Compliance And Data

New EU Law on Pay Transparency

New EU Law on Pay Transparency
HireHive Team

HireHive Team


Equal pay for equal work was one of the founding principles of the European Union, but the practice of ensuring pay equity has struggled. With a lack of transparency about pay rates, including the gender pay gap, it's been difficult to enforce for years. 

The European Union's Pay Transparency Act went into effect on August 1st, 2022 to create more equitable pay across the EU. Employers must now include a salary range in all job posts to end salary discrimination. What does this mean for workers and job seekers all across the EU? Let's take a closer look.

Pay Transparency 

This act aims to ensure that all jobs in the same general categorization are transparent with the salary information. There are two core elements of equal pay present in the legislation. It ensures pay transparency for workers and employers and provides better solutions for individuals who have faced pay discrimination. 

Keeping this information transparent and public prevents organizations from sweeping problems under the rug or not providing the same salary for multiple people performing the same job, usually based on other unrelated factors. 

Pay transparency will also be required in job postings, so candidates know the pay range for open positions. Conversely, employers cannot ask job seekers about their previous salary histories. 

Right to Information 

Included in the act is the right to information for employees. Workers can request information from their employer about their specific and average pay levels. This information will be broken down by gender and incorporate categories of employees doing the same job or work of equal value. 

Access to information is a critical part of transparency. In 2019, the employment gap between European men and women was 11.7%. Women working also earned, on average, 14.1% less than male counterparts in the same positions. The study also showed a massive variance between EU member states, with Estonia and Latvia having a nearly 20% gender pay gap. 

Gender Pay Gap

Understanding the gender pay gap is critical regarding the right to information, access to services and resources, and equal pay for equal work. Any company with more than 250 employees has to report the proportion of men and women in each quartile pay band. They need to provide the average and median pay gap between men and women broken down by salary. This includes cars, bonuses, overtime, and any benefits. 

There will also be a gender-neutral job evaluation to create better classification criteria, including education and professional training requirements, skills, responsibility, and the nature of tasks for any individual position. 

Joint Pay Assessment

Compliance, reporting, and liability will be higher for companies where a gender pay gap of 5% or higher exists when that can't be justified using the gender-neutral criteria. In this case, the company must comply with a joint pay assessment. Worker's representatives, labor inspectors, and equality bodies will analyze the pay gap to remedy the situation. 

Reporting will also be more critical. Organizations will be required to publish data on their website or make it publicly available in another way. The data must be accessed equally by employers, workers, unions, labor inspectorates, and equality bodies to ensure compliance. These governing bodies can then compare business sectors and regions. Many EU member states already have reporting requirements, so this only seeks to provide conformity. 

Far-Reaching Implications

To fully allow member states to comply with the new legislation, the implementation date is expected in 2024. Because of the European Union's far-reaching governance, member states with a wide range of individual mandates will need to make adjustments to ensure compliance. 

This legal editorial provides a closer look at the impact on several EU countries and how it might affect the UK. For example, though the UK is no longer under the auspices of the EU, if a UK employer still has operations elsewhere in Europe, they will need to comply in those regions. 

International Response

Can the EU pay transparency laws be a model for other areas of the world? Certainly, other governing entities can use aspects of this to help bring pay equality to their regions. For example, several US states have now enacted pay transparency requirements. And even though the Equal Pay Act was signed by congress in 1963, pay in the United States has been far from equal. 

According to the 2020 US Census, women earned $0.83 for every dollar earned by men in similar roles. To symbolize this, March 15th has been declared Equal Pay Day to demonstrate how much longer a woman must work to make as much as men did in the previous calendar year.

Conclusion: Have Access to Data a Click Away 

As you make these hiring decisions, having the best technology to enhance your experience will be one of your most significant investments. 

You can use technology to assess top talent for your company for every new position and ensure equity in pay rates. An applicant tracking system can provide you with additional insights as you search for candidates who match the skills and background of each job. 

With more competition for top talent, it pays for companies to consider all their advantages and the use of tools to assist in the quest to find talent. HireHive helps busy people hire great people. You can post jobs, streamline your online application process, improve the candidate experience, and tap into vast global networks by having your entire recruitment process all in one place.

Watch our demo

Hiring Pipeline

Arrange a product tour today and start using
recruiting software that helps you find and hire
the best candidates.

Read also

Company logo for Life Credit Union

“HireHive makes the team a lot more productive. We’d be lost without it. Team Leaders can do it all themselves if needed or jump in at the right time and know exactly where everything is and what’s happening.”

Profile of Hilary Dempsey

Hilary Dempsey Head of HR at Life Credit union

Join over 2,000 companies who streamlined their hiring process with HireHive