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Article | Global News Briefs

Ireland: New pay-related unemployment benefit introduced

By Elisa Navarro and Jesse Plecas | September 30, 2024

Higher unemployment benefits linked to pay will bring workers closer to prior earnings, with a slight increase in employer and employee social security contributions.
Work Transformation|Health and Benefits|Benessere integrato
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Employer Action Code: Monitor

Parliament has approved legislation to change the formula and some parameters for the existing Jobseeker’s Benefit, resulting in a higher benefit for most individuals, and to implement a slight increase in employer and employee social security contributions. Social security, referred to as Pay-Related Social Insurance (PRSI), covers all workers between the ages of 16 and 70 and is funded by employer and employee pay-related contributions.

Key details

  • For claimants with at least five years of PRSI contributions, the Jobseeker’s Benefit amount will equal 60% of prior earnings (subject to a maximum benefit of 450 euros per week) for the first three months; 55% of prior earnings (up to €375 per week) for the next three months and 50% of prior earnings (up to €300 per week) for the remaining three months (for a total duration of nine months, as currently applies).
  • For claimants with less than five years' coverage, the Jobseeker’s Benefit amount will equal 50% of prior earnings (up to a maximum benefit of €300 per week) and payable for up to six months (as currently). In contrast, the maximum Jobseeker's Benefit amount is currently only €232 per week.
  • On October 1, 2024, the PRSI contribution rate (which is applied to uncapped wages) will increase by 0.1 percentage point for employers and employees each and thereafter will increase annually (by varying increments) over the next five years, for a cumulative increase of 0.7 percentage point each. PRSI contributions finance a range of social security benefits without distinguishing between the programs. The PRSI employer and employee contribution rates depend on the employee's social insurance class, which in turn depends on the level of earnings and type of work; there are 11 classes. Most employees are in Class A1 (earning more than €496 per week, effective October 1, 2024). The current employer and employee contribution rates for Class A1 are 11.05% and 4.00%, respectively.

Employer implications

The changes to the Jobseeker’s Benefit are expected to take effect in December this year; individuals who lose their job before the implementation date will remain entitled to the existing Jobseeker’s Benefit. The state currently provides only a flat-rate (and low) weekly unemployment benefit. Even the statutory redundancy amount (up to €600 a week) payable for collective dismissals has remained the same for many years. With this change, the unemployment benefit will provide something close to prior earnings, for lower-paid workers at least.

Among those companies surveyed by WTW that provide severance in excess of statutory requirements, the median number of weeks of salary paid per year of service to employees leaving the organization involuntarily is four weeks for all levels of staff.

Contacts


Elisa Navarro

Jesse Plecas

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