A female employee has raised a concern on the grounds that she is not receiving the same remuneration as her male colleagues. As an organisation how can we ensure that we are not at risk of equal pay claims?

Equal pay is a hot topic in in light of the recent and welcome announcement from the Football Association of Ireland (FAI) that the men’s and women’s senior international team will receive the same match fees while on international duty. Any person who wishes to succeed in a claim for equal pay must identify a comparator who is carrying out like work but is treated differently on the basis of a discriminatory ground, and in this case on the grounds of gender.

The Legal Basis for Equal Pay

The Employment Equality Acts 1998-2015 (the ‘EEA’) deals with equality in the workplace and governs the law in this area. An employee’s right to equal pay for like work applies to all nine protected characteristics, including gender, provided for in the EEA.

Sections 19(4) and 29(4) of the EEA extend this protection to instances of indirect discrimination. Indirect discrimination can occur where a seemingly neutral provision puts employees of, for example, a particular gender at a disadvantage in respect of remuneration compared with other employees of a different gender. In such circumstances, an employer will be in breach of its equal pay obligations however it will be a defence for an employer if it can demonstrate that the pay differential is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.

The definition of ‘like work’ is provided for in Section 7 of the EEA. Like work is work that:

• is performed in the same or similar conditions as another employee, or
• is interchangeable with the work of another employee, or
• is of a similar nature to that performed by another employee and any differences between the work performed by another employee are of small importance in relation to the work as a whole; or
• is of equal value to the work performed by another employee, having regard to such matters as skill, physical or mental requirements, responsibility and working conditions.

How can an employer ensure that all employees receive equal pay for like work?

An employer should ensure that the organisation’s pay structure, system and policies are based on the principles of equal opportunity and equal pay for equal work and that the proportion of staff at different pay levels is monitored across the protected grounds under the EEA. Employers should ensure that the policies are strictly followed and will need to be able to justify any difference in pay as being based on grounds other than discriminatory grounds.

An equal pay audit is an effective way to assess whether an employer has any issues regarding direct and indirect discrimination on grounds of equal pay in the workplace.  An equal pay audit involves comparing the pay of comparators, for example, men and women who are doing like work in the workplace, investigating the causes of any pay gaps by gender and addressing any gaps that cannot be justified. By addressing the issue, it can help employers significantly reduce the risk of equal pay claims. The following steps can be used as a general guide when carrying out an equal pay audit.

1. Determine Scope of Audit 

A full equal pay audit focused on gender would involve including all employees in an organisation however for practical reasons an employer may decide to limit the scope to a particular section/department.

2. Job Evaluation

Establish categories of employees performing ‘like work’ as set out in section 7 of the EEA. While job titles can generally be an indicator of like work this may not necessarily be the case particularly in circumstances where there may be a limited range of job titles within the workplace. Work of equal value is work which is not the same but is of equal value in terms of the demands of the role based on certain factors such as effort, skill and decision-making.

3. Analyse Pay Data

Once an organisation has identified which employees are doing like work, a comparison needs to be carried out regarding pay information to identify any pay gaps.  It is necessary to calculate the average basic pay and average total pay of each employee category and calculate the difference between average pay for each gender. If there are any pay differentials, there should be genuine justification based on objective criteria.

4. Action Plan

If there are differences in pay between men and women which cannot be justified, an employer is exposed to the risk of an equality claim. Employers should put in place an action plan to address this as soon as possible and amend any pay policies and practices that have contributed to unequal pay. Even if the audit does not reveal any discrepancies regarding equal pay, an organisation will benefit from carrying out regular reviews to ensure that standards are maintained and compliant with current law and best practice.

Consequences for Employers

If an employer does not provide equal pay for equal work, then they are at risk of an employee taking a claim to the Workplace Relations Commission (WRC). A claim to the WRC must be taken within 6 months (extended to 1 year in certain circumstances) of the date of discrimination. A decision of the WRC can be appealed by either party to the Labour Court.

If an Adjudication Officer upholds a claim, he or she may grant one or more of the following remedies, amongst other available remedies:

• An order for compensation up to three years’ arrears of remuneration from the date of the claim;
• An order for equal remuneration; and
• An order for compensation up to 2 years’ pay or up to €40,000 whichever is the greater for the effects of acts of discrimination or victimisation.

Alternatively, an employee may take a gender discrimination claim regarding equal pay to the Circuit Court. The Circuit Court may order equal remuneration and/or compensation and/or arrears of wages for up to 6 years prior to the date of making the claim.

Gender Pay Gap Information Act 2021

The gender pay gap can commonly be confused with the principle of equal pay for equal work which although connected is a separate and distinct issue and one which employers should be familiar with in light of recently enacted legislation. The gender pay gap is the difference between the average wages of men and women within a particular organisation irrespective of their level/seniority.

The Gender Pay Gap Information Act 2021 (the ‘Act’) was signed into law on 13 July 2021 and under the Act employers (to include private and public employers) will be required to report data on their gender pay gap. Where a gender pay gap exists within an organisation, an employer will be obligated to publish statements giving reasons as to why a gap exists and outline what measures are being implemented to deal with it. The finer details of the gender gap pay reporting obligations are to be set out by regulations which are anticipated to be published and in force by the end of the year.

Initially the mandatory reporting obligations will only apply to those employers with 250 or more employees however the scope will be widened to employers with 150 or more employees from the second anniversary of the regulations, and to employers with 50 or more employees from the third anniversary of the regulations. The regulations will not apply to those employers with less than 50 employees.

Employers are advised to take steps to prepare for their obligations under the Act and consider measures which may need to be taken to address a gender pay gap before mandatory reporting is enforced.