According to some equality campaigners, women in Ireland effectively work unpaid for the last eight weeks of the year, due to the current gender pay gap of 14.4%.
The gender pay gap is the difference in the average hourly wage of male and female employees and is now addressed by the Gender Pay Gap Information Act (the Act). The Act and its implementing Regulations have been introduced to address this inequality, and employers are now obliged to monitor and report on the gender pay gap in their organisations.
The Act is one element in a programme of work by the Irish Government to promote gender equality, within the framework of the National Strategy for Women and Girls. In launching the Act, the Minister for Equality stated that he hopes mandatory reporting will incentivise employers to take measures in addressing the issue, insofar as they can.
What are the new obligations on employers?
All employers with over 250 employees (including part time staff and staff on leave) must now calculate and report on differences in wages between their male and female employees.
Employers have an obligation to report:
- Differences between the average hourly pay of male and female employees
- Differences between the average bonus pay of male and female employees
- The percentage of male and female employees who received bonuses and benefits in kind.
The report must include reasons for the difference in pay and the measures used to eliminate or reduce these differences.
The report must be published annually in a publicly accessible way, in the December of that year. The information must stay on the organisations’ websites for at least three years. While there is no central data base at the moment for these reports, the Minister has indicated that a central website will be established this year.
Can an employer be penalised for having a pay gap?
Currently, there are no penalties for having a gender pay gap or failing to report.
Employees can bring a claim to the Workplace Relations Committee (WRC) where there is a failure to report. However, the obligation to report is not an infrastructure for pay disputes. Pay disputes are covered by Equality legislation.
Nevertheless, the WRC can make an order requiring a report to be produced. There is also scope for the Irish Human Rights and Equality Commission to apply to the Circuit Court or the High Court for an enforcement order in respect of a report.
In its report in 2021, the Citizens’ Assembly on Gender Equality (the Citizens’ Assembly) recommended that the State should set targets in legislation to reduce the hourly gender pay gap from 14% to 9% by 2025 and to 4% by 2030, with a view to eliminating it completely by 2035. Whilst the Citizens’ Assembly also advocated penalties for noncompliance, the Legislature chose not to implement penalties in the Act.
However, it is not beyond possibility that we will see such penalties in future legislative initiatives.
There are plans in the EU to address the gender pay gap, by a new Directive (not yet implemented) - the Directive to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms.
Under the proposal for the Directive, member states will need to create penalties for when the principle of equal pay is not respected, while workers will have the right to compensation if companies do not respect equal pay obligations. It is not clear from the Directive, as drafted, if this right to compensation will extend where the employer has an unjustified pay gap over a certain level.
Will the Act make a difference to the gender pay gap?
The existence of a pay gap does not necessarily mean women are not receiving equal pay. However, a submitted report will also reflect gender representation in an organisation. An organisation may have a significant pay gap if the majority of female employees are in lower paid jobs.
The requirement that the report is made public may encourage media coverage of significant pay gaps, which may, in turn, attract unwanted negative attention and reputational damage to the company. Also, future employees, when made aware, may move to an organisation with a less significant pay gap.
The consensus is that shedding light on this information will lead to a reduction in the pay gap, whether in an effort to genuinely encourage equality or to reduce negative publicity. The UK has had a similar Act in place since 2017 and over time, the pay gap has narrowed.
The requirement to produce a gender pay gap report is now a statutory obligation on large employers and is quickly coming down the track to apply to most medium sized organisations.
If an employer fails to report, it may face the disruption and negative attention of a complaint to the WRC and/or the courts. Producing the report is a significant piece of work and it is recommended to take time with the preparation, particularly in respect of measures to tackle any pay gap. We recommend that organisations of 50-250 employees consider how they will address their reports come 2024 and 2025.
The Act does not expressly deal with employers who may have employees in multiple jurisdictions. Multinational organisations and group companies should seek advice in determining the employees to be counted for the purpose of gender pay gap reporting.