When Should a Tradesperson Hire Their First Employee?

Taking on your first employee is the biggest financial decision most sole traders will make. Get it right and it frees you up to grow. Get it wrong and you’ve committed to a cost you can’t afford, with obligations you didn’t fully understand.

The problem is most tradespeople make this decision based on how busy they feel, not on the numbers. “I’ve too much work on” feels like a good reason to hire. Sometimes it is. Often it isn’t, at least not yet. Here’s how to know the difference.

The real cost of an employee in Ireland

The number most people quote when thinking about hiring is the gross salary. That’s not the real cost.

As an employer in Ireland in 2026, here’s what you’re actually paying on top of that salary:

Employer PRSI: 11.15% on most earnings above €441 per week. On a €35,000 salary, that’s approximately €3,900 per year.

Holiday pay: Employees are entitled to 4 working weeks of paid annual leave. On a €35,000 salary, that’s roughly €2,700 in paid leave costs.

Public holidays: 10 paid public holidays per year, approximately €1,350 on a €35,000 salary.

Sick pay: Since 2024, employers are obligated to pay statutory sick pay (5 days in 2024, increasing over time). Budget €500–€800 per year.

Recruitment costs: Job ads, time spent interviewing, references. Budget €300–€600 for a straightforward hire.

Training time: The first 4–8 weeks of any new hire involves significant downtime and supervision from you. That has a real cost even if it doesn’t appear on an invoice.

Total real cost of a €35,000 salary: approximately €43,000–€45,000 per year.

Most tradespeople who crunch these numbers for the first time are surprised. Plan for the real cost, not the headline salary.

How much extra revenue do you need to justify hiring?

A useful rule of thumb: your new employee should generate at least three times their total employment cost in additional revenue.

On our €35,000 salary example, total cost €44,000, you need that person generating approximately €132,000 in additional billable work per year to justify the hire comfortably. That’s around €2,500 per week in chargeable output.

Is that achievable? Work it backwards. If your day rate or job rate means a competent person can generate €600–€800 per day in billable work, five days a week, the maths works. If your work is more variable or the new person will spend significant time on non-billable activity (driving between jobs, tidying up, attending to you), the number gets harder to hit.

The 3x rule is a buffer, not a ceiling. If the numbers only work at exactly breakeven, a quiet month, a sick week, or a van repair will push you into a loss.

Signs you’re ready to hire, and signs you’re not

You’re probably ready if:

• You’re consistently turning down work due to capacity
• You’ve been at this level of busyness for at least 6 months, not just a busy season
• You have enough cash in the business to cover 3 months of their salary if work slows down
• You have a clear picture of what they’d be doing every day
• You’ve got systems in place to manage and track their work

You’re probably not ready if:

• You’re busy but not consistently profitable
• The business account and personal account are still the same account
• You don’t have a job management system and are running everything from memory
• Your cash flow is tight even before the additional cost
• You’re hoping a new hire will solve a business problem that’s actually a systems or pricing problem

That last point is important. Hiring when you’re overwhelmed but undercharging is one of the most common mistakes in growing trades businesses. More output at poor margins just creates more stress.

Employee vs subcontractor: what Revenue Ireland says

Many tradespeople sidestep the cost of employment by using subcontractors. This is legitimate, but only if the relationship is genuinely that of a subcontractor and not a disguised employment.

Revenue Ireland uses a set of criteria to assess the difference. Key factors include: whether the person can work for others simultaneously, whether they supply their own equipment, whether they invoice you, whether they carry their own public liability insurance, and whether they can send someone else to do the work in their place.

If someone is working exclusively for you, at your direction, five days a week, using your tools, and you set their hours, Revenue is likely to treat that as employment regardless of what your agreement says. The penalties for getting this wrong include back-payment of PRSI contributions plus interest.

If you’re using subbies regularly, get proper agreements in place and understand your RCT obligations as a principal contractor. Our guide to RCT covers this in detail.

What to have in place before day one

Hiring someone isn’t just a financial decision. It comes with administrative obligations.

Register as an employer with Revenue before the person starts. You do this through ROS (Revenue Online Service). Revenue will then expect payroll submissions from you.

Set up payroll software. Xero has a payroll module that handles the calculations and Revenue submissions. Failure to submit payroll returns on time attracts automatic penalties.

Have a written contract of employment in place before day one. This doesn’t need to be complicated but it does need to exist. Cover: start date, job title, pay, hours, holiday entitlement, notice period. There are templates on the Workplace Relations Commission website.

Ensure you have employer’s liability insurance in place. Your current public liability policy almost certainly doesn’t cover employees.

The question nobody asks

Can you manage someone?

This isn’t a criticism. It’s a genuine practical question. Running a sole trader operation and managing another person are different skills. Giving clear direction, checking work quality, handling performance issues, being responsible for someone else’s income. These are management skills that don’t come automatically.

The best tradespeople aren’t automatically the best employers. Some people discover they love it. Others find it stressful and draining in ways the money doesn’t compensate for. Worth thinking about honestly before you commit.

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Thinking about your first hire?

The decision to take on staff should be based on numbers, not just a feeling of being busy. Our Fractional CFO for Trades service helps you work out whether the timing is right, what you can genuinely afford, and what to put in place before you commit.

Book a free 30-minute call. We’ll give you a straight answer.

Or read next: How to Manage Subcontractors Without a Spreadsheet Nightmare