EU – Impact of the Pay Transparency Directive on employers

What’s new?

On 7 June 2023, the EU passed Directive 2023/970 (“Directive”) which will strengthen equal pay for equal work / work of equal value, between men and women, through transparent pay and enforcement mechanisms. Member States have until 7 June 2026 to transpose this into national law.

Who does this apply to?

This applies to all employers and workers who have an employment contract or employment relationship, including collective agreements.

What impact does this have on employers?

  1. Recruitment – Employers will no longer be able to ask job applicants what they are currently paid or have previously been paid. Employers will also have to ensure that vacancies, including job titles, are general neutral, and recruitment processes are non-discriminatory.
  2. Pay levels – Employers will be required to make the criteria used to determine workers’ pay, pay levels, and pay progression easily accessible to them. This criteria must be objective and gender neutral.

In addition, employers will have to inform all employees annually of their right to request, written information on their pay and average pay levels by sex for colleagues doing the same work / work of equal value.

  1. Gender pay gap – Employers will have to provide information on their gender pay gap and the proportions of their staff, who are male or female and who are receiving complementary / variable components.

Employers will also have to cooperate with workers’ representatives to identify, remedy, and prevent discriminatory pay differences if they are found to have a gender difference of 5% or more which cannot be justified by objective and gender-neutral criteria; and has not been actioned within six months.

So, what should employers do now?

Employers should familiarise themselves with the EU Pay Transparency Directive and consider their future obligations as an employer to ensure compliance once this is implemented into their national law. Employers should also consider the following:

  • whether the criteria they use to determine workers’ pay levels and pay progression is objective, gender-neutral, and easily accessible;
  • whether they are already reporting their gender pay gap and whether this information is accurate (i.e. has it been audited?); and
  • if they have identified a gender pay gap, what action they are taking to improve it.

If you need any support with this, or would like any further information, please get in touch with a member of the MDR ONE team.

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