Out-Law Analysis | 17 Aug 2021 | 1:34 pm | 5 min. read
Employers in Ireland should review whether they need to update their processes or invest more in data analytics to comply with new legislation aimed at shining a light on pay disparity between men and women in their organisation.
The Gender Pay Gap Information Act 2021 (the Act) was implemented on 13 July 2021 and introduces a series of new reporting requirements that will initially impact employers with more than 250 employees.
The Act has yet to take effect. However, the precise details of the reporting regime will be outlined in regulations that Ireland’s minister for children, equality, disability, integration and youth is expected to publish in due course. In line with the Act, employers can expect these regulations to require them to publish information concerning the remuneration of their employees and any differences in the remuneration of men and women under their employment. Employers reporting a ‘gender pay gap’ will also be expected to explain the reasons for it and the action they are taking to address it.
Based on our experience of gender pay reporting in other jurisdictions, companies are likely to come under scrutiny if they are reporting a large gender pay gap, regardless of their size or prominence. Therefore, it will be essential for companies to be able to explain the reason for the gap and to have an action plan to help close the gap
The information which employers will need to publish includes the following:
Employers will also be required to publish a statement setting out, in the employer’s opinion, the reasons for such differences in that employer’s case, and the measures, if any, being taken, or proposed to be taken, by the employer to eliminate or reduce such differences in that employer’s case.
It is understood that a central website will be established onto which employers will be required to upload their information, much like the position in the UK.
In addition to the mandatory reporting requirements above, the regulations could prescribe any of the following:
The gender pay gap reporting regulations which are to be introduced in Ireland are quite like those introduced in Great Britain in 2017
The Act will, for an initial period of two years from the introduction of the regulations, only apply to employers with 250 or more employees. Any employer with fewer than 250 employees will be exempt from the regulations until the second anniversary of the first regulations coming into being. Any employer with fewer than 150 employees will be exempt from the regulations until their third anniversary. Regulations made by the minister will not apply to an employer having fewer than 50 employees. Public bodies are included within the scope of the Act.
Under the Act, the regulations could require that employers ensure that the data they are required to publish is pseudonymised on or before publication to preserve the data subject’s privacy in line with national and European data protection legislation.
Employees who feel that their employers have failed to comply with the regulations will be able to refer their complaint to the Workplace Relations Commission.
The Workplace Relations Commission will investigate the complaint if it is satisfied that there is a case, on the face of it, warranting investigation. If the Workplace Relations Commission upholds the complaint, it could order the employer to take a specified course of action to comply with the regulations. There is no provision for the payment of compensation to the employee or for a fine to be imposed. However, the publication of a decision could cause significant reputational damage to an employer as their name would be disclosed, along with that of the complainant.
The Act also provides that if the Irish Human Rights and Equality Commission is satisfied that it has reasonable grounds for believing that there has been a failure by an employer to comply with the requirement to publish the gender pay information, it may make an application to the Circuit Court or the High Court for the granting of an order requiring the employer concerned to comply with those regulations. An employer that fails to comply with a Circuit Court or High Court order, will be in contempt of that Court.
The minister could also request that the Irish Human Rights and Equality Commission carry out an equality review or prepare and implement an equality action plan in relation to a particular undertaking, group of undertakings or a particular industry or sector.
The gender pay gap reporting regulations which are to be introduced in Ireland are quite like those introduced in Great Britain in 2017. In Great Britain, employers with 250 or more employees are required to publish their overall mean and median pay gaps based on gross hourly pay for men and women, expressed as a percentage; as well as their mean and median gender bonus gaps.
Companies caught by the regulations in the UK must also publish the proportion of male and female employees within each quartile of their pay distribution, ordered from lowest to highest pay, as well as the proportion of both men and women that have been paid a bonus in the preceding 12-month period.
Although gender pay gap data has to be reported annually, the obligation to report was suspended last year due to the challenges presented by the Covid-19 pandemic, and the UK’s Equality and Human Rights Commission has advised that it will not consider enforcement action against employers that have failed to publish their gender pay gap data for the 2020-21 reporting period until 5 October 2021. This means that, although there has been no formal extension of the reporting deadline for the 2020-21 reporting period, employers will essentially benefit from a six-month grace period.
According to our colleagues in the UK, data analysis is vital to closing the gender pay gap in financial services and a number of the UK’s financial services firms are employing data analysis in a bid to close the gender pay gap. The firms are hoping that by setting targets and establishing regular reporting to track progress it will help companies with their internal and external recruitment. This is an interesting aspect which employers in Ireland should be mindful of, particularly as there has been a shift in workplace consciousness amongst prospective employees and/or employees who are seeking out truly diverse and inclusive workplaces.
While the publication of the Act has been welcomed across the country, we are eagerly awaiting the regulations to give effect to gender pay gap reporting. According to the minister, his intention is that the regulations will be published and in force by the end of this year. Therefore, we recommend that employers in scope of the new legislation take action now.
Employers that are in scope should ensure that they will be in a position to comply with their obligations once the regulations are introduced by considering whether a gender pay gap exists in their organisation, and if so, considering what steps need to be taken to reduce it. This may require the introduction of new technology, data analysis and/or processes and it would be wise to take these preparatory steps sooner rather than later to ensure a smooth process.
Based on our experience of gender pay reporting in other jurisdictions, companies are likely to come under scrutiny if they are reporting a large gender pay gap, regardless of their size or prominence. Therefore, it will be essential for companies to be able to explain the reason for the gap and to have an action plan to help close the gap.
Co-written by Jason McMenamin of Pinsent Masons in Dublin.
16 Jul 2021
18 Jun 2021