EU Parliament and Council Agree on New Rules for Pay Transparency



On Dec. 15, 2022, the European Parliament and Council reached an agreement on pay transparency measures. Here are the key measures set out in the directive.

Contents

In March 2021, the EU Commission proposed a new EU Directive on Pay Transparency, to strengthen existing equal pay rights. Lack of pay transparency has been identified as one of the key obstacles to proper implementation and enforcement of equal pay principles across the EU.

The proposed directive is part of a multipronged approach addressing the gender pay gap and economic empowerment of women across the EU, which includes, among other things, the Work Life Balance Directive and a Directive on improving gender balance on the boards of large EU listed companies.

Over a year later, on Dec. 15, 2022, the European Parliament and EU countries' negotiators reached an agreement on pay transparency measures. Under the new rules, employers will be required to provide more transparency and ensure they are adopting equal pay principles between male and female workers.

Key Measures

Key measures set out under the directive, include:

Pay transparency before employment—Employers will be required to provide information about the initial pay level or its range in the job vacancy notice or before the job interview. Employers will not be allowed to ask prospective workers about their pay history.

Pay setting and career progression—Employers must make easily accessible to workers a description of the gender-neutral criteria used to define pay and career progression.

Right to information for employees—Employees will have the right to request information from their employer on their individual pay level and on the average pay levels, broken down by sex, for categories of workers doing the same work or work of equal value. This right will exist for all employees, irrespective of the size of the company.

Reporting on gender pay gap—Employers with at least 100 employees will have to publish information on the pay gap between female and male workers. In a first stage, employers with at least 250 employees will report every year and employers with between 150 and 249 employees will report every three years. From five years after the transposition of the directive, employers with between 100 and 249 employees will also have to report every three years.

Joint pay assessment—When pay reporting reveals a gender pay gap of at least 5 percent and when the employer cannot justify the gap on basis of objective gender-neutral factors, employers will have to carry out a pay assessment, in cooperation with workers' representatives.

Provisions for Victims of Pay Discrimination

For victims of pay discrimination: the directive provides:

Compensation for workers—Workers who have suffered gender pay discrimination can receive compensation, including full recovery of backpay and related bonuses or payments in kind.

Burden of proof on employer—When the employer did not fulfill its transparency obligations, it will be for the employer, not the worker, to prove that there was no discrimination in relation to pay.

Sanctions that will include fines—Member states should establish specific penalties for infringements of the equal pay rule, including fines.

Equality bodies and workers' representatives may act in legal or administrative proceedings on behalf of workers.

Next Steps

Once the co-legislators have given final approval, the directive will take effect 20 days after its publication in the Official Journal. Member states will then have three years to transpose the new directive.

Attiya Zia is a paralegal and future trainee solicitor with DLA Piper in the U.K. © 2023 DLA Piper. All rights reserved. Reposted with permission of Lexology.