As published in the Sunday Business Post, Sunday, May 29, 2022
Dublin, 30 May 2022
The genesis of gender pay gap reporting in Ireland goes back to a 2014 recommendation from the European Commission on pay transparency. Two elections and a pandemic later, we’re almost there. Legislation was passed in 2021 in the form of the Gender Pay Gap Information Act. On May 10th, the government finally moved to give employers clarity, publishing guidance that sets out in detail the reporting required.
The guidance has not arrived before time. Companies that wish to meet the deadline need to act now. Under the law, employers with more than 250 employees must report on their gender pay gaps by the end of this year, based off a reference date in June that the employer may choose itself. They will need to repeat the exercise every year. In later years, employers with more than 50 employees will also be required to report annually.
Practically speaking, though the Act contains provisions for legal action in the event of failure to report, the real penalty for such failure, or for reporting big gender pay gaps, will be reputational. Customers, shareholders and, most importantly, employees and potential employees will be watching.
The publication of the guidance effectively fires the starting gun. The first step is to decide who in the company will be responsible for obtaining the relevant data from payroll and HR systems. The second step is to decide whether the organisation feels confident in producing the data, calculations and report itself without guidance, or whether it needs expert external support. If the latter, it is advisable to agree that support now: demand is going to be high towards the end of the year. Third, the company must decide how to frame the explanation required in its report.
We now know the information and calculations that will be required. Employers can start identifying the data they will need from their own payroll and HR systems and how they are going to get it. It is desirable to have this preparatory work done before the June reference date chosen by the employer. Six months is not a long time, particularly for those dealing with multiple entities or complicated payroll systems.
The explanation in the report will be vital where significant pay gaps exist. Employers must explain why, in their opinion, their gender pay gap exists – and what, if anything, they plan to do about it. Is the pay gap attributable to explainable factors, such as experience or roles? Are there plans in place around hiring, promotion or pay increases that will reduce the gap over time? Is there a policy that contains practical steps around pay equity, and is it being followed? Do changes in gender representation in particular roles point towards a closing of the gap? It will be beneficial to include proper discussion of these questions in the report.
It is sensible to assume that stakeholders interested in the gender pay gap will examine the report closely. A report that appears to make unfounded excuses, or that discusses a diversity, equity and inclusion strategy that exists only as words on paper, will compound concern that the employer is not really concerned about its gender pay gap.
On the other hand, a report that is clearly grounded in reality and includes an honest assessment of where the company is in its journey will resonate better. Ideally, this journey should involve a diversity, equity and inclusion strategy that the employer is visibly and effectively pursuing, which should go a considerable way to addressing concerns arising from the figures.
It has long been said that what you don’t measure, you can’t manage. Gender pay gap reporting will give employers valuable insights into their internal pay and talent dynamics. For those serious about tackling inequity, it will be an early step towards a fairer and more inclusive environment that will benefit both employees and the organisation itself.
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