European Union adopts pay transparency legislation

European Union payThe European Parliament, the legislative body of the European Union (EU), has voted to accept pay transparency legislation that calls for employers to disclose salaries and existing gender pay gaps.

Under the rules, employers will base their pay structures and levels on gender-neutral criteria and include gender-neutral job evaluation and classification systems.

If an organisation has a gender pay gap of at least 5%, it will be called upon by law to conduct a joint pay assessment in co-operation with employee representatives. If an employee suffers harm as a result of a rule infringement by their employer, they will have the right to claim compensation, with intersectional discrimination and the rights of non-binary persons included in the scope.

The legislation also stipulated that employees and representatives would have the right to receive clear and complete information on individual and average pay levels, broken down by gender. Pay secrecy and contractual terms that restrict staff from disclosing pay, or from seeking information about the same or other categories of employees’ pay, will be banned.

In cases where a worker feels that equal pay has not been applied and takes the case to court, national legislation will require the employer to prove that there has been no discrimination.

Samira Rafaela, member of the European Parliament and member of the women’s rights and gender equality committee, said: “Not only do we finally have binding measures to tackle the gender pay gap, but also all citizens of the EU are empowered, recognised and protected against pay discrimination. Non-binary people have the same right to information as men and women.

“I’m proud that with this directive, we have defined intersectional discrimination for the first time in European legislation and included it as aggravating circumstances when determining penalties.”

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Eva Jesmiatka, European lead on pay & career equity at Willis Towers Watson, added: “The EU Pay Transparency Directive is a step change in the information rights of employees and candidates and will reinforce the delivery of equal pay. Employers have three years to ensure they are delivering equal pay and benefits. Employers’ preparatory activities will be focused on reviewing and tightening their approach to pay management, ensuring they have ready access to all the data needed and preparing their leaders, managers and employees for the higher level of pay transparency.”

Parliament will have to formally approve the agreement before the legislation becomes law.