Employers no longer have to pay employer PRSI on share-based remuneration, Minister for Social Protection Joan Burton said today.

The new rule, which reverses the previous government's decision to impose employer and employee PRSI on all share-based remuneration, comes into effect immediately.

The decision to remove the employer element of the levy was part of the current Government’s jobs initiative, announced in May. The PRSI contribution was deemed to needlessly increase the costs of doing business in Ireland.

"As some employers may have continued to deduct employer PRSI on share-based remuneration, it has been agreed, in consultation with the Minister for Finance, to provide this clear indication of the Government’s commitment to alleviating the unnecessary costs to employers," a statement from Ms Burton's office said.

The employee PRSI charge will apply to all share-based remuneration from the 2012 tax year, regardless of when agreements were entered into, with the exception of shares held in an Employee Share Ownership Trust before January 1st, 2011.

"This will ensure equity between pre-January-2011 written agreements, which award shares on a once-off basis and those of a multi-annual or ongoing nature," the statement said.

The PRSI paid on share-based remuneration within the 2011 tax year due to be refunded can be offset against current PRSI liabilities through the monthly P30 or end of year P35 returns.