As Ireland enters its third year of gender pay gap reporting, Andrew Egan and Aoife Newton outline legislative updates, bonus gap impacts and new reporting requirements
As many employers in Ireland commence their third year of gender pay gap reporting, it is essential to understand the legislative changes and analyse bonus trends following the introduction of the Gender Pay Gap Information Act 2021, and identify important changes for employers to note as they begin this year’s gender pay gap reporting cycle.
Bonus gap analysis
A fundamental feature of the Gender Pay Gap Information Act 2021 reporting requirements relates to bonus gap calculations. These calculations are used to understand the disparity in bonus payments between genders within an organisation.
Bonus payments can also considerably impact total remuneration (as bonus pay is built into ordinary pay results), affecting the overall pay gap within an organisation.
As a result, the observation of a large bonus gap is often reflected in the overall pay gap.
Pay gap trends
More than 1,000 gender pay reports from 2022 and 2023 have been analysed by KPMG’s data team to identify key trends in Ireland across different industries:
- From 2022 to 2023, the average bonus gap in Ireland rose by 1.5 percent, up from 16.5 percent to 18 percent.
- In 2023, 87 percent of the employers analysed reported a bonus pay gap in favour of men.
- The most common reason cited by employers for their pay gap related to a higher proportion of men occupying senior roles.
- The bonus gaps are biggest in the insurance, real estate and construction, financial services and professional services industries.
Senior roles are typically associated with higher bonus remuneration. We expect bonus and pay gaps to persist if women remain underrepresented at senior levels.
Correctly determining the cause of an employer’s gender pay gap is critical in addressing the problem and improving the gap in future reporting cycles.
We are seeing employers having to more clearly define their bonus pay models to ensure greater transparency and consistency of treatment of men and women to reduce or eliminate bonus pay gaps, which in turn will positively impact their overall gender pay gap.
Gender Pay Gap Reporting in 2024
In late May 2024, the Employment Equality Act 1998 (Section 20A) (Gender Pay Gap Information) (Amendment) Regulations 2024 (the 2024 Regulations) were introduced.
Following this, the Department of Children, Equality, Disability, Integration and Youth updated its Gender Pay Gap FAQs for employers document (the FAQs) and the associated Guidance Note document.
The 2024 Regulations amend the original Employment Equality Act 1998 (Section 20A) (Gender Pay Gap Information) Regulations 2022 (the 2022 Regulations) to reflect the obligation of relevant employers with over 150 employees to report on their gender pay gap in 2024.
This reporting threshold will expand to those with over 50 employees in 2025.
The 2024 Regulations also provided an update on the definition of ‘basic pay’ to include payment when an employee is on certain types of statutory leave (adoptive leave, maternity leave, parents leave (or transferred parents leave) paternity leave (or transferred paternity leave), entitling them to a corresponding social welfare benefit.
Employees entitled to the relevant benefit for each of these types of leave under the Social Welfare Consolidation Act 2005 shall now have these payments included as a component of their basic pay calculations.
Employers should incorporate salary top-ups to employees on statutory leave as listed above when calculating employees’ pay. The FAQs guides employers who do not pay a top-up to employees to ‘report on the benefit the employee is paid where eligible.’
Online reporting
We understand that the development of an online reporting system is underway. We expect this will consist of a central portal where all employer data will be uploaded.
While we think it is unlikely this will be in place for 2024 reporting, we are awaiting further details on its implementation and whether its operation will move the reporting deadline from December to November in future years.
This change would result in employers having five months from their June snapshot date to report on their gender pay gap, instead of the current six-month period.
Gender pay gap and shares
One of the most significant changes brought about by the 2024 Regulations was the shift in the approach to how share options and interests in shares are treated for gender pay gap calculations.
After the 2022 Regulations were introduced, many employers struggled with the application of these elements as a part of bonus remuneration calculations.
Share options and interests in shares are now included in the benefit-in-kind calculations rather than under bonus remuneration.
The definition of benefit-in-kind now includes “any non-cash benefit of an estimated monetary value and, for the purposes of these regulations, includes share options and interests in shares.”
Shares (distinct from share options and interests in shares) are still part of bonus pay and, as such, the value of shares issued during the reporting period should be included in bonus remuneration calculations.
Andrew Egan is Director at KPMG and Aoife Newton is Director at KPMG Law
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