EU Employers are now required to disclose Salary Ranges in Advertised Vacancies

22 May 2024

The gender pay gap remains a persistent issue across Europe. Despite legal guarantees of equal pay for equal work, statistics show that women on average still earn significantly less than men performing the same or similar roles. Recent Eurostat data shows that women still earn 13% less than men per hour. This disparity has a profound impact on women’s financial security, contributing to a wider gender pension gap and increased vulnerability to poverty.

In furtherance of its duty as established in Article 157 TFEU, the European Union has adopted the Pay Transparency Directive in May 2023 and Member States are expected to transpose it to their national law within three years, by not later than the 7th of July 2026. This EU legislation aims to dismantle the culture of secrecy surrounding salaries and empower both employers and employees to achieve fairer pay practices. In this article, we will delve into the key measures arising from the Directive, and how AE can help.

Key Measures of the Directive

The Pay Transparency Directive introduces a range of measures designed to increase transparency and combat gender pay discrimination. The basic tenet of the directive is that Member States shall ensure that employers have pay structures that guarantee equal pay for equal work or work of equal value.

Access to Information

Employers are now required to disclose salary ranges for advertised positions, a development that empowers job seekers to make informed decisions during the application process. Additionally, employers are prohibited from asking candidates about their salary history, a common practice that can perpetuate existing pay gaps. Once hired, employees gain the right to request information on average pay levels for their category and the criteria used for determining pay and career progression. This allows them to compare their own salaries against objective benchmarks and identify potential biases.

Reporting Obligations

The Directive introduces a tiered system of mandatory reporting on the gender pay gap. Companies with more than 250 employees will be required to report annually on their gender pay gap to national authorities. Smaller companies are required to submit such reports every three years. Organisations with less than 100 employees do not have any reporting obligations. If the report shows a pay gap greater than 5%, then the employer will have to justify such gap with objective gender-neutral criteria.   This creates a system of public accountability, pressuring companies to address any significant pay disparities within their organisations. Moreover, it helps make employers more aware and helps them identify discriminatory gender-based pay differences that cannot be explained by valid discretionary factors and are often unintentional.

Remedies and Enforcement

The Directive strengthens legal protections for workers experiencing pay discrimination. Workers who believe they have been discriminated against can now seek compensation, and the burden of proof now falls on employers to demonstrate compliance with pay transparency rules. This shift makes it easier for workers to challenge discriminatory practices and hold employers accountable. Additionally, member states are responsible for establishing penalties for violations of the Directive which must be effective, dissuasive and proportionate, and will include fines.

Widened Scope

Recognising the complex nature of discrimination, the Directive takes a broader approach by considering intersectional discrimination, which considers how factors like race, ethnicity, or disability can combine with gender to create additional disadvantages. The legislation also includes provisions to ensure that the needs of workers with disabilities are taken into account when implementing pay transparency measures.

How to Prepare for the Directive

While the Directive offers a significant step towards pay equality, it also presents adjustments for employers. Here’s how to get prepared.

Review Recruitment Practices

Eliminate questions about salary history from application processes. Include pay ranges in job postings to attract a wider pool of qualified candidates and set clear expectations from the outset. Ensure gender-neutral language is used throughout job descriptions and recruitment materials.

Analyse Pay Structures

Conduct a thorough review of internal pay structures to identify any existing pay gaps. Develop objective criteria for determining pay and career progression, ensuring these factors are not influenced by gender bias.

Develop Training Programs

Invest in training programs to educate staff on the Pay Transparency Directive’s requirements and its implications for recruitment, compensation, and performance management. Additionally, implement diversity and inclusion initiatives to foster a more equitable workplace culture.

How we can Help

At AE Legal, we stand prepared to guide employers through the complexities of the Pay Transparency Directive. Our team of lawyers specialise in navigating the requirements of employment law and can offer tailored advice to ensure compliance with this directive. Should you require any further information or assistance on the matter, do not hesitate to reach out to us at info@ae.com.mt.

Key Contacts

Joseph Grech

jgrech@ae.com.mt

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