Employment Law Update – What’s ahead in 2025

Changes to the use of NDAs

As discussed in our previous briefing, (which can be accessed here), the Maternity Protection, Employment Equality and Preservation of Certain Records Act 2024 introduced very significant restrictions on employers with regard to non-disclosure provisions within agreements with employees. The effect of the Act is to place new restrictions on entering into NDAs where any such NDA relates to information concerning an “allegation” or any “action taken” by an employee relating to discrimination, harassment, sexual harassment or victimisation.  This Act also introduced a new change to maternity leave whereby employees who are suffering from a serious health condition will now be permitted to defer all or part of their maternity leave for up to 52 weeks. Employees must provide a medical certificate to their employer and give at least two weeks;’ notice of this postponement, with the postponement period being not less than five weeks.

As these changes were brought in late last year, we are likely to see the effect of this legislation moreso as we move through 2025. Particularly in relation to the significant restrictions on the use of NDAs, as how this change will operate in practice for employers entering into agreements with employees will become clearer in 2025.   

Introduction of Auto-enrolment

After twenty-five years of false starts, auto-enrolment looks set to come to Ireland in 2025. The Irish auto-enrolment system (to be known as “My Future Fund”) is due to commence on 30 September 2025. Under the system, certain employees who are not paying into a pension will be automatically enrolled into a new pension savings scheme, with an ability to opt out after six months. Under this auto-enrolment scheme, the employer, employee, and government all pay a certain amount into the employee’s pension fund. Further, a new public body, the National Automatic Enrolment Retirement Savings Authority, will be set up to administer the auto-enrolment scheme.

As Minister Humphrey’s stated when the Automatic Enrolment Retirement Savings Systems Bill 2024 was approved by Cabinet in March 2024, the auto-enrolment system “will provide the foundation for the most radical shake up of the pensions landscape in Ireland for generations”. Our previous briefing (which can be accessed here) sets out what this means for employers and pension schemes alike.

Determining Employment Status

2024 saw great change in the area of determining employment status, with the Supreme Court’s decision in Revenue Commissioners v Karshan Midlands Ltd t/a Dominos Pizza [2023] IESC 24 and the release of the updated Code on Determining Employment Status which was published by the Workplace Relations Commission, the Department of Social Protection and the Revenue Commissioners. The Revenue Commissioners have also separately introduced new guidance on determining employment status. Since these changes, we have seen both the WRC and the High Court beginning to apply the five-factor test for employment status, which the Supreme Court coined it the Karshan decision, with the most recent application of the Karshan test being in a tax case, namely, Ryanair v Aidan Reddy, the Chief Appeals Officer and the Minister of Social Protection [2024] IEHC 719. 2025 will likely provide us with further case law in this area as both the Workplace Relations Commission and the High Court continue to apply the Karshan test.

Ireland’s Gender Pay Gap and Pay Transparency

2025 will see Ireland’s gender pay gap regime continue to expand, as the threshold for reporting is lowered from employers with 150 or more employees, to employers with 50 or more employees. This will undoubtedly bring about increased obligations for smaller employers to report on and address any gender pay issues within their organisation. Not only that but 2025 will also see Ireland working towards implementing the EU Pay Transparency Directive, which needs to be fully implemented by all member states by 7 June 2026. 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 each year. The implementation of this Directive will require significant changes to Ireland’s current gender pay gap reporting system to include the reporting of pay gaps by “categories of workers” as well as additional pay transparency measures to prevent unequal pay such as, the provision of certain information rights to employees and prospective employees. We recommend that employers act now to prepare for the implementation of the EU Pay Transparency Directive.

Provisions of the AI Act come into force

The first provisions of the EU’s AI Act will come into force shortly from 2 February 2025. Employers, as deployers, of AI systems, will need to ensure they are compliant with these provisions and will need to take measures to ensure there is a sufficient level of AI literacy amongst staff and other individuals dealing with the operation and use of AI systems on their behalf. These provisions will impact organisations in various areas such as recruitment, promotion and performance evaluation and express prohibit certain AI practices in organisations. Importantly, under the AI act, individuals will have the right to a clear explanation of the role of AI in decision making which impacts upon them. Failure to comply with the prohibition under the AI Act, once implemented into Irish law, could expose organisations to significant fines (non-compliance may be subject to administrative fines of up to €35 million or 7% of total worldwide annual turnover (if the offender is an undertaking), whichever is higher). As such, employers should prepare for and, if necessary, seek legal advice on how best to comply with the provisions ahead of 2 February 2025.

Changes to the Employment Permit System following the Employment Permits Act 2024

The Employment Permits Act 2024 brought about significant and much-needed change to Ireland’s employment permit system. You can read our briefing on the 2024 Act here. One element of this legislation which will come into force in 2025 is the introduction of the Seasonal Employment Permit, which is a short-term employment permit allowing non-EEA nationals to work for a maximum of seven months per calendar year in seasonal employment. This permit type has been introduced in order to aid certain sectors of the economy such as horticulture and agriculture in addressing labour market shortages. A pilot scheme for this new permit is to be launched in the horticultural sector later this year and we can expect further detail on the exact operation of this employment permit once this scheme is published.

Further, the government had previously indicated an intention to make further changes to the minimum annual remuneration thresholds for employment permits in both 2025 and 2026. These proposed changes include an increase of the minimum salary threshold for Critical Skills Employment Permits from €38,000 to €44,000 and for the General Employment Permit from €34,000 to €39,000. In light of these expected changes, employers should ensure they remain informed and prepared in advance of any government announcement to this effect.

General changes to Irish employment law

More generally, 2025 will see an increase in statutory sick pay. Since 1 January 2024, employees had a right to 5 days’ sick pay per year, to be paid by their employer at 70% of the employee’s normal pay up to a maximum of €110 a day. This entitlement increased from 5 to 7 days from 1 January 2025.

Finally, employers should note that the national minimum wage increased from 1 January 2025 to €13.50 per hour.