The Gender Pay Gap Information Act 2021 is a welcome (and many say long overdue) piece of legislation that will mean Irish companies with more than 250 employees publish information on their gender pay gaps for the first time this year.
Yet representative bodies are arguing that the failure to publish the accompanying regulations until June of this year makes the turnaround time for companies to report on their gender pay gaps extremely tight. Others say that the introduction of the legislation is only one small step towards true gender equality in the workplace and are calling on the Government to look at other, more practical measures to address the gender pay gap.
The legislation means that companies with more than 250 employees will be required to publish information on their gender pay gaps — having chosen a “snapshot” date in June, they will then need to provide a report on employee remuneration in the past 12 months within six months of that date. The detail sought relates to a number of pay metrics, such as the difference between the wages and bonuses paid to male and female employees, for example. Companies must also provide a report setting out the reasons for the gender pay gap, if any, and the measures being taken to address it.
Several companies are ahead of the curve on this, despite no official guidance in this area until recently. Last year, An Post became the first major company in the State to report a zero gender pay gap, with the organisation saying they had eliminated the difference between male and female average hourly rates of pay from 3.7 per cent to 0 per cent over the past two years. In March of this year, Lidl Ireland pro-actively reported their gender pay gap findings, outlining how the organisation had maintained a median gender pay gap at 0 per cent since 2020 and had reduced its mean gender pay gap from 8.8 per cent in 2020 to 6.2 per cent last year.
According to Ibec head of social policy, Dr Kara McGann, a number of organisations have published their gender pay gap figures in recent years. “We have seen real progress in those figures being reduced year on year which is extremely commendable. However, others, in the absence of a final Irish methodology and definitions of what is to be included or excluded from the gender pay gap, have been hampered in their reporting,” she notes.
Mary Connaughton, director of CIPD Ireland, echoes this. A recent survey of its members found that 32 per cent of the organisations who took part had already calculated their gender pay gap, she says. “But what was disappointing was that this 32 per cent hadn’t changed in the past three years. It does tend to be the larger organisations, such as in the public sector and in large multinationals where they are already doing it in other jurisdictions but there are still so many other companies who won’t have looked at this.” Connaughton believes that, as a result, the deadline is “too tight”.
Despite the grumblings about the short notice, Ireland is merely following in the footsteps of its neighbours and European counterparts. Since 2019, all France-based employers with 50 or more employees are required to publish a gender pay gap report on an annual basis. In 2017, Germany implemented a new law targeting unequal pay of men and women, which is aimed at closing the gender pay gap in existence there. And since last year, all employers in Spain are obliged to report on their gender pay gap differences. The reporting threshold in Ireland will also decrease for organisations with more than 150 employees in 2024 and 50 employees in 2025.
But understandably, there has been pushback from Irish companies regarding the failure to provide proper guidance and accompanying regulations for the legislation until recently. “It was very difficult for employers to prepare adequately for the introduction of gender pay gap reporting in the absence of these detailed regulations,” says Louise O’Byrne, employment partner with Arthur Cox LLP.
“This guidance provides some much-needed clarity for employers which will allow them to finalise preparations for their first rounds of gender pay gap reporting later this year. Companies which have been considering what they need to do to prepare for gender pay gap reporting, ensuring that they have ‘buy in’ from stakeholders from across the business and that their payroll and HR systems can produce the data required by the Act, along with those companies that have the resources to engage professionals to help them ensure compliance with their gender pay gap reporting obligations will necessarily be in a much better position to comply with these new obligations, than those who are just now engaging with the requirements.” O’Byrne adds that there is flexibility in the guidance that will be welcomed by employers who can decide the precise format that their gender pay gap reporting will take.
While the process of calculating the gap itself will be challenging for organisations that haven’t previously looked at their data in this way, Connaughton believes that a bigger challenge for employers may be the communication of their findings, both internally and externally. “If your figures are saying you have a wide gender pay gap, you will have to communicate it within the organisation and that can be a tense thing to do.” Connaughton notes that there is still a misconception about the difference between the gender pay gap and equal pay; respondents to CIPD’s recent survey said they wanted better support around explaining the difference between equal pay and the gender pay gap, as it is widely misunderstood.
“But overall, there is recognition that this needs to happen, that we need to know the numbers and understand the size of the problem so that we can take action,” she says.
EY’s Deirdre Malone, who is an associate partner and Head of Employment Law, agrees. “The principle of closing the gender pay gap is welcomed by Irish employers but the nuanced reporting obligation, as well as the market and employees’ perception of an employer’s gender pay gap, will be challenging for the first year or so,” she warns.
So how will the Act be enforced? O’Byrne explains that an employee who claims that his/her employer has failed to comply with the requirement to publish gender pay gap information may make a complaint to the Workplace Relations Commission. “If the Workplace Relations Commission upholds the complaint, it may order the employer to take a specified course of action to comply with its gender pay gap reporting obligations,” she says. “This is the only remedy that may be ordered. There is no provision for the payment of compensation to the employee or for a fine to be imposed.” She adds, however, that the Irish Human Rights and Equality Commission may apply for a court order against an employer they believe not to have complied with the legislation.
O’Byrne points out that the UK legislation contains stronger enforcement powers compared with the Irish legislation. “In the UK, failure to comply with an obligation imposed constitutes an unlawful act, which empowers the Equality and Human Rights Commission to take enforcement action. Employers who don’t comply with their gender pay gap obligations in the UK can also be publicly named.”
But according to Malone, Ireland is seeking to establish the “gold standard” in gender pay gap reporting.
Malone points out that Irish employers will have a responsibility not only to report but also to explain why it has a gender pay gap and to set out what steps it is taking to reduce and eliminate this gap. “The obligation in the UK is just to publish a report. It is hoped that placing the burden on employers to establish initiatives to close the gap and measure it annually will result in an immediate improvement to Ireland’s gender pay gap,” she says. “The old cliche of ‘what gets measured gets done’ can only bring positive news for gender equality in Ireland.”
Ibec’s McGann notes that even in the absence of the gender pay gap figures, significant work on gender balance is already being undertaken across a variety of organisations of different sizes and in different sectors. “They are trying to understand where blockages or obstacles may act against the progress of women in their business and look at how representation can be improved at all levels of the pipeline. For some this has meant addressing recruitment practices and the language of job advertisements, for others working with schools and colleges to encourage more females into male-dominated industries and careers, while others are examining how senior roles can accommodate flexibility and different ways of working.”
Lidl’s chief people officer Maeve McCleane explains that the retailer is seeking to address its gender pay gap via a targeted action plan. “We looked intently at what were the obstacles for women’s career progression and this is where health and wellbeing diverged significantly from our male colleagues. As part of our action plan, we committed to further developing initiatives that would support our female colleagues throughout their careers with us.”
The legislation is only the first step in what will necessitate a broader societal shift, Connaughton says. “The real challenge is taking action and changing things in terms of making sure that women who are part-time workers, or who are parents or carers, that they don’t lose opportunities for career development and promotion and making sure that women are being encouraged to go forward for promotion.”
McGann agrees. “While employers are the only stakeholders who have to report on the gender pay gap, a whole of society approach is required if we are really to address the true causes of the gender pay gap and achieve gender parity.”