Budget 2021

Employment Law Update

This week the Government has revealed its Budget plans for 2021, delivering one of the largest budget packages in the history of the State.

In this briefing, the employment team looks at what changes can be expected in the area of employment law.


For Employees

  • Pension Age – The pension age will remain at 66 for now and will not increase to 67 from 2021. A Pension Commission will be established and it is expected that a report will be produced by the commission next June
  • Parent’s Benefit – This is increased to 5 weeks for parents of babies born or adopted from 1 November 2019, an increase of 3 weeks.
  • Minimum Wage – This is to increase to €10.20 per hour from 1 January 2021. There shall be no changes to income tax, USC or PRSI rates, but the government has decided to raise the ceiling of the second USC band from €20,484 to €20,687 so that minimum wage workers will not be brought into this band in light of the increase.
  • Pandemic Unemployment Payment – There shall be no restoration of the PUP, however, self-employed people will be allowed to earn up to €480 a month on top of their PUP, allowing them to take up sporadic or occasional work.
  • Illness benefit – Employees can avail of the illness benefit after 3 days of absence from work, previously this was 6 days of absence, this comes into effect from end February 2021.
  • Working From Home – Employees may claim a tax deduction in respect of certain utility bills if they have been working from home as a result of Covid-19.


For Employers

  • VAT – In September, the VAT rate was reduced from 23% to 21%. The VAT rate for the hospitality sector shall now also be reduced from 13.5% to 9% effective from 1 November 2020.
  • Wage Subsidy Scheme – This shall continue until March 2021, when it shall then be replaced by a subsequent scheme for the remainder of 2021.
  • Covid Restriction Support Scheme – This will introduce a new scheme of supports for businesses which have been impacted by Level 3 or higher restrictions. This will consist of a payment based on 2019 turnover levels.

As always, if you would like to discuss any employment matters with us, please reach out to any member of our employment team. We have also launched a dedicated COVID-19 Helpline to assist clients and businesses in need. The Helpline number is 01 6110016.