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Across European Union March 30th, 2023 will beremembered as the day the European Parliament("EP") tackled the EU gender pay gap. Inour 'Mind the gap!' article we have alreadystated that pay transparency offers a solution in bridging the paygap. However, until today the first step still needed to betaken.

The members of EP have understood the need to tackle this issueand on March 30th, 2023 a large majority in the EP votedin favour of the Pay Transparency Directive("Directive"): 427 members voted infavour. The 79 votes against and 76 abstentions could not havestopped this first step in closing the gender pay gap.

The EU Commissioner for Equality Helena Dalli welcomed EP'ssupport for the new rules:

"Today's adoption of the pay transparency directiveis a significant step towards addressing the gender pay gap in theEuropean Union and increasing women's economic and financialindependence"

The proposal for this Directive was introduced by the EuropeanCommission in March 2021 and entailed amongst other an obligationfor EU organisations to be open about the pay policiesstrengthening the principal of equal pay for equal work.

Adopting the Directive is the first step in making salaries moretransparent as the lack of pay transparency has proven to be one ofthe main obstacles, if not the major one in closing the gender paygap women (of EU) so badly need.

The Directive also ensures job-seekers to have access toinformation on the pay range of positions they apply for anddisabling employers to ask about previous pay, thus limiting thepossibility of job-seekers salary history to influence the salaryoffered to the candidate.

The Pay Transparency Act, in order to prevent discrimination,requires employers to be open about the pay policies making itaccessible to their employees. The pay policies need to offerobjective and gender-neutral criteria used to determine wages andwage increases.

However, this is only applicable to companies with more than 100employees. But it is a starting point giving employersresponsibility for providing transparency as they have to sharethis information with the competent national authority, withemployees and with employees' representatives (e.g. unions).Additionally, employees and their representatives shall be able torequest information on their pay level and that of other employeesdoing the same work in order to compare the wages.

If it should appear that the average pay of male and femaleemployees differs by at least 5% (on a full-time basis!) and theemployer cannot sufficiently justify the difference (e.g. noobjective and gender-neutral criteria) the employers incooperation with employees' representatives must carryout a joint pay review. If unjustified differences exist, theemployer shall have to take corrective measures.

Moreover, under the new pay transparency rules the employersshall be obliged to provide the information on pay policiesannually or every three years, depending on the size of the companyand intersectional discrimination will be considered an aggravatingfactor.

Employers who fail to comply with the 'equal pay for equalwork' principle risk compensation claims by employees, judicialmeasures such as forcing employers to comply with this law withintheir own organisation and organisations, e.g. equality bodies orstaff representatives taking action on behalf of employees.

More specific penalties and measures will have to be set up bymember states upon implementation of the Directive.

Directives contain targets that all European Union member statesmust meet. The intended outcome is therefore fixed, but how amember state meets it is not. Member States are free to decide howto implement the directive. In doing so, they can take into accountthe specific situation in their own country.

So we're not there yet!

The period for implementation is three years, meaning that fore.g. the Netherlands, the legislation will have to be in force by2026 at the latest.

Let's hope the House of Representatives (TweedeKamer) won't wait that long and implementation shall bequicker than continued consideration on the proposal 'GenderPay Equality Bill', similar to the one EP just adopted, whichhas been submitted in March 2019 and not yet deliberated on.

It is clear that employers cannot give the same wage toeveryone. A lot of work is needed in determining someone'sworth. It takes a lot of effort to take into account differentwages and everyone's different situations and to organize itall to a fair amount of money.

As an employer you may have good grounds to reward someone withless work experience even if they have to do the same work, butthis needs to have a good justification. This requires labourtransparency and that is difficult.

It can seem overwhelming and often employers do not know exactlywhere and how to start. These kinds of issues can cause problemsand create a tense working atmosphere. ACG International can helpemployers to achieve transparency.

ACG International is specialized and experienced in assistingcompanies preparing these kinds of divisions of labour. It isimportant for both employers and employees that these issues areand remain properly managed.

ACG International's managing partner, Edith Nordmann, has anexpert qualification in labour law. She has been working as alawyer in the field for over twenty years and can offer practicaland strategic advice about employment contracts as well as help youmaximize the transparency you have been searching for.

In addition, as of 2023, Edith has been appointed as member ofthe Task Force Future of Work, Skilling and Mobility under theBusiness 20 (B20 (of the G20 2023)) meeting withapproximately 100 esteemed professionals from around the worldspecialised in the field of employment. The B20?is the official G20dialogue forum representing the global business community.Established in 2010, the B20 is among the most prominent EngagementGroups in G20, with companies and business organisations asparticipants. The B20 leads the process of galvanising globalbusiness leaders for their views on issues of global economic andtrade governance and speaks in a single voice for the entire G20business community.

So, at ACG International you're in great hands.

If you want to learn more about labour transparency and labourdivisions, or how to really start reducing inequality in anefficient way on the business floor you are at the right place. ACGInternational offers free"labour-transparency-check" strategy sessions tohelp employers assess what needs to be done to achieve labourtransparency.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

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European Parliament Adopts Pay Transparency Directive First ... - Mondaq News Alerts