What is the Gender Pay Gap?

While it is often confused with equal pay, under which men and women doing the same work are expected to receive the same rate of pay, the gender pay gap measures the difference between the earnings of all men and women across an entire organisation i.e. the difference in the average gross hourly pay of women compared to men in a particular company.

Governments across the EU and the US are tackling the gender pay gap by way of public mandatory reporting. Iceland, which is the best country in the world for gender equality and has a government agenda to eliminate its Gender Pay Gap by 2022, has recently made it illegal for men to be paid more than women. The UK’s Equality Act 2010 (Gender Pay Gap Information) Regulations means that since the 6th of April 2017 more than 10,000 companies in the UK, including several Irish ones with a presence in the UK, submitted details on wage transparency with the final figures indicating that more than 78% of UK firms pay men more than woman on average.

In Ireland the Anti-Discrimination (Pay) Act 1974 has failed to close the gender pay gap and we are now showing our intention to tackle this increasing and very topical issue by means of the Irish Human Rights and Equality Commission (Gender Pay Gap Information) Bill. This Bill is expected to be enacted before the summer recess this year.

This draft legislation, which will no doubt go through change before it is enacted, seeks to introduce gender pay gap reporting in Ireland. It is envisaged that this legislation will be much stronger than the essentially toothless UK equivalent.

The Bill:

The Bill requires employers who employ more than 50 employees to carry out pay reviews and it allows for the publication of such reviews with the aim of highlighting any differences in the pay of male and female employees, and the nature and scale of such differences. The information gathered would relate to differences between male and female employees in the following categories:

  • The mean hourly rate of pay;
  • The median hourly rate of pay;
  • The mean bonus pay;
  • The median bonus pay;
  • The proportions who are paid bonus pay; and
  • The proportions who are in the lower, lower middle, upper middle and upper quartile pay bands.

The “bite” to this draft legislation is that, unlike the UK equivalent which has “naming and shaming” provisions only, this Bill provides that if an employer fails to publish this information and comply with the provisions of the proposed legislation they will be guilty of an offence and fines of up to €5,000 can be imposed.

Get ahead of the Curve:

The Bill as it stands is in line with, but somewhat more substantial than, the legislation brought in by the UK, US and Europe. It provides for an information gathering or information disclosure scheme. It seems that in its current form it is more of a diagnostic tool than anything else and it is envisaged that it will improve the investigations of possible pay discrimination.

Irish employers now have an opportunity to take steps to get their house in order early and to identify and rectify any disparities in advance of the reporting obligations coming into law. Companies can start to look at their HR policies, compensation practices and payroll systems now, in order to take corrective action or explore any disparity to establish whether it can be justified. Organisations can ensure that they are ready for the enactment of the legislation and avoid potentially embarrassing and negative publicity which may arise from any pay gaps being published.  

Should you have any queries or require any assistance in carrying out a review of your organisation’s policies and procedures or for more information on this issue, please contact us.

19 April 2018

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