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.
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