- What is the gender pay gap and what are typical reasons cited as the cause of it?
The gender pay gap is the difference between the average pay of males and females in an organisation. The Irish Government gave effect to the Gender Pay Gap Information Act 2021 by regulations on May 31st, 2022. This now requires organisations with more than 250 employees to report on their gender pay gap.
The aim of gender pay gap reporting is to create greater transparency and awareness of the factors that contribute to the gap so that ultimately it can be closed.
The drivers of the gender pay gap stem from a number of factors, including historical reasons. For example, some industries and trades may have been predominantly male dominated. Other sectors, such as retail, traditionally employ more women than men. Differences in pay may also be influenced by the fact that more women than men may avail of family leave, reduced working hours or flexible working patterns.
- Is equal pay for men and women for equal work the same as the gender pay gap?
The concept that male and female employees should be paid the same rate of pay when doing comparable work has been established in Irish law since 1974. This is different to gender pay gap reporting.
In calculating the gender pay gap, an employer looks at how male and female employees are paid on average in an organisation. The legislation requires employers to report on both the median and mean pay of men and women in their organisations. Establishing this gender pay gap allows organisations to focus on whether or not there is an over/under-representation of men and women across different levels in an organisation, i.e., whether there is a gender imbalance in senior management positions and/or lower paid roles. In reporting on any gender pay gap that is found employers will also be required to provide an explanation as to why they think this gap exists.
- What are key insights for businesses in Ireland in terms of the gender pay gap, and how do we compare with our European and/or global counterparts?
The gender pay gap shows how far we have to go in achieving just and inclusive workplaces. Ireland is following in the footsteps of many other countries including France, Germany, Sweden and the UK, who have all implemented gender pay gap reporting.
In preparing for gender pay gap reporting, Irish employers should consider the experience and insights from our neighbours in the UK so that they can navigate the journey effectively. Since 2018, UK companies have published data relating to the gender pay gap in their business. Guidance for employers provided by the UK Government Equalities Office is a helpful guide for Irish employers to consider.
“Many Irish businesses have already, before the Irish legislation came in and on a voluntary basis, analysed and published data relating to their gender pay gap”
Some Irish businesses have already, before the Irish legislation came in and on a voluntary basis, analysed and published data relating to their gender pay gap, including An Post, the Central Bank of Ireland and professional services firms such as PWC.
When considering the Irish gender pay gap against the European standard, it’s important to remember that the gender pay gap will vary widely across sectors and is dependent on traditional gender balances in certain industries. Eurostat publishes the gender pay gap statistics on a national basis across Europe and the EU average (as reported in November 2021 by reference to 2020 figures) is 13 per cent. The Irish gender pay gap was reported in 2019 as being in line with this - being 13.9 per cent.
- The Gender Pay Gap Information Act became law in 2021. What does this mean for a business or employer?
The introduction of the Gender Pay Gap Information Act means that employers must now assemble data that will allow them to identify gender pay gaps within their organisation and make this information publicly available.
Impacted organisations must have selected a date in June 2022 that will act as a "snapshot" day for the report. This date is relevant to all organisations and will be used:
- to determine how many employees were employed in the business on that date;
- the categories of employees employed on that date - to include part-time and temporary employees;
- as a reference date for calculating average hours worked in the 12 months preceding the snapshot date;
- as a reference date for calculating the average hourly pay of employees (both mean and median) - to include bonus pay (including incentives) and also benefits in kind; and
- for the purpose of annual reports in successive years.
Having selected a date in June 2022, the employer must begin assembling and analysing the data as there will be a tight timeframe for reporting on the data in a publishable report - to be put on the organisation's website by December 2022.
- Organisations with more than 250 employees are being asked to report on their gender pay gap for the first time in 2022. What advice can you offer to businesses on reporting this information? Are there any resources to be aware of?
Businesses that take a positive approach to gender pay gap reporting and don’t just "tick the box" will find competitive advantage
It’s clear how important it is for businesses to be proactive on their gender pay gap reporting and to take action now and not to wait for the closing date for submissions. My recommendation to employers is to not only focus on what information must be published but to also - at an early date - start thinking about how the report will be published and what the potential reputational implications are for the company in publishing the gender pay gap in the business.
While this is a mandatory requirement, businesses that take a positive approach to gender pay gap reporting and don't just "tick the box" will find competitive advantage in presenting the information by focusing on the positive measures the business is going to adopt to address any shortcomings in its current organisation.
In a jobs market where competition for talent is intense, those businesses that are transparent and show an understanding of their own organisation and culture and a commitment to change will have an advantage.
- How is the number of employees calculated to determine whether or not the obligation applies to an employer?
Using their ‘snapshot date’ in June, organisations are expected to calculate how many employees and part-time employees they employ to determine whether they meet the threshold – i.e., whether or not they employ 250 or more employees.
When calculating the number of employees, the organisation must also count anybody that is employed via an agency - provided the organisation is responsible for the wages of such agency employees.
- How is an employer defined for the purposes of these reporting obligations?
The obligation to report in 2022 only relates to individual companies in Ireland who employ more than 250 employees. This obligation to report will within three years extend to organisations that employ more than 50 employees.
The gender pay gap has clear social and economic consequences and business have an important role to play in reporting on the gap and finding solutions to address it. I’d encourage companies who are not yet impacted by the threshold to consider their current state of play now.
The regulations require an employer to publish this information on its website in a way that is accessible to its employees and the public
- In what format should gender pay gap information be published, and where should this information be published by the employer?
The gender pay gap reporting regulations require an employer to publish this information on its website so that it’s accessible to its employees and the public. If there is no website, then the information must be available to be accessed at the organisation's registered office or principal place of business. There are plans for a portal to be developed so that reports could be maintained in a central register - the Government has indicated this may be in place by 2023.
- What happens if an employer fails to publish their report, or is late in publishing?
The legislation is aimed at bringing about organisational change that will promote the advancement of women collectively.
There is a process by which the Irish Human Rights and Equality Commission may apply to the Circuit Court or High Court for an order directing an employer to produce a report, but it is not anticipated this power would be used very widely. There is also provision for the IHREC to investigate a sector undertaking at the request of the Minister.
There is a possibility that a complaint would be made by an employee to the Workplace Relations Commission, which would investigate the issue
There is also a possibility that a complaint would be made by an employee to the Workplace Relations Commission, which would investigate the issue. But unlike other employment laws, this legislation does not give employees a right to compensation for breach. The outcome of any such investigation would be a direction to the employer to comply.
The more likely pressure points for employers will come from the publicity that surrounds the failure to report.
The requirement is to report on the pay gap and what the employer plans to do about it. But if an employer is prepared to live with the unfavourable publicity that might go with reporting a wide gender pay gap there is no means by which the employer can be forced to actually address the gender pay gap. In the UK, similar legislation has been criticised for going no further than to require employers to report on their gender pay gap, but there is no enforcement mechanism to require the active implementation of measures.
Through the Covid-19 pandemic, the UK paused its gender pay gap reporting obligations. Subsequently, the Financial Times reported on October 6th, 2021 that the gender pay gap worsened in the UK in 2020.
- What support is available to help employers complete their reports?
The Department of Children, Equality, Disability, Integration and Youth has published guidance for employers on how gender pay gap calculations should be made. The department recommends that employers requiring help to complete the reports should first consult this guidance and they have provided a helpline for employers through an email contact centre.
Closing a gender pay gap must be seen as a whole of business issue. It's not just the preserve of HR departments
- What advice do you have for business leaders to help to close the gender pay gap?
I believe that closing a gender pay gap must be seen as a whole of business issue and not just the preserve of HR departments. Equally, while the assembly of the financial data and analysing it so as to produce a report may satisfy the legislation, this is not likely to lead to any real insights into the reasons for the differences in treatment unless business leaders review and consider the data across the business.
Identifying barriers to progression within a business, such as where women are not applying for promotions while on family related leave, or inbuilt biases in the way roles are described, will ultimately be of benefit for a business because the outcome of any such review is to widen the pool of potential talent available to drive the business forward.
Measures such as mentoring, coaching and encouraging both male and female employees to consider flexible working patterns may lead to a greater balance and willingness of female employees to remain engaged especially when they assume caring responsibilities.
Having effective systems in place to review at all levels in a business the reasons why there are differences will give an organisation a valuable insight into its culture and the "why" of any differences in the make-up of its business.
Maura Connolly is a partner and head of employment at Addleshaw Goddard (Ireland) LLP.