Provisional deal on gender pay transparency rules

Background
In March 2021, the EU Commission presented a proposal for a directive on pay transparency. Main aims of the proposal are to empower workers to enforce their right to equal pay through a set of binding measures, strengthen the transparency of pay systems, improve public understanding of the relevant legal concepts, and enhance the enforcement of the rights and obligations relating to equal pay between men and women. The proposal builds upon increased obligations for the employers to share gender pay gap information.

Scope of pay transparency
The provisional agreement, reached by the European Parliament and the Council in December 2022, implies that the employers will need to make sure their employees have easy access to the objective and gender-neutral criteria they use to define pay and possible pay rises, whereas workers will have the right to request and receive information on pay level broken down by sex. Contractual terms restricting disclosure of such information will be banned.

Employers with more than 100 employees will have to provide information about the pay gap between female and male workers within the organisation and share this information with the national authority. In cases where the difference in average pay level between female and male workers is of at least 5% and this difference is not justified with objective and gender-neutral criteria, employers will have to conduct a joint pay assessment in cooperation with their workers' representatives.

Consequences
Member States will have to put in place penalties, such as fines, for employers that infringe the rules. A worker who has suffered harm as a result of an infringement will have the right to claim compensation. Courts can also order an employer to stop the infringement and take measures to comply with the principle of equal pay, and the burden of proof will be on the employer and not on the worker.

Next steps
The European Parliament and the Council will have to formally approve the agreement, which is expected to be tabled in Q1 2023. The new rules will come into force twenty days after their publication in the Official Journal of the EU and will have to be transposed into Member State law within two years from entry into force.