As organisations across Ireland prepare to publish their reports, Deirdre Malone outlines some practical aspects of the Gender Pay Gap Information Act. Among the key questions for employers about Gender Pay Gap reporting, one of the most important is who to include. All employees must be included, but this is not as straightforward as it appears. The definition of an employee in Irish employment law is well understood, but for Gender Pay Gap reporting, the statutory definition is taken from the Employment Equality Acts and includes individual contractors who are engaged personally to provide services. This definition has the potential to make things very complicated for employers. In most cases, employers have gone to some lengths to ensure that these individuals are not deemed employees. They do not have HR records for them, and they do not know how much the contractors are paying themselves for their work for the organisation, nor have they any idea of their leave and bonus arrangements. Including this cohort of workers in the Gender Pay Gap report will place many employers in a difficult position. Furthermore, this data gap may force some employers to exclude contractors from their Gender Pay Gap report. The Guidance Note that accompanies the Gender Pay Gap Information Act (the Act) advises employers to consult Workplace Relations Commission (WRC) case law for advice, but this is not as comprehensive as it could be. Instead, a practical and common-sense approach is required. Non-binary and transgender employees Very simply, everyone identifying as female must be included as female in the report, and the same applies to males. There is no definition of male or female in the Act, and it is up to individual employees to self-identify their gender. Organisations must remember that HR records may not be in accordance with individuals’ self-identification. Where there are non-binary individuals who do not identify as either gender in the workforce, they are not included in the Gender Pay Gap calculations but should be included in the headcount. Employers must ensure that data collection concerning gender identity is carried out as sensitively as possible. Those collecting the data must never rely on second-hand information or hearsay. Employers must engage with all employees about why they are seeking this data. They must ensure they obtain it directly from the individual or a trustworthy and reliable source. However, no one should be singled out and asked about their gender. Large group companies with numerous legal entities Many large organisations will wish to produce a single Gender Pay Gap report for their Irish operations. However, they need to be mindful that each legal entity in a group that employs more than 250 people has its own statutory reporting obligations. Nothing prevents the organisation from producing a consolidated report, however, if each legal entity also reports its individual statutory requirements within the consolidated report. There will also be cases where large organisations have entities that employ numbers below the reporting threshold. In our experience, though, companies tend to report on those entities—either within a consolidated report, or separately, to present the fullest possible picture of gender representation across its business and also in the interests of transparency. Where an organisation chooses not to report on smaller entities, the reasons behind that decision must be communicated fully, so they cannot be accused of a lack of transparency. Managing leave when calculating ordinary pay If a type of leave is paid, it is included in the Gender Pay Gap report. All pay received by every employee in the 12 months up to the snapshot date must be included in the calculation. However, this can give rise to anomalies. Take maternity leave, for example. Where maternity leave is paid, an employer may pay an amount to top-up statutory maternity benefit. Only the portion paid by the employer is included in the calculation, however, thereby artificially depressing the hourly pay rate of the employee in question. Where employees exercise an entitlement to additional unpaid maternity leave, this can further skew the figures. This will have to be looked at as it will be essential to explaining the anomalies in the circumstances arising for various cohorts of employees. Deirdre Malone is Head of Employment Law at EY Law Ireland

The Employment Investment Incentive Scheme looks set to become a vital source of much-needed funding for businesses in Ireland. Paddy Morrissey explains why The Employment Investment Incentive Scheme (EIIS) has been a crucial source of funding for Irish SMEs since its introduction in 2011 when it replaced the Business Expansion Scheme (BES). Now, EIIS, which allows Irish taxpayers to claim relief of up to 40 percent on qualifying investments, looks set to become an important source of investment for SMEs operating in a volatile economic environment in which risk appetite is on the wane. Despite several pre-budget submissions from various bodies, Budget 2023 became the first Budget in recent years to propose no amendments to the scheme after a period in which significant changes were made. The most significant came in the Finance Act 2019, which introduced a new self-certification-based system to replace the existing Revenue approval system. This allowed investors and investee companies to take responsibility for fulfilling the scheme's conditions. Once the investment takes place, the company may issue a "Statement of Qualification", allowing investors to claim their tax relief. The move to self-certification was widely welcomed, as it significantly shortened the period between an investor making an investment in a company and being able to claim tax relief. Some concerns have been raised about the uncertainty self-certification creates for a company receiving investment, however. The main concern here is that where a company is judged to be non-compliant with the provisions of EIIS, the withdrawal of the tax relief is against the company. In a scheme known for its complexities, companies are now limited to querying particular areas of the EIIS legislation solely with Revenue. It is not possible to seek an overall opinion from Revenue on whether or not an investment will qualify – a point noted in some pre-budget submissions. With that said, Revenue's guidance notes (Part 16-00-02), coupled with appropriate tax advice, are critical resources available to stakeholders to minimise risks. The most recent changes to EIIS came in Finance Act 2021. This extended the scheme to 2024 and removed the requirement for the benefitting company to spend 30 percent of the investment before issuing a "Statement of Qualification", accelerating the time between investment and the investor's ability to claim tax relief. The 2021 Act also significantly broadened the scope of fund structures that can complete EIIS investments, allowing Investment Limited Partnerships or Limited Partnerships managed by Alternative Investment Fund Managers to participate in the scheme. The 2021 Act also relaxed the 'capital redemption window' rules. Previously, exiting the initial investment before the second tranche investment had completed its minimum four-year holding period would result in a clawback of the investor's tax relief claimed on the investment. Now, investors may complete follow-on investments in a company without it impacting their ability to redeem or exit the initial investment. Recent findings suggest a contraction in investment activity in Ireland, driven by a volatile global economic backdrop. According to the Irish Venture Capital Association, overseas funding in Irish technology companies fell by 50 percent between the first and second quarters of 2022—from €303 million to €152 million. Equally, rising interest rates are driving a higher cost of debt funding. In this context, EIIS funding, boosted by legislative changes to the scheme in recent years, looks set to become an increasingly important source of equity funding for Irish SMEs in the coming years. Paddy Morrissey is an Investment Associate with BES Management DAC, the fund manager of The Davy EIIS Funds

As financial services firms prepare to comply with Central Bank guidance on operational resilience by December 2023, there will be challenges ahead, writes Linda Gibson The Cross Industry Guidance on Operational Resilience issued recently by the Central Bank of Ireland (CBI) highlighted just how important operational resilience has become to the financial services regulator—increasingly comparable to financial resilience, both in terms of regulatory resources and the supervisory scrutiny firms can expect to face. While the past two years have been challenging for businesses in Ireland, their resilience journey is only just getting started. The objective of the Central Bank’s guidance is to communicate to the industry how to prepare for, respond to, recover, and learn from an operational disruption that affects the delivery of critical or important business services. The guidance aims to enhance operational resilience and recognise the interconnections and interdependencies within the financial system that result from the complex environment in which firms operate. Responsibility is now being placed on the board and senior management to approve: the operational resilience framework; the critical or important business services; impact tolerances, business service maps, scenario testing to ascertain the firm’s ability to remain within impact tolerances; and communications plans. The CBI’s approach is that every firm, regardless of size or activity, will need to meet its expectations. While proportionality is a key factor, every firm will likely have at least one critical or important business service. Firms will now be working towards compliance with the CBI’s guidance on operational resilience by the December 2023 deadline. If firms needed a reminder of the importance of operational resilience, they need look no further than the recent disciplinary measures taken by the CBI against firms that failed to ensure continuity of service in the event of a significant IT disruption and for outsourcing-related control failings.  Embedding hybrid working into resilience models COVID-19 has brought operational resilience to the forefront of the boardroom agenda after firms around the world grappled with significant day-to-day disruption and a shift in the status quo. Where previously it was seen as more of a planning exercise, this rapid change helped focus many leadership teams on the need to meet the regulator’s expectations. Across our organisation, we revisited many of our controls during the pandemic to ensure that potential risks arising from remote working were considered (print capabilities were disabled centrally, for example). Maintaining most of these controls enabled us to accommodate an environment where employees work flexibly, both within and outside of the office. Promoting the shift towards resilience While a paradigm shift in mindset and culture may be unnecessary, there is value in consistently conveying that resilience is about understanding what is most important and planning to get that done, even in dire circumstances. It is important to engrain an enterprise-wide culture and mindset. If you have a consciously engaged and resilient workforce, resilience planning and decision-making will be more effective. In addition to building resiliency by design, to prevent and minimise most disruptions, firms should strive to maintain strong contingency plans for “all hazards” such that, when disruption is unavoidable, they are able to recover and resume the delivery of services as quickly as possible.   Future fix The events of the past two years have brought to light the reality of supply chain risk and business continuity challenges associated with third-party vendors. This significant and persistent threat forced businesses to undertake consequence assessments of supplier disruptions on operational, strategic and financial functions. These are all key elements of operational resilience. Firms now have an opportunity to "future fix"; to create more resilient operating models and build for competitive advantage. They must recognise that the purpose of the new regime is not to demonstrate how resilient they are, but for them to proactively assess where they may have resilience gaps and look to address these gaps as soon as is ‘reasonably practical’, and no later than December 2023. The challenge across the industry is to relay to employees. The next year will be a busy time, and firms need to act early to address vulnerabilities where they exist, instil the operational resilience mindset throughout the organisation, and adjust their operating models to support resilience where it is necessary. Linda Gibson is the Head of Regulatory Change at Pershing EMEA

Dawn Leane examines the main barriers to success experienced by women and what organisations can do to break the career inhibitors down In workshops organised after the publication of the research study carried out by Fiona Dent and Viki Holton for their book Women in Business: Navigating Career Success, women were asked to identify factors they believed had hindered their progress. Their responses are broadly categorised as follows: Limiting beliefs; Family issues; Work colleagues; Personal style and skills; Lack of organisational support; Gender issues; Taking the wrong career path; and Politics and bureaucracy. The most frequently mentioned issues focus on self-doubt and limiting beliefs. As this is a nuanced subject, it is important to distinguish between limiting beliefs and confidence.  Limiting beliefs vs confidence Beliefs are assumed truths developed over time from our direct experiences and observations. They usually don’t exist as explicit propositions. We may barely be aware of them, but they influence what we think, say, and do.  When they manifest self-doubt, they become limiting beliefs. An example of a limiting belief may be ‘I can’t handle conflict’, which could lead to a lack of assertiveness or the tendency to give in to others. Limiting beliefs can have a significantly negative impact on our ability to achieve our full potential. Confidence, however, can be significantly influenced by workplace culture. Women are regularly told that they should be more confident, which is particularly unhelpful as it puts the responsibility firmly back on women, as opposed to examining the environment as a contributing factor. One way in which the office environment can impact confidence is ‘backlash avoidance mechanism’, whereby women feel uncomfortable self-promoting due to perceived social consequences. Feedback and career development In the workshop, 59 percent of participants believed that men and women are judged unequally, particularly when it comes to feedback and development in the workplace. This is supported by the Women in the Workplace study—a study of US women in the workplace conducted by LeanIn.Org and McKinsey & Company—which found that women report receiving feedback much less frequently than their male co-workers. In fact, women are more than 20 percent less likely than men to receive difficult feedback, which is essential to improving performance. One reason cited by managers is their fear of an emotional response, which is less of a concern when giving feedback to male employees. Further, the feedback that women receive is often vague and non-specific. In their Harvard Business Review article, ‘Research: Vague Feedback is Holding Women Back’, Shelly J. Correll and Caroline Simard advised that “women are systematically less likely to receive specific feedback tied to outcomes, both when they receive praise and when the feedback is developmental.” They also found that when women did receive feedback, it was largely focused on their style of communication. Family issues While it is widely accepted that family issues can be a barrier to success, most participants in Dent and Holton’s research recognised that decisions made in relation to family life require compromise—and that it was typically the woman in the relationship who compromised out of personal choice. Many women accepted this as an inevitable consequence of motherhood and feel obliged to take responsibility and be available for their children. Managing employee long-term success The overarching message from these pieces of research is that what happens early in a woman's career significantly impacts her long-term success. It is important that both the career accelerators and inhibitors discussed in this series are considered by organisations when developing talent management and career development programmes. You can read the first two articles in this series: Empowering women for better balance in the workplace Four success factors for women in the workplace Dawn Leane is Founder of Leane Leaders and Leane Empower. 

Good coaches motivate, support and inspire us. So, what can leaders do to become the inspirational coach their team needs? Patrick Gallen shares his insights When we think about a coach, our first thought may be of sports coaches, and images of wild gesticulating on the side-lines to rallying pep talks. People don’t always associate the idea of coaching with the workplace. However, for the past 30 years, many leaders have embraced coaching as a way of developing employees and driving organisational performance. The skill sets are transferrable, and there is no arguing with the evidence – good coaches produce better results. Increased need for workplace coaching There has never been a more important time or a greater need for incorporating a coaching approach into leadership styles. With the increasingly demanding changes brought about by the legacy of the pandemic, blended working environments, amendments to legislation, advancements in technology and human interconnectivity are all contributing to increased pressures experienced by staff on a daily basis. There is a need for leaders to put their coaching hat on and listen, ask questions, challenge thinking, and provide support to their team. If employees are not supported through periods of change, there can be a detrimental impact on engagement and, ultimately, performance. In a recent survey done by Forbes Magazine, only 33 percent of employees report feeling engaged, and companies with greater levels of employee engagement are, on average, 22 percent more profitable. Research proves that coaching improves employee morale, boosts engagement, enhances employee retention, and drives productivity. Even tech companies such as Meta, Google and Apple increasingly seek workers with ‘soft skills’, like coaching. What makes a good coach? Humility, openness and authenticity: The old model of ‘leader as hero’ can be replaced with a model that is humble and open. Be open to questions, and if there is something you can’t confidently answer, don’t be afraid to say so. This can foster an authentic sense of relationship transparency, which is integral to trust. Shared purpose and values: Sometimes, we can’t see the wood for the trees. Effective coaches can encourage organisational focus, team cohesion, and group resilience by stepping back from the noise and redirecting attention to the shared purpose and values of the team. Trust and communication: It may seem obvious, but effective coaching centres around communication. By keeping teams informed and encouraging frequent communication, employees can feel more in control and involved. Enabling vertical as well as horizontal communication – and employing a healthy sense of humour – can go a long way. Team support: Psychological safety is vital for teams during times of change. Would your team benefit from a safe space and having their voices heard in decisions that affect them? Do your people feel free to speak up, disagree, or challenge? Coaches help create that environment. Celebrate success: It’s human nature to dwell on things that go wrong as opposed to right. However, effective coaches give credit where credit is due. As the old adage goes, ‘people don’t quit jobs, they quit managers’. What can you do to be the coach that your team needs? Patrick Gallen is People and Change Partner at Grant Thornton

Despite the tough current climate, Budget 2023 made clear that action against climate change remains a priority for the government. Deirdre Hogan explains The Minister for Finance, Paschal Donohoe TD, delivered his Budget 2023 speech against a contrasting backdrop: the trilemma facing Irish businesses and individuals of energy, inflation and supply chains versus the recent positive reports on the exchequer finances. While the Budget’s focus was on solving the short-term cost of living crisis, the Minister noted that “climate change is one of the key challenges of our time”, indicating that the climate crisis remains a priority for the Government. Carbon tax As expected, carbon tax was increased by €7.50 from €41 to €48.50 per tonne of CO2. The carbon tax increase applies from 12 October 2022 for auto fuels but will be offset by a levy reduction, so we will not see a price increase. For all other fuels, carbon tax will increase from 1 May 2023.   Due to the current energy crisis, the government opted to extend the nine percent reduced rate applicable to electricity to February 2023 and maintain the excise reduction introduced last spring on marked gas oil, petrol, and diesel of five, 16 and 21 cents respectively, providing for costs in the winter months when energy usage will be at its highest.   The receipts from carbon tax are ringfenced to support wider sustainability initiatives and to support the costs of society and businesses in their transition from high carbon-emitting practices to more sustainable alternatives. Carbon tax is expected to generate €623 million in 2023, and almost 50 percent of that is earmarked to go into improving the energy efficiency of houses. Certain social welfare measures, such as Qualified Child Payment and the Fuel Allowance, will also be funded by the carbon tax. The Fuel Allowance is set to increase to €200 above the relevant State Pension Contributory, while those over 70 will see an increase in the Fuel Allowance to €500 for a single person and €1000 for a couple. Agriculture Farmers are set to receive €81 million to finance a new agri-climate rural environment scheme that will support up to 50,000 farmers who take action to improve biodiversity, climate, air, and water quality. Individuals Every household in Ireland will receive €600 in electricity credits over three €200 payments commencing pre-Christmas 2022. Businesses For businesses, a Temporary Business Energy Support Scheme is being introduced to assist businesses with their energy cost over the winter months. Other sustainability-related measures Other sustainability measures introduced include the announcement that €850 million will be spent on capital investment by the Department of the Environment, Climate and Communications in 2023 with over €337 million going towards grants for improved energy efficiency. This should fund over 37,000 home energy upgrades. In transport, the reduction of fares by 20 percent and the 50 percent reduction in the Youth Travel Card will both be extended until the end of 2023. Considering the current sustainability skills shortages in the labour market, the government provided for more than 2,000 apprenticeship places in areas around sustainable finance, green technology, and climate change. The above measures are all welcome and positive. However, there is more work to be done to help increase the pace of our climate or sustainability ambitions. Deirdre Hogan is Partner, Tax and Law from EY Ireland