Employment and Pensions

Under the Adequate Minimum Wages Directive, Member States with a collective bargaining coverage below 80%, as is the case in Ireland, must establish an action plan to “progressively increase the rate of collective bargaining coverage” by the end of 2025.
The Government has indicated that other changes to the gender pay gap reporting regime may be introduced this year, including that the reporting deadline may be brought forward from December to November of each year

Employment

Action plan to increase rates of collective bargaining

The European Union Adequate Minimum Wages Directive (the Directive) was required to be transposed into Irish law by 15 November 2024. The Directive aims to increase collective bargaining coverage in member states and ensure minimum wages are set at an adequate level. Under the Directive, Member States with a collective bargaining coverage below 80%, as is the case in Ireland, must establish an action plan to “progressively increase the rate of collective bargaining coverage” by the end of 2025. It remains to be seen if this Directive will fundamentally alter Ireland’s so-called voluntarist model of industrial relations.

For more information on the Directive, see here.

Pay Transparency Directive

The European Union Pay Transparency Directive must be transposed into Irish law by 7 June 2026. The aim of the Directive is to eliminate unequal pay for equal work or work of equal value through pay transparency measures and stronger enforcement provisions. There are three core measures provided for in the Directive:

  • Implementing public reporting measures (for larger companies);
  • Creating new information rights (for everybody); and
  • Refreshing the concepts of the equal pay regime.

We recommend that employers act now to prepare for implementation of the Directive.

For more information on the Directive and next steps for employers, see here.

Threshold for gender pay gap reporting to lower again

In 2025, employers who employ 50 employees or more will come into scope for gender pay gap reporting in Ireland for the first time. To date, only employers with 150 employees or more are required to report. The Government has indicated that other changes to the gender pay gap reporting regime may be introduced this year, including that the reporting deadline may be brought forward from December to November of each year and that a central online reporting system operated by the Department of Children, Equality, Disability, Integration and Youth may become operational.

Restriction on use of certain mandatory retirement ages

The General Scheme of the Employment (Restriction of Certain Mandatory Retirement Ages) Bill 2024 was published in 2024. The Bill will apply to clauses in contracts of employment, whether express or implied, which oblige an employee to retire at an age which is below the age at which the employee can first access the State Pension (referred to as ‘the pensionable age’). The pensionable age is currently 66 years.

The General Scheme sets out a consent-based approach in this regard. It states that where an employee does not consent to the enforcement of a mandatory retirement age (the MRA) in a contract of employment earlier than the pensionable age, that clause will be deemed to prescribe the mandatory retirement age as:

  • the pensionable age; or
  • where the employee consents to retire at an age which is later than the mandatory retirement age but before the pensionable age, as that age.

For more information on the General Scheme, see our briefing here.

Pensions

Automatic Enrolment

The Automatic Enrolment Retirement Savings System Act 2024 (the AE Act) was signed into law on 9 July 2024. The parts of the AE Act which require employees to be enrolled into the new automatic enrolment (AE) system will commence on 30 September 2025.

The AE Act provides for employees aged between 23 and 60, who earn in excess of €20,000 per year from all employments and who are not already enrolled in a pension arrangement such as an occupational pension scheme or personal retirement savings account (PRSA), to be automatically enrolled into the new AE system.

Employers who have not already done so, should now seek to implement a clear action plan to get their business AE ready ahead of the commencement date of 30 September 2025. Employers need to review which employees are in scope for AE and their preferred approach to staying out of the AE system or working with dual pension provision. Whatever the conclusion, changes to eligibility (and opt-out provisions) of current schemes are likely to be needed by September 2025.

To receive further updates on the introduction of AE in Ireland, you can subscribe to our auto-enrolment mailing list here.

Digital Operational Resilience Directive (DORA)

DORA is an EU regulation which aims to create a harmonised regulatory framework strengthening the ICT security of financial entities (which includes pension schemes). DORA will be directly effective across the EU from 17 January 2025, so it is important that pension scheme trustees now take steps towards compliance with its requirements.

On 29 July 2024, the Pensions Authority published guidance (available here) on how it expects pension schemes and trustees to comply with DORA. However, there is still uncertainty in the pensions industry regarding the scope of the application of DORA to pension scheme service providers and further guidance from the Pensions Authority is awaited in this area. Nevertheless, trustees of pension schemes should be working through a DORA compliance plan in Q1 2025.

For a summary of our recommended next steps for pension scheme trustees, please see our update here.

Increase to Standard Fund Threshold (SFT)

On 18 September 2024, the Department of Finance published the report of Dr Donal de Buitléir’s examination of the SFT (available here). On foot of the recommendations in the report, the Minister for Finance confirmed that the SFT would increase on an incremental basis of €200,000 per year between 2026 and 2029 to reach a level of €2.8 million by 2029 and increase in line with average earnings growth thereafter. The legislative changes required to implement the incremental increases to the SFT have been included in section 13 of the Finance Act 2024.

Whilst the first increase in the SFT (to €2.2 million) is not due to occur until 2026, employers and trustees should now consider the implications of the SFT increases for their schemes. Where employees have previously opted out of occupational pension schemes in order to avoid exceeding the SFT, such employees may now seek to re-join schemes in order to avail of the additional tax headroom provided by the changes to the SFT regime. If employers or trustees receive such requests, they should carefully review and consider the provisions of their scheme rules regarding eligibility and opted-out members before implementing such requests. To the extent that such employees are not readmitted to pension schemes, they may be caught by the new automatic enrolment rules from September 2025.

Employers need to review which employees are in scope for AE and their preferred approach to staying out of the AE system or working with dual pension provision.
There is still uncertainty in the pensions industry regarding the scope of the application of DORA to pension scheme service providers.
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