pay of €38 or more per week from all work as well as public servants recruited from 6 April 1995.
|AO, AX, AL, A1, A4, A6, A7, A8 and A9|
|B||Permanent and pensionable civil servants recruited before 6 April 1995, registered doctors and dentists employed in the civil service and Gardaí recruited prior to 6 April 1995.||BO, BX and B1|
|C||Commissioned officers of the Defence Forces and members of the Army Nursing Service recruited before 6 April 1995.||CO, CX and C1|
|D||Permanent and pensionable employees in the public service, other than those mentioned in Classes B and C, recruited before 6 April 1995.||DO, DX and D1|
|E||Ministers of religion employed by the Church of Ireland representative body||E|
|H||NCOs and enlisted personnel in the Defence Forces.||HO, HX and H1|
|J||People with reckonable pay of less than €38 per week from all employments.
However, a small number of employees are insurable at Class J, no matter how much they earn, such as employees aged 66 or over or people in subsidiary employment.
|J0, J1 and J9|
|K||Public office holders, such as:
* The president.
* Members of the Oireachtas and the judiciary.
* Certain military judges.
* The attorney general.
* The comptroller and auditor general.
* Members of a local authority.
* Certain members of the european parliament.
|M||Individuals with nil contribution liability, such as:
* Employees under age 16.
* Those in receipt of occupational pensions or lump-sum termination payments.
Also public office holders with a weekly income of less than €100 per week.
|P||Share fishermen and share fisherwomen who are classified as self-employed and who are already paying PRSI under Class S.|
|S||Self-employed people, including certain company directors, and certain people with income from investments and rent.||SO and S1|
Assigning a PRSI contribution class to an employee
When you’re setting up an employee in Payroll, you must assign their PRSI class code. This code is determined by the employee’s particular work circumstances.
If you’re unsure of what PRSI code to use for an employee, you should contact the Department of Social Protection for clarification.
|If you’re advised to put the employee on subclass||In Payroll, select the following PRSI code:|
|AO, AX, AL or A1||A1|
|A4, A6, or A7||A4|
|A8 or A9||A9|
|B0, BX or B1||B1|
|C0, CX or C1||C1|
|D0, DX or D1||D1|
|H0, HX or H1||H1|
|J0, J1 or J9||J1|
|S0 or S1||S1|
Assigning a PRSI subclass to an employee
When you’re processing an employee’s pay details, Payroll automatically assigns the correct PRSI subclass based on both of the following:
- The employee’s PRSI code.
- The employee’s reckonable earnings in that particular pay run.
For example, a weekly-paid employee with a PRSI code A1 is assigned the subclass AO if their weekly reckonable earnings in that period are between €38 and €352. If their weekly reckonable earnings are between €352.01 and €424, they’re assigned to the subclass AX.
If you want to see what legislation has changed in the new tax year, read our legislation changes for the 2023 tax year article.