The EU has adopted new rules to address the gender pay gap. Under the pay transparency directive, companies will be required to share information about pay for work of equal value and take action if the gender pay gap exceeds 5%. The directive also includes provisions on compensation for victims of pay discrimination and penalties for employers who break the rules.
The European Council has adopted new rules to address the persistent gender pay gap in the region. Under the pay transparency directive, companies will have to share information about how much they pay male and female employees for work of equal value and will have to take action if their gender pay gap exceeds 5%. The directive also provides compensation for victims of pay discrimination, plus fines, for employers who break the rules.
The legislation makes it compulsory for employers to inform job seekers about the starting salary or pay range of advertised positions, either in the vacancy notice or before the interview. Employers will not be allowed to ask candidates about their pay history. Once in the role, workers will be entitled to ask their employers for information about average pay levels, broken down by sex, for categories of employees doing the same work or work of equal value. They will also have access to the criteria used to determine pay and career progression, which must be objective and gender-neutral.
Companies with more than 250 employees will be required to report annually on the gender pay gap in their organisation to the relevant national authority. The reporting obligation will occur every three years for smaller organisations (initially those with over 150 employees). Suppose the report reveals a pay gap of more than 5% that cannot be justified by objective, gender-neutral criteria. In that case, companies will be required to take action through a joint pay assessment in cooperation with workers’ representatives.
The new directive shifts the burden of proof in pay discrimination cases from the employee to the employer and allows workers who suffer pay discrimination to receive compensation. Penalties for violations will include fines, and the directive also includes provisions on intersectional discrimination and workers with disabilities.
The pay transparency directive was adopted by the European Parliament on 30 March 2023, following a political agreement reached on 15 December 2022. Once published in the EU’s Official Journal, EU countries will have up to three years to adapt their national legislation. After the transposition deadline, companies employing over 100 workers must also report gender pay information every three years.
