Tuesday, 14 May 2019
Gender Pay Gap Information Bill 2019: Second Stage
I move: “That the Bill be now read a Second Time”.
I am pleased to address the House on the Second Stage of the Gender Pay Gap Information Bill. The purpose of the Bill is to provide for a requirement that employers with 50 or more employees publish certain information on the differences in pay between female and male employees.
The gender pay gap is a well-known phenomenon which is receiving more and more attention in Ireland and internationally. Most commentators on the gender pay gap are keen to find ways to reduce it and legislation providing for the publication of information concerning the pay gap at the level of the firm is seen as important in improving understanding of the pay gap and incentivising employers to use whatever means they can to reduce it.
The gender pay gap has long been an issue of concern at EU level. In 2014, the European Commission issued a recommendation on pay transparency and this Bill can be seen as a response to it. In 2017, the Commission adopted an action plan on the gender pay gap. In addition to addressing the many aspects and causes of the pay gap, this plan raises the possibility that aspects of the 2014 recommendation might be the subject of a draft directive which would make them binding.
In Ireland, A Programme for a Partnership Government includes a commitment to promote wage transparency by requiring companies of 50 and more to complete a wage survey. The National Strategy for Women and Girls 2017-2020 has a number of actions to address directly or indirectly the gender pay gap. The action relevant to this debate is No. 1.23 to “promote wage transparency by requiring companies of 50 or more employees to complete a wage survey periodically and report the results.”
In light of all of this, we have conducted extensive consultations on the gender pay gap. In August to November 2017, we held a written consultation, which was followed by a well-attended seminar in January 2018. The outcome of both of these lends ample support to this Bill. I myself have spoken on many occasions and to a wide variety of groups on the issue. The culmination is this Bill, which is an important measure to address the gender pay gap though, of course, it is not the complete solution.
Senator Ivana Bacik and her Labour colleagues in the Seanad have also done very good work. They introduced the Irish Human Rights and Equality Commission (Gender Pay Gap Information) Bill, which has been passed by the Seanad and has gone through Second Stage here. As I have said a number of times in both Houses, the Government shares the objective of this Bill but we do not agree with the mechanism it proposes for gender pay gap reporting.
On 7 February, the Joint Committee on Justice and Equality issued its report on pre-legislative scrutiny of the general scheme of the Bill which is before us. This is a very informative and interesting report even if I disagree with some of its conclusions.
I turn now to the main provisions of the Bill. Section 2 provides for the insertion of a new section 20A in the Employment Equality Act 1998. This provides that the Minister for Justice and Equality shall, as soon as is reasonably practicable after commencement, make regulations requiring the publication of gender pay gap information. The regulations must include certain items of information and there is a discretion to include additional items. The items that must be included are the mean and median gap in hourly pay between men and women, in bonus pay and in hourly pay of part-time male and female employees; and the percentage of men and of women who received bonus pay and benefits in kind.
Section 20A(1)(c) requires the publication of the reasons, in the employer’s opinion, for any gaps and of the measures, if any, that the employer is taking or proposes to take to eliminate or reduce gaps. This reflects a recommendation in the pre-legislative scrutiny report of the Joint Committee and came from other interests as well.
In addition to the required information which I have outlined, the regulations may provide for the publication of the following information: the mean and median pay gap between men and women on temporary contracts, the percentage of each pay quartile who are men and who are women and the publication of pay gap information by reference to job classifications.
Section 20A(2) provides that, in making regulations, the Minister shall have regard to the estimated costs of complying with and enforcing the regulations.
Section 20A(3) provides for the threshold of employees above which the employer will be required to publish gender pay gap information. The key point is that employers with fewer than 50 employees will not be covered. It also provides for the phased introduction of the requirements on certain employers to report, namely, that the regulations shall not apply to employers with fewer than 250 employees before the second anniversary of the making of the first regulations, nor to employers with fewer than 150 employees before the third anniversary. I will return to the thresholds and the phasing later.
Section 20A(4) provides that the regulations may prescribe, among other things, the classes of employer to which the regulations apply, subject to the thresholds I have just mentioned, the classes of employee and the classes of remuneration to be reported.
Section 20A(5) provides that the regulations may prescribe the form and manner in which and the frequency with which information is to be published in order to bring the information to the attention of the employees and the public. For example, the regulations might require the employer to send the information to the employees in addition to publishing it on the employer’s website and uploading it on a central Government website. Publication will not be required more often than once a year.
Section 20A(6) provides for publication of gender pay gap information by each Government Department, scheduled offices, An Garda Síochána and the Defence Forces. Essentially, the intention is that this legislation applies to the public as well as the private sector where the body in question is within the employment threshold.
Section 20A(7) provides for the situation in which the employer does not have access to pay information on employees. In that case, the regulations may require the person who has such access to give the information, or access to the information, to the employer so that the latter can comply with the regulations. This arises in the education sector where teachers are employed by a school board but are paid by the Department of Education and Skills.
Section 20A(8) provides that the regulations may prescribe measures to ensure that personal data have undergone pseudonymisation before or when they are released. This means the processing of personal data in such a manner that the data can no longer be attributed to a specific person.
Section 3 is concerned with enforcement and inserts three new sections in the Employment Equality Act 1998. These are sections 85B, 85C and 85D. Section 85B provides for the appointment by the Minister of designated officers to investigate how employers prepare the information required to be published to ensure its accuracy. Provisions already in the Employment Equality Act on powers to enter premises, obtain information and require persons to provide information and associated sanctions are applied to this situation.
Section 85C enables the Irish Human Rights and Equality Commission, IHREC, to apply to the Circuit Court for an order requiring a person to comply with the regulations. A person who fails to comply with a Circuit Court order is in contempt of that court. Section 85D allows for an employee to make a complaint to the Workplace Relations Commission, WRC, of non-compliance with reporting regulations by their employer. The Director General of the WRC or an adjudication officer, to whom one would expect this function will be delegated, will investigate the complaint if satisfied that there is a prima faciecase. If, on investigation, the officer finds in favour of the complainant, he or she may make an order requiring the employer to take a specified course of action in order to comply. This is the only remedy that may be ordered. For example, compensation may not be awarded, as it is not an appropriate remedy in this situation. Enforcement of WRC orders is through the District Court.
Sections 85C and 85D adopt the approach of requiring a person to comply with the regulations rather than penalising the person for failure. If they fail to comply they are in contempt of court. I prefer this approach to one of creating a criminal offence. In contrast, the Labour Party Bill creates a summary offence with a maximum fine of €5,000. It is doubtful whether this would be an adequate sanction. I would not be content to see perhaps substantial employers accepting a fine and failing to comply with the regulations.
Section 5 inserts a provision in the Irish Human Rights and Equality Commission Act 2014 to allow the Minister to request IHREC to consider exercising its powers under section 32 of that Act. This section concerns the carrying out of equality reviews and the drawing up of equality action plans. It will be for IHREC to decide whether to exercise its section 32 powers following the Minister’s request. For instance, the situation could arise that it becomes apparent to the Minister following publication of an employer’s gender pay gap information on a central government website that the pay gap is abnormally large having regard to all relevant considerations.
It would then be appropriate to draw it to IHREC's attention and ask it to consider using the powers I have mentioned.
Section 6 provides that the Minister shall review the Act before the fifth anniversary of commencement.
I will return now to the question of the threshold at which the reporting requirement should apply. In accordance with A Programme for a Partnership Government and the national strategy for women and girls, this is set at 50 employees. There have, however, been calls for lower limits. In its scrutiny report, the Oireachtas joint committee notes that the vast majority of companies in Ireland have fewer than ten employees. The committee then recommended that the Bill reduce the threshold for public and private organisations to between ten and 15 employees. Other interests have also argued that the proportion of employers that employ 50 or more people is very small, at 1.4% of employers, and that the vast majority of businesses will not have to report gender pay gap information. Focusing on the percentage of employers that will be affected is only marginally relevant, if that. What we need to consider is the proportion of employees that will come within the legislation. According to the CSO's Business Demography 2016, almost 57% of employees are in firms with 50 or more employees. However, when we look at the public service, which is also covered by the legislation, we find that organisations with fewer than 50 employees are rare. According to the Department of Public Expenditure and Reform's databank, more than 99% of employees are in bodies which employ 50 or more. These are figures from quarter 4 2018. Taking the private and public sectors together, there are grounds for believing that approximately two thirds of employees are covered by the Bill.
The CSO uses a classification whereby firms with fewer than ten employees are regarded as micro, firms with between ten and 49 employees are small, firms with between 50 and 249 employees are medium and those with 250 or more are classified as large. The committee's recommendation would take in all small firms and is, therefore, unacceptable. At the same time, the committee recognises that extending the coverage of the scheme in this manner would cause problems because it goes on to state:
With lower thresholds, consideration should be given to the capacity of smaller businesses to meet reporting requirements. One option would be to establish a unit in the Department of Justice and Equality, or potentially the Revenue Commissioners, to provide necessary supports.
My priority will be to get the resources needed to implement the overall reporting system. Deputies generally and, in particular, those who have served as Ministers or Ministers of State, will recognise that setting up new units, etc., is far from easy and I would be totally against imposing the regulatory burden that this would entail for small business.
On phasing, the Oireachtas joint committee recommends extending the requirement for reporting within one year to all companies with 50 or more employees. I believe, however, that it is better to phase in the introduction of gender pay gap reporting in the more measured way set out in the Bill, namely, by applying it to firms with 250 or more employees for the first two years, to those with 150 or more employees in the following year and to those with 50 or more employees the year after that. This gives firms and those charged with administering the new system an adequate lead-in time and presents an opportunity to modify the regulations, if necessary. We have an opportunity to learn. Large companies have the resources, manpower and wherewithal to do this and they are willing to do it. The smaller companies can learn from their experience and, possibly, mistakes, etc. That is important to bear in mind. Many small companies do not have the resources or wherewithal to do this.
I look forward to hearing the views of Deputies and to discussing the Bill in more detail on Committee Stage. I commend the Bill to the House.