Gender pay gap reporting regulations
The requirement for gender pay gap reporting in Northern Ireland is set out in Section 19 of the Employment Act (Northern Ireland) 2016. Section 19 specified that, no later than 30 June 2017, detailed regulations were to be published which would contain the details of the regime, such as who should be counted, what amounts to “pay” and other such matters (the Regulations).
Due to the collapse of the Northern Ireland Assembly in 2017, however, and lack of a functioning legislature for three years, there has been neither draft regulations nor even a consultation on gender pay gap reporting in Northern Ireland. The issue now forms part of the Department for Communities’ wider gender equality strategy and so we may start to see some progress in the near future. That said, it is highly unlikely that there will be any consultation or guidance at least until after assembly elections due in May 2022.
The Regulations are expected to be a cut and paste of the GB regulations, as happened for example with regulations on shared parental leave. However, additional provisions will be needed relating to the requirement to include ethnicity and disability statistics on workers within each pay band.
Moreover, the GB Regulations are due to be reviewed and potentially amended in 2022 – a mandatory review was written into the Regulations.
What will be in the Northern Ireland gender pay gap reporting regulations?
Assuming that the Regulations are similar to those in GB, it is expected that they will apply to any private sector, voluntary sector or public sector organisation that employs 250 or more workers. In GB the threshold of 250 workers is fixed, but in Northern Ireland the Regulations can, and may, specify a lower number of workers. In the Republic of Ireland, gender pay gap reporting will eventually apply to those with just 50 or more employees.
The first "snapshot date" for calculating pay gaps was to be 31 March 2018 for the public sector and 5 April 2018 for all others, as in the GB Regulations. Whether any future Northern Ireland Regulations will similarly mirror the GB Regulations’ snapshot date is uncertain. Employers will have 12 months from that snapshot date to calculate their gender pay gap statistics and publish these in a report on their website. It is still not known whether there will also be a Northern Ireland equivalent of the GB government’s gender pay gap reporting website.
The Regulations will set out detailed provisions as to who is to be included, which will probably extend more widely than those included in Fair Employment monitoring returns, covering workers, and also part-time staff on less than 16 hours per week. They will set out the prescribed definitions of ordinary pay and bonus pay, and how to calculate the hourly rates. They will also set out the information to be provided, including the mean and median pay and bonus gaps. The information must also set out the percentage of men and women in each of four quartiles from the lowest paid to the highest paid.
Although not required to do so, some employers who have employees across the UK have decided in the interests of transparency to use the GB method of measuring and for now simply apply this to and include their Northern Ireland employees in their published statistics. This will need to be reviewed in light of the Regulations when published.
Differences between gender pay gap reporting in Northern Ireland and Great Britain
Although we are still missing much of the detail, already we know that there will be some important differences between gender pay gap reporting in Northern Ireland and GB.
Disability and ethnicity pay reporting
Besides gender pay gap reporting, as mentioned above employers in Northern Ireland will have to publish additional disability and ethnicity statistics on workers within each pay band. Precisely what statistics must be calculated and within which “pay bands” is still unknown at this point and remains to be clarified by the eventual Regulations.
These might simply require reporting on the proportion of each pay quartile or decile that includes individuals with a disability or who are from an ethnic minority. If the Regulations go further, however, and require the calculation of disability or ethnicity pay gaps, then since Northern Ireland is the least ethnically diverse region of the UK – around 98% of the population is white, according to the 2011 census results (more recent data is not yet available) – calculating ethnicity pay gaps could be difficult for many employers.
There is also a question about whether the Regulations when eventually published will require analysis of ethnicity, race, or both.
Gender pay gap action plans
Where there are differences in the pay of male and female employees, an employer must publish an action plan to eliminate those differences, sending a copy to all employees and any recognised trade union. In GB, employers must only report their figures and confirm they are accurate – there is no requirement to take positive steps to reduce any gaps.
It does not appear that this provision directly extends to ethnicity and disability pay gaps. But, given that the information to be provided to employees and any recognised trade union and published on the employer's website includes statistics about ethnicity and disability, where the statistics demonstrate pay differences employers may wish to consider how they will report and deal with this. Trying to come up with an effective action plan to deal with three different types of pay gap at once could be challenging for employers.
Enforcement of gender pay gap reporting
It will be a criminal offence for an employer to fail to comply with the Regulations. The offence is punishable by a fine not exceeding Level 5 (currently £5,000) for every employee. The maximum fine for a company employing 250 people would therefore be £1,250,000.
To put this in the perspective, there has for many years been a provision allowing prosecution of employers who fail to provide the statutory monitoring information on religion and sex required under the Fair Employment and Treatment (Northern Ireland) Order 1998. In practice, the Equality Commission for Northern Ireland almost never uses these powers, preferring to engage with employers to ensure compliance rather than prosecuting.
Subject to the detailed Regulations, it does appear that failure to comply includes a reference to failure by a person acting on behalf of an employer, which may raise the issue of personal liability.
By contrast, the GB Regulations are loosely enforced by the EHRC. Their approach is limited to sending letters to employers who should but do not publish gender pay gap statistics.
What employers in Northern Ireland should be doing now
Because data is critical to any pay gap analysis, employers should review the data that they currently hold. Employee response rates for providing ethnicity information are typically very low and this can cause problems when analysing the data. Because we know that there will be a requirement to report some form of ethnicity statistics, employers should try to increase their ethnicity dataset as much as possible.
Employers might also consider whether they might want to make any changes to simplify the pay gap reporting process. For example, by moving bonus payments away from the (possible) April pay period to avoid having to perform pro rating calculations, or changing their arrangements when engaging self-employed contractors.
Employers should also consider a dry run. This can be done on a privileged basis to avoid creating potentially disclosable documents. By doing a dry run now, employers will be able to identify any potential problems, start developing and implementing effective diversity initiatives, and begin the slow process of reducing their gender pay gaps.
Gender pay gap reporting in the Republic of Ireland
Gender pay gap reporting regulations covering the Republic of Ireland have not yet been published but are due by the end of 2021. Only when published will it be possible to work out the extent to which employers will be able to use similar systems to monitor and report, or what differences will be required. It is too soon to know whether it might be possible for employers to calculate gaps covering employees over the entire island of Ireland.
We can support your gender pay gap reporting needs throughout the island of Ireland. Contact Adam Brett for Northern Ireland, or Linda Hynes for the Republic. For gender pay gap support in GB, contact Tom Heys.