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How gender pay gap reporting legislation will impact the workforce

Gender pay gap reporting is now law, mandating large companies to report on their performance. How will this legislation impact upon business, talent attraction – and the gap itself?

Unequal representation is very different to unequal pay, which occurs when men and women are potentially paid a different rate for the same or an equal-value role. Photograph: Kzenon
Edel Corrigan
Fri Dec 16 2022 - 00:00

Getting to the bottom of the pay gap

The gender pay gap (GPG) is the difference in the average hourly wage of men and women across a workplace, says Gillian Harford, country executive of the 30% Club in Ireland. “There are several reasons why a gender pay gap can exist in some companies. This may be that more women are working in lower-paid positions, or do not feature in the higher, senior or leadership positions of an organisation, where remuneration is higher. Some sectors/scarce specialist skills are traditionally more male-dominant so the GPG can be a feature in these too.

“The primary factor that drives a gender pay gap is the under-representation of women and the over-representation of men in higher-paid roles, relative to the overall gender balance in the company, ie more women versus men in lower-paid roles and more men versus women in higher-paid roles, which creates a gap when you average all salaries,” says Harford.

Unequal representation is very different to unequal pay, which occurs when men and women are potentially paid a different rate for the same or an equal-value role. Ireland has a very robust legal framework to prevent this form of discrimination, and equal pay for equal work is already enshrined in the law.

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Setting the bar

So where does Ireland stand with its gender pay gap? It’s unclear, as it is not data that has been collected at a national level previously, Harford adds. “The last Eurostat in 2019 estimated that Ireland has a gender pay gap of 11.3 per cent compared to an EU average of 13 per cent.

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“There are two things to be aware of – reporting in Ireland in 2022 will only cover employers with 250 employees or more, so will not cover the full workforce, and there is no facility to collate a national figure within that process; and that the figure of 11.3 per cent is an estimated national average, and individual organisations will report individually across a wide gap range.”

New reporting measures

The new legislation means employers with 250 employees or more will need to report across seven dimensions, although the expectation is that the main focus will be on the first requirement – the mean and median hourly pay of male and female employees, Harford says. “The legislation also provides for the publication of the key drivers for the gap, and the key plans to address/close the gap, which is the most important area that we need to focus on.”

The primary factor that drives a gender pay gap is the under-representation of women and the over-representation of men in higher-paid roles

For 2022, companies are required to report their gender pay gap information and action plans on their websites or similar. In the longer term, we expect to see a reporting portal being developed for more centralised national reporting.

Harford says a gender pay gap is not a sign of an organisation doing something wrong, instead it is a metric at a point in time that is strongly influenced by unequal representation in higher-paid roles versus lower-paid roles. “Therefore, there are no penalties for having a gender pay gap. This does not take away from the mandatory requirement to report that gap, and there are mechanisms in place within the legislation to ensure that requirement is enforced.”

Getting the balance right

“We have seen a lot of progress in the last five years in terms of female participation levels in the workforce, improving the gender balance in very senior roles, the availability of more agile working arrangements, and the focus on removing stereotypical skills development in school and further education,” says Harford. However, there is still more to be done, and the gender pay gap, although a crude measure, is a first step in providing data on where we are at, and where we need to be to improve more balanced accessibility to higher-paid roles.

“A significant number of employers in Ireland are already on a journey to improve their gender balance at senior levels within organisations – and we see this across all the main industry groups including financial services and professional services. For those employers, gender pay gap reporting is another step on that journey that will help to give greater focus on areas where continued action is still required.”