Employment & Benefits Update: Budget 2019 – Key Implications for Employers

10 October 2018

Budget 2019 was announced on 9 October by the Irish Minister for Finance, Paschal Donohoe. We outline some of the notable employment-related aspects:

Increase in National Minimum Wage

Following on from the recommendation of the Low Pay Commission, the national minimum wage for an experienced adult worker will increase from €9.55 to €9.80 on 1 January 2019.  

Parental Leave

A new scheme, provisionally called “paid parental leave scheme”, will be introduced in November 2019. It is expected that this scheme will be separate and distinctive from the existing parental leave scheme. The new paid parental leave scheme will provide for two weeks’ leave to every parent of a child in their first year. The Minister intends to increase this to seven weeks’ leave in the future.

It is unclear how the new paid parental leave scheme will interact with the existing maternity and paternity leave schemes.

Income Tax and Universal Social Charge (USC)

The Minister announced that he will be increasing the entry point to the higher rate of income tax for all earners by €750, raising it from €34,550 to €35,300 in the case of a single worker.

He also announced the following changes to USC rates which will apply from 1 January 2019:

  • The third rate band of USC will be reduced from 4.75% to 4.5%
  • The ceiling of the second rate band of USC will be increased from €19,372 to €19,874

Employer’s Pay Related Social Insurance (PRSI)

The weekly threshold for the higher rate of employer’s PRSI will be increased from €376 to €386.

This change is expected to apply from 1 January 2019.

Increase in social welfare payments

There will be an increase of €5 on all weekly social welfare payments. The most relevant of these payments for employees and employers are:

  • Carer’s Benefit
  • Illness Benefit
  • Maternity Benefit
  • Paternity Benefit

This increase is expected to apply from March 2019. 

Key Employee Engagement Programme (KEEP)

KEEP was introduced last year and charges capital gains tax on any gains arising on the exercise of KEEP share options rather than income tax, USC and PRSI. Given the limited take up to date, certain changes will be made including increasing the maximum annual market value of share options that may be granted from 50% to 100% of the employee’s salary. In addition, the overall value of the options which may be awarded per employee will be increased from €250,000 to €300,000 and the 3 year limit has been increased to a lifetime limit.  It is hoped that this will assist SMEs in attracting and retaining employees.


For more information relating to Budget 2019 and how the provisions may affect your business, contact a member of our Employment & Benefits team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

Discuss your employment law queries now with Melanie Crowley.

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