The news that Sweden has said it will seek a renegotiation of the European Union’s Pay Transparency Directive two months before the deadline for its transposition across the EU will do little to dispel the ongoing uncertainty regarding implementation here in Ireland.
The Department of Equality, which is responsible for the legislation required to incorporate the directive into Irish law, has confirmed the process won’t be ready by the June 7th deadline and that implementation will be on a phased basis.
Three years after the timeline for introducing the directive was set out, employers say they are still in the dark about what they are required to do and when it should be done by. The directive seeks to highlight existing pay inequalities in workplaces and ensure efforts are made to address them.
“Businesses are putting a lot of time, effort and resources into preparing themselves for the directive, says Nichola Harkin, head of employment law services at Ibec. “But we’ve probably hit a point now where, without the transposing legislation and without the guidelines around carrying out job evaluations, for a lot of businesses there’s not a huge amount more they can do.”
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Harkin says there is widespread support among Ibec’s members for the aims of the directive, but she cites “a huge administrative burden associated with it”.
“I think what will be important now is that Government strikes the right balance between meeting the needs of the directive without putting an excessive burden on business.”
There is also the risk, she suggests, that a new legal framework might be regarded as “a silver bullet”.
The directive is intended to ensure more openness around earnings, with employers required to provide salary information to job applicants, for instance. They will not be permitted to ask candidates about their earnings in previous roles.
There will also be an obligation to provide information sought by existing employees about the pay of colleagues and, where significant gender-based inequalities persist among those doing similar work or performing roles of similar value, the employer will be obliged to consult worker representatives to formulate a plan to address the issue.
“I think we have already made progress through the introduction in recent years of gender pay gap reporting. It’s a valuable diagnostic tool that provides really good data," says Harkin.
“To really address the gender pay gap, though, we need a whole-society approach. It will involve Government and business; it’ll involve the education system all the way from primary up to third level.
“There’s a huge amount of other work that needs to be done, [and] the number of women coming into STEM is a huge element of it. I think the pay transparency directive, while welcome, will only go so far in addressing that.”
Elizabeth Sheehan, country director of the 30% Club in Ireland, who previously worked in senior marketing roles at multinationals such as PepsiCo, Mars and Suntory, feels greater transparency on pay will be a significant step forward for workers.
“It’s so important,” she says, “because what it does is basically endeavour to level the playing field and ensure men and women enter negotiations on a similar footing.
“We’ve seen evidence of historical underpayment in the existing gender pay-gap reporting and that’s valuable in itself because, if you don’t measure it, if you don’t look at the numbers, then where is the accountability?
“Now, with this pay-transparency directive, there will be an ability for anyone to go into a job interview and know the salary bands for the role, know that whoever else walks in the door behind them is looking at the same salary bands. That it isn’t just down to their negotiation skills or daring.”
There is, Sheehan says, considerable support for addressing gender equality issues within the business community. She points to research in a report for the 30% Club in Ireland entitled the Courage Dividend. Forty per cent of employers surveyed considered work on the issue as a positive thing that could help improve “organisational culture” and “talent attraction”.
“This is an issue that organisations can turn into a competitive advantage,” adds Sheehan.
The immediate practical challenges are very real, however, says Leeanne Connolly, head of employment services at HR consultants, Peninsula Ireland.
Even in the ongoing absence of the legislation and guidelines, it is important that organisations prepare for change that has the potential to give rise to a wave of claims of unequal treatment, she says.
“There is absolutely the potential for that and, where there are claims, the burden of proof will have switched as well. Currently, the way it works is that if an employee takes a claim in relation to unequal pay, the burden of proof would lie with them to show the discrepancy.”
In an environment where many employers discourage or prohibit disclosure of pay rates, that can clearly be challenging but the directive is set to transform the landscape.
Connolly says: “It’s important to remember that none of this means every single employee suddenly has to be put on the same pay. There may be a reasonable justification for the differences that exist.
“If you’ve got someone with many years of experience, maybe they’ve worked their way up through a career pathway, that’s absolutely fine. You can have a reasonable justification there. But there does need to be a justification and it does need to be reasonable.”
She says organisations need to be looking at their current employee pay rates to assess if action is required. She adds that they need to put in place plans for the future, both in terms or recruitment procedures and career pathways or structures.
“Take action now. Take a look at your policies, your procedures. What current structures do you have in place? Do you have somebody who is earning more than you know? And if you do, why is that?”
Laura Bambrick, social policy officer at the Irish Congress of Trade Unions (Ictu), shares the widespread frustration that the Government has not yet published the legislation intended to complete the directive’s transposition into Irish law. She is also somewhat bemused that employers’ groups are still saying they need more time. BusinessEurope recently sought a two-year delay on implementation.
“There has been a three-year lead-in period,” she says. “And beyond that, you have to remember that the reason for this pay transparency directive is to ensure the effectiveness of a previous directive, the Equal Pay directive, that’s 50 years old.”
That gender pay-gap reporting is already in place is welcome, she says, but it has served to highlight that a gap of almost 10 per cent persists here, only fractionally below the European average. “And where is the Government’s portal which is supposed to allow people to compare employers’ performance? At the moment, submitting to it is voluntary and none of the information that is submitted is accessible.
“These aren’t just nice things to do,” she adds. “There is an evidential basis for them. The research shows women workers in general – not all of them but in general – are more likely to underprice themselves initially in a salary negotiation. And after that, they’re less likely to ask for a pay rise.
“But it also suggests that where you know what an employer hiring is willing to pay, or where you know what they’re paying your colleagues, that puts fire in your belly and it narrows the ask.”
Roland Erne, professor of European integration and employment relations at the UCD School of Business, does not believe the latest move by Sweden to delay implementation of the directive, or its failure to provide for legislation at home, will have wider implications. He says it is down to the general Euroscepticism of the right-wing Swedish Democrats, the support of which is required by the minority government there.
“Instead of calling for a Swedish ‘Brexit’ vote, which they would lose,” Erne suggests, “they want to undermine the European Union from within by refusing to implement EU laws. They think they can get away with that in this case.”
With so many other challenges currently facing the EU, they may be right, at least for a time, Erne suggests. However, he adds: “Sweden requires EU support in many ways. The government will pay a political price in Brussels. They will also pay a political price at home as gender equality is one of the main priorities of the social democratic opposition.”
The EU is also guilty of dragging its feet. Its own agency, the European Institute for Gender Equality, only published its 150-page guidance on practical implementation of the directive in late March, 10 weeks before the deadline for transposition.
“Call me a cynic,” says Bambrick, “but I think we’ll still be talking about this in a year’s time.”
