The European Commission welcomes the political agreement reached recently between the European Parliament and the Council on the Directive on pay transparency measures. The project was a key component of President von der Leyen’s political guidelines, and the Commission presented their proposal on March 4, 2021.
The pay transparency Directive aims to increase openness and effectiveness in enforcing the equal pay rule between men and women, as well as improve access to justice for victims of pay discrimination.
Key elements of the Directive on pay transparency
Pay transparency measures:
Pay transparency for job-seekers – Employers will have 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.
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. As of five years after the transposition of the Directive, employers with between 100 and 149 employees will also have to report every three years.
Joint pay assessment – Where pay reporting reveals a gender pay gap of at least 5% 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.
Better access to justice for victims of pay discrimination:
Compensation for workers – workers who have suffered gender pay discrimination can receive compensation, including full recovery of back pay and related bonuses or payments in kind.
Burden of proof on employer – where 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 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.
Source: European Commission, ‘Commission welcomes the political agreement on new EU rules for pay transparency’, (15 December 2022)
The new Directive by the European Parliament and the Council is now subject to co-legislators’ official confirmation. Once accepted, the Directive will enter into effect 20 days after publication in the Official Journal, and Member States will have three years to incorporate the Directive’s new features into national legislation.