Is UK the Best Guide for Gender Pay Gap Reporting?

Gender Pay Gap lessons learned from the UK experience

Gender Pay Gap legislation was signed into Irish law in July this year and while much is still unknown about how the initiative will be implemented, lessons can be learned from the roll out of similar legislation in the UK

Gender Pay Gap legislation seeks to redress the imbalance between the average earnings of men and women and will mandate organisations to annually report figures illustrating the extent of the pay gap between what women and men earn as a group.

Employers will be required to publish the following data on their workforce: The mean and median gap in hourly pay between men and women; the mean and median gap in bonus pay between men and women; the mean and median gap in hourly pay of part time male and female employees; the percentage of men and of women who received bonus pay and the percentage of men and of women who received benefit in kinds.

But perhaps most importantly, the legislation will also require employers to provide an explanation for the reasons for any gaps and outline measures being taken to address them.

If anything can be learned from the UK roll out of Gender Pay Gap reporting it is that context is key to framing and clarifying what the Pay Gap is, why it exists, how it is communicated and what the organisation intends to do to reduce it.

In the UK, positive feedback was received by organisations that focused on developing a fundamental understanding of underlying issues behind the Gender Pay Gap and were seen to be taking action to resolve them. In contrast, organisations that were perceived to make excuses for the gap, abdicated responsibility or were overly defensive or dismissive were staunchly criticised.

It is important to note that the Gender Pay Gap does not necessarily mean unequal pay. It is critical for organisations to communicate this point internally, as employees and other stakeholders may leap to the conclusion that men and women are not being paid the same amount for the same work. This is unlikely to be the case as paying women less than men for the same job, purely on account of their gender, is illegal. The gender pay gap is considerably more complicated and its root causes are often more nuanced and challenging.

The Gender Pay Gap refers to the difference between what is earned on average by women and men. It compares the pay of all working men and women; not just those in similar jobs, with similar working patterns or with similar competencies, qualifications or experience. The difference is subtle but important. For most organisations unequal pay is not the primary cause of the pay gap. Instead, it has more to do with occupational segregation, over representation of women in part-time roles, unequal opportunities for promotion across gender lines, as well as societal norms and employment biases. Put simply, if female employees hold more lower paid jobs in an organisation than men, then the gender pay gap will be wider.

It is only by addressing the root causes that companies will be able to reduce the gender pay gap. Consequently, it may be helpful to gather additional information and metrics to help build a more comprehensive narrative about your organisation’s Gender Pay Gap. Additional information might include the type of sector the organisation is in, whether it is a male or female dominated industry and how your figures compared to national and industry averages, the number of males and females within the organisation as well as their length of service, department, seniority level and whether they engage in full-time or part-time work.

The UK experience indicated that gathering this information provides insights into where gender imbalances are likely to occur. It also helped pinpoint whether imbalances exist at entry level or if they emerge at a later stage and if imbalances are limited to specific departments or roles within the organisation.

Choosing to consult with employees along the way is also highly recommended from the UK experience, and outside expertise should be drafted in as required. Even where the news is not positive it is preferable to communicate any results internally first, rather than having employees discovering them through Government websites or news headlines.

It is only by reviewing this data and their related policies and practices that employers and stakeholders will be able to identify what is occurring within the organisation and what approach is required to address any challenges. Additionally, by analysing these figures employers can identify any areas where they may have acted inappropriately or in a discriminatory manner and can set about rectifying any behaviours or biases that may have been present.

As per the UK experience, employers should include the specific, meaningful and measurable actions their organisation intends to take to tackle the gender pay gap. It is also important to note at this point that resolving the gender pay gap will take time. It is not simply a matter of paying women more, but of reviewing and improving recruitment processes, introducing flexible working, reviewing career development opportunities and redesigning bonus schemes. While this might all sound like a lot of effort, ultimately a reduced gender gap will result in increased female workforce participation rates which will benefit employers and society at large.

For more on the Gender Pay Gap read:

Gender Pay Gap Ireland – What Employers Need To Know

Mandatory gender pay gap reporting required for UK companies

Gender Pay Gap Reporting

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This article first appeared in the Irish Independent on 2nd Dec 2021