Gender Pay Gap Reporting in Northern Ireland – where are we so far?

Gender pay gap reporting has long been anticipated by employers in Northern Ireland, and despite having legislation in place since 2016 to allow for adoption in NI, thanks to the prolonged absences of the Northern Ireland Assembly, Regulations to formally mandate reporting have been delayed. This has left Northern Ireland significantly out of step with the rest of the UK and ROI, who have had gender pay reporting requirements in place for some time.

There has been much interest and speculation around whether the eventual regime would largely replicate what has been in existence in GB since 2017, and there were a number of aspects of the Employment Act that indicated potentially significant differences in the future NI requirements.  These included a requirement to report on ethnicity and disability pay gaps, and to publish an action plan to eliminate the differences in gender pay gaps. This was, at the time, a step ahead of GB obligations. However, changes to pay reporting requirements under the current Employment Rights Bill in GB will now require employers to publish action plans, and the draft Equality (Race and Disability) Bill is also expected to introduce mandatory ethnicity and disability pay reporting requirements in GB.

We previously wrote about what employers in Northern Ireland might expect, and how it might compare to the GB gender pay gap reporting regime here. However, without the finer details in the statutory Regulations, it has been a case of wait and see for employers.

What does the new consultation say?

On 25 November 2024, the Department for Communities opened a public consultation setting out its plans to introduce Regulations that will require employers in Northern Ireland to disclose and publish information showing whether gender pay disparities exist between male and female employees.

The consultation calls for responses from employers and more widely from within the voluntary and charity sectors, civil society organisations, trade unions and employment lawyers, from which the Regulations will be developed.

The document includes draft proposals for the Regulations which demonstrate, in large part, a mirroring of the existing reporting requirements in GB.

Gender pay gap reporting thresholds

It is proposed that employers in the public, private, and voluntary sector, with 250 or more relevant employees, will be required to publish their gender pay gap information. The Department reports that this will capture in the region of 345 employers in the jurisdiction.

There had been speculation as to whether a lower threshold would be implemented in Northern Ireland, taking account of the relative size of business, and bearing in mind that under the EU Pay Transparency Directive, there will be a gradual lowering of the threshold to eventually bring employers with 100 workers into scope for reporting. In fact, the Republic of Ireland’s gender pay gap reporting regulations will capture employers with 50 or more employees, by 2025.

However, for now, the Department appears to have discounted a lower reporting threshold, on account of additional and disproportionate financial burden, as well as the potential data protection and confidentiality compliance issues that could arise for smaller businesses if they were caught by the new reporting requirement. Views are sought on the 250+ threshold, but it seems likely this will be implemented, at least to start with.

Methodology for pay gap reporting

The Department proposes adopting the methodology used by the NI Office of National Statistics for their Annual Survey of Hours and Earnings, and mirroring the existing reporting requirements in GB to ensure comparability of gender pay data with England, Scotland and Wales. It will involve:

• Annual reporting of mean and median pay and bonus gaps
• Carrying out calculations based on a specific pay period (known as the snapshot date). As in GB, the Department proposes a snapshot date in April, to avoid seasonal fluctuations in the workforce.
• Preparing calculations based on hourly rate of pay for each relevant employee, which will include basic pay, allowances, pay for piecework, pay for leave and shift premium. Overtime is excluded due to the possibility it could skew results as more men than women are likely to work overtime.
• Reporting on the proportion of male and female employees that receive a bonus.
• Publishing pay and bonus gap information in quartiles, by dividing the workforce into four equal groups.

Ethnicity and disability pay gap reporting

The requirement to report on ethnicity and disability was an aspect of pay gap reporting that was unique to the Northern Ireland pay gap reporting framework. However, the devil was always going to be in the detail in terms of nature and method of reporting. 

The draft proposals in the consultation document do not provide this detail save to confirm that under the Regulations, employers will be required to publish information including statistics on workers within each pay band in relation to ethnicity and disability.

The consultation recognises the current absence of a legal requirement to record an employee’s ethnic origin, but states that where the information is known, it should be recorded.

These reporting obligations would almost certainly give rise to practical difficulties. At present there is no agreed methodology with regard to ethnicity (as opposed to Community background in Northern Ireland, where there is a compulsory monitoring question), although the UK Government has published guidance for organisations who voluntarily analyse ethnicity pay gaps – we wrote about that here. There is also much more room for divergent groups in this category, for example, the Race Relations Order specifically identifies Irish Travellers as an ethnic group.

The position is even more complex in relation to disability, as an employee’s status will often vary over time, for example, if they become disabled during employment. Employees may often not want to disclose their disability, or even see themselves as disabled. How a disability is to be defined, and by whom, will be relevant to this issue and greater legislative clarity on definitions in the draft Regulations is needed. The consultation document seeks comments from participants on providing pay gap information relating to worker’s ethnicity and/or disability and we anticipate this will be an area that will see significant engagement from respondents, which will hopefully inform the basis of more detailed provisions in the published Regulations.

Action plans

Another key differentiator from the current GB regime in the NI Act was the requirement for employers, where a gender pay gap exists, to publish an action plan to eliminate those differences, which must be sent to all employees and any trade union recognised by the employer. The Department states in the consultation document that it does not intend to prescribe the content of action plans. Employers are instead encouraged to produce plans that are proportionate to the level of their gender pay gap and cover the reasons and the actions being taken to address the causes that are within their control.

It would appear from the consultation document that action plans will be required to address gender pay differences only, and not any ethnicity or disability pay gaps. However, in practice the publication of ethnicity and disability pay gaps will put pressure on employers to cover these as well.

Non-compliance

Section 19 of the Employment Act (Northern Ireland) 2016 stated that that non-compliance with gender pay gap reporting requirements would be a criminal offence punishable by a fine and be enforced by such other means as are described in the Regulations.

The consultation document does not elaborate on this, but the Department invites opinions on which body/organisation should be responsible for monitoring and enforcement. By comparison, the enforcing body in Great Britain is the Equality and Human Rights Commission, albeit there is no equivalent criminal offence under the GB regime for non-compliance, and no current plans to introduce such a penalty under the Employment Rights Bill reforms. Currently registration and monitoring requirements of community background under the Fair Employment Order rest with the Equality Commission for Northern Ireland, and indeed there may be some overlap given the requirement to break down community background by sex, so it might be thought that the Equality Commission would be the obvious body.

When can we expect Regulations to be published?

The Department wants these to come into force as soon as possible, but because of the delay in drafting these Regulations, it will take little longer yet.

Amendments will be required to the Employment (Northern Ireland) Act 2016, which currently stipulates that Regulations would be made by 30 June 2017. Subject to Assembly approval, it is anticipated that Regulations will come into force in early 2027.

Employers would not, however, be required to publish pay gap reports immediately, but would likely have further time to prepare, with first reports likely due to be published in 2028, reflecting a 2027 snapshot date, and then annually thereafter.

What about the EU Pay Transparency Directive?

This consultation comes as part of a broader move towards requiring employers to be more transparent about pay and pay gaps – with new and developing legislation having been recently passed in many US states, Brazil and beyond. The high watermark is the EU Pay Transparency Directive which will set new standards on pay reporting and transparency.

This Directive is particularly relevant for employers in NI: the Equality Commission for Northern Ireland and the Northern Ireland Human Rights Commission have published their view that, under the dynamic alignment principle captured in the Windsor Framework, the majority of its obligations will need to be implemented. Whether that happens and how the Directive obligations interact with new gender pay gap reporting obligations remains to be seen. 

What does this mean for employers and how should they prepare?

For those 345 employers who come within scope, there may be a number of those in the private sector who are already caught by the gender pay gap reporting requirements in other jurisdictions and have the functionality and administrative resource in place to pull together the data easily, although given the devolved nature of employment law in NI and the separate legal regime that will apply, it is likely that statistics will separately have to be compiled for Northern Ireland based employees. For those who do not, they will need to plan ahead and budget accordingly. If considering updating or replacing HR Information Systems then the ability to capture relevant data securely needs to be a feature.

This can become somewhat complicated when taking account of current ways of working, particularly in the post Covid era, where there has been a sharp rise in home and remote working. This could raise questions for employers as to who should be included in the overall headcount within each jurisdiction where there is a reporting requirement. The existing regulations in GB, do not specify where an employee must be based to be within scope of the Regulations but non-statutory guidance produced by Acas and the Government Equalities Office provides that an employee working overseas will be within the scope of the regulations if they have standing to bring a claim under the Equality Act 2010.

This necessarily involves assessing whether an employee has a strong connection to the jurisdiction, by reference to matters such as where they live and work, where the employer is established, which laws govern other aspects of the relationship (such as the employment contract) and where tax is paid. Going forward, this may be something that requires careful consideration by employers to ensure reporting properly and accurately reflects the workforce.

There will inevitably be much more to do to prepare for ethnicity and disability pay gap reporting, and employers would be well advised to start reviewing current data gathering practices, and consider carrying out some early analysis to help spot – and take action in relation to - particularly significant gaps before reporting obligations kick in.