Pay Transparency in Recruitment and in Employment

The EU Pay Transparency Directive came into force in June 2023 and Ireland has until June 2026 to implement the new rules. 

It contains far-reaching new measures, such as gender pay-gap reporting, a ban on pay secrecy, information rights for employees, job candidates and much more.

The ban on pay secrecy will not only affect the recruitment process but also has an impact on how pay is communicated for existing employees.

Pay Transparency in Recruitment

At the recruitment stage, Employers will have to indicate the initial pay level or range in a job vacancy notice or in discussions prior to interview.

Recruiters/interviewers will not be allowed to ask candidates about their pay history. 

The aim is to ensure that candidates have the necessary information to engage in balanced and fair negotiations regarding their salaries and to ensure existing pay discrimination and bias is not perpetuated over time, especially when changing jobs. 

Pay Transparency for Existing Employees

Employees will have the right to request information from their employer on their individual pay level and on average pay levels broken down by gender for employees doing the same work. 

This information must be supplied by the employer within two months of the request.

Not only that, but employers with 50 or more employees will have to make information easily accessible regarding the criteria used to determine employees’ pay, pay level and pay progression.

Pay Secrecy Clauses in Contracts

Measures will be put in place to prohibit pay secrecy clauses in employment contracts.

Equal Pay Claims could Rise

If equal pay issues are revealed this will have significant potential to expose the employer to equal pay litigation.

If an employee is successful under an equal pay claim, under the directive, employees will be entitled to full recovery of back pay which could be substantial depending on how far back an equal pay issue goes.

Equal pay claims are already big news in the UK with some well-known retailers currently in the middle of defending test cases by sales staff, who are predominantly female, on the basis they perform work of equal value to warehouse staff, who are predominantly male.

There will most likely be an increase in employee and representative involvement in addressing pay equity.

It also means extra administrative requirements for employers to conduct equal pay audits and assessments of work of equal value.

While the current focus for many employers is on complying with existing and new Gender-Pay Gap reporting requirements, employers should not lose time in getting ahead of the new pay transparency rules. 

Employers should examine existing recruitment and pay transparency, and start taking steps to address issues in pay and how to be ready for the new requirements for pay transparency in recruitment and in pay for all staff.

Gender-Pay Gap Reporting

In addition, employers will have to provide details of the Gender-Pay Gap by employment category to employees and employee representatives. Employers will need to consult employee representatives when preparing Gender-Pay Gap reports, which is not currently required under Irish law.

Employees, their representatives and employment rights bodies (the WRC etc.) will have the right to ask the employer for clarifications and explanations concerning any gender pay differences. The employer will be required to respond to any such request within a reasonable time and provide reasons. 

Where gender pay differences are not justified by objective and gender-neutral factors, the employer will be required to correct the situation in close co-operation with employee representatives, the WRC and the Irish Human Rights and Equality Commission (IHREC).