Companies with a significant presence in Ireland are now facing the long-awaited disclosure requirement as set out in the Gender Pay Gap Information 2021, in accordance with the underlying regulations and accompanying guidance issued by the Minister for Children, Equality, Disability, Integration and Youth
The rules came into effect on 31st May, and apply to all companies in Ireland with over 250 employees in the first instance. It is expected that this will extend to companies with over 150 employees in 2024 and again to companies with over 50 employees by 2025. The requirement applies to any legal entity with operations in Ireland, regardless of the parent company’s country of origin or structure (i.e., public or private).
Companies are required to report a specified set statistics for the reporting period:
Additionally, companies are required to develop a narrative based on the statistics. The narrative should include an outline of the believed underlying drivers behind the gaps (if any), and the steps that the company is proposing to take in order to address and reduce the gaps over time.
The regulations also provide clarity around the definition of a relevant employee, which pay elements are to be included and how to calculate for relevant employees who have been on leave for a portion of the reporting period. It is worth noting that the definition for ordinary pay includes overtime payments, moving away from the UK model of excluding such payments. Furthermore, hourly pay encompasses ordinary pay and bonus pay, meaning that these statistics are based on overall employee remuneration figures for the reporting period reflecting another shift from the UK model. The definition of bonus pay includes both short-term and long-term incentives. For U.S.-based companies, this means that stock options, restricted stock/units, employee share purchase plans and dividends will all be captured.
A snapshot date in June 2022 should be chosen by companies, with a reporting deadline exactly six months after that date in December 2022. The reporting period will be the twelve month period preceding the snapshot date, meaning that all calculations should be based on payments made to employees during this period. This is another move away from the UK model of reporting based on one month’s payroll, and points to a more onerous regime being implemented in advance of the Directive on Pay Transparency.
The report should be published on the company’s website or elsewhere provided it is accessible to both employees and the public and available for a period of at least three years beginning the date of publication.
It is expected that an online reporting system will be established by the government for the 2023 reporting cycle, where employers will be required to upload their report.
Unlike the UK regulations, there is no explicit requirement for a senior employee to sign off on the figures and be named on the central website. In our experience however, it is still important to engage senior stakeholders throughout the process and gain buy-in when developing the narrative and action plan. Engaging senior stakeholders early in the process and bringing them on the journey from statistical findings to developing a narrative and action plan is key to making this a meaningful, successful process. We believe that having a plan with tangible actions is more meaningful and leads to increased engagement from a company’s most important stakeholder: their employees.
For many companies the work has already started, given the potential challenges in gathering data and the multiple stakeholders that will invariably be involved. Questions that are already coming up include:
Many companies have already started preparing for reporting, running basic gender pay gap calculations or conducting more in-depth exercises based on the UK regulations. Based on our experience conducting fair pay analyses in Ireland and across Europe, we have outlined some key considerations for companies as they prepare for reporting:
WTW can help you calculate your pay gap in accordance with the regulatory requirements, as well as identify and address the drivers of any gender-based pay differences. From here, we can also support you in developing your action plan, communicating your results and aligning with wider diversity initiatives.
Whilst calculating the statistics and developing a narrative and action plan is already moving beyond the UK requirements, we believe that in order to be able to effectively develop a concise and meaningful narrative, companies must first understand their gaps and the underlying reasons for them. This analysis needs to be panoramic, encompassing not just rewards, but recruitment, career progression, pay governance, promotion and possible glass ceilings, and whether the way they organise work impedes women from progressing to higher pay quartiles. Any underlying job framework in place also helps to ensure a consistent and robust application and associated governance, as this will enable additional analysis in order to be able to develop a more meaningful narrative and action plan. Companies who have taken a broader view of their HR policies and assessed how (and if) they are impacting the gender pay gap have generally been better equipped to address the gaps through the years, beginning to embed fair pay as a part of their core inclusion and diversity offering.
Gender pay coming to Ireland is big news, and will become even bigger news over the next 6 months as businesses release their pay gap figures. Companies may hope to publish quietly and go unnoticed but, in our experience, this is unlikely. Current and potential employees, the media, customers and investors all have an interest and will potentially pick up any apparent issues with your figures.
It’s therefore essential for businesses to demonstrate that their gender pay gap is not an equal pay issue and also to show that action is underway to deal with gaps and open up opportunities for women to populate upper pay quartiles. Good communication around gender pay reporting will integrate the story with a business’s broader approach to diversity, aspiration, strategy, and what type of employer and company it wants to be. This isn’t just a rewards story.
A good communications strategy should focus on the facts and the plan for addressing any concerns that arise through gender pay gap analysis. It shouldn’t dismiss less-than-ideal findings with rose-tinted assertions about a diversity-friendlier future. The point to remember here is that gender pay reporting is now an annual requirement – information on gender pay must be maintained online on employers’ websites for a minimum of three years, and future failures to close the gap will be readily spotted. Any plans and improvements sketched out in this year’s narrative have to be authentic and tangible. Any serious action plan by a major employer to close the gender pay gap is going to take more than 12 months to deliver tangible improvements, in our experience it can take up to 10 years or more to truly close the gap. This is a long-term journey, not a quick fix.
One thing that is certain is that scrutiny of progress on gender pay gaps is going to be rigorous and sustained. No company should under-estimate the work involved to prepare, disclose and communicate, either this year or in future years.