Is your business ready for gender pay gap reporting?

Guest Blog, Sustainability | Wed 25 Aug | Author – Business & Finance

Pictured: Mary Connaughton, Director at CIPD Ireland

For the last 12 months, much of our focus at CIPD Ireland has been on how we design the future of work. We all experienced transformation in our working lives to some extent and our members, the people profession, turned to us for guidance on how to approach the constantly evolving ‘new normal’, and translate it into practice in their companies, writes Mary Connaughton, Director at CIPD Ireland. 

Now, enterprise in Ireland must factor another element into the re-shaping of their business model – the new Gender Pay Gap legislation, signed into law by the President in July.  It means most companies – all those with more than 50 employees – will have to produce and publish the gap in pay and bonuses between men and women in their employment. 

there is a persistent difference between the average pay of males and females – with women being paid around 14% less nationally

The gender pay gap is an issue that needs to be addressed in Ireland as there is a persistent difference between the average pay of males and females – with women being paid around 14% less nationally. For women, this is equivalent to being paid one hour less than their male colleagues every day. Recent figures also show that women have been more seriously affected by the pandemic, have been more likely to have been out of work, mainly as a result of the sectors they worked in, and so the gender pay gap may be increasing. 

The new Gender Pay Gap Information Act 2021 will force companies to address this by publishing their pay gap and what they plan to do about it. CIPD research found that up to a third of companies already calculate their gender pay gap, but we know these are mainly large employers, both MNCs and public bodies (CIPD HR Practices in Ireland 2019 ).

What do we know so far

From the start, publishing accurate information on the difference in pay between men and women will apply to employers with 250 or more employees, two years later it will apply to employers with 250 to 150 employees, and another year later it will apply to all companies with 50 or more employees. There is no plan to go below 50 employees.

Employers will have to report on the gap in hourly pay and benefits information, including: 

  • The mean/average and median gap in hourly pay between men and women
  • The mean/average and median gap in bonus payments between men and women
  • The mean/average and median gap in hourly pay of part-time male and female employees
  • The percentage of men and of women who received bonus pay
  • The percentage of men and of women who received benefits in kind.

It is expected that reports will be freely available on a government website. This will create a lot of media interest when it goes live at the start, as it will be easy to compare how one company and one sector fare against another.

What we don’t know

There is a lot more work needed from the government to help employers understand their obligations.  To date, no clarity has been provided about:

  • How frequently gender pay gap reports will have to be published
  • What is meant by hourly pay – does it include overtime, allowances, shift premia, etc
  • How benefits are to be calculated – the formula to calculate gaps in bonuses, benefits in kind
  • Who is covered – does it include contractors, partners, company directors, casual employees, temporary employees?
  • How to calculate the number of employees  – does it include those who have recently started or left, what about employees on maternity or parental leave, how to handle periods of sick leave?
  • Whether or not employers will have to publish pay gaps by job classification.

What to do next

There is a lot of costly administration and expertise in getting ready to produce a gender pay gap report. This has not been acknowledged by the government, and it’s hard for employers to fully prepare until the requirements and definitions are clearer.

However employers cannot afford to wait. Calculating a gender pay gap now, in advance of having to publish it, gives employers a chance to start to tackle it. A real challenge in disclosing a gender pay gap is often the internal communications, as employees – both male and female – are generally not pleased to be contributors to such a gap. A gender pay gap does not mean that pay discrimination is happening, once male and female employees are being paid equally for equal work. Commonly it reflects that more men are in higher paid senior roles, and more women in less well paid roles. Becoming aware of how this is playing out in your company and mitigating the impact is a good place to start.

Further information is available on cipd.ie, including a practical guide based on the UK experience.