The Directive's key measures to promote pay transparency and equal pay
The Directive aims to establish binding measures to promote pay transparency and access to remedies for those experiencing pay discrimination in the broad sense, it encompasses intersectional discrimination for the first time and contains clauses that guarantee the consideration of employees with disabilities.
These measures include requirements prior to employment; employers will have to disclose salary ranges and will be prohibited from inquiring about a candidate's pay history. The Directive also includes a reporting obligation; employers with at least 100 employees will be required to disclose information on gender pay gaps, and those with a gender pay gap of at least 5% will be required to conduct a pay assessment in collaboration with workers' representatives.
Additionally, the proposal strengthens the existing minimum standards on sanctions in cases of infringement. Employers will bear the burden of proof, and member states will have to establish specific penalties and fines.
The Directive will come into force upon publication on the EU Official Journal. The member states will have a three-year window to translate the Directive into national laws.
Taking action - how organizations can start preparing for the new law
The directive sets out strong standards and will have significant implications for employers and employees in the EU and is expected to serve as a model for similar legislations in other parts of the world such as Switzerland.
While no immediate change in law is expected, promoting gender equality and pay transparency in the workplace is a multifaceted challenge that cannot be easily or quickly resolved. Nevertheless, there are actions that organizations can take now to proactively tackle the issue and stay ahead of the curve.
Analyze your pay gap and take corrective actions. Carry out a thorough equal pay review to identify any potential gender pay gap and take corrective action where necessary.
Review your job architecture and pay structure. Having an up-to-date and accurate job architecture lays the foundation for a fair and transparent pay system in which roles and responsibilities are reflected correctly and based on objective criteria.
Assess and review your policies regarding Diversity, Equity, and Inclusion (DEI). Examining policies and procedures in recruitment, performance management, promotion, and compensation is key to ensure they are unbiased and equitable. The improvement of these policies can foster a culture of fairness and equality, which will help attracting and retaining top talents.
Raise awareness by training managers and HR staff. Providing training on DEI policies in place and unconscious bias helps raising awareness and ensuring managers and HR staff apply the standards and foster a culture which promotes equal opportunities for all.
By implementing proactive measures to promote fairness and address potential gender pay gaps, organizations can not only prepare for the new EU regulations but also reap the numerous benefits that arise from fostering diversity and inclusion in the workplace, positioning themselves as employers of choice.
