Two significant changes to Irish employment law came into effect on Thursday, affecting thousands of workers and businesses across the country. Pension auto-enrolment and an increase in the minimum wage are set to reshape pay and retirement saving for many employees.
The new pension auto-enrolment scheme aims to help more than 760,000 workers begin saving for retirement. Employees aged between 23 and 60 who earn more than €20,000 across all employments and are not already part of an occupational pension plan will be automatically enrolled. The scheme is being phased in over ten years, with both employer and employee contributions starting at 1.5% of earnings. Contributions will rise by 1.5% every three years, eventually reaching 6% by the tenth year. The State will add €1 for every €3 saved by employees to encourage participation.
The Department of Social Protection said that about 85,000 employers with eligible staff have already registered their business details for the scheme. The department warned that delaying registration carries no benefits. Contributions are due from the first payrolls of 2026 regardless of registration, and employers who fail to comply risk accumulating a legal debt, penalties, fines, and potential prosecution.
Also effective from today is a rise in the minimum wage. The hourly rate has increased by €0.65, bringing it to €14.15. Moira Grassick, Chief Operating Officer at HR firm Peninsula Ireland, said the combination of pension auto-enrolment and the minimum wage hike will significantly increase payroll costs for many employers.
“There will be a strong overlap between the employers who are heavily impacted by auto-enrolment and those affected by the increase to the minimum wage,” Grassick said. “Sectors such as hospitality and retail, for example, typically have a higher proportion of younger workers who earn the minimum wage and do not have a pension plan. Businesses with a younger and more transient employee demographic are the most likely to feel the impact of these coinciding legislative changes.”
The Irish Congress of Trade Unions also criticised the government for delaying its commitment to reach a living wage. General Secretary Owen Reidy said that if the original plan had gone ahead, the minimum wage would have increased by €0.95 to €14.45.
“Adding another three-year wait for a living wage until January 2029 leaves over 200,000 of the lowest-paid workers, who worked throughout the Christmas period, up to €600 out of pocket in 2026 alone,” Reidy said.
The introduction of these measures marks a major change in the Irish labour landscape. Employers and employees alike will need to adjust to new payroll obligations and savings schemes, while the government maintains that these steps are essential to improve retirement savings and support low-paid workers.
