The Equal Pay and Pay Transparency Directive is an EU regulation placing major new transparency obligations on employers in Ireland. Find out what it means for organisations and how to comply.
The pressure to close the gender pay gap is mounting, driven by increased legislative reporting requirements as well as shareholder and employee expectations. Not to be confused with equal pay, the gender pay gap is defined as the difference between the average gross hourly earnings of all working men and women within an organisation.
The gap stands at 13% in the European Union overall. Addressing this gap and its root causes is a key aim of the European Commission’s Gender Equality Strategy 2022-2025. This includes initiatives such as the Work Life Balance Directive (read our blog), gender balance on corporate boards, and the European Care Strategy. The most recent regulatory push focuses on pay transparency. The Equal Pay and Pay Transparency Directive, which came into effect on 6th June, 2023.
What’s the status of gender pay gap reporting in Ireland?
The Gender Pay Gap Information Act took effect in 2022. It mandated employers with 250+ employees to publish information annually about their gender pay gap, reasons for it, and measures being taken to eliminate/reduce it.
The twenty metrics include gender differences in:
- Mean and median hourly remuneration
- Mean and median bonus payments
- Percentage of employees paid a bonus or benefit in kind
The scope of the Act will widen to employers with 150+ employees in 2024, then 50+ employees in 2025. While aligning with the basic requirements of the EU’s latest pay equity directive, the new provisions take transparency further.
What are the provisions of the Equal Pay and Pay Transparency Directive?
The Equal Pay and Pay Transparency Directive is aimed at all workers and employers in the EU both prior to and within employment. Before a job interview, applicants must be given information on a position’s starting salary or pay range. The goal is to ensure an informed and transparent pay negotiation. Employers aren’t allowed to ask about the candidate’s current or previous salary history.
During employment, workers are entitled to request information on their specific pay level and average pay levels by gender for the category of workers performing the same work or work of equal value within a company. This can help determine if they might be a victim of pay discrimination. Employers may also be alerted to possible unjustified pay disparities. With pay confidentiality clauses banned, workers can disclose their pay to colleagues or representatives should they wish to. Moreover, employers must be transparent about workers’ pay setting and career progression.
The pay reporting obligations involve regular publishing of information that can help detect pay disparities between men and women within an organisation, and raise awareness about unjustified pay gaps that employers can correct. Basic pay reporting concerns overall pay gaps as reported by member state monitoring bodies (by obligation) and on employer websites (by choice).
Strengthened pay reporting reveals the pay gap between men and women in categories of workers doing the same work or work of equal value and is made available to workers by employers. The Workplace Relations Commission and Irish Human Rights and Equality Commission can request this information. Workers and their representatives are also allowed to ask employers for clarifications on any data provided, including gender pay differences.
How does the new directive impact HR systems and payroll in Ireland?
All member states are required to comply with the new rules around pay transparency. They must enact the amendments through in-country legislation by 7th June, 2026.
Companies with more than 250 employees will be asked to report on the gender pay gap annually, while those with a workforce of 150 to 249 people will do similar every three years.
By 2028, the three-yearly reporting requirement will be extended to companies employing over 100 staff. A gender pay gap of at least 5%, revealed through reporting and unattributable to legitimate factors, will trigger a joint assessment that includes deeper reporting obligations.
The Irish Government will have the power to enforce fines in these cases. This directive goes beyond gender pay gap reporting measures. It could have far-reaching implications for a company’s HR and payroll infrastructure as well as recruitment policies.
The next couple of years are the perfect time for Irish employers to prepare. Consider your overall equality strategy, pay philosophy, HR systems, and payroll processes to ensure compliance readiness when the time comes
“The gender pay gap at the macro level talks about a number or percentage but what’s very interesting is to do a deep dive into the detail that payroll data can deliver. Companies can see if there’s an issue with the type of roles women are doing compared to men and get a proper understanding around it. They can assess what can be done to change this, such as incentives to bring women from more junior to more senior roles.”
What about the reference to “categories” of workers?
One interesting component of the directive is a requirement to report pay gaps by categories of workers. This refers to the job or post of the individual employee and a requirement to compare pay across groups of employees who are carrying out the same work or work of equal value.
Also, the current legislation (Irish Gender Pay Gap Information Act 2021) makes an allowance for the introduction of new regulations by the Minister requiring employers to report pay gaps across job categories. While there’s no necessity to do so just now, the directive will require that in-country legislation is aligned by mid-2026, giving employers over two years to conduct job evaluation exercises to ensure they’re ready to report and comply by this time.
How can companies prepare for mandatory gender pay gap reporting?
The directive clarifies what is to be taken into account as pay and as work of equal value. As such, pay represents the basic wage and any complementary component, such as bonuses, statutory sick pay, and occupational pensions.
Positions must be compared on the basis of skills necessary to perform a specific job and how those skills are valued. Employers will need to have job grading or pay structures to assess whether workers are in a comparable situation when it comes to the value of work performed. This assessment should be made on the basis of objective, gender-neutral criteria. These could include skills, efforts, responsibility, working conditions and other job-specific factors.
Employers should establish a baseline of where they’re at with measuring, reporting and explaining pay gaps. It’s crucial to look carefully at reward systems to understand any unjustified breaches. It’s important to review recruitment, HR and governance practices and rectify any issues with them. Employee engagement is also critical so that staff feel part of the positive change toward pay transparency.
You may also find our article on gender pay gap reporting useful.
How Zellis Ireland can help
Zellis offers an expert reward consultancy with a team dedicated to providing support, insights and guidance. We help organisations introduce and maintain an efficient, structured and fair approach to pay and reward. Our reward consultants can advise on pay structure design, equal pay audits, gender pay reporting, and quality impact assessments.