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The Irish national statutory minimum wage was first introduced in 2000 with the National Minimum Wage Act (Act 5 of 2000). This legal source is the main applicable law for statutory minimum wage setting in Ireland. The National Minimum Wage is brought into effect by order of the Minister for Enterprise, Trade and Employment – Not directly through a formal modification of the Act, which does not contain the rate, but rather provides for the process of setting the statutory hourly minimum. The latest ministerial Order is S.I. No. 497/2023, setting the rate from 1 January 2024.
Apart from the Minimum Wage Act and the Ministerial Orders, the third source that should be mentioned in an analysis of statutory minimum wage setting in Ireland is the National Minimum Wage (Low Pay Commission) Act 2015, which from 2015 couples and complements the 2000 National Minimum Act, making important amendments to it in the description of the process of setting the minimum wage.
The most relevant provision of the Minimum Wage Act 2015 is the establishment of the Low Pay Commission (‘An Coimisiún um Pá Íseal’ in Irish).
Finally, the fourth category of relevant documents for statutory minimum wage setting are the recommendations and reports of the Low Pay Commission from 2015, integrant part of the formal process provided by the Minimum Wage Act 2000 as modified by the Minimum Wage Act 2015.
The Minister for Enterprise, Trade and Employment is the organ with the competence to enact the Order setting the rate of the national minimum wage.
The Low Pay Commission is, according to the establishing Act, an independent body with consultative and reporting functions consisting of a chairperson and eight ordinary members – three of which are representing the interests of the workers, three representing the interests of the employers, and two experts in labour market, employment law, statistics, or economics.
Although acting independently, all eight members are formally appointed by the government, specifically by the Minister for Enterprise, Trade and Employment.
Apart from being involved in the process through their participation in the Low Pay Commission, social partners, defined as ‘any organisation claiming to be substantially representative of employees or employers in the State’, may also take part to the process independently, as described in the following section.
The process of setting the statutory minimum wage was, before 2015, legally described by the National Minimum Wage Act 2000 (sections 11-13). It did not provide for a regular update of the minimum wage, but it provides that the Minister shall, ‘from time to time’ (section 12(1)), review it. However, where the Minister identified a relevant agreement (called ‘national economic agreement’) among economic and social interests in the State which includes a recommendation in relation to the national minimum rate of pay of employees for the duration of the agreement, within three months after being advised of the recommendation, shall either accept it, by enacting a new order or modifying an existing one, or reject it (section 12(2)). Such relevant national economic agreement could be brought to the Minister’s attention by social partners directly (section 13(1)), who retained their role in the process also after the enactment of modification of an order by the Minister, being allowed, not earlier than 12 months after the latest declaration of the minimum rate by the Minister, to request an examination by the Labour Court and to make recommendations to the Minister. Social partners would then participate in a consultation phase before the Labour Court, and the Labour Court will subsequently be able to make its own recommendation to the Minister. Within the following three months, the Minister shall accept, vary, or reject the Court’s recommendation, formally providing reasons for any variation or rejection of such recommendation (section 13).
After 2015, due to the enactment of the National Minimum Wage Act 2015, the procedure described above changed substantially, with the Low Wage Commission acquiring a primary role in minimum wage setting.
According to the new procedure, resulting from the modifications to the 2000 Minimum Wage Act apported by the 2015 Act, the Commission is required periodically – once a year before the third Tuesday of the month of July – to examine the national minimum hourly rate, make a recommendation to the Minister accompanied by a report of the matters considered (section 10C(1) and (2)). In the exercise of this function, the Commission shall consult with social partners, if it considers it appropriate (section 10C(6)).
Within three months of the date of receipt of the Commission’s recommendation, the Minister shall declare, by order, a new national minimum hourly rate in the terms recommended by the Commission or on other terms, or decline to make such order, providing reasons for a decision not in accordance with the Commission’s recommendation (sections 10C(6) and 10D).
The National Minimum Wage Act 2000, as modified by the National Minimum Wage Act 2015, allows to identify several criteria applicable to minimum wage setting (sections 10B and 10C(3)); the Low Pay Commission, in the exercise of its functions, shall aim to:
And keep into consideration the following indicators:
The Low Pay Commission’s annual reports highlight that it keeps in high consideration all the above-mentioned aims and indicators, by mentioning them in the opening of the first Chapter of each report.
To mention a further criterion which is employed by the Commission itself in its reports and recommendations, the 60% of the median wage should be highlighted. The employment by the Commission of such criterion was prompted by government (Department of Enterprise, Trade and Employment) announcement in November 2022, with which the progressive implementation of a national Living Wage (equal to 60% of the hourly median wage) was launched, with the aim for it to conceptually substitute the National Minimum Wage by 2026. According to the announcement, ‘once the national living wage has come into effect in 2026, subject to an assessment of the impact of the change, the Low Pay Commission will advise on the practicalities of gradually increasing the targeted threshold rate towards 66% of the hourly median wage’. In turn, the governmental decision was based on the recommendation issued by the Commission itself in its 2022 Report on the Living Wage published in March 2022, in which the Low Pay Commission recommended ‘setting the fixed threshold at 60% of the median wage, with the median wage being calculated as the median hourly wage of all employees’. The process leading to the decision started with the governmental commitment to progress to a living wage expressed in the 2020 Programme for Government and to the requested issues by the government to the Commission in January 2021 to examine and make recommendations on how best to achieve this commitment.
The Irish statutory minimum wage is binding on the whole economy, in both private and public sectors. Apart from the sub-minimum rates applicable to young employees (see next section), few exceptions are envisaged by the minimum Wage Act:
According to section 15 of the National Minimum Wage Act, the Minister for Enterprise, Trade and Employment shall prescribe a percentage of the minimum hourly rate of pay applicable to:
In setting the amount of these sub-minimum rates, the Minister must take into account indicators such as
As a matter of fact, the minimum rates currently applicable up to 19 years old reflect the minimum percentages provided by law.
The whole relevant legal norms related to the statutory minimum wage always refer to the national minimum ‘hourly’ rate of pay, creating a legal obligation to express the wage in hourly terms.
Given the hourly qualification of the minimum wage, the number of hours worked during the week or month is irrelevant (each hour, irrespective of the number of hours worked, must be paid at least the statutory minimum wage).
There are no additional monthly payments provided by the law – apart from the paid annual leave (‘statutory entitlement’, corresponding to four weeks per year), that is however part of working time regulation rather than of minimum wage regulation.
The national minimum hourly rate of pay declared by Order in accordance with the Minimum Wage Act (as modified by the 2015 Act) may include an allowance in respect of board and lodgings, board only or lodgings only at such rates as are specified in the order.
In practice, ministerial orders usually do provide such rates (amounting to €1.14 per hour worked for board, and to €30.00 per week, or €4.28 per day, for boarding, as per the latest order S.I. No. 497/2023).
The Minimum Wage Act lists all reckonable and non-reckonable pay components in calculating average hourly rate of pay and a section on the calculation of the minimum hourly rate of pay (sections 18-20 and F24[schedule 1] of the revised Act). The list of pay components provided for by the Act is rather long and exhaustive (including 27 components of the wage in total). To summarize, reckonable components are the following:
In general, any other component of the wage are not reckonable: these include premium for overtime, unsocial hours, public holidays or weekend work; on-call or standby allowances; annual leave entitlement; sick pay and other payments or compensation to which the workers is entitled in case of inability or impossibility to work; severance and redundancy payments; tips, paid in any form and irrespective of the modality of payment; allowances for special or additional duties; awards part of a staff suggestion scheme; loans given by the employer; payments or benefits in-kind (except for board and lodgings); advance of salary or any other allowance and payment not included in the list above.
In determining whether an employee is being paid not less than the minimum hourly rate of pay to which they are entitled in a pay reference period, the gross remuneration of the employee calculated in accordance with these rules shall be divided by the total working hours of the employee in the pay reference period.
Ministerial Order S.I. No. 497/2023
The Low Wage Commission publishes annual reports which are provided for by the Minimum Wage Act (as modified in 2015) and are integrant part of the process of setting the statutory minimum wage, as described in the relevant section.
All annual reports are publicly available on a specific page of the official website of the government; for a link to the latest reports:
Among other resources on minimum wages, research carried out by the following institutes may be mentioned: