Tom Heys Síobhra Rush July 27 2022 Gender pay gap reporting – updated guidance clarifies some (but not all) issues Lewis Silkin LLP | Employment & Immigration - Ireland Tom Heys, Síobhra Rush Employment & Immigration IntroductionAdjusting bonus paymentsPay for leave, hours for leaveDefinition of "employee"Temporary and part-time employeesPensionsGroup companiesDeadline for reportingIntroductionA number of issues regarding the interpretation of the new gender pay gap reporting regulations in Ireland became immediately apparent following their publication in June 2022. The government has now clarified some (but not all) of these.This article addresses key aspects of the regulations and clarifies what employers should be doing, updating some of the information previously detailed in a previous article (for further details please see "Gender pay gap reporting in Ireland – regulations finally published").Adjusting bonus paymentsClarification was needed on how to adjust bonus payments, which was a big issue in the gender pay gap reporting regulations. The regulations are clear on how to treat bonus payments when calculating an employee's hourly rate. They say that, unless they relate to a period the same length as the "relevant pay period" (ie, one year) they should be divided by the period that they relate to and multiplied by a year. Essentially, annualising every payment. This would lead to massive distortion of many bonus payments that relate to a period of less than one year (but which are paid more than once in the year). Commission payments, which are often paid monthly, would be particularly affected.Thankfully, the latest employer FAQs clear this up. Only payments that relate to a period longer than 12 months must be adjusted. For example:An employee receives a €12,000 annual bonus. All of this is included in the hourly rate calculations.An employee receives twelve €1,000 monthly commission payments. As none of the payments relate to a period longer than 12 months, no adjustments are necessary, and all €12,000 worth of commission payments are added together and are included in the hourly rate calculations.An employee receives a €60,000 long service payment after being employed for five years. As this payment relates to a period longer than 12 months it must be adjusted. It is therefore divided by five and €12,000 is included in the hourly rate calculations.Pay for leave, hours for leaveThe regulations give an exhaustive list of what is included as "pay". Pay for statutory leave (eg, maternity and adoptive leave) is not set out in that list, but the Department of Children, Equality, Disability, Integration and Youth's guidance said that it should be. The regulations also state that "working hours" only include time when someone is working or is available to work. When someone is on leave, they are neither.There are potentially two different approaches:including pay for leave – use the notional number of hours that an employee would have worked had they not been on leave; ornot including pay for leave – use the actual hours that someone worked (ie, disregard time not working).The FAQs now clarify this (in part) and say that employers should take the first approach. The FAQs say that pay for leave is included as "pay". They also say that periods of paid leave should be included when calculating the total working hours for an employee.However, the FAQs do not say what to do about periods of unpaid leave. It is likely that these should be taken into account (ie, employers should use the notional hours during the period of leave). As periods of paid leave must be included (even if paid at a considerably reduced rate, eg, 50% of normal pay, which can be the case for periods of maternity leave), the logic follows that this must be the approach intended.Definition of "employee"The definition of "employee" has been an issue for employers, and it will continue to be even after these new FAQs. The definition of "employee" for gender pay gap reporting purposes is broad. It is essentially anyone that could bring a discrimination claim.The FAQs make clear that partners (eg, in a limited liability partnership) would be outside the scope of gender pay gap reporting. However, the government encourages employers to calculate and report additional statistics including these individuals.The new FAQs do not give any extra information about how to treat contractors. Therefore, they should continue to be included if they are providing personal services (but if there are a lot of contractors, and there is a concern that they are swaying the statistics, employers could choose to produce figures that both include and exclude them). This means that someone engaged directly would be included but someone engaged through an intermediary, such as a personal services company, would not. In any event, many contractors may not be included; only those "employed" for 12 months will be included in the statistics.Temporary and part-time employeesThe FAQs state that someone is a temporary employee if, on the snapshot date, they were not employees on a contract of indefinite duration. If someone's contract changed during the previous 12 months, that would not affect this. What matters is their status on the snapshot date in June.The same applies in relation to part-time employees. "Part-time" may mean different things in different roles in a business – for example, a full-time person on the factory floor may be doing 48 hours a week, but a full-time personal assistant might be doing 37.5 hours a week. Hours alone is not a good criterion in determining who to count as "part-time".PensionsThe new FAQs say that pay should be calculated before deductions at source. This means before tax. If pension contributions are also taken before tax, they should be taken into account (they are essentially a negative payment rather than a true deduction). If they are taken from an employee's net salary, they should not be taken into account.The new FAQs do not say how to treat employer pension contributions. These are likely a benefit in kind, as they are not cash being paid to an employee (ie, outside of the definition of both "pay" and "bonus"), but they are something of value.Group companiesRecently, employers have (informally) been hearing different things from the department as to how group companies should comply. The FAQs now clarify this.The government's position is that group companies must report statistics for each individual entity, but they can also go above and beyond the minimum legal requirements and report a combined figure for all employees in the group. This is something that the government is encouraging, but not requiring. If combined group figures only were reported (and not broken down into individual entities), this would not be enough to comply with the regulations.Deadline for reportingThe regulations say that gender pay gap reports must be published "not later than 6 months after" the snapshot date.The government's view in these latest FAQs is that you don't include the snapshot date when working out the deadline. For example, if an employer has a snapshot date of 1 June, they can report on 1 December (even though, technically, a six-month time period from 1 June would expire on 30 November).For further information on this topic please contact Tom Heys or Síobhra Rush at Lewis Silkin by telephone (+353 1566 9875 or +353 1566 9877) or email ([email protected] or [email protected]). The Lewis Silkin website can be accessed at www.lewissilkin.com.