Gender pay inequality in the workplace is still a persistent social problem. Even though the fight for equal pay for equal work has been going on for decades, progress has been slow. Nevertheless, recent developments and adoption of the EU Pay Transparency Directive (in March 2023) by the European Parliament indicate that a change is on the horizon.
EU Pay Transparency Directive
On 30 March 2023, the European Parliament approved the European Commission´s legislative proposal introducing pay transparency requirements and a mechanism to enforce them. The purpose of this legislative standard is to strengthen the application of the principle of equal pay for equal work or for work of equal value between men and women. Companies established in an EU member state with at least 100 employees will be subject to these requirements.
Implications for employers and employees:
Reporting on the gender pay gap
- mandatory for companies with 100+ employees
- joint pay assessments carried out in cooperation with employees´ representatives, applicable to companies where the difference in the average pay level between male and female employees is 5% or more
Recruitment of employees
- transparency of pay information prior to employment
- ban on asking applicants about their pay history
Pay philosophy
ensuring transparency of criteria used to determine employees´ pay and career progression
Average pay levels
employees´ right to request information on their individual pay level and the average pay levels of employees performing the same work, broken down by gender
Remedies and enforcement of remedies
stipulation of remedies and enforcement mechanisms, such as compensation for damage, shift of burden of proof, protection from victimization and sanctions for non-compliance
What does this mean for you?
The EU Pay Transparency Directive will impact almost all employers operating in the EU, and its consequences will be reflected in the entire life cycle of an employee.
17 May 2023 – published in the Official Journal of the European Union
enters into force 20 days after its publication in the Official Journal of the EU
Meeting all the requirements of the Directive will mean modification of many HR processes at companies. We recommend a preliminary GAP analysis of the requirements of the Directive as a first step. This will give you an overall idea of which processes need to be addressed. We recommend undertaking such an analysis as early as possible, as other legislative regulations also introduce the reporting of data related to fair remuneration, and a timely GAP analysis will save you work by avoiding having to implement individual requirements separately.
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