The draft directive would represent a significant step for employers and employees toward ensuring equal pay. Every employer regardless of size would need to be confident that their pay structures and processes are delivering equal pay for the same work and work of equal value in each European Union member state. To address what the European Commission views as inadequate implementation of the 2006 Directive of Equal Pay, it is proposing extensive measures that would require employers to be transparent on pay structures, pay processes and pay gaps by category of workers, and require the removal of any unjustified gaps of 5% or more. Employees would also have extensive rights to information on pay, to raise questions on pay gaps and to seek redress.
Measures for increasing pay transparency include:
Measures for redressing pay discrimination include:
The directive would build and expand on existing equal pay laws of the member states to create a more coherent framework. Member states would have two years to transpose the directive into national law if it is approved by the European Parliament and Council. As a result, compliance may not be required until 2024 or later, providing employers with time to take action to become confident that their pay systems are ready for greater transparency around equal pay. In our experience, it can take three to five years for an employer operating in multiple markets to gain this confidence. In addition, some specific challenges exist in the current drafting, for example, the definition of “pay” encompasses basic wages, other guaranteed payments, variable rewards and benefits-in-kind, provided directly and indirectly to staff.
Public consultation on the commission’s adoption of the directive is open April 15, 2021, to August 27, 2021.