Alan Healy: Women in Ireland will soon know how much they are underpaid

Once in force, the Pay Transparency Directive is set to dismantle pay secrecy

Workers will be allowed to request information about pay levels for colleagues doing the same work or work of equal value.

Companies in Ireland are now well-versed in the growing list of reporting requirements which form part of their annual reporting.

In addition to the financial accounts and audit reports, firms here have also been preparing for new ESG reporting and sustainability disclosures in recent years. These new rules have been delayed and may not come into effect until the end of the decade.

Compliance with these reporting requirements requires cost, time and effort, but once in place, they will form part of the regular filings. 

However, the EU Pay Transparency Directive, which is barreling down the tracks and is supposed to be implemented by Irish companies by June 2026, is something new and will have much more impact. The directive does not just change what companies report but has the potential to alter how they operate.

The Government here has flagged that it will miss the June deadline for transposing the directive into law and that companies will not be penalised for not having all elements in place. However, it is still on its way, and once fully in force, it will bring significant change to the business environment.

The rules mean that for the first time, Irish workers will be allowed access to concrete data about what their colleagues are doing in the same work. For many companies, the change will bring to an end what has long been rumoured when it comes to pay parity, that female workers are still underpaid for doing similar work as their male colleagues. For companies where this takes place, the new directive will represent a seismic shift.

The EU's own data tells the story clearly. The gender pay gap across the bloc sits at around 12%, meaning women earn on average 12% less per hour than men for equal work. The CSO said Ireland's gender pay gap was 9.6% in 2022. Women in Irish workplaces have long suspected this reality. Under the new directive, suspicion becomes certainty.

The immediate changes will include salary ranges published in all job ads and a ban on asking candidates about their pay history during recruitment. These provisions alone will reshape how hiring works in Ireland, removing one of the key mechanisms by which pay inequality is perpetuated by anchoring new salaries to whatever someone was previously earning.

But the obligations go further. Workers will be allowed to request information about pay levels for colleagues doing the same work or work of equal value. Larger companies will have to report publicly on their gender pay gap across categories of workers. If a pay gap of more than 5% exists and cannot be objectively justified, companies will be legally required to conduct a joint pay assessment with employees.

These last changes have the potential to be most significant. For many companies, the directive will mean much more than publishing salary bands on job ads but will require a grassroots-level re-examination of how they classify roles and justify salaries, which often evolved organically or have never been seriously questioned.

It is likely that many pay structures will not hold up to scrutiny. Historically undervalued positions, often disproportionately occupied by women, will now sit uncomfortably alongside comparable positions which command greater salaries.

But the uncomfortable truths keep coming. The new pay transparency directive will collide with companies that want to keep a lid on their salary bill, not increase it, but they will struggle to do so. There will be a reporting cost to the changes, and also a direct cost in bringing workers into line with each other.

For companies maintaining a cap on salaries, there will be winners and losers. When gender pay gaps are closed without expanding the overall wage bill, someone's overdue pay increase comes at the cost of someone else's progression. That tension will play out quietly in organisations across Ireland.

Companies have already been publishing their gender pay gap reports for a while now, but these reports have been simple statements of data and statistics and relatively easily explained away. But under the new rules, workers who discover they have been significantly underpaid relative to colleagues will not simply accept it. There will be pay demands, grievances and, in some cases, legal challenges. Sectors with historically wide gender pay gaps face a particularly significant reckoning.

Workers themselves will gain significant powers.  They will begin benchmarking their roles against others as they can see the salary bands offered by competing companies.

Pay secrecy has been the default in Irish workplaces for generations. That default will shortly be dismantled, and once it is gone, it will not come back. The shift from an environment where salaries are a private matter to one where pay structures are visible and contestable changes the game permanently.