Transparency Directive and Contractual Retirement Act: Compliance checklist for Irish SMEs

Here’s what Irish SME’s need to know now to comply with the 2026’s EU Pay Transparency Directive and the Employment (Contractual Retirement Ages) Act 2025. 

1. Preparing for the EU Pay Transparency Directive: Effective date, June 2026

Employers must provide pay information to employees, include pay ranges in jobs, and report on gender pay gaps.  While reporting is phased by company size, transparency rules apply to all Irish employers, including the smallest SMEs.

Read the Official EU Directive Text (EUR-Lex). There is also a “step-by-step toolkit” at European Commission Guidance on Gender-Neutral Job Evaluation.

1.1 Key requirements:

• Right to Information: Employers must provide, upon request, average pay levels for workers doing the same work, broken down by gender.
• Job Advertisements: Pay ranges must be included in all job advertisements.
• Recruitment Bans: Salary history questions are now prohibited during interviews.
• No More Pay Secrecy: Clauses preventing employees from discussing compensation are legally unenforceable. Review existing contracts and remove any provisions that prevent employees from discussing compensation with colleagues.

1.2 Action Plan for Irish SMEs:

1. Audit “Equal Work”: Categorise roles performing work of equal value (e.g., specialised technician vs. administrator with similar skill requirements). Clear payroll data is needed as the foundation of these audits.
2. Analyse pay gaps: Analyse gender pay gaps within each role category to identify where men and women are paid differently for equal work. 
3. Identify discrepancies: Document any unjustified pay differences exceeding 5% and investigate root causes within your organisation.
4. Contract reviews: Update employment contracts to remove “Pay Secrecy” clauses by June 2026.
5. Fix your recruitment process: Remove salary history questions from interviews, include clear pay ranges in all job advertisements, and ensure transparency to prevent pay discrimination.

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2. The Contractual Retirement Ages Act 2025 

This Act applies to every employer in Ireland, regardless of size. It strengthens an employee’s right to request to work beyond their contractual retirement age. It fundamentally changes how retirement clauses operate. Irish SMEs must review contracts to ensure compliance and avoid potential legal challenges from employees.

Read the full text of the [Employment (Contractual Retirement Ages) Act 2025] on Gov.ie.

2.1 Retirement age changes in Ireland from 2026

• The 66 Rule: If an employee has passed probation, they may request to work until the State pension age (66 in 2026).
• Ending mandatory retirement: Retirement at 65 can no longer be automatically mandatory.
• The “reasoned reply”: Employers can only refuse a request to stay on objective, justified grounds. You must provide a formal written response within one month.
• Legitimate aims: Refusals must be based on a “legitimate aim,” such as health and safety or clear succession planning.

2.1 Action Plan for Irish SMEs:

• Update contracts: Review and update all employment contracts to ensure retirement clauses are compliant.
• Audit insured benefits: Many insurance schemes (Death in Service, Income Protection) stop coverage at 65. Engage providers early to extend coverage to a minimum of 66 to avoid contractual breaches.

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Not just the law: Compliance as a competitive advantage

These changes represent a fundamental shift in the Irish employment landscape – and an opportunity for forward-thinking SMEs. Compliance is not just about avoiding legal risk; it is about building a culture of fairness and retaining the expertise of an experienced workforce. 

A business that is transparent about pay and supportive of its veteran workers sends a powerful message. A “culture of fairness” could become your greatest retention tool, reducing the high costs of turnover and recruitment in an increasingly competitive environment.