Update: On 3 June 2022, the Irish government published implementing regulations of the Gender Pay Gap Information Act 2021. More information is included below.
The Gender Pay Gap Information Act 2021 (the “Act”) amends the Employment Equality Act 1998 and was passed into law on 13 July 2021.
The gender gap reporting process will begin from 2022 onward in different phases as follows:
- From 2022 for employers with a minimum of 250 employees
- From 2023 for employers with a minimum of 150 employees
- From 2024 for employers with a minimum of 50 employees
Prior to the Gender Pay Gap Information Act, the Employment Equality Act 1998 (as amended in 2015) guaranteed the principle of equal pay for equal work by providing employees with the opportunity to bring suit against a company if the employee could provide evidence that another employee of the opposite sex, doing a similar job, was being paid more. Equal pay claims did not arise often as evidence of pay inequality is very difficult to obtain. As a result, there were few penalties, financial or otherwise, for employers who failed to guarantee the principle of equal pay for equal work.
Because gender pay inequalities have not significantly decreased over time, the Irish government, following the lead of several other European governments, has sought to provide greater transparency into company practices by creating a gender pay gap reporting system for both public and private sector companies with a minimum of 50 employees.
The gender pay reporting obligation aims to oblige employers to measure the difference between female employees’ pay compared to male employees and require those employers to report on their findings and actions considered or taken to the data uncovered.
Public and private sector employers with a minimum of 50 employees will be required to publish data specifying:
- The difference between the mean and median hourly remuneration for males and females. This data must include both full and part-time employees.
- The difference in the mean and median bonus (the exact definition may be provided by the forthcoming regulations) remuneration between females and males.
- The percentage of male and female employees in receipt of bonuses as well as benefits in kind.
In addition to the data, employers will be expected to provide a narrative discussing reasons for any pay disparities and any measures they have taken, or propose to take, to eliminate reported differentials. The analysis must be published on a central government website and the employer’s website, if any. Reports will also need to be accessible for three years from publication.
Remuneration is calculated by dividing the total pay (ordinary pay and bonus) by the total number of hours worked in the relevant pay period. Ordinary pay is calculated before any statutory deductions are made and includes basic pay, allowances (travel, car, etc.), overtime pay, shift premium pay and piecework pay.
The Irish government recently published nonbinding guidance for employers on how to calculate their gender pay gap metrics. The guidance states employers are required to calculate the total pay of each employee employed on a chosen snapshot date in June 2022. The definition of “employees” includes full-time and part-time employees, contractors and partners personally hired by the employer to execute work or a service. The gender pay reporting obligation must be implemented for employers with at least 250 employees within six months from the snapshot date by December 2022 for the pay period of 12 months preceding the snapshot date chosen by the affected employer.
There will be no financial penalties for employers who fail to take action to reduce their gender pay gap. However, the Irish Human Rights and Equality Commission (IHREC) can apply to civil courts for an order forcing an employer to comply with the Act. In addition, employees can lodge a complaint with the Workplace Relations Commission (WRC), which will be able to investigate and order the employer to comply with the Act.
Employers may also face negative publicity, difficulties retaining talent and potential pay raise demands from their employees.
Employers with more than 50 employees should start preparing for the upcoming implementation of the Act by auditing their employees’ remuneration. Employers may want to start strategic discussions with their internal payroll, human resources and IT departments, as well legal counsels and public relations advisors as needed. Employers should:
- Ensure that they have the necessary technological resources to support their new reporting obligations
- Ensure that their reporting obligations are in compliance with relevant data protection laws
- Plan their internal and external communication strategy regarding their new reporting obligations
If any gender pay differences are identified, employers should work to find the reasons and think about actions that can be taken to reduce them.