Gender Pay Gap (GPG) Reporting: Bridging the Gap between Employers and Employees

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by Sarah McDonough, Talent & Reward Lead, Willis Towers Watson (Ireland)

Closing the gender pay gap (GPG) has become a priority for many employers and following the recent passing of the Gender Pay Gap Information Act, 2021, GPG reporting is now a legal requirement in Ireland.

The GPG reporting requirement is wide ranging and will impact employers across all sectors, so it is important we understand that it is fundamentally the difference between the average wages of men and women across a workforce (regardless of their seniority). Reporting on this gap will be mandatory for all public and private sector organisations, initially for companies with 250+ employees and in time, all companies with 250 or more staff. Looking ahead, now is the time for companies in Ireland to fully understand what is to be reported and Willis Towers Watson is actively working with companies across all sectors to assist in the creation of a transparent, equitable company culture.

There are lessons to be learned for Ireland from other countries. GPG reporting has been in force in the UK since 2017 and three in five of all reporting companies have decreased their mean hourly pay gap over the last three years. More recently in the UK there has been a shift away from focusing on yearly figures to looking at gender pay reporting over a five-year period to detect changes in the long term.

Questions remain about whether remote working due to Covid-19 will impact GPG, but companies must factor it into pay management operations to ensure robust governance and confidence in practices. At Willis Towers Watson we can help organisations identify the changes that need to be made to pay management to reduce the risks of inequities recurring.

The UK experience has revealed that action still needs to be taken in several areas. Gender bias needs to be removed from recruitment and promotion, and flexible working must also be supported by companies. The establishment of internal networks can also facilitate GPG, and maternity support and return to work programmes need to be enhanced by employers. Willis Towers Watson is working with clients in these areas and helping to establish good pay governance that supports a diverse, equitable and inclusive culture.

Efforts to enforce GPG have also taken place at an EU level. The European Commission has proposed a draft directive as part of the 2006 Directive of Equal Pay that would require employers to be transparent on pay structures, pay processes, and pay gaps by category of workers, and require the removal of any unjustified gaps of 5% or more.

We work with organizations to develop their fair pay pathway as part of good pay management and align them to broader diversity, equality, and inclusion (DE&I) and environmental, social and governance (ESG) agendas. Overall pay management and ensuring that you have confidence in principles and practices is central to pay equity.

Willis Towers Watson has a long history of supporting and listening to organisations. We use advanced analytics to help clients understand their current state quickly and comprehensively. Pay gaps are identified and also what individual pay changes and potential costs you need to consider, alongside longer-term pay program and practice improvements. We partner on the calculation, interpretation, and communication of local requirements, building these into a broader company approach and narrative.

Clients can be assisted in identifying the root causes of pay inequities and the changes you may need to make to how pay is managed to reduce the risks of inequities recurring. For many clients, this is a journey and can take several years, featuring key actions that includes driving local buy in, developing manager guidance, accountability, and reporting.

Developing a strategy for how and what you will communicate is another essential component in the success of your fair pay journey. In our experience, the most successful businesses strategically consider how, when, and where to tell their fair pay story.

As we look towards 2022, we recommend that employers take the following steps to prepare for GPG reporting.

Companies must ensure that they have a robust job evaluation system that is being applied consistently across all business areas, as equal pay audits may uncover potential bias that can creep into the process.

Employers must also question if data is being used efficiently and ensure that any agreement with a payroll provider allows for them to send you payroll information for completing the GPG reporting.

Additionally, companies can examine if action needs to be taken regarding the gender distribution of the employee population and if this if influencing a gender pay gap. Most importantly, companies need to acknowledge that reporting is a key part of company culture and transparency is the way forward.

Education will play a key role in preparing for GPG reporting if the shift in culture is to be truly meaningful. This includes educating managers on topics including unconscious bias during recruitment and promotion processes. Ways around this include ensuring job descriptions and adverts are gender neutral and having gender representation during the interview process.

Overall, GPG reporting is an opportunity to drive meaningful changes that include employees and an overall workforce. From our experience, employers who act now in a considered and strategic manner to assess and address their GPG will benefit not only their staff and business but also culture and reputation, key factors that drive business performance.

For more information on how Willis Towers Watson can assist organisations around defining their pathway to Fair Pay and in addressing the GPG Reporting issues please contact our team in Ireland at [email protected]