2025 is shaping up to be another landmark year for Irish employment law, continuing the trend of significant changes we've seen in recent years. From the introduction of auto-enrolment pensions to increased sick pay and expanded gender pay gap reporting, employers in Ireland face a wave of important updates. These changes build upon previous reforms, aiming to create a fairer, more secure, and more transparent workplace.
This article breaks down the key changes for 2025, explains what they mean for your business, and provides practical steps to ensure you're compliant.
For a broader perspective on employment law changes from around the world, download our full eBook, Employment Legislation Updates 2025.
Perhaps the most significant change to the Irish employment landscape in 2025 is the introduction of a new auto-enrolment pension scheme called "My Future Fund," expected to commence on September 30, 2025. This scheme marks a fundamental shift in how retirement savings are approached in the country. The National Automatic Enrolment Retirement Savings Authority (NAERSA) will administer the scheme.
Many workers in Ireland, especially those in the private sector, currently lack adequate pension coverage beyond the State Pension. This scheme aims to bridge that gap, making it easier for employees to save for retirement and potentially improving their financial security in their later years.
The scheme will automatically enroll employees who meet these criteria:
Important Note: Even if an employee earns less than €20,000 through a single job, they could still be enrolled if their combined earnings from multiple jobs exceed the threshold. Any employment with a pension contribution already being made through payroll will be exempt.
NAERSA's Role: The National Automatic Enrolment Retirement Savings Authority (NAERSA) will oversee the scheme, using Revenue payroll data to identify and enroll eligible employees. They will be responsible for collecting contributions, managing investments, and eventually paying out retirement benefits.
Contributions: Both employers and employees will contribute a percentage of their gross salary. Contributions start at 1.5% each in the first three years.
Government Incentive: Instead of tax relief on contributions, the government will provide a "top-up" of €1 for every €3 an employee contributes.
Phased Increases: Contribution rates will gradually increase over 10 years. The schedule is as follows:
Years | Employee Contribution | Employer Contribution | State Top-Up | Total Contribution |
Years 1-3 | 1.50% | 1.50% | 0.50% | 3.50% |
Years 4-6 | 3% | 3% | 1% | 7% |
Years 7-9 | 4.50% | 4.50% | 1.50% | 10.50% |
Year 10 Onwards | 6% | 6% | 2% | 14% |
Contribution Cap: Contributions will be calculated on gross earnings up to a limit of €80,000 per year.
Investment: Contributions will be invested on behalf of employees. NAERSA will offer a default investment strategy based on a lifecycle approach (higher risk when younger, lower risk closer to retirement) as well as other options (high, medium, and low risk) for those who want to make an active choice.
Employees will have the option to opt out of the scheme during specific periods: six months after enrolment (months seven and eight) and six months after a contribution rate change (months seven and eight). Employees can also suspend their contributions at any time for a period of one to two years. Any employer and state contributions made before opting out or suspending will remain in the employee's pot.
Payroll System Preparations: This change will require significant adjustments to your payroll systems. You'll need to accurately calculate and deduct employee contributions, make your own matching contributions, and remit all contributions to NAERSA.
Employee Communication: Begin planning how you'll communicate this new scheme to your employees. They'll need a clear understanding of how it works, their contribution obligations, investment options, and their rights to opt-out or suspend contributions.
Employers must update their payroll systems immediately to reflect these new rates. Ensuring all eligible employees are paid correctly is a legal requirement.
The Small Benefit Exemption has been increased. From January 2025, employers may give employees up to five tax-free, non-cash benefits (like gift cards or vouchers) each year, with a combined value of up to €1,500 (up from €1,000).
What it Means: This is a great opportunity to reward your team in a tax-efficient way. It is part of a broader trend in Ireland incentivising employers to provide non-salary benefits.
Review your benefits: Could you be using this exemption more effectively?
Track your benefits: Keep accurate records to stay within the limits.
Report to Revenue: Ensure your payroll or HR systems are set up to report these benefits correctly and on time.
Under the Sick Leave Act 2022, the number of statutory sick pay days is increasing from five to seven days per year, effective from 2025. This means more financial support for employees during periods of illness.
How It Works: Employers are now legally required to pay eligible employees 70% of their standard daily wage for up to seven sick days each year. There is a maximum daily payment of €110.
Eligibility: To qualify for statutory sick pay, employees must have completed at least 13 weeks of continuous service with their employer. They can take these sick days consecutively or on separate occasions throughout the year.
Future Increase: It's important to note that this entitlement is set to rise again in 2026, increasing to 10 statutory sick pay days per year.
Update Your Policy: Revise your company's sick leave policy to ensure it accurately reflects the new seven-day entitlement and aligns with the provisions of the Sick Leave Act 2022.
Payroll Adjustments: Ensure your payroll system is properly configured to calculate and process statutory sick pay at the correct rate (70% of daily wage, capped at €110).
Management Training: Brief line managers on the updated policy, eligibility criteria, and the process for employees to claim statutory sick pay. They should understand how it is recorded and what, if any, company sick pay schemes are in place to supplement the statutory provision.
Ireland is taking a big step forward in pay transparency. Starting in 2025, the requirement to report on gender pay gaps will apply to many more businesses. If your organisation has 50 or more employees (whether in the public or private sector), you'll now be required to publicly disclose your gender pay gap data. This is a significant expansion from the previous threshold of 150 or more employees.
When to Report: While organisations with 150 or more employees had to report on their gender pay gap by December 2024, it is anticipated that in 2025, the reporting deadline will move to November.
What Information Do You Need to Report? The report you publish needs to include several key metrics:
Check if You're Covered: Determine if your organisation meets the 50-employee threshold.
Get Familiar with the Requirements: Study the specific reporting metrics and ensure you understand how to calculate them.
Data Collection and Analysis: Begin gathering and analysing the necessary payroll and HR data before the deadline. You'll need accurate data on hourly pay, bonuses, and employee demographics.
Develop Your Report: Start drafting your report, ensuring it's clear, accurate, and published on your website in a readily accessible format.
As a global employment expert with a home base in Ireland, Boundless is uniquely positioned to help you navigate this evolving landscape wherever in the world you are. Founded and headquartered here, we deeply understand the local nuances.
Alongside Ireland, our employment expertise extends to all corners of the world. We empower companies to confidently employ talent right across the globe, leaning on our industry-leading expertise and in-depth, in-country knowledge.
Through our Employer of Record offering, we act as the legal employer of your employees. That means we are there for the entire employment lifecycle, from compliant onboarding and contracting to benefits administration, accurate payroll processing, and even handling terminations with sensitivity and adherence to local regulations.
Along the way, we offer our expertise through unmatched HR support always available whatever the question.
Get in touch with our team today to learn more.
Download the Employment Legislation Updates eBook 2025.