by Ailbhe Dennehy, Partner in the Employment & Benefits Department,
Mandatory gender pay gap (GPG) reporting, which aims to provide transparency on the GPG and incentivise employers to take measures to narrow the gap to the extent possible, is already a legal requirement in many jurisdictions.
In advance of such reporting becoming a legal requirement in Ireland, employers can learn from the experiences of UK employers where GPG reporting has been mandatory since 2017. Many UK employers found the reporting obligation complex and time-consuming, and their figures were the subject of significant media scrutiny and consequent adverse publicity. Irish employers can take proactive steps now in order to assess the GPG within their business, mitigate any potential risk and put measures in place to narrow the gap.
An organisation’s GPG will be significant when it comes to its reputation, recruitment and retention of staff, and client expectations. Where GPG reporting will likely be a recurring annual requirement, with possible publicity around each year’s figures, an employer’s approach to its GPG and the measures it takes to narrow any gap must be considered.
We have set out below our top 10 most frequently asked questions when it comes to understanding the GPG and what mandatory GPG reporting will likely involve, alongside our recommendations for getting your business ready.
1. What is the Gender Pay Gap?
The GPG is the difference in the average gross hourly pay of men compared with women in a particular organisation. By dividing a business into “quartiles” (i.e. lower paid, lower-middle, upper-middle and upper paid) for calculation and reporting purposes (as detailed below), it is possible to identify where women are most represented across an organisation, whether in higher or lower earning roles.
Significantly the GPG should not be confused with the concept of equal pay for equal work – the existence of a GPG does not automatically indicate women are not receiving equal pay to their male counterpart.
2. Why is there a Gender Pay Gap?
There is no single explanation for the existence of a GPG. Rather there are a number of complex cultural, traditional and socio-economic factors to be considered.
For example, in certain sectors the higher paid quartiles tend to be dominated by men (for example more pilots are male whereas more (lower paid) cabin crew are female). Other factors include that more women than men tend to work part-time (70% in Ireland) and a greater proportion of women traditionally take on child-care or other caring responsibilities which can impact their career progression.
3. What is Ireland’s Gender Pay Gap?
According to the most recent statistics (2020, European Commission factsheet on the gender pay gap), Ireland’s GPG is 14.4% (data last updated in 2017) which is slightly higher than the EU average of 14.1%.
According to the most recent World Economic Forum Global Gender Pay Gap Report (2020), there is a 31.4% average gender pay gap globally that remains to be closed.
4. Is mandatory GPG reporting a legal requirement in Ireland?
Not presently. The most recent draft legislation, the Gender Pay Gap Information Bill 2019 (Bill), was first published in April 2019. The Bill lapsed in early 2020 with the dissolution of the Dáil, before being returned to the Order Paper in late 2020. In April 2021, the Cabinet approved the plan to amend the Bill and to introduce a strengthened Bill at Report Stage before the Dáil. Under the Bill both private and public sector employers are required to report and publish their GPG information, which includes details relating to both salaries and bonuses.
5. Who will be affected?
The Bill proposes that reporting obligations will apply on a staggered approach; applying first to organisations with over 250 employees, after two years applying to organisations with over 150 employees and then after three years, to organisations with over 50 employees.
In March 2021, the European Commission issued a publication of the proposed Directive on pay transparency. The proposal includes GPG reporting obligations for employers with more than 250 workers. The Bill will be revised to reflect the provisions of the Directive.
6. What must be reported?
As currently drafted, the Bill requires in-scope employers, including public body employers, to report on the difference in male and female remuneration as follows:
- Mean and median hourly remuneration for full-time and part-time
- Mean and median bonus remuneration
- Percentage of all employees who have received a bonus or benefits in kind.
The Bill also indicates that additional regulations may be enacted to provide further clarity on:
- The class of employer, employee and pay to which the regulations apply
- How the remuneration of employees is to be calculated
- The form, manner and frequency in which information is to be published
Unlike the similar UK legislation, affected employers will also be required to provide a narrative to accompany the reported figures in order to explain, in their opinion, the reasons for the gaps identified in their report and, significantly, to outline the measures that employer will take to reduce the GPG identified.
It is likely that the information will have to be published annually on both an employer’s own website and a publicly accessible government website (similar to the UK approach).
7. When will the Bill be enacted?
After lapsing with the dissolution of the Dáil in early 2020, the Bill has since been returned to the Dáil Order Paper. The Irish Government also confirmed its commitment to the introduction of measures to tackle Ireland’s GPG in its Programme for Government in June 2020.
The Minister for Children, Equality, Disability, Integration and Youth (Minister) received Cabinet approval to introduce a revised and strengthened Bill to the Dáil at the Report Stage in April 2021.
8. Will there be consequences for failure to comply?
Yes. The text of the Bill provides for sanctions for non-compliance with the appointment of “designated officers” empowered to investigate and prepare a report on how an employer prepared its calculations and reporting of final figures. These officers will be able to enter the business premises and seek copies of relevant information.
In addition, the Irish Human Rights and Equality Commission (IHREC) will have the ability to apply to the Circuit Court for an order directing compliance with the regulations. The revised Bill proposes to further extend IHREC powers allow applications to the High Court for enforcement orders.
Further, an employee may take a claim to the Workplace Relations Commission (WRC) where his/her employer is alleged to have not complied with the mandatory reporting obligation. The WRC can order a specified course of action to ensure compliance. Currently the Bill does not provide for any monetary sanctions for breaches, although it is notable that the Minister has referred to strengthening the enforcement mechanisms within the upcoming draft legislation.
9. Has the ongoing COVID – 19 pandemic affected the Gender Pay Gap?
Unfortunately, yes. Before the emergence of COVID-19, it was found that women do double the amount of unpaid family care work compared to men. In a June 2020 survey, the National Women’s Council of Ireland found that 85% of women have increased care responsibilities since the pandemic outbreak. This socio-economic factor could have an adverse effect on Ireland’s GPG (and the global GPG) and result in women reducing their working hours or not having the capacity to be promoted to higher earning jobs. Further, the Minister has acknowledged that “women are over-represented in the sectors which have been badly affected” by the pandemic. These side effects of the pandemic can have long term effects on the representation of females in the labour market and, consequently, great potential to widen (rather than narrow) the GPG.
10. How can employers get ready?
There are a number of proactive steps that employers can take in advance of GPG reporting coming into law.
- Trial run – identify the relevant employee groupings (quartiles) across the business and collate and analyse the payroll data attached to each quartile
- Technology – assess whether the business has the necessary software and/or hardware to process the calculations required
- Training – consider what types of training, ranging from payroll staff to HR teams and management, may be appropriate
- Policies – review existing HR policies around recruitment and promotion. Evaluate the business’ approach to remuneration and compensation to establish whether such policies indicate any unintentional gender bias. The implementation of a comprehensive flexible/agile working policy will be a core element in facilitating increased female representation in the labour market
- Invest – explore ways to invest in your staff talent through upskilling and reskilling with a focus on gender diversity – in particular diversifying the leadership pool and implementing innovative methods around talent development and integration
- Expert Advice – obtain legal advice to ensure appropriate compliance with the regulations (i.e. what elements of a remuneration package should fall within the definition of “pay”; what data protection issues arise; how can issues of equal pay or discrimination be best addressed)
- Build your Team – identify the key stakeholders within the business that need to be brought together to comply with the reporting obligation and tackle the GPG identified. Input from and cross-collaboration between Finance, HR, Legal and Public Relations is advisable
- Communication – while mandatory reporting specifies the information to be published, employers must be mindful of the internal and external messaging of both the existence of its GPG and the measures to reduce it, to minimise scope for employee grievances or claims
About the author
Ailbhe is a Partner in William Fry’s Employment & Benefits Department. She advises both domestic and international clients in relation to a variety of contentious and non-contentious employment law and industrial relations issues. Ailbhe specialises in guiding employers through crisis and change management situations, ranging from the conduct of disciplinary & grievance processes and investigations of bullying/harassment or whistleblowing allegations, to complex terminations of employment.
Ailbhe also has extensive experience providing strategic and practical advice in the context of corporate transactions and restructurings. She regularly acts for clients before the Workplace Relations Commission, the Labour Court and the civil courts.
Ailbhe frequently lectures on current employment law issues and contributes to employment law publications. Ailbhe is a member of the Employment Law Association of Ireland (ELAI), the Employment Committee of the Dublin Solicitor Bar Association (DSBA), the European Employment Lawyer’s Association (EELA) and the UK Employment Lawyers Association (ELA).