Mind the gap: how employers can stay one step ahead of mandatory gender pay gap reporting

By Peninsula Associate Director of Advisory Alan Hickey.

The Department of Justice and Equality announced that the Government agreed on the text of the Gender Pay Gap Information Bill 2018 (Government Bill). Although full details of the Government Bill have not been published yet, reports indicate that mandatory gender pay gap reporting will be introduced later this year. So how can employers prepare for gender pay reporting?

What causes the gender pay gap?     

Equal pay for equal work has been enshrined in Irish law since the 1970s. Despite continued progress in the area of employment equality in the intervening years, the gender pay gap has remained persistently high.

Various studies and data have demonstrated that the gender pay gap is not simply an employment equality issue and can be caused by a variety of socio-economic reasons, such as childcare, lack of flexible working practices, etc. The gap is widest for instance when workers over 40 years of age are compared. This could suggest that the pay gap is being eliminated as equal opportunities continue to improve or it could indicate that the ‘glass ceiling’ remains a barrier to women entering senior roles. Studies also indicate that the average pay of mothers is lower when compared to the average pay of childless women (i.e. the motherhood pay gap). This motherhood gap would suggest that family status, as distinct from gender, is a key contributor to the gender pay gap.

As Peninsula pointed out in submissions to the Department of Justice and Equality, the failure to address affordable childcare concerns and the structure of existing family-related leave entitlements, traditionally have led to women taking far more time off from work for family reasons compared to men. The introduction of two weeks’ paid parental leave for both parents to commence in November this year may indicate a shift in our legislators’ approach to family-related leave entitlements.

What will need to be reported?

The Government Bill would require employers to report differences between the pay of male and female employees in terms of mean and median hourly pay, mean and median bonus pay, mean and median pay of part-time employees and mean and median pay of employees on temporary contracts. Data on the proportion of men and women receiving bonus pay benefits in kind and the proportion in lower, middle and upper pay ranges will also be required.

Are all employers required to report?

Under the Government Bill, the requirement to report gender pay data is subject to employment thresholds. Organisations with more than 250 employees will initially be required to report. After two years, the employment threshold will reduce to 150 or more employees and the following year, the threshold will reduce to organisations with more than 50 employees.

How can employers prepare?

To stay one step ahead of the incoming law, we advise employers to look at carrying out a ‘dry run’ as part of their financial reporting activities. This may entail providing additional training to payroll and finance professionals who will be required to collate the required data. Payroll software and other finance technology may also need to be updated to capture the relevant data.

As outlined above, the gender pay gap is not necessarily an equality issue. The most equality-conscious employer could have a rather large gender pay gap for reasons that are outside of its control. Therefore, if the dry run reveals a significant gap, employers should try and identify the causes of the gap and take corrective action where possible. The reasons the gap has developed is likely to vary from organisation to organisation. Once you have identified the organisational factors causing your gender pay gap, a corrective action plan should be developed to ensure the gap is reduced where possible. Failing to address the issue may lead to negative publicity, equal pay claims and even discrimination claims when mandatory reporting comes in.

What about employers that won’t be required to report?

Although gender pay gap reporting will only be a compliance requirement for organisations with 50 or more employees, innovative smaller businesses could enjoy a competitive advantage in the labour market by promoting their business as an equality-focused employer. The labour market remains very competitive and smaller employers looking to attract and retain talent have an opportunity to differentiate themselves by promoting the fact that their organisation has taken proactive measures to prevent a gender pay gap from developing. Introducing preventative measures while employment levels remain low will make it easier to prevent a gender pay gap from developing and causing problems down the line.