Mandatory Gender Pay Gap Reporting: A Step Closer

The Gender Pay Gap Information Bill has been published. Businesses employing 250 people or more are advised to start examining whether they are ready and able to:

• Conduct a business wide gender pay audit; and
• Explain and publish the results.

While a date has not yet been set to progress the Bill, as initiated, through the Irish parliament, it is likely that progress will be made in the coming months towards introducing mandatory gender pay gap reporting in Ireland.

Further, as a second year of mandatory pay gap reporting draws to a close in the UK, what lessons have we learned from the UK experience and how can Irish employers prepare to report on their gender pay gaps.

Briefly – What is the Gender Pay Gap?

The Gender Pay Gap is a measure of the average difference between men and women’s’ earnings. It is usually expressed as a percentage of the relevant male hourly rate figure. In Ireland at present, the gender pay gap is estimated to be 14%. It is sometimes referred to as the unadjusted gender pay gap and critics observe that the available data does not reflect other differences between men and women such as experience and education.

What Can Employers do now to Start Getting Ready?

For now, the advice is to start thinking about how you will conduct the gender pay audit.

• Who will perform this task? Is there in-house capability or do you need to seek external support?
• Is your existing data set complete, accurate and up-to-date? Some UK employers experienced challenges accurately reporting their gender pay data because their data sets were incomplete and difficult to prepare and some organisations lacked the internal capability to correctly report their gender pay gap data. Some employers were identified as reporting statistically impossible gender pay gaps of above 100% leading to speculation that the integrity of at least some of the gender pay gaps reported were questionable.
• Do you already know your gender pay gap? If so, how will you explain the gender pay gap in your business?
• What measures can you now take in advance of mandatory reporting to tackle any structural issues or working practices which may start to narrow the gender pay gap in your organisation? For example, it is widely understood that one of the key drivers of a widening gender pay gap is the absence of women in leadership and senior roles. If this is the key driver of a poor gender pay gap in your business, then addressing this will require time and effort such as the creation of a female talent pipeline which in turn may require businesses to critically examine their work practices.

It is therefore imperative that your current pay data is capable of analysis to support a thorough and accurate gender pay audit and that you have the capability to conduct the audit lined up in time.

It Sounds like a Big task. So how Much Time do I Have?

We do not know yet when the Bill will become law but it is very likely to be this year. Audit reference periods were set at one year in the UK but Irish employers have been given more time under this Bill. Businesses employing more than 250 employees will have two years from the date the Regulations commence to report on and explain their gender pay gap. This is the timetable at the moment assuming the law commences in Q4 2019:

Number of Employees	When will it Apply to you?	Likely Date for Reporting
250+	As soon as the regulations commence, mandatory reporting will be required 24 months later	Q4 2021
50 – 150	36 months after the law commences	Q4 2022
Below 50 employees	N/A	N/A

What do I Need to do with my Pay Data?

The data which you will rely on to publically report on the gender pay gap must be complete, accurate and up-to-date.

• Gather pay data on hourly basic pay in respect of men and women working full time, part time and on fixed term or temporary contracts respectively;
• Calculate the mean and the median hourly pay for men and women working full time, part time and on fixed term or temporary contracts respectively and then calculate and report on the differential that is revealed;
• Gather pay data on bonus pay in respect of men and women working full time, part time and on fixed term or temporary contracts respectively;
• Calculate the mean and the median bonus pay for men and women working full time, part time and on fixed term or temporary contracts respectively and then calculate and report on the differential that is revealed;
• Gather data on percentage of men and women paid bonuses and report on the difference;
• Gather data on percentage of men and women who received benefits in kind and report on the difference;
• Calculate the proportions of men and women in the lower, lower middle, upper middle and upper quartile pay bands and report on the differences;
• Employers will need to consider and understand the differences and be able to explain the data; and
• All of the above data will likely need to be reported to a designated body and also may need to be published by the business, for example on its website.

What Else do I Need to Publish?

In addition, employers must publish:

• A statement explaining why there is a gender pay gap in their organisation; and
• Details of the actual or proposed measures in place to reduce the gender pay gap in their business.

Details of how and where the gender pay gap data will be published will be set out in more detailed regulations. Interestingly, in the current Bill, the Minister can have regard to the cost to businesses of complying with the gender pay gap reporting obligations. It is not clear what this will mean in practice. This could mean that the frequency of gender pay gap reporting may be different to the UK where mandatory reporting occurs annually.

What about the Protection of Personal Data in the Reporting on Gender Pay Gap?

The Regulations made under the Bill may require detailed classification of employee bands. That part is not yet clear. The narrower the classification of employees, the higher the risk that employee personal data may be processed in a manner that is potentially unlawful. The Bill addresses this issue by requiring employers to apply pseudonymisation to personal data and take such measures as are necessary to comply with their obligations under GDPR in relation to the processing of employee personal data.

What Happens to Defaulting Employers?

The Bill provides for:

• The appointment of inspectors / designated persons to investigate the accuracy of employer GPG reporting. Regulations will provide further detail but it would seem to make sense that labour inspectors already appointed and in possession of investigative powers under other employment legislation will be tasked with this;
• The Irish Human Rights Commission will have the ability to apply for a Circuit Court order directing an employer to comply with its obligations; and
• Individual employees have the potential to name and shame employers by filing a complaint with the WRC seeking an investigation of an employer’s compliance with the legislation. There is no provision for the award of any compensation to the individual employee but there may be publicity for the parties. The initial hearing is in private which is nothing new. However any appeal to the Labour Court may be heard in public and the names of the parties to the complaint as well as the Labour Court decision will be published.
  

What Have we Learned from the UK Experience?

April 2018 was the deadline for the first gender pay gap reports for large private employers in the UK. More than 1000 employers published their gender pay data within the 24 hours before the deadline. As noted above, there were reported difficulties with the data sets, with in house capability to conduct the audit and the accuracy of the data overall. Some of the results were startling with many business required to reveal that they had gender pay gaps of 40% and some businesses revealing gender pay gaps of close to 80%. Others reported statistically implausible and statistically impossible gender pay gaps.

After two years of mandatory reporting in the UK, the median pay gap across over 10,000 employers in 2019 was actually slightly higher at 11.9% compared to 11.8% in 2018. Progress is slow and in some sectors, such as financial services, some employers continue to struggle with gender pay gaps close to 40%.

In the UK, the gender pay gap that is reported must remain published for three years. A timely reminder for Irish employers to start getting their house in order. Things are about to change.