Ireland's gender pay gap legislation was signed into law on July 13th last. While many companies have already been reporting on their gender pay gap status on a voluntary basis, the Gender Pay Gap Information Act 2021 will make it obligatory for every state body and a large number of private sector organisations.
The legislation will have far-reaching consequences for workplace organisation and employment practice in Ireland and will propel equality, diversity and inclusion (EDI) to the top of the agenda for many organisations which had not seen it as a priority before now.
The new requirements will come into force on a progressive basis over the next few years, according to Mazars head of consulting, Dera McLoughlin.
“It has to be worked out yet. The legislation is the responsibility of the Department of Children, and they say implementation will commence in 2022. It will initially apply to all companies with more than 250 employees and in year two it will apply to organisations with more than 150. It will then apply to those with more than 50 in year three. It is not targeting smaller companies and microenterprises. They wouldn’t have a sufficient number of data points to compare because of their size.”
All public service bodies are also included under the act. “It’s going to involve a significant amount of work for the organisations covered,” McLoughlin adds.
The purpose of the legislation is to get employers to report on differences in pay, bonuses, and benefit in kind benefits broken down by gender. “It’s not about equal pay for equal work,” she explains. “It is illegal to pay people differently for the same work. Gender pay gap metrics act as a proxy for how many women work at senior levels in organisations. The numbers tend to be more equal at junior levels.”
In other words, the fewer women earning higher pay at senior levels the higher the average pay will be for men in the organisation. “Ireland’s GPG currently stands at 11.3 per cent, according to research published by the European Commission, that’s just below the EU average,” she adds. “Here at Mazars, we’ve been reporting on our gender gap for the past two years and it is now less than one per cent.
“The legislation places an obligation on employers to publish data on the mean and median pay gap as it relates to hourly pay, bonuses, benefit in kind, the hourly pay of part-time workers and percentage of women and men working part-time,” says Mazars HR consulting director, Yvonne McNulty.
“Employers will also have to explain the reasons for the gap and outline the measures they have in place to address it.”
The inclusion of separate part-time statistics is significant, McNulty points out. “More women tend to take up part-time work while a lot of studies show women are underrepresented at higher levels in organisations.”
Aggregating the part-time data with the full-time metrics could therefore have a masking effect on the overall figure as longer serving part-time women will naturally enjoy higher pay rates than shorter serving males.
Gender pay gap legislation has been in force in the UK since 2018 and the trend there has seen organisations going further than its minimum requirements. For example, partners in professional services firms are excluded because of the partnership structure of those organisations. But because of demand from employees and others, the organisations have included them voluntarily.
Employers should start preparing now for the new reporting requirements to ensure compliance, McNulty advises. “Non-compliance can be reported to the Workplace Relations Commission (WRC) which can make an order requiring the organisation to comply. That’s a risk to an employer’s reputation. There is also scope for the Irish Human Rights and Equality Commission to apply to the courts for orders requiring compliance. In addition, an inspector could be appointed to examine compliance.”
Employers should also look at the positive aspects of the legislation, according to McLoughlin. “They have time to prepare, all is not lost,” she notes. “This can be a good opportunity for organisations to make changes. The first step is for the board to become aware of the risks and benefits it presents. A number of organisations in the UK and elsewhere have found it beneficial but tone at the top is essential.”
Ireland's GPG currently stands at 11.3 per cent, according to research published by the European Commission
Organisations should ensure they have the data to comply with the legislation. “They should do a dry run to make sure they have it and to look at the results,” McLoughlin adds. “They can use this to identify the root causes of the pay gap. Is it a lack of female applications? Is it a lack of support for women during their careers? There is a lot you can do in the short term. You can work on gender bias in the organisation. You can provide unconscious bias training. You can develop a diversity and inclusion policy to set the tone - only a quarter of organisations in Ireland have one at the moment.”
Organisations can also use established standards to guide them. “At Mazars, we have achieved Silver Investors in Equality, Diversity and Inclusion accreditation for commitment to diversity and inclusion in the workplace,” she points out. “This affirms that Mazars has been benchmarked against companies and has embedded EDI practices throughout the firm and engendered fairness and belonging among all colleagues. Only 15 firms in Ireland have silver and two have gold. We are now going for gold.”
And there are clear benefits for organisations which do well on gender pay gap reporting and other EDI metrics. “Recent McKinsey research suggests that companies in the top quartile for gender diversity on their executive teams were 21 per cent more likely to experience above average profitability than companies in the fourth quartile,” says McNulty.
It will also matter in the burgeoning war for talent. “There are implications for brand and talent attraction,” she adds. “Employees will use gender pay gap metrics as a filter for selecting companies to work for. It will facilitate comparisons with other companies, and nobody wants to be the worst. Unemployment is falling and the employment market is tightening. Talent is becoming more difficult to attract and retain and companies need to establish themselves as employers of choice. Good performance on EDI and the gender pay gap can help.”
McLoughlin sees the legislation as another important step in a journey. “It’s not a panacea but it is a step in the right direction. I am not sure if we will ever eliminate the gender pay gap totally, it’s about focusing on ensuring that every man and woman gets the same opportunities and chances. We also have to look beyond gender to broader diversity and inclusion and provide the same opportunities and chances to everyone.”
McNulty agrees. “Diversity and inclusion are not just about men and women. Organisations need more diversity of thought where people are empowered to challenge one another. It’s also about belonging. It’s vital to sit at the table in the boardroom and have a voice, but you truly belong when people listen. This is very fundamental at all levels. If someone feels they belong, they stay.”
Gender pay gap analysis tool
Mazars offers a variety of services to prepare and support businesses with gender pay gap reporting. Using our bespoke GPG analysis tool, we can calculate gender pay gap in accordance with legislative requirements. We can provide an independent assessment of the accuracy of an existing or trial GPG calculation or any preparatory work. Once the GPG figure is identified, Mazars can help with the design, development and implementation of initiatives to address the gap noted, including action plans, D&I frameworks, culture reviews, D&I strategies, recruitment and selection techniques and training.