As of December 2024, a significant change will be implemented in Ireland. Companies with 150 to 249 employees must publish their first gender pay gap (GPG) report, a legal requirement outlined in the Gender Pay Gap Information Act 2021. This is a substantial shift, especially for smaller organisations and their HR teams. One that will also extend to companies with 50 or more employees in 2025, having come into force for those with 250 or more employees in 2022..
The change in reporting requirements is one part of a much-needed broader strategy to improve female participation rates and employment gaps between genders. It won’t solve the causes of these differences alone, but it is a crucial and welcome element. However, it’s also adding an additional burden to HR teams in smaller organisations.
Non-compliance with these regulations can result in significant reputational harm. Therefore, all companies must put in the work to ensure they fully understand and adhere to these reporting requirements. Yet, as our recent research uncovered, with just weeks to go, more than half of businesses remain ill-prepared, as only 45% have reviewed their pay rates by gender in the past year.
Here, we look at the crucial aspects of the gender pay gap and the new GPG reporting requirements.
Before delving into the implications of GPG reporting, it’s important to understand what the gender pay gap is. Essentially, a pay gap measures the difference between the average earnings of two groups—in this case, male and female employees.
It’s also important to differentiate between the ‘gender pay gap’ and ‘equal pay.’ While equal pay laws mandate that individuals should earn the same for performing similar work, the gender pay gap considers broader pay disparities across all roles, regardless of seniority.
Despite the fact women make up over half the world’s population, it remains the case that their contribution is unequal in terms of measured economic activity and the labour market. This means that while unequal pay may play a role in creating a gender pay gap, it is not the sole factor.
The causes of the gender pay gap are complex and often stem from structural and societal influences, including:
As such, GPG reporting is not just about compliance. It’s a step towards enhancing pay transparency and reducing the disparities between male and female participation and earnings in the workplace, fostering a more equitable and inclusive environment for everyone.
Under the Act, employers with 150 or more employees must publish information on their gender pay gap. In brief, the metrics gathered must include:
Each organisation must also publish a broader explanation, giving the underlying reasons for any gap and what measures it will take to address it.
Organisations have to make the information publicly available and accessible to anyone for at least three years. Plans are in place to create a central government portal (similar to the UK) where companies can upload their reports. However, it has yet to be released, so, in the interim, organisations should upload their reports to their company website.
In practice, businesses will need to follow a carefully laid out plan and include the following steps:
You can read our latest blog, ‘Understanding Irish gender pay gap reporting metrics and best practice’ to learn more.
With larger companies already engaged in GPG reporting for the last two years, organisations with 150-249 employees have an opportunity to learn from this experience. Such learning can be translated into actionable steps that, if followed, will help you avoid the pitfalls while realising compliance benefits.
Actionable steps for HR in smaller companies:
By implementing these steps, smaller companies can not only comply with gender pay gap reporting requirements but also foster a more equitable and inclusive workplace.
Complying with GPG reporting offers several benefits. The most obvious is avoiding the negative outcomes of non-compliance. While there isn’t a sanction for having a pay gap or failing to report, it can be costly in terms of reputational damage with both customers and employees.
By identifying and addressing potential disparities, organisations can minimise the risk of costly pay equity lawsuits. Ensuring all employees receive fair pay also boosts internal morale and nurtures trust between employers and staff, leading to greater employee satisfaction.
Finally, organisations that comply with GPG reporting promote their commitment to equality and demonstrate a business-wide dedication to ensuring fair practice in the workplace, which can help with attracting and retaining skilled talent.
In practice, the feedback has been overwhelmingly positive despite initial resistance from larger organisations that are already required to report. According to PwC’s report on the gender pay gap in Ireland, the mean gender pay gap across all companies surveyed decreased by 1.4%, from 12.6% to 11.2%. Sectors such as aviation and construction saw even greater improvements.
The mandatory nature of reporting has also spotlighted issues around gender representation at various levels within organisations. The data revealed that over 75% of companies reported a predominance of males in the highest pay brackets, prompting many businesses to concentrate efforts on increasing female representation in senior positions.
However, it’s essential to recognise that not all sectors are faring equally. Industries like law, finance, and construction continue to grapple with considerable pay gaps, often linked to male-dominated senior roles and substantial bonus discrepancies. This is something to bear in mind at your organisation.
The introduction of gender pay gap reporting in Ireland has been a crucial step towards gender equality in the workplace. It has not only fostered transparency but also encouraged companies to reflect on their practices and actively work towards creating fairer working environments for all.
As you prepare for this new requirement, there are lessons to be learned from the larger firms that have already navigated this path, setting the stage for meaningful change to the gender pay gap in Ireland.