You might have heard about the EU Pay Transparency Directive, which comes into force in 2024. Lack of pay transparency was identified as a key obstacle in implementing equal pay for all across the EU. This Directive aims to rectify this and was proposed back in March 2021. More than a year later on December 15, 2022, the EU Parliament reached an agreement on pay transparency measures. This means that employers will be required by law to provide more transparency and information even prior to one applying for a role.
This Directive is also part of the bigger picture which is a multipronged approach that addresses the gender pay gap and work-life balance through the Work-Life Balance Directive and Directive on Improving Gender Balance on the boards of EU-listed companies. (In Malta, the Work-Life Balance Directive was implemented for Parents and Carers, entering into force on 2 August 2022.)
Helena Dalli, Commissioner for Equality on 15 December 2022 said “Assuring equal pay contributes to women’s economic and financial justice and independence, which in times of multiple crises is more important than ever. Pay transparency is everyone’s business. It is a question of fairness. And it will also benefit the economy, as better work conditions will help bring and retain more women in the labour market. We need transparency to identify an end to pay discrimination.”
Some of the key measures under the directive include…
Pay transparency before employment for job-seekers
Employers must provide information about the salary range. within a job vacancy ad or notice/ or prior to the first job interview. Moreover, employers will not be allowed to ask potential candidates about their pay history.
Right to information for employees
Employees will have the right to request information about their individual pay grade as well as average pay levels, broken down by sex, for categories or groups of workers doing the same work or work of equal value/ level. This right is for all employees, regardless of the size of the company.
Reporting on the gender pay gap
Employers with at least 100 employees will have to publish information on pay discrepancies present between male and female workers. First, employers with 250 or more employees will report every year, whereas those with 150 to 249 employees will report every 3 years. From 5 years after the Directive comes into place, employers with 100-149 employees will also have to report every 3 years.
Joint pay assessment
If reporting reveals a discrepancy of at least 5%, and the employer cannot justify the gap on the basis of objective facts irrespective of gender, employers will have to carry out a pay assessment, in cooperation with workers’ representatives.
The Member states now need to transpose these new elements found in the Pay Transparency Directive into national law within 3 years.
The right to equal pay between women and men for equal work or work of equal value has been a founding principle of the European Union since the Treaty of Rome in 1957. Whilst the European Commission adopted a Recommendation on strengthening the principle of equal pay between men and women through transparency in March 2014, there was never effective implementation and enforcement of this principle in the European Union. In June 2019, the Council called on the Commission to develop concrete measures to increase pay transparency. , and the Commission adopted a 2021-2025 action plan on Gender Equality.
Companies would do well to think ahead and get on board with this directive, by changing what needs to be improved and ensuring their employees are treated fairly.
The Directive also introduces new safeguards and justice to address issues related to this Directive and compensate those who have been discriminated against. The Commission encourages Member States to introduce fines and penalties for infringements of the equal pay rule. Moreover, where the employer does not fulfil their transparency obligations, it will up to the employer to prove that there was no discrimination in relation to pay. Workers who have been discriminated against will also retain the right to back pay and related bonuses.
More info on the Pay Transparency Directive can be found on the European Commission website here.
Share this article with a friend who needs to read this.
