Payment of Wages Act 1991 (Ireland)

09 July 2019

The Payment of Wages Act 1991 regulates the payment of wages to employees and affords various rights to employees, including the right to receive a pay slip. In this guide, we explain what your legal obligations as an employer are in relation to the payment of wages.

What’s the Payment of Wages Act?

Coming into operation back in January 1992, the Payment of Wages Act sets out a wide range of rights for employees together with legal obligations applying to employers in relation to payment of wages. Some of the regulations within this Act include the right of employees to:

  • Receive their wages through a mode of payment set out in the statute.
  • Receive a written statement of wages, plus any deductions, that clarifies the gross amount of wages and the type of deductions that are made each month (a payslip).
  • Legal protection from unlawful wage deductions. As an employer, you can make deductions form your employee’s wage but only in accordance with the terms of the legislation.

Your employees have the right to make a claim in the Workplace Relations Commission which can be appealed to the Labour Court. In the event of either, it’s your responsibility to demonstrate your compliance with the regulations in the Act.

The different types of wages

The definition of wages underpayment of wages legislation includes:

  • Basic pay.
  • Overtime pay.
  • Shift allowances.
  • Fees, bonuses, or commission.
  • Holiday pay.
  • Sick or maternity pay.
  • Sums payable to staff members in lieu of a notice period or employment termination.

For your clarity, the following examples aren’t wages:

  • Payment of expenses a staff member gathers in their role.
  • Any payments that are due to the death, retirement, or resignation of one of your employees.
  • Payments due to aedundancy.
  • Other payments unrelated to your employee’s role in your business.

How to specify the gross amount of payable wages

Section 4 of the Payment of Wages Act, sets out the employer’s obligation to provide a written statement of wages and deductions at the time the employee is paid. In practice, this takes the form of a payslip. You should note, failure to comply with section 4 of the Act exposes you to a the risk of receiving a fine on summary conviction.

Deductions to wages

Section 5 of the Payment of Wages Act 1991prohibits employers from making any unlawful deductions from your staff wages . Certain deductions are permitted such as the following:

  • The deduction is required or authorised through any statute.
  • An employee’s contract confirms the deduction can be made.
  • A staff member provides prior consent.
  • Deductions that are necessary under Irish tax law, such as PAYE and PRSI.
  • Pension contributions.

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We can help you learn more about your legal obligations relating to payment of wages. Call us today on 1800 719 216.

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