Sync Payroll Services

08/04/2025

After decades of discussions, a date has been set for the rollout of the pension auto-enrolment scheme in Ireland.

In this article, we answer a series of frequently asked questions on the scheme and discuss its implications for employers and employees.

We highlight how auto-enrolment works, how it’ll be funded, costs for you to be aware of, and what happens if your business has a workplace pension in place already.

What is the auto-enrolment scheme?

Under the scheme, employees who do not have a private pension, earn more than €20,000 per year, and are aged between 23 and 60, will automatically be enrolled into the pension scheme.

It will apply to almost 800,000 employees who are employed but not in an occupational pension scheme, or other type of private pension such as a PRSA (Personal Retirement Savings Account).

For the moment, the self-employed are not included in the scheme, but this may be considered in the future.

Why is it being introduced?

There are two main reasons why the government is introducing the auto-enrolment scheme.

Firstly, the scheme will supplement the state pension, which is currently about €277 a week.

For a person relying solely on the state pension when they retire, this can mean a significant drop in income, and the auto-enrolment pension should help close the gap.

As it stands today, there are a significant number of workers who will only have the state pension to get by on.

Figures from the Central Statistics Office say a third of workers in 2023, that are aged between 20 and 69, had no private pension.

Secondly, there is a loudly ticking pension time bomb.

People are living longer and the population is ageing, which means pensioners will make up a higher proportion of the population in the coming years.

This will put enormous pressure on the exchequer and the auto-enrolment pension is one way of alleviating the pressure.

When does the scheme begin?

The government originally proposed January 2025 as the start date, but Minister Humphreys recently announced that it will begin on 30 September 2025.

That does not leave a lot of time to prepare, and only once the legislation is enacted, can the wheels start turning in terms of setting up the scheme.

There is also very little awareness among the public and eligible employees in particular will need to be informed well ahead of time.

How does the scheme work?

Any employee between the age of 23 and 60, and who is earning over €20,000 a year, will automatically be enrolled into the pension scheme when they start a new job, unless they have their own pension or access to an occupational pension.

People under 23 and earning less than €20,000 can choose to opt in, if they want to.

An employee will be able to opt out or suspend contributions after 6 months.

However, the employee will be re-enrolled again after 2 years. Once re-enrolled, the employee can opt out again after another 6 months.

Is it a legal requirement?

Yes, it is a legal requirement and as an employer, if you do not fulfil your obligations, you will be subject to penalties and possibly to prosecution.

How is the scheme funded?

It will be funded by the employee, the employer and the government, with the contributions increasing on a sliding scale over the next 10 years.

In year 1, the employee and employer will each pay 1.5% of the employee’s annual gross salary.

This will gradually increase to 6% by year 10.

The government contribution will start at 0.5% in year one and climb up to 2% by year 10.

In essence, this means that after a decade, 14% of an employee’s gross salary will go towards their pension.

However, both the employer’s and government’s contributions will be capped at €80,000 gross annual salary. However, if the employee earns over €80,000, they can still contribute, but the employer or the government will not match contributions for any income over €80,000.

As yet, there is no possibility of the employee making additional contributions.

This is usually an option with private pensions, as long as the additional contributions are within Revenue’s limits in terms of tax relief.

19/07/2024

https://www.sage.com/en-ie/blog/auto-enrolment-and-pensions/?utm_campaign=NPS_2410_NCA_IE_SageAdviceIrelandJuly_Email01STOYDT&utm_medium=email&utm_source=Eloqua

Discover how your business can prepare for the new auto-enrolment workplace pension savings scheme, which is due to begin from January 2025.

27/05/2024

The statutory sick pay scheme in Ireland
The scheme aims to bring Ireland in line with other European countries that have mandatory paid sick leave for workers in place.

The move by the government is in response to the recognition during the pandemic for the need for greater security for lower-income workers.

Leo Varadkar, the Tánaiste and Minister for Enterprise, Trade and Employment, said: “This is a really important new employment right, that all workers will now have, no matter what their illness or job. Many employers pay sick pay, but the pandemic really highlighted the vulnerability of some workers, especially in the private sector and those on low pay.”

Under the legislation, employers are obliged to provide a minimum number of paid sick days annually.

Previously, an employee whose employer didn’t provide paid sick leave could apply for Illness Benefit.

However, the payment was a flat €203 per week and the worker had to satisfy a minimum level of PRSI contributions.

The applicant didn’t get paid for the first three days they were absent, called ‘waiting days’ – this was reduced from six days in March 2021.

What is statutory sick pay?
Statutory sick pay is money paid by employers to employees who are ill and unable to work.

The legislation gives employees the right to a minimum period of paid leave if they become sick or sustain an injury that makes them unfit for work.

Both full and part-time employees can avail of paid leave under the scheme, which will be rolled out in four phases. More details on this are below.

How many days of statutory sick pay do employees get?
From 1 January 2023, employees were entitled to a rate of 70% of gross earnings up to €110 a day for three days.

Since 1 January 2024, this rose to five days of paid leave, and will increase again in 2025 (seven days) and 2026 (10 days).

The eventual 10 days, or two working weeks, of sick pay per year will be in addition to other leave entitlements including annual leave, parental and maternity leave as well as public holidays.

The staggered roll-out has been designed to avoid placing an excessive financial burden on employers. It gives them time to plan and budget for the additional costs.

When did the scheme start?
The Sick Leave Act 2022 became law on 20 July 2022.

And the statutory sick pay scheme came into force on 1 January 2023.

Leo Varadkar said: “Given the current challenging business environment and inflation in particular, I have concluded that the fairest and most appropriate approach is to introduce the entitlement on 1 January 2023.”

How does it affect employers?
If your business is taking on employees for the first time, or if you have a team of staff at your company already but don’t have a sick leave scheme in place, the new legislation will impose costs on your company.

Additionally, indirect costs may include administrative costs in relation to implementing the scheme and maintaining records for each employee.

Potential benefits for employers include reducing presenteeism and managing absenteeism.

Other benefits include reduced employee turnover and promoting a safer work environment where those who suffer injury or infectious illnesses take time to recover and which results in less productivity loss overall.

As an employer, you must keep proper records for each employee. The records must be maintained for four years and include information in relation to each employee who availed of sick leave.

The following information must be included in the records:

The employee’s period of employment
The dates of statutory sick leave in respect of each employee
The rate of statutory sick leave payment in relation to each employee.An employer who fails to maintain accurate records may be convicted and subject to a fine of up to €2,500.

In certain circumstances, an employer whose business is experiencing severe financial difficulties may apply to the Labour Court for an exemption to pay sick leave.

If an exemption is granted, it will be for a minimum of three months and up to one year.

What employee protections are included?
The scheme is being enforced through the Workplace Relations Commission and the courts system.

As an employer, you’re obliged to ensure that employees who express their intention to take or do take statutory sick leave aren’t treated differently.

An employee who avails of their right to statutory sick leave should not be penalised for their absence. Penalisation includes dismissal or layoff, coercion, demotion or transfer of duties.

Additionally, any absence in relation to statutory sick pay shouldn’t affect any other employment rights – whether statutory or contract.

The Sick Leave Act provides protection for an employee to lodge a complaint to the Workplace Relations Commissions if they believe their employer has failed to comply with the provisions of the statutory sick pay legislation.

What employers need to do now
If you already provide for paid sick leave through your employment contract or through collective sector or union agreements, you need to review the contracts in light of the legislation.

If you have a dedicated HR manager or team, you need to look at the Act and how it relates to your company.

The Sick Leave Act states that if an existing provision for paid sick leave in an employment contract is as favourable or more favourable than the statutory provision, then the employer’s obligation under the legislation is met.

The Act further states any such provision shall be a “substitution for, and not in addition to” the entitlement.

However, if a provision for sick leave in your standard employment contract is less favourable than the entitlement provided under the legislation, it will be “deemed to be so modified so as to be not less favourable”.In summary, an employer who provides a sick leave scheme to employees more favourable than the terms of the statutory scheme won’t have additional obligations under the Act.

The Sick Leave Act sets out the criteria for employers to determine whether their existing sick pay scheme is more favourable than the proposed statutory provisions provided in the Act:

The period of service of an employee required before sick leave is payable
The number of days an employee is absent before sick leave is payable
The period for which sick leave is payable
The amount of sick leave that is payable
The reference period of the sick leave scheme.

What your employees might ask about the scheme
The Act sets out the conditions under which employees can take statutory sick leave:

Employees must have completed 13 weeks’ continuous service before availing of statutory sick leave.
The employee must provide their employer with a certificate from a registered medical practitioner and the certificate must state that the employee named is unfit to work due to their illness or injury.
The leave must be in relation to a day or days when an employee would ordinarily work but is incapable of working due to illness or injury.
The leave can be taken on consecutive days or non-consecutive days.
Additionally, once the entitlement to statutory sick pay from the employer ends, employees who haven’t recovered and are still unfit to return to work may qualify for Illness Benefit.

27/05/2024

What is the auto-enrolment scheme?
Under the scheme, employees who do not have a private pension, earn more than €20,000 per year, and are aged between 23 and 60, will automatically be enrolled into the pension scheme.

It will apply to almost 800,000 employees who are employed but not in an occupational pension scheme, or other type of private pension such as a PRSA (Personal Retirement Savings Account).

For the moment, the self-employed are not included in the scheme, but this may be considered in the future.

When does the scheme begin?
The proposed date is January 2025.

That does not leave a lot of time to prepare, and only once the legislation is passed, can the wheels start turning in terms of setting up the scheme.

There is also very little awareness among the public and eligible employees in particular will need to be informed well ahead of time.

But the scheme should start sometime in 2025.

How does the scheme work?
Any employee between the age of 23 and 60, and who is earning over €20,000 a year, will automatically be enrolled into the pension scheme when they start a new job, unless they have their own pension or access to an occupational pension.

People under 23 and earning less than €20,000 can choose to opt in, if they want to.

An employee will be able to opt out or suspend contributions after six months.

However, the employee will be re-enrolled again after two years. Once re-enrolled, the employee can opt out again after another six months.

Is it a legal requirement?
Yes, it is a legal requirement and as an employer, if you do not fulfil your obligations, you will be subject to penalties and possibly to prosecution.

What happens if an employee moves job?
The scheme is designed on a “pot follows member” basis, meaning the retirement savings pot will follow the employee to their next job.

This will happen automatically and will be managed through the new governing authority, NAERSA.

What if an employee has more than one job?
If an employee has more than one job, their gross pay from all their jobs will be considered for the eligibility assessment of the scheme.

If it is over €20,000, the employee will be enrolled in respect of any jobs where they do not make pension contributions through payroll.

Will there be extra costs for employers?
As an employer, you will be obliged to sign up to the scheme if any of your employees do not have a pension and there will be costs.

This will be on top of additional costs already imposed in 2024, including increased minimum wages and the continued roll-out of statutory sick pay.

Pay related social insurance (PRSI) charges are also set to increase later in 2024.

In terms of the scheme, you should look at your current payroll and make an estimate of the cost.

However, you will be able to claim corporation tax relief on the employer contribution.

What happens if there is already a workplace pension in place?
An existing pension scheme will run in parallel to auto-enrolment.

Any employees that have a record via payroll of either employee contributions and/or employer contributions will not be enrolled in the scheme.

23/05/2024

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