07/07/2021 Briefing

The Bill, once enacted, will amend the Employment Equality Acts 1998 to 2015 to require the Minister for Children, Equality, Disability, Integration and Youth to make regulations requiring certain employers to publish information relating to the gender pay gap in their organisations. Employers will also be required to publish the measures taken by them to eliminate or reduce the gender pay gap.

On publication of the Bill, the Government stated that its aim is to provide transparency on the gender pay gaps that exist in organisations. The Government believes that firms which can report a low or non-existent pay gap will be at an advantage in recruiting future employees and that mandatory reporting will incentivise employers to take measures to address the issue insofar as they can.

 

Background

As the law currently stands, no gender pay gap reporting obligations exist for Irish employers. However, the principle of equal pay for equal work has been enshrined in law for a long time. It formed part of the original constitutional architecture of the EU at the time of the adoption of the Treaty of Rome in 1957 and an equivalent provision is now contained in Article 157 of the Treaty on the Functioning of the European Union. The principle of equal pay for men and women, originally in the Equal Pay Directive enacted in 1975, is now contained in the Recast Directive on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation.

Furthermore, the European Commission recently introduced a proposal for a directive to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms (available here), which, if adopted, will introduce wide-ranging reforms in the area of equal pay across the EU, far beyond the measures proposed in relation to gender pay gap reporting contained in the Bill.

 

Existing Equal Pay Legislation in Ireland

In Irish law, the relevant legal protections in this area are the equal pay provisions of the Employment Equality Acts 1998 to 2015. These Acts provide employees with a cause of action if they can show that there is a person of the opposite sex in the same employment working for the same (or an associated) employer doing ‘like work’ and being paid more.

Equal pay claims do not arise very frequently before the Workplace Relations Commission and Labour Court. This is due to several factors including the requirement that an employee must be able to point to an actual real-life comparator of the opposite sex who is performing ‘like work’ for higher pay necessarily presents an obstacle for potential claimants. In addition, employers have a defence to an equal pay claim under the Employment Equality Acts if they can demonstrate that the grounds for unequal pay are not related to any of the protected characteristics under the Acts.

Despite these longstanding legal prohibitions on discrimination in relation to pay, evidence suggests that significant differences remain in the rates of pay of men and women doing the same work. A recent EU survey found that only 26% of Europeans were aware of the legal guarantee of equal pay for equal work in their country. Nonetheless, the survey indicated that a clear majority were aware of the gender pay gap, with 69% of Europeans thinking that women are paid less than men. According to figures collected by the Central Statistics Office, in 2008 Ireland’s gender pay gap stood at 17%. In 2016, Ireland’s gender pay gap had reduced to 13.9%. Across the EU in 2018, women earned on average 14.1% less than men, with large differences between EU countries. However, a gender pay gap of 13.9% remains high, by any objective measure. It was against this backdrop that the Government introduced the Gender Pay Gap Information Bill 2019.

 

Gender Pay Gap Information Bill 2019 – Measures that must be contained in the Regulations

The Gender Pay Gap Information Bill 2019 requires the Minister for Children, Equality, Disability, Integration and Youth (the “Minister”), as soon as reasonably practicable after the commencement of the legislation, to make regulations requiring employers to publish information relating to the pay of their employees for the purpose of showing whether there are differences in such pay referable to gender and, if so, the size of such differences.

The information which must be published by employers under the regulations includes the following:

  • the difference between both the mean and the median hourly pay of male and female employees;
  • the difference between both the mean and the median bonus pay of male and female employees;
  • the difference between both the mean and the median hourly pay of part-time male and female employees;
  • the percentage of male and female employees who received bonuses and benefits in kind.

The mean, commonly known as the average, is calculated when one adds up the wages of all employees and divides this figure by the number of employees. The median is the figure that falls at the midpoint of a range when all employees’ wages are considered from smallest to largest. The median is typically considered to be a more representative figure as the mean can be skewed by a handful of highly paid employees.

In addition, employers will be required to publish, concurrently with the above gender pay gap information, the reasons for such differences and the measures (if any) taken or proposed to be taken by the employer to eliminate or reduce such differences.

The regulations will only apply to employers with 250 or more employees in the first two years after their introduction. In the third year, the requirements will also apply to employers with 150 or more employees. Thereafter, the requirements will apply to employers with 50 or more employees. The regulations will not apply to employers with fewer than 50 employees.

The Minister has indicated that a central website onto which employers will be required to upload their information will be established.

 

Gender Pay Gap Information Bill 2019 – Measures that may be contained in the Regulations

In addition to the above requirements that must be contained in the regulations, the Bill provides that the regulations may, but are not required to, prescribe the following:

  • the class of employer, employee and pay to which the regulations apply;
  • how the number of employees and pay is to be calculated; and
  • the form, manner in which information is to be published, along with the frequency of publication (which will not be required more than once per year).

The regulations may require the publication of the difference between both the mean and the median hourly pay of temporary male and female employees, the percentage of employees in each of the four (lower, lower middle, middle and upper) quartile pay bands who are male and female or the publication of information by reference to job classifications.

The regulations may also provide that, where the employer does not have access to the information it is required to publish but another person does have access to that information, the other person must give the information, or access thereto, to the employer to allow it to comply with its obligations under the regulations.

The regulations may require that employers ensure that personal data undergoes psuedonymisation on or before publication.

Although the Bill provides that the regulations may require the publication of the above information and actions, the Minister confirmed, as the Bill was being passed by the Oireachtas, that the regulations will in fact require the publication of this information and actions, unless an issues arises at drafting stage. Therefore, it was to afford some flexibility to the drafters of the detailed regulations that the words may and not shall is used in these provisions of the Bill.

 

Enforcement of Gender Pay Gap Reporting Measures

An employee who claims that his/her employer has failed to comply with the requirement to publish gender pay gap information may make a complaint to the Workplace Relations Commission. The Workplace Relations Commission will investigate the complaint if it is satisfied that there is a prime facie case warranting investigation. If the Workplace Relations Commission upholds the complaint, it may order the employer to take a specified course of action to comply with its gender pay gap reporting obligations. This is the only remedy that may be ordered. There is no provision for the payment of compensation to the employee or for a fine to be imposed.

The Bill also provides that where the Irish Human Rights and Equality Commission is satisfied that it has reasonable grounds for believing that an employer has failed to comply with the requirement to publish gender pay gap information, as provided for in the regulations, it may apply to the Circuit Court or the High Court for an order requiring the employer to comply. An employer that fails to comply with a Circuit Court or High Court order, will be in contempt of that Court.

The Irish Human Rights and Equality Commission may itself carry out, or invite a particular undertaking, group of undertakings or the undertakings making up a particular industry or sector, to carry out an equality review or prepare and implement an equality action plan. It will be for the Irish Human Rights and Equality Commission to decide whether to exercise these powers following a request by the Minister.

 

Amendments to the Bill since publication

There have been a number of amendments to the Bill since it was first initiated, including the following:

  1. The Bill as initiated allowed the Minister to appoint designated officers to ensure that the gender pay gap information published by employers was accurate. The provisions relating to designated officers have now been deleted in their entirety from the Bill. No such designated officers will exist. It was considered that the creation of the role was not necessary and might not be workable from a practical perspective. Instead, as detailed above, employees will be able to take a complaint of non-compliance to the Workplace Relations Commission.
  2. The role of the Irish Human Rights and Equality Commission (IHREC) has been somewhat strengthened. IHREC will now be able to apply to the High Court (in addition to the Circuit Court) for an order requiring an employer to comply with a requirement of the Bill. Consequently, employers who do not comply with a court order may now be held in contempt of the High Court, considered a stronger sanction.
  3. The Minister responsible will now be the Minister for Children, Equality, Disability, Integration and Youth, rather than the Minister for Defence, as originally planned.
  4. The current Bill contains a broader and more complete definition of what constitutes a public body, bringing it into line with the definition contained in section 10 of the Data Sharing and Governance Act 2019.
  5. A review of the functioning of the legislation must now be carried out before the fourth, rather than the fifth, anniversary of its commencement.

 

Conclusion

While the publication of the Bill is welcome, the requirement that the Minister makes regulations to provide for gender pay gap reporting means that the detail of the proposals is not yet known. The regulations will prescribe the form which publication of gender pay gap information must take and the manner in which compliance with the obligations contained in the Bill will be achieved. The Minister confirmed that it is his intention that the regulations, giving effect to the proposals contained in the Bill, will be published and in force by the end of this year. He stated that the “direct way in which the employer will be expected to report and engage on an annual basis will be set out clearly within the regulations”. Clarity on what precisely is expected of employers in this regard is eagerly awaited.

The passing of the Bill may mean that the legislation will apply to employers (at least those with 250 or more employees) from 2022 onwards, unless the Government decides to give employers more time to prepare. Given this uncertainty and a potentially short lead in time, we recommend that employers take steps now to establish whether gender pay gaps exist in their organisations and consider the steps that they can take to reduce/eliminate a gender pay gap ahead of time.