EU adopts new rules on pay transparency to tackle the gender pay gap

Context of the measure

Despite the principle of equal pay being set in the Treaty of Rome, the gender pay gap persists and stands at around 13%, only slightly decreasing over the past 10 years.

To address this trend or lack thereof, the European Parliament has adopted new rules on binding pay transparency measures aimed at closing the gender pay gap.
 

Spirit of the directive

Employers will now have to use gender-neutral standards for job evaluation and classification systems when creating fair pay structures. This will impact the broader employee-value proposition and recruitment processes: both job titles and vacancy posts will be put under scrutiny in case of discriminatory tendencies.

The new regulations grant workers and their representatives the right to access comprehensive information on individual and average pay levels categorized by gender.

Indeed, under the new regulations, companies will also need to conduct a joint pay assessment with their workers' representatives if the overall salary gap is at least 5%.

Prohibiting pay secrecy and contractual terms that prevent workers from sharing their salary information or seeking information about others' pay will be forbidden.
 

Legal consequences of non-compliance

Member states will be able to enforce penalties, such as fines, for employers who violate the regulations.

Workers who have suffered as a result of an infringement can seek compensation. Additionally, the new rules also include intersectional discrimination and the rights of non-binary individuals for the first time.

Moreover, the employer will have the responsibility to prove that there was no discrimination in cases where a worker believes that the principle of equal pay has been violated and takes the matter to court. This marks a shift from the burden of proof being on the worker.
 

How can you act?

Once approved by the European Council, the current agreement will come into effect 20 days after its publication in the EU Official Journal. The member states will be given a period of three years to incorporate the new components of the directive into their national legislation.

We highly recommend that your organization starts with some basic preparations already today to stand out as an employer of choice.

• Identify all HR and C&B processes/practices that could be affected by this approved directive.
• Proactively assess your pay gap to understand where your organization stands versus the 5% threshold. This would help to evaluate any potential inequalities and outliers.  
• Establish or review existing job evaluation and classification systems on which your pay structure is based to maximize their fairness and objectivity.
• Give particular attention to your recruitment process to safeguard it from gender bias: review job offers and job descriptions.
• Insert the concept of gender equality in your employer branding strategy and embed it in your Diversity & Inclusion policies.

Find more info on the official site of the European Parliament.