September 18th celebrates International Equal Pay Day. As new regulations under the EU Pay Transparency Directive get closer, it is time for Organisation’s in Ireland to fully contemplate the requirements of the directive and what areas of compliance they need to plan, prepare, update and adhere to.
The Directive came into effect at EU level in June 2023 and Ireland must transpose the legislation into domestic law no later than 7 June 2026.
The Directive aims to ensure Employers adopt fair compensation practices and will require Organisations to identify any compliance gaps. The legislation is a significant step towards creating a fair and equitable work environment ensuring Employers must adapt to changes to ensure compliance and, more importantly, to cultivate an inclusive workplace culture.
What does this mean to an Employer?
Given the proposed legislation’s complexity and implications, Employers should begin preparing early to ensure an even transition from a considered, operational, and legal position. Especially as our own national legislation may impose stricter rules on Companies based on the number of Employees.
Pay Transparency
- Employers must provide information about the initial pay scale or pay range in the job vacancy notice or prior to the job interview. Future Employees cannot be questioned about their pay history to date.
Employee Rights to Records
- Employers must make readily available information about the standards used to establish individual pay levels, and average pay levels, broken down by gender for any Employee doing or providing the same level of work. No matter what the company size all Employees have the right to be informed of this annually.
Gender Pay Gap Reporting
- There is an obligation for Companies with more than 250 Employees to report annually on any gender pay gap and for Companies with over 100 Employees every three years. This is required to also highlight and report on serious signs of pay inequalities.
Joint Pay Assessments
- A pay assessment report will have to be conducted by an Employer if a gender pay gap is revealed of a minimum of 5% in any category of workers doing the same work or providing the same level of work and where the employer cannot substantiate the pay gap.
Why is this a Strategic HR Priority for Employers?
Given the proposed legislation’s complexity and implications, Employers should begin preparing early to ensure an even transition from a considered, operational, and legal position. Compliance will be arduous for all sized Companies, so setting this as a key HR priority for Q4 2024/2025 and introducing new remuneration frameworks, policies and strategic planning procedures to ensure pay equality will be essential.
What is the implication of non-compliance?
If an Employer is found to not have complied with the new Directive, then sanctions will be imposed.
- Any Employee who has borne gender pay discrimination may receive compensation which will include back pay and any other payments in kind and/or relevant bonuses.
- The onus of proof will be on the Employer and not the Employee to prove that there was no discrimination in relation to pay.
- Specific penalties could be enforced by Member States on Employers for infringement of the Directive.
- Employee representatives and/or Pay Equality bodies may act on behalf of Employees in administrative proceedings.
Key areas to work on to ensure compliance:
Promote Pay Transparency: Equal work deserves equal pay across both genders. Open communication and transparency in advertising job vacancies should be a standard practice. Begin by evaluating the existing condition of pay in your Organisation. Identify any current gender or other pay discrepancies and investigate the reasons that contribute to these disparities.
Rethink your Remuneration Policies: Start now to review and update remuneration policies to ensure compliance with the EU Pay Directive. Develop and implement measures to address any identified pay gaps. This may include adjustments to salary structures, performance evaluation processes, and promotions. For large companies (250 or more Employees) who are legally bound by the snapshot date for pay gap analysis, this is already in play, however, it does not mean that an Organisation of less than 150 in size should not also be preparing for this policy change. A fully comprehensive approach to ensure equal pay will look beyond gender and also consider age, disability, and race.
Develop your Recruitment Strategy: Commence and strategically plan your recruitment strategy to develop inclusive practices and procedures.
Upskill your HR and Management Teams: Provide training to HR and management teams on the principles of the EU Pay Directive. Ensure that they understand the importance of equal pay and are equipped to implement necessary changes.
The EU Pay Transparency Act marks a significant stride towards gender equality in the workplace. Employers must view these legislative changes not just as compliance requirements but as an opportunity to create a fair, transparent, and inclusive work environment. By strategically implementing the key changes discussed above, Organisations can not only comply with the new regulations but also foster a workplace culture that attracts and retains diverse talent while promoting equal opportunities for all.
To support and guide your HR and Management team we advise Organisations on how to plan key changes to their current remuneration analysis and systems. Adare can strategically plan your remuneration and total reward frameworks and discuss the most appropriate path to success depending on your Company size and upcoming legislative deadlines.