The law, as they say, is the law, but when there’s so much of it to deal with, it can cause headaches for SMEs. The amount of regulation and legislation they have to manage is becoming increasingly burdensome and there’s more on the way.
The compliance load will get busier at the start of the new year. “One of the most pressing compliance challenges facing SMEs is the introduction of auto enrolment for pensions via the My Future Fund scheme in January 2026,” says Jennifer Kelly, director of outsourcing at Azets Ireland. “This will apply to all companies with employees in Ireland, regardless of their size or structure.”
Under this scheme the employee, employer and the State will collectively pay into a new pension saving scheme.
This will mean an additional cost to the employer of 1.5 per cent of gross pay in the first three years, rising incrementally to 6 per cent by year 10, with a cap of €80,000 on gross pay.
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“Employers will also be required to file additional returns to the National Automatic Enrolment Retirement Savings Authority,” says Kelly. “As yet no information has been provided on how this process will work in practice.”
That is adding to a heavy workload of long-established compliance matters. Barry Crushell, principal solicitor at Crushell & Co, says managing the termination of employment process is proving particularly taxing for small businesses.
“There are differing procedures to be utilised depending on the reason for the dismissal. If an employee is under performance, they need to be placed on a performance improvement plan. If an employee’s conduct is questionable, that conduct needs to be independently investigated, coupled with a separate disciplinary and appeals process,” says Crushell.
“If the role for which the employee was hired no longer exists, a full redundancy process must be implemented. These procedures are in place to ensure that there is never a predetermined outcome. A failure to implement a proper process prior to the dismissal of an employee can often come at considerable legal, commercial and reputational risk.”
Combining existing challenges like navigating employee termination with increased compliance challenges elsewhere makes for a weighty burden for SMEs.
“The sheer volume of legislative based compliance matters, stemming from existing legislation and proposed new national laws, and new directives is making it more difficult for SMEs to have the resources to ensure compliance in all areas of labour and immigration law,” says Aoife Newton, director and head of employment and immigration law at KPMG Law.
“SMEs find it hard to balance limited resources with a high compliance rate. Start-up employers can find the breadth of potential claims, and the public nature of employment-based claims, overwhelming and potentially stifling to the progress of the business. Managing even basic HR compliance can be costly.”
Even thinking about the workload can cause migraines for SME owners but Crushell says the best approach is to focus on the fundamentals.
“Getting the basics right is fundamental. Have employees been issued contracts of employment? Are you monitoring their hours? Are there set procedures in place when issues arise? When in doubt, step back, take advice and remedy when necessary,” he says.
Even still, there’s a clear difference in capacity to address these issues between a company of 10 people and one with 1,000.
“Depending on the circumstances, it’s more likely a larger employer – which will almost certainly have a dedicated HR function, with multiple staff members – can handle a disciplinary dispute more easily,” says Patrick Walsh, partner and head of the employment group at Philip Lee.
“The problem for SMEs is that they won’t necessarily have this support, and as far as the law is concerned, that doesn’t matter. An employee in an SME enjoys precisely the same fair procedure rights as an employee in a larger organisation.”
Legislation and regulation not being based around capacity is an area that SME groups are most concerned about.
“Through the lens of remote and hybrid SMEs, the issue is not whether the framework is fair on paper. It is that the system assumes a level of capacity that many smaller employers simply do not have,” says Graham Harron, data and impact lead at Grow Remote.
“Larger organisations can rely on HR departments, in-house legal teams or external consultants to interpret and apply regulation. SMEs rarely have that kind of support. When they try to implement flexible or remote-first models, they are often left trying to make traditional rules fit new ways of working.”
A more consolidated approach towards employment law may offer relief to SMEs. Deirdre Malone, head of employment law at EY Law Ireland, says a simplified regime could make life more manageable for small businesses.
“One significant option that would be worth considering in the longer term would be to consolidate all employment-related legislation into one document, taking the same approach as other countries, such as Australia with the Fair Work Act. This legislation in Australia covers everything for private-sector employees from the maximum weekly hours to flexible work and termination of employment and redundancy,” she says.
“A more realistic ask [of lawmakers] would be to recognise that the post-Covid world in which we live is an evolved workplace from the one that we worked in over the last few decades. There are pieces of legislation that would benefit from an update to reflect the new working world.”
