Auto-enrolment: What You Need to Know

The government has announced details of a new auto-enrolment pensions savings scheme. It’s designed to encourage workers to save for their retirement and make it more straightforward for businesses to offer a workplace pension option.

What is auto-enrolment?

Auto-enrolment is a pension investment scheme for employees, which involve their employer matching their contributions of a set percentage of their gross income with a top-up from State funds.

An estimated 750,000 employees earning more than €20,000 per annum and aged between 23 and 60, and who are not already enrolled in an occupational pension scheme, will be automatically enrolled in the new scheme.

The accumulated funds plus investment returns will be paid to participants upon their retirement in addition to the State pension, at age 66.

How auto-enrolment will work?

All employees – current and new – who fit the eligibility criteria and who are not already enrolled in a workplace pension scheme will be automatically enrolled in the new scheme.

Eligibility

- Employees aged between 23 and 60 earning more €20,000 per annum
- Those earning below the income threshold or aged outside of the parameters will be able to opt in to the system.
- Members of an existing occupational pension scheme won’t be automatically enrolled for that employment. Employees who are on probation, or are casual or working on a part-time basis will be assessed by a new Central Processing Authority (CPA) to determine eligibility.

Opting in/out option

All eligible employees will be automatically enrolled in the scheme. Participation is optional and operates on an opt-out basis.

Employees who have been automatically enrolled can choose to opt out or suspend their participation after six months. Those who opt out will be auto-enrolled after two years have elapsed and they can opt out again after another six months.

When will the auto-enrolment scheme begin?

The scheme is to launch for the end of 2023 and paid contributions to start from January 2024.

Contributions will be gradually phased in over 10 years, with employee and employer payments beginning at a modest level of 1.5% and increasing every three years by 1.5% until they reach 6%.

How businesses can prepare for the new legislation?

The workplace pension scheme is designed to minimise the administrative burden on employers who will not need to set up and run an occupational pension scheme.

Instead, employers will be responsible for recording employee-related data via a simple payroll instruction. The scheme will begin at a modest level in 2024 and increased at a set rate until 2034. This gives your business time to prepare for the scheme.

You’ll need to review the following areas and plan accordingly:

- Payroll
- Contracts
- Communication with employees
- Financial management

An employer who fails to fulfil their obligations under the scheme, including implementing a payroll instruction for enrolment, and/or deduction or remittance of contributions as required, will be subject to penalties.

Employment contracts

In advance of the legislation coming into force, you’ll need to review employment contracts.

You should consult your solicitor well in advance of the January 2024 roll-out to ensure your employment contracts are updated to include the provision for pension contributions and any other legal details required.

Communication with employees

Employers have a full year to ensure employees fully understand the scheme before it begins in January 2024. This will give you time to communicate with your employees about how it will work.

You should provide details of the scheme and advise employees on the four fund options, how much they will contribute, tax implications and the benefits of the scheme, including the employer and State contribution.

Employee contributions will be taken from net income, after deductions of income tax, pay related social insurance (PRSI) and universal social charge (USC).

Tax relief won’t apply in respect of these contributions. Instead, the State tops up the pension fund at 33% of the employee contribution.

Participants in the new scheme will still be entitled to receive a ‘benefit-in-kind’ tax exemption in respect of their employer’s contribution.

Posted in Auto Enrolment

Signing of the Transparent and Predictable Work Conditions Regulations 2022

On 16 December 2022, the government signed into law the European Union (Transparent and Predictable Working Conditions) Regulations 2022 to fulfill Ireland's obligations under EU Directive 2019/1152 on transparent and predictable working conditions.Employers should be aware of the changes resulting from this legislation. In addition to creating new employee rights, the Regulations amend employers' obligations under the Terms of Employment (Information) Act 1994, the Organisation of Working Time Act 1997, and the Protection of Employees (Fixed-Term Work) Act 2003.

With limited exceptions, the Regulations apply to all employees in Ireland, except for those with less than four consecutive weeks' service or working fewer than three hours per week.

Employers must now provide general written terms of employment to their employees one month after they begin employment. The information employers must provide within 5 days of the start of employment and within one month has also been changed.

The written statement of employment must be:

• signed and dated by the employer,
• in writing, and
• It may be transmitted on paper or electronically, provided the employee has access to it, the employee can store and print it, and the employer retains proof of its transmission or receipt.

If an employee's terms are changed, the employer must notify the employee in writing as soon as the change takes effect.

Probationary Periods

There have been significant changes to probationary periods. It is no longer possible to extend probationary periods beyond 6 months except in exceptional circumstances, and even then not beyond 12 months unless this would be beneficial to the employee. The duration of employee absence can be taken into consideration when extending a probationary period. In the event that an employee (other than a public servant) is subject to a probationary period exceeding 6 months and has completed at least 6 months service, the probationary period will end on the earlier of:

• the date on which the probationary period was due to expire, or
• 1 February 2023

As a final point, the Regulations also amend the Protection of Employees (Fixed-Term Work) Act 2003 to require that probationary periods in fixed-term contracts be proportionate to their duration and nature. There must be no probationary period for contracts that are renewed or extended (for the same work).

Mandatory Training

If an employer is required by law or by a collective agreement to train an employee, this training must include the following:

• be provided to the employee free of cost,
• count as working time, and
• where possible, take place during working hours.

Parallel Employment & "Incompatibility Restrictions"

The Regulations provide that an employer must not:

• prohibit an employee from taking up employment with another employer, outside the work schedule established with the first employer, or
• subject an employee to adverse treatment for taking up employment with another employer.

An employer may prohibit an employee from taking a job with another employer if the restriction is proportionate and objective. Where an employer imposes an "incompatibility restriction":

• details of the incompatibility restriction (including details of the objective grounds on which the incompatibility restriction is based) must be included in the contract, or
• the employer must provide a statement in writing setting out the incompatibility restriction (including details of the objective grounds on which the incompatibility restriction is based).

According to the Regulations, objective grounds include health and safety, business confidentiality, and avoiding conflicts of interest.

 Collective Agreements/REAs

If the employment in question is covered by a collective agreement approved by the Labour Court or a Registered Employment Agreement, then the Regulations are disapplied in respect of probationary periods, the right to seek additional (parallel) employment, and the right to request transfer to a job with more predictable and secure working conditions and training.

Through more transparent and predictable employment, the Directive aims to improve working conditions. Among other things, it expands the information that must be provided to employees upon beginning employment and introduces new provisions such as the right to request transition to another form of employment with more predictable and secure working conditions (Article 12) and the right to mandatory training. 

Employment outside the State and Changes for Posted workers

Also included in the Regulations is a new obligation to provide information to posted workers. Employees who are posted workers (under the European Union (Posting of Workers) Regulations 2016) must be given the following additional information:

• Employee's remuneration according to the host country's legal requirements,
• Travel, board, and lodging allowances and reimbursement arrangements specific to postings
• The URL of the single official national website (IMI Regulation, Regulation (EU) No 1024/2012) that is developed by the host Member State.

Additionally, the Regulations require employees working outside the State for a period of not less than one month to receive more information. It is now required of the employer to also tell the employee which country or countries the employee will be working in outside the State.

Right to request transfer to more predictable and secure working conditions

Once in a 12 month period, an employee who has been employed continuously by an employer for at least 6 months and has completed their probationary period (if any) may request a form of employment with more predictable and secure working conditions. Within one month of receiving such a request, an employer must provide a reasoned written response. When the same worker submits a similar request again, and the situation remains the same, employers may provide an oral reply.

Posted in Employment Update

The Finance Act 2022: Changes You Need to Know in 2023

Last year, the Finance Act 2022 was signed into law, and employers should be aware of certain things, such as an increase in the amount of qualifying vouchers employers can offer.

For the upcoming year, here are some changes employers need to know:

1. The Small Benefits Exemption

As of 2022, the annual limit for the Small Benefits Exemption was raised from €500 to €1000. The number of vouchers employers can offer each year has also been increased from one to two as part of this change.

2. Employer Reporting Requirements

The small gift exemption, travel and subsistence expenses, and the remote working daily allowance of €3.20, are all benefits employers are required to record and report to Revenue. The format and manner in which these benefits will be reported are subject to the commencement order and Revenue's guidance.

3. Bike to Work Scheme

As of 2023, the Bike to Work scheme will include cargo bicycles and e-cargo bicycles, reducing the threshold of tax-free benefits to €3,000.

4. Covid-19 Related Lay-Off Payment Scheme (CLRP)
Beginning in 2022, the Covid-19 Related Lay-Off Payment Scheme (CLRP) will be tax-exempt. As a result of Covid-19 related restrictions on layoffs, these payments are available to individuals who lost the opportunity to accrue reckonable service as a result of layoffs under the Redundancy Payments (Amendment) Act 2022. Those affected by this change include:

(a) those made redundant since 13 March 2020, or by 31 January 2025; and

(b) Those who were laid off during the COVID-19 restrictions from 13 March 2020 to 31 January 2022 but lost the opportunity to build reckonable service.

Ringing in the New Year with the EU Whistleblowing Directive

The Protected Disclosures (Amendment) Act 2022 commenced operation on the 1st of January 2023.
This new legislation makes significant changes to the operation of the legal framework for the protection of whistleblowers in Ireland, the Protected Disclosures Act 2014. These changes have important implications for employers in the public and private sectors and for persons prescribed under section 7 of the Act.

The Protected Disclosures Act 2014 (the “Act”) protects workers from retaliation if they speak up about wrongdoing in the workplace. Persons who make protected disclosures (sometimes referred to as “whistleblowers”) are protected by this law. They should not be treated unfairly or lose their job because they have made a protected disclosure.

The most material changes to the Act include:

• the introduction of a requirement for many employers to have a whistleblowing policy
• the creation of a new criminal offence for non-compliance
• the introduction of new avenues of redress for whistleblowers who allege they have been penalised and the reversal of the burden of proof in such claims.

What is a protected disclosure?

Making a “protected disclosure” refers to a situation where a person who is in a work-based relationship with an organisation discloses information in relation to wrongdoing that the person has acquired in the context of current or past work-related activity. This is sometimes referred to as “whistleblowing”. Such a person is referred to as a “worker” or “reporting person” and disclosing information in relation to alleged wrongdoing in accordance with the Act is referred to as “making a report” or “making a disclosure”. The Act provides specific remedies for reporting persons who are penalised for making a protected disclosure. “Penalisation” includes dismissal and any act or omission causing detriment to a reporting person. Penalisation can be caused not only by the reporting person’s employer but also the reporting person’s co- workers or otherwise in a work-related context. The Act provides significant forms of redress for penalisation and other loss.

What do employers need to do?

The WRC has already advised that it is expecting an increase in Protected Disclosures Act claims this year therefore it is vital that employers ensure they are compliant with the amended Act and are in a position to deal with whistleblowing reports under the new regime.

Private sector employers with 250 or more employees will be required to establish formal reporting channels for workers to report concerns about wrongdoing in the workplace. In addition, all public bodies will be required to overhaul their protected disclosures procedures to comply with the Act by the commencement date. Employers with between 50 and 249 employees will not be required to establish reporting channels until 17 December 2023.

Even though companies with less than 50 employees are exempt from the requirements set out in the Act, it would be good practice for such employers to implement similar mechanisms to deal with the reporting of any wrongdoings in the workplace. A well communicated whistleblowing policy, and internal reporting procedures will ensure employees feel comfortable in reporting any wrongdoings. By having such procedures in place, companies have an opportunity to identify and manage risk at an early stage, helping to avoid or limit financial and reputational damage.

For further information on applications of the act, penalisation, reporting, offences under the act and more download our Protected Disclosures document HERE which contains further information surrounding the Act.

Posted in Employment Law

New Year, New Sick Pay Rules!

It's a new year and with that brings the enactment of the new Sick Pay Scheme. Ireland is one of few advanced economies in Europe without a mandatory sick leave entitlement and this new scheme now brings Ireland in line with other European countries that have mandatory paid sick leave for workers in place. Under the legislation, employers are now obliged to provide a minimum number of paid sick days annually from 2023.

Statutory sick pay provides for the entitlement of an employee to be paid a statutory sick leave payment by his or her employer in respect of a temporary absence from work due to illness, subject to medical certification from a registered medical practitioner. In the past, employees had no legal right to be paid while on sick leave from work, however since the 1st of January 2023 sick pay will be paid by employers at a rate of 70% of an employee’s wage, subject to a daily maximum threshold of €110.

To avail of statutory sick pay an employee must obtain a medical certificate and the entitlement is subject to the employee having worked for their employer for a minimum of 13 weeks. In all EU countries, medical certification of some form is a requirement to receive sick pay. However, there is some variation around the timing and frequency of when medical certification is needed.

Once an employees entitlement to sick pay from their employer comes to an end, if employees need to take more time off then they may qualify for illness benefit from the Department of Social Protection (DSP) subject to PRSI contributions. The scheme covers all workers and no waiting days are to apply (waiting days are the unpaid days in the event of illness).

What is the new Statutory Sick Pay scheme (SSP)?
The entitlement to paid sick leave is being phased in over 4 years:

2023 - 3 days covered
2024 - 5 days covered
2025 - 7 days covered
2026 - 10 days covered

Sick days can be taken as consecutive days or non-consecutive days. The sick pay year is the calendar year and therefore runs from 1 January to 31 December.

The first day in a year that an employee is incapable of working due to illness or injury shall be the employee’s first statutory sick leave day, and any subsequent statutory sick leave days shall be construed accordingly.

Employers can have a more generous sick pay scheme in place however they cannot give an employee less than the statutory amount. In determining whether a sick leave scheme confers benefits that are, as a whole, more favourable than statutory sick leave, the following matters are to be taken into consideration:

a) the period of service of an employee that is required before sick leave is payable;

b) the number of days that an employee is absent before sick leave is payable;

c) the period for which sick leave is payable;

d) the amount of sick leave that is payable;

e) the reference period of the sick leave scheme.

Section 10 of the Sick Leave Bill provides for an exemption from the obligation for employers to pay the statutory sick leave payment where the employer is deemed unable to pay sick leave by the Labour Court. The exemption is for a period not exceeding one year and not less than 3 months, and while it remains in force the employer accordingly need not so comply.

Sick Pay Records

Records must be retained by the employer concerned for a period of 4 years and must include:
a) the period of employment of each employee who availed of statutory sick leave,
b) the dates and times of statutory sick leave in respect of each employee who availed of such
leave, and
c) the rate of statutory sick leave payment in relation to each employee who availed of
statutory sick leave.

You can watch our most recent webinar “2022 Legislation Changes” where our expert Jennifer discusses the legislation. For further information please see the Sick leave Bill 2022.

Posted in Employment Law, Sick Leave/Absence Management, Staff Handbook

New Tips & Gratuities Bill in Effect As of Today!

As of today, December 1st 2022, a new law has come into effect to safeguard employees’ tips. Under this bill workers have a legal right to receive electronic tip payments in accordance with the Payment of Wages (Amendment) (Tips and Gratuities) Act 2022, which also mandates that these payments be made fairly to employees.

Any fee labelled as a “service charge” or that could be reasonably expected to make a customer think it’s for service must be split among employees like a tip or gratuity would be. Factors such as an employee’s seniority or experience, the value of sales they generate, or the number of hours they work can all be taken into account when determining tip allocation. This act will primarily affect tourism, hospitality, hairdressing, taxis, and delivery services.

The act requires employers to post a tips and gratuities notice, and every employer must post information on how tips or gratuities and mandatory charges are shared or distributed to employees. It must be clear to the customers whether and how tips are distributed among employees. If an employer fails to comply with the posting requirements, they will be guilty of an offense and subject to a Class C fine of up to €2,500.

What is a “tip or gratuity”?

A ‘tip or gratuity’ is a voluntary payment made by a customer to, or left for, an employee or group of employees which they intended or assumed that the payment would be kept by the employee or shared with other employees.

What is an “electronic tip”?

An ‘electronic tip’ is a payment other than by cash. Examples include:

• By debit / credit card
• By smart card
• By way of apps designed to facilitate payment of tips and gratuities
• By means of a ‘push notification’ app
• There will be no regulation of tips received by cash or other means.

So what do these changes mean for the employer and the employee?

• Employers should now have their policy clearly displayed to customers on how cash and card tips, gratuities, and service charges are distributed.
• Employers are prohibited from using tips to supplement statutory or contractual pay entitlements. Employers must ensure that tips and gratuities are distributed in addition to wages.
• Employees will now be entitled to tips paid electronically via credit or debit card. Employers will be required to show the value of tips received during a timeframe as well as the portion paid to each individual employee during the timeframe. 
• Employers must no longer keep tips for themselves unless they can show that they do a lot of the same work as the employees who get tips. The employer can only keep what is fair and reasonable in the situation, taking into account how much work was done during the time period.
• Employers should note that only electronic payments are regulated. This is because the WRC has stated that the regulation of cash tips was not “workable”.
• An employer must now include the policy regarding the distribution of tips or gratuities and service charges in the employee’s core terms and conditions of employment within 5 days of commencing employment.

The new rules apply to employers in the following service areas:

1. The sale of beverages (including alcohol) or food for consumption on the premises at which such beverage or food is sold.
2. The sale of beverages (including alcohol or food by means of casual trading.
3. The accommodation of overnight guests on a commercial basis in a hotel, guesthouse, hostel, bed and breakfast, self-catering accommodation facility or any similar accommodation facility.
4. Providing guided tours.
5. Carrying out non-surgical cosmetic procedures including: cosmetic nail care; nail styling; skin care; hair care; hair styling; tattoo services; and piercing services.
6. Gaming.
7. The provision of services as a licensed bookmakers.
8. Providing transport services by means of a public service vehicle other than services provided under a public transport services contract, services provided under a public bus passenger service licence, services provided exclusively for carrying children to or from a school.

What if an employee is not satisfied with the distribution of tips and gratuities?

While an employer must consult with employees on changes to the current way tips or gratuities are to be distributed, employee consent is not required and it is for the employer to decide on the policy they chose regarding the distribution of tips or gratuities.

If an employee is not satisfied with the distribution policy the employee may take a case to the Workplace Relations Commission (WRC) for adjudication as to whether the distribution is fair in the circumstances.

As for customers, they have the right to know what service charges are used for and who they go to.

From the 1st of December 2022, employers must clearly display their policy on how cash and card tips, gratuities and service charges are distributed. The ‘Tips and Gratuities Notice’ must clearly state:

• Whether or not tips or gratuities are distributed to and among staff
• The way they are distributed and the amounts distributed
• Whether or not service charges (or any portion of them) are distributed and if so, how they are distributed and amounts distributed

Budget 2023: What does it mean for employers?

Budget 2023 was viewed as a chance for the government to take decisive and effective steps to reduce the cost-of-living crisis. The measures announced were implemented against a globalized backdrop of rising prices, worsening fuel crisis and political pressure experienced both by employers and employees. What does it provide for employers?

Increased Small Benefit Exemption

For several years, tax rules have allowed employers to provide one non-cash incentive of up to €500 per year to an employee without incurring a tax charge if certain conditions are met. This is known as a small benefit exemption.

The minister has announced an extension of this scheme, which is expected to be a welcomed move. An employer may provide up to two qualifying awards per year, and the maximum tax-free amount per year has been increased to €1000. This will give employers more leeway in rewarding employees in a tax-efficient manner.

Employers frequently use the incentive as a bonus given to employees at the end of the year in the form of a Christmas voucher. The amendment is set to take effect on 28 September 2022, so the enhanced benefits will be available in the current tax year. The expansion of this scheme will provide employers with a cost-effective way to support their employees and reward their commitment.

Related Articles:

SSP to come into effect in January 2023

Posted in Employee Contracts, Employment Law

Use of CCTV Footage in Disciplinary Hearings

The crossover of data protection and employment law continues to be important when considering the use of CCTV in disciplinary processes.

Background

The case concerned a security incident arising out of disturbing graffiti being found on the property of the employer. The employer contacted the Gardaí, who recommended that the employer review CCTV footage to identify the perpetrator. During the CCTV review an employee, Mr. Doolin, was identified entering and exiting a tearoom at certain times, indicating that he was taking unauthorised breaks. A disciplinary process was initiated, and a sanction was issued.

Mr. Doolin complained to the Data Protection Commission (DPC) that his employer had unlawfully processed his personal data, as the employer’s CCTV policy indicated that the purpose of CCTV monitoring was for security and crime prevention and not disciplinary purposes.

The DPC dismissed the complaint, on the basis that the footage had only been processed once to investigate the graffiti incident, which was a security incident, and that the employer subsequently relied on Mr. Doolin’s admissions during the investigation.

The Circuit Court dismissed Mr. Doolin’s appeal of the DPC’s decision, observing that Mr. Doolin had admitted a breach of security and that disciplinary action was taken against him for security purposes.

The High Court overturned the Circuit Court decision, on the basis that there was no evidence that the disciplinary action was carried out for security purposes. The employer relied on the CCTV footage and a table was included in the investigation report that set out his times of entry and exit to the tearoom.

The decision of the Courts

It found that the processing was not for a related purpose and was incompatible with the specified purpose of security reasons. It noted that the original purpose of attempting to detect the perpetrator of offensive graffiti was irrelevant to the incidental monitoring of Mr. Doolin taking unauthorised breaks, there was no evidence that the taking of unauthorised breaks was a security issue. In this case, it was clear that Mr Doolin’s data was used for a purpose other than, and incompatible with, the specified purpose, and was therefore unlawful.

Conclusion

Employers should continue to follow best practice in the use of CCTV footage in the workplace by:

1. Reviewing and updating their policy on a continuous basis
2. Conducting a data protection impact assessment before deploying CCTV cameras in the workplace
3. Deploying CCTV in areas of particular risk, and not where employees have a high expectation of privacy
4. Clearly communicating the location of CCTV cameras
5. Not as a matter of course capturing footage for one purpose and using it for another
6. Clearly communicating to employees that footage captured may be used not only for security purposes but also the employee investigations and disciplinary proceedings
7. Ensuring CCTV review is conducted in a manner that allows any subsequent issues to be dealt with in a manner compliant with natural justice; consider who will review the footage, and avoid overlap with those charged with conducting HR investigations.

Posted in Discrimination, Employment Law, Staff Handbook

SSP to come into effect in January 2023

According to Tánaiste Leo Varadkar, the statutory sick pay scheme will go into effect on 1 January 2023. As per our previous blog post the Sick Leave Act will establish an entitlement for all employees to sick leave paid by their employer in addition to illness benefits from the state.

Workers will be entitled to three days of paid sick leave in the first year of operation, increasing to five days in year two, seven days in year three, and ten days in year four. Employers will pay sick pay at a rate of 70% of an employee's wage, up to a daily maximum of €110. The law was passed in July but it will not take effect until the new year.

What actions should employers take now?

if your employment contracts already include paid sick leave provisions, you’ll need to review the agreements in line with the new legislation.

An employer who offers a sick leave scheme to employees with more favourable conditions than the terms of the statutory scheme is not subject to additional obligations under the Act.

You can watch our most recent webinar “2022 Legislation Changes” where our expert Jennifer discusses the legislation or read our previous blog post: Preparing for New Sick Pay Rules

Posted in Sick Leave/Absence Management

Termination of Employment

An employer must have a reason to dismiss an employee. Under the Unfair Dismissals Acts 1977 to 2015, the dismissal of an employee is deemed not to be unfair if it is for reasons of capability, conduct, capacity, redundancy, contravening the law, or some other substantial reason.

Giving Notice

At a minimum, employers must give employees the following statutory periods of notice.

Duration of employment Minimum notice

• 13 weeks to 2 years -1 week
• 2 to 5 years -2 weeks
• 5 to 10 years -4 weeks
• 10 to 15 years-6 weeks
• 15 years or more -8 weeks

If the employee’s contract of employment provides for notice in excess of the statutory period, the contractual notice must be given.

An employer may dismiss an employee without notice for gross misconduct e.g assault, stealing or serious breach of employment policies. Employment contracts or handbooks may contain further examples of gross misconduct.

Termination Procedures

The Workplace Relations Commission has introduced a Code of Practice on Grievance and Disciplinary Procedures which employers should follow when dismissing an employee. Disciplinary action may include:

• An oral warning
• A written warning
• A final written warning
• Suspension without pay
• Transfer to another task, or section of the enterprise
• Demotion
• Some other appropriate disciplinary action short of dismissal
• Dismissal

You can read more about Unfair Dismissal in our previous blog post, Unfair Dismissal Claims & How to Avoid Them

Bright Contracts Software has a “Resignation and Termination” policy in the “Terms and Conditions” section of the handbook. Furthermore, in the Company Policies and Procedures section, there is a Grievance/Dispute Procedures which you can edit to your company needs.

Posted in Dismissals, Employee Contracts, Employee Handbook, Employment Law