Gender Pay Gap Reporting: A Guide for SMEs
Contributed by Padraic Hayes – Head of Business Solutions at Intuity Technologies
In recent years, Ireland has taken significant steps towards promoting pay equity and transparency in the workplace. The Gender Pay Gap Information Act 2021 marks a pivotal move in this direction, requiring companies to disclose the wage difference between male and female employees. The first gender pay gap reporting requirement was introduced in 2022 for companies with more than 250 employees. In 2024, the requirement was extended to companies with over 150 employees, and by 2025, the obligation will further extend to companies with more than 50 employees, requiring them to begin reporting.
These milestones are particularly significant when you consider that, according to the latest figures from the Central Statistics Office, small and medium-sized enterprises (SMEs) with fewer than 250 employees constitute 99.8% of active businesses in Ireland and employ 68.4% of the workforce. Until now, reporting only applied to the remaining 1% of Irish enterprises. This means that we have yet to uncover the full extent of Ireland’s gender pay gap.
SMEs are under the spotlight in 2024 from both industry and media when they publish their first gender pay gap reports. This could be Ireland’s key solution to making real progress on closing the gap.
What is the gender pay gap?
The gender pay gap is the difference between the average hourly wages of men and women in the workplace. This gap reflects gender representation at different levels within an organisation and the overall pay differences.
For example, it shows how many men and women are in the top versus the lowest earning quartiles. It’s important not to confuse the gender pay gap with “equal pay for equal work,” which is already a legal requirement in Ireland.
The gender pay gap can result from factors like unconscious bias, company policies, or the division of caregiving responsibilities. According to the UN globally the gender pay gap stands at 20 per cent, meaning women workers earn 80 per cent of what men. Ultimately, women’s lifetime earning potential is significantly lower.
In Ireland, the gender pay gap is 11.3%, slightly better than the EU average of 13%. However, this still means women work for free for about one month each year. This issue affects everyone, not just women, as it impacts overall household income.
Who needs to report and when?
Gender pay gap reporting is now mandatory for all public and private organisations in Ireland, with 150 employees or more. Organisations must publish a report on their website that details their hourly gender pay gap across a range of metrics by December for 2024. It is intended that from 2025 the reporting deadline will move to November. In 2025, this requirement will be extended to organisations with 50 employees or more.
As SMEs prepare for this new reporting requirement, they must take the necessary steps to meet these obligations. Here are the steps you should take and the pitfalls you need to avoid.
Challenges for SMEs
Data collection from disparate systems
Reporting requires inputs from various data sources. Rarely can any organisation, regardless of size, extract all necessary data from a single source. Finance, payroll, and HR systems are often disparate and contain data of varying quality. This challenge intensifies when spreadsheets are used instead of integrated systems. Non-technical users may find it time-consuming and difficult to extract, organise, combine, and compare this data. Significant effort may be needed to cleanse existing datasets in preparation for reporting.
Resourcing
Completing the gender pay gap report requires significant time and effort, which should not be underestimated. For SMEs, this task can be particularly challenging as they may need to divert attention from regular activities, especially if they lack a dedicated reporting team. The leadership team will also face added pressure, as they must contribute to and sign off on the report. This situation increases the risk of introducing bias, similar to correcting one’s own homework, which should be avoided at all costs.
Availability of expertise
Smaller organisations are highly unlikely to have access to the broad range of expertise needed to complete the report. Creating detailed reports requires independent expert skills from a range of disciplines such as data analytics, visualisation, and organisational change specialists.
Navigating legislative nuances
The guidance in relation to how to report has evolved since the initial introduction of gender pay gap reporting. While many issues have been ironed out through the FAQs available on the government website, there are still nuances in the preparation of the report. Its advisable to carefully study the available guidance to ensure you are compliant.
Comparing results
Many organisations will be tempted to compare their results with their peers. However, it’s important to remember there is no right or wrong answer. The gender pay gap is a complex issue that goes beyond numbers. Instead, focus on assessing and improving your company’s practices, policies, and culture that influence the gap. By doing so, your gap results will naturally improve.
Best practice recommendations for SMEs
Fail to prepare, prepare to fail
Prepare for questions from your employees once your report is published. It’s crucial to communicate the results clearly and ensure they understand what the data says—and what it doesn’t say. Misunderstanding the metrics in the gender pay gap report is common. Remember, good news travels fast, but bad news travels twice as fast—so lead the narrative.
Action planning
In your final report, list the actions you will take to improve your gender pay gap over the next 12 months. Set goals for the upcoming year using the SMART (Specific, Measurable, Attainable, Relevant, and Time-Bound) technique. Focus on your company practices, policies, and culture, and use this opportunity for a yearly reset.
Get help early on
Getting help early on is crucial. The requirements of reporting may seem straightforward at first, but don’t be fooled. Preparing such a report can be time-consuming and intricate, requiring expertise in data analytics, visualization, and organisational psychology for a complete assessment. Significant input from various departments and teams across the organization is also needed—typically human resources, finance, payroll, and senior management.
Feeling Overwhelmed?
If you’re feeling overwhelmed about the reporting requirements, we’re here to help. Reach out to us, our Head of Business Solutions, Padraic Hayes and his dedicated Business Solutions team would be happy to help.
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