Time to prepare for gender pay reporting

Mandatory gender pay-gap reporting appears increasingly likely in Ireland and employers should start preparing for it. "Mandatory gender pay-gap reporting for employers has not yet been implemented in Ireland," says Ciara Ruane, an associate with law firm Pinsent Masons. "However, two draft Bills have been published which propose that employers with a certain number of employees will be required to publish data on their gender pay gap. This would indicate that mandatory gender pay gap reporting will apply soon to employers in Ireland."

A significant number of other countries have already introduced their own equality legislation and reporting requirements to address their gender pay gaps, she notes. “This global trend has led to increased scrutiny from the media, employees, trade unions, shareholders and governments, meaning that the stakes are high for employers to ensure that their pay processes are fair. As a result, some employers in Ireland have already started to review their pay review processes in preparation of some form of gender pay gap reporting being introduced.”

Pinsent Masons senior associate Susannah Donaldson explains the difference between equal pay and the gender pay gap. "There is often the perception that having a gender pay gap equates to having equal pay issues," she notes. "This is not the case. Equal pay, in the gender context, means that men and women are to receive the same pay for the same or similar work and this concept has been enshrined in Irish legislation for a number of years. Whereas, gender pay gap is the difference between the average gross earnings of male and female employees across a business."

Spotlight

But they are not totally separate. “While there is a difference between gender pay and equal pay issues, we have seen that the gender pay-gap reporting regime in Great Britain has caused the wider issue of equal pay to come under the spotlight,” Donaldson adds. “We have found that most employees want to know that they are receiving equal pay for equal work and this is resulting in discussions within organisations as to how they ensure this.”

In Great Britain, some employers have published reports on their gender pay gap statistics with explanations of the results and have proposed strategies to narrow the gap. “Many employers have reported in their narrative that they have conducted an equal pay review as well as a gender pay gap review and that they are satisfied that the gap is not indicative of an equal pay issue,” Donaldson notes. “Importantly, the narrative usually gives the employees a better understanding of the causes of the gender pay disparity and consequently discourages equal pay challenges.”

Employers need to be able to respond to these questions in a transparent manner

Ruane believes employers will need to consider their pay processes from an equal pay as well as a gender pay-gap prospective if they are to address adequately employees’ questions on pay practices.

“We are moving towards a culture where employees are discussing pay matters with colleagues and questioning any disparities,” says Ruane. “Employers need to be able to respond to these questions in a transparent manner.

Review

“To prepare for such questions and gender pay gap reporting, employers will need to carry out a review of their pay review processes to establish if there are any gender pay gaps and understand the causes of those gaps,” she continues. “As a starting point, the pay review could be conducted using the UK methodology as the proposed gender pay gap legislation here in Ireland is similar to the legislation in Great Britain.”

Fairness should be a guiding principle. “From an equal pay perspective, employers will also need to consider whether the review processes are fair and what mechanisms are being used to ensure they are no unconscious bias in setting pay,” Donaldson advises. “We have found that the review process in an important step in devising more robust and transparent pay practices for employers.”

Finally, multinational companies will have to consider how best to report on the issue. “Global companies will, in many cases, find it artificial to review the gender pay gap on a single jurisdiction basis and so should consider conducting a review of its gender pay gap across all jurisdictions in which they operate to ensure pay parity is promoted across the business,” Donaldson concludes.