Will Ireland make firms report their gender pay gaps? Here's what you need to know
The UK is about to implement the rule, while the government here has plans to follow suit.
FIRST, THE GOOD news. The global gender pay gap is narrowing.
The bad news is that the World Economic Forum (WEF) has predicted that it will take until 2186 to close the gap fully. That’s 170 years, so don’t watch this space.
Governments across the EU, the UK and the US, are tackling this gap by way of public mandatory gender pay gap reporting. Will we see a similar approach in Ireland?
The gender pay gap should not be confused with the concept of equal pay for equal work, as the existence of a pay gap does not necessarily mean women are not receiving equal pay.
Rather, the gender pay gap is defined as the difference in the average gross hourly pay of women compared with men in a particular organisation, such that it captures whether women are represented evenly across an organisation.
To an extent, the pay gap can be explained by several factors. As a consequence of women traditionally spending more time out of the workplace or working shorter hours, women are more likely to work part-time, be employed in lower-paying sectors, experience slower pay progression and ultimately not take on management roles.
What is changing on the 1st of April?
From next month in the UK, new Equality Act regulations will require private and voluntary sector employers with 250 or more staff to annually publish details of their gender pay gap figures for ‘relevant employees’. This report must be published online for three years.
While the UK Regulations are a step in right direction, they are essentially toothless, with no sanctions for non-compliance. Rather employers will only be deterred by the prospect of being ‘named and shamed’.
What is happening in Ireland – and what do we need to do?
Does Ireland really need such reporting? Ireland is ranked 6th overall in the WEF report, well ahead of the UK’s ranking of 20th and the US’s ranking of 44th.
Despite Ireland’s favourable placing, its gender pay gap has actually been increasing in recent years. PwC’s annual ‘women in work index’ places Ireland at a disappointing 25th out of 33 OECD countries. So what should Ireland be doing?
Currently, Ireland’s Programme for Government includes an express commitment to “promote wage transparency by requiring companies of 50 or more to complete a wage survey”.
No practical steps have been taken as yet to put further shape on what this reporting obligation will look like, but the global trend is pointing towards mandatory, public gender pay gap reporting.
What does this mean for Irish employers?
The PwC index has predicted that the expected gain from increasing female employment in Ireland is approximately €57 billion.
This figure, coupled with the international trend towards reporting, will likely incentivise the Irish government in its efforts to close the gap.
Greater focus on cancelling out the ‘motherhood penalty’, by supporting women in their return to the workplace through more-affordable childcare and expanding the concept of shared parental leave, as well as encouraging employers to facilitate more flexible working arrangements, will be key.
Irish employers should get a head start and gather and analyse their payroll data to ascertain whether there is any unintentional gender bias before there is a requirement that such data be reported.
Undertaking such a review at this stage means an employer will be well-placed to diffuse any discrimination bombs before they go off.
On a positive note, an employer whose review reveals little or no gender pay gap may want to use this data proactively, perhaps voluntarily providing the information and attracting some good PR along the way.
The collation of such data raises data protection and confidentiality considerations as well as the very real possibility that the output of such a review may ultimately be disclosable in legal proceedings.
Furthermore, the financial cost of undertaking such a preliminary review and rectifying any disparities could be significant. However, prudent employers would be well advised to consider such a trial run as a once-off investment for a long-term gain.
If (and likely when) reporting comes into play in this jurisdiction, the publication of data that shows up a significant gender pay gap may lead to discrimination claims.
Furthermore, in today’s pro-diversity society, being associated with such negative data may threaten an employer’s brand, placing it at a competitive disadvantage in the market place.
While the concept of gender pay gap reporting hasn’t yet got off the blocks from an Irish perspective, the writing is on the wall that such reporting may be the missing link to bridging the gap sooner rather than later.
Duncan Inverarity is head of the employment law group at A&L Goodbody.
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