An Introduction to Gender Pay Gap Reporting
To start at the very start, a ‘pay gap’ is the measure of the difference in average pay between two groups in a workforce – typically those who identify as male and female – regardless of seniority, indicating a disadvantage to the group that earns less. As such, the gender pay gap (GPG) measures the difference in average pay between those two cohorts.
Gender Pay Gap Reporting then refers to the obligation on organisations to collect and analyse its pay data. The purpose of which is to capture the extent to which women are evenly represented in a company or organisation by identifying whether a gender pay gap exists, and if so, to identify ways in which the organisation can address these disparities.
Background on Gender Pay Gap Reporting
Gender Pay Gap Reporting is important in Ireland as a society as we aim to bridge inclusion gaps and create equity for all.
In Ireland, the Gender Pay Gap Information Bill was published in 2019 with the expectation that it would be enacted in 2020. However, having lapsed in 2020 as a result of the Covid-19 pandemic, it finally became law in Ireland with the creation of the Gender Pay Gap Information Act 2021 and was signed into law in July of that year.
Gender Pay Gap Reporting is a requirement in many countries - including the United Kingdom, Australia, and Germany – and the Act essentially places a reporting and publication obligation on both private and public sector employers to report on their Gender Pay Gap, depending on the organisation’s size.
So what does that exactly mean for organisations in Ireland?
Well, in 2022, organisations with more than 250 employees had to report on their Gender Pay Gap for the first time in the history of the State. As part of that, they had to select a ‘snapshot’ date in the month of June 2022 on which their reporting was based on the employees they had on this date. Taking a ‘snapshot’ of this data on a set date created a level playing field for all reporting organisations.
Organisations then had six months to prepare their calculations before reporting six months later, in December 2022.
In 2023, the Regulations now also apply to employers with 150 or more employees and who will have to provide a snapshot of data in June 2023. While in 2024, employers with 50 or more employees will have to publish a Gender Pay Gap Report; and employers with fewer than 50 employees do not have to report on their gender pay gap.
The requirements on employers comprises of six different ‘measures’ of pay gaps that must be reported:
1. Mean gender pay gap
This is the difference between the mean hourly rate of relevant male full-pay employees to that of their relevant female counterparts.
2. Median gender pay gap
The difference between the median hourly rate of relevant male full-pay employees to that of their relevant female counterparts.
3. Mean bonus gap
The difference between the mean bonus paid to relevant male employees to their female counterparts.
4. Median bonus gap
The difference between the median bonus paid to relevant male employees to their female counterparts.
5. Bonus proportions
The proportion of male and female relevant employees who received bonus pay during the relevant period.
6. Quartile pay bands
The proportion of male and female full-pay relevant employees in the lower, lower middle, upper middle, and upper quartile pay bands.
Understanding the Gender Pay Gap & Workplace Equity
Each of these measures aim to provide a different view on the gender pay gap, and perspective, within the context of the organistion’s HR and payroll policies, training, development, recruitment, or selection.
Before calculating gender pay gap figures, the organisation needs to gather specific payroll data for each relevant employee. This is done by determining relevant employees and full-pay relevant employees from a headcount, and using this data to make gender pay gap calculations.
Factors that contribute to the gender pay gap
The gender pay gap is the result of many factors, including race and ethnicity, disability, access to education and age. As a result, different groups of women experience very different gaps in pay. To this point, organisations also need to be aware of the intersectionality (Stanford University) of their employees in this regard.
Statistics on the gender pay gap in Ireland
In February of this year, an analysis of up to 500 firms based in Ireland that published gender pay gap reports in December 2022 found a mean gap of 12.6% (RTE News).
The analysis - carried out by PwC Ireland - discovered that the widest pay gaps were in the finance, banking, insurance, legal and construction sectors; while the lowest gaps were recorded in retail, health and charity organisations.
According to the report: “The exact reason for a gender pay gap varies by company and sector, a key factor appears to be the relatively high number of males in more senior (and so, more highly paid) roles.”
While an official national figure is not yet available, the last published data for 2019 found Ireland’s national gender pay gap was 11.3% while the EU average was 13% the following year according to the European Commission.
The Benefits of Gender Pay Gap Reporting
The transparency that gender pay gap reporting brings has been widely welcomed, as is the focus that many companies are putting on closing the gender pay and bonus gap. Of course, it presents challenges for certain sectors who may have large gaps to bridge, but inevitably the benefits of improving the representation of women in business far out-weighs the short-term lift.
The Challenges of Gender Pay Gap Reporting
Employers and organisations must be aware that where a gender pay gap exists, it could potentially negatively impact employer brand, employee value proposition (EVP), reputation, and the ability to attract and retain talent. Hence why communicating the report honestly and delivering on the actions suggested to drive change is key.
How to Prepare for Gender Pay Gap Reporting
Employers are required to publish their gender pay gap report within six months of the snapshot date. It must be published on the employer’s website, or alternatively, hard copies should be made available to all employees and to the general public. The report must remain accessible for at least three years from the date of publication, it is intended that an online reporting system will be in effect later this year.
In preparing for Gender Pay Gap Reporting (KPMG), it is advised that organisations complete the following steps:
1. Before completing your calculations, understand what is required, and confirm if you have all the relevant data.
2. Document your approach and calculations, so that you can compare like-for-like each year.
3. Finalise your report by explaining the gap, outlining the measures your organisation is proposing to take to close the gap, and clarify what internal stakeholders will complete the final review and sign-off, as well as who is responsible for uploading the report to your website, and publication of hard copies.
4. Confirm your communications strategy and ensure all senior stakeholders have been briefed in advance of the report.
5. Prepare for next year’s report and act on the proposed measures you identified to close the gap – if identified – by continuing to drive diversity, equity and inclusion plans.
Conclusion
In conclusion, the importance of gender pay gap reporting in Ireland will be transformative in years to come – for both individuals, their families, communities. However, organisations simply cannot just report on their pay gap and walk away. The very essence of having to report is to drive change by actioning the diversity, equity and inclusion initiatives you identify in order to reduce the pay gap and ultimately transform the world we live in.
About the Author:
Mary is an award-winning author. A strategic and inclusive leader who aims to drive positive change for all, Mary has 20+ years’ of experience in communications, DEI, wellbeing, and its impact on workplace culture.
