¶ EU Gender Pay Gap Directive
I'm Deborah Ishihara and this is Talking Work. Women in the EU are paid only 84% of what men are paid, and given that some countries have had equal pay laws in place since the nineteen seventies, that's a really damning indictment of their effectiveness. But the EU has been well and truly on this just recently and has come up with a far reaching set of reporting rules to address the problem. So we've recorded a really interesting discussion between two of our employment specialists.
They're both UK lawyers in fact, which means that they can also provide a UK perspective on all this. To me that's interesting because the UK does have some gender pay gap reporting rules already, but the question is, will they now keep pace with the EU, or will this turn out to be a key moment of divergence from EU law? Have a listen.
Welcome to Talking Work, the Employment Law podcast by Yousla Boris. In each episode, we invite a different guest to discuss what's happening in the world of work. If you're an HR professional of any kind, this podcast is for you.
Hello, I'm Rebecca Ruhl, a legal director in the employment team at Lewis Silk. And I'm joined today by my colleague Gemma Taylor, one of the lawyers We wanted to talk to you today about some interesting developments in European law that we think will start impacting businesses operating in the EU in the coming months and years.
Right, so discrimination is an area where we see a lot of change through developing case law and new legislation, but there's one new huge legislative change on the the Pay Transparency Directive, which is focused on reducing pay.
Yes, of course. So the intention behind the Pay Transparency Directive is to promote greater transparency and fairness in the workplace, and to help reduce the gender pay gap within the EU. According to data from the European Commission, the EU gender pay gap currently stands at around sixteen percent, meaning that on average, women in the EU earn eighty-four cents for every euro earned by.
¶ Directive's Core Reporting Mandates
As currently drafted, the directive will require Member States to establish gender pay gap reporting regimes that will require employers to report. for example bonuses, the proportion of men and women receiving complementary or variable components of pay, and the proportion of men and women within each quartile paid. So this is quite similar to the position we already have in the UK, but the directive goes further and will require the reporting of pay gaps by categories of workers.
So the intention is to require employers to publish the gender pay gap between workers doing the same or similar jobs. And this is deliberate and to make sure that the reporting can be used for the purposes of an equal
Mm, I can see the value in that from a theoretical standpoint and of course Anything that supports equal pay is a good thing. But in the UK, the question of work of equal value is really complex. The legal process to define what counts Value requires expert job evaluation and can take months or even years.
Yes, I totally agree, Gemma. And it will be interesting to see what the guidance says and how employers should define these categories of workers. And whether in time that might make the question of equal value easier in equal pay claims in the EU. If it does, that would unfortunately not benefit the UK, Brexit taking us outside the scope of the direct.
That's not the only difference with the UK scheme, though. Workers and their representatives, labour inspectorates, and equality bodies will be able to ask the employer for additional clarifications and details, and the employer must respond within a reasonable time. Where gender pay differences are not justified by objective and general neutral factors, the employer will be required to remedy the situation within a reasonable time.
And this obviously goes a lot further than just reporting. So it will be interesting to see what sort of time period European countries allow for action to remedy any gap. For example, if you take STEM professions, so that's science, technology, engineering and mathematics, as an example. One of the things that we have found in the UK is that the pool of senior level female talent is small.
And that means meaningful and sustainable change will only happen if companies invest in bringing women in at junior levels and support their growth and development. But often when a company does that, it can see a short-term increased gap, with more women occurring junior roles, which are generally on lower.
Rydyn ni'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd So they know whether they have an
I agree, and as is much more common in the EU than the UK, the directive also anticipates more material worker involvement. It introduces a type of compulsory equal pay audit that is triggered by an unjustified pay gap by requiring a joint pay association. And this applies where pay reporting reveals a gender pay gap of at least 15% in any category of workers. The employer cannot justify the gap based on objective gender neutral factors, and the unjustified difference has not been recognized.
A joint pay assessment requires the employer to co-operate with worker representatives to analyse the pay differences, the reasons behind them and the effectiveness of measures to address.
¶ Expanding Transparency Beyond Reporting
In the UK the gender pay gap reporting rules only applied to large
EU Member States must create gender pay gap reporting legislation within three years of the directive coming into So for employers with 250 or more workers, they must report their gender pay gaps every year. Employers with 150 to 249 workers will have to report every three years. The directive also provides that the threshold will be lowered to just 100 workers within five years of the directive.
And these smaller employers will also have to report gender pay gaps every three years. All that means that by 2026, all large employers in the EU will have to report gender. And by twenty thirty one all smaller employers, with one hundred or more employees, These are only the minimum requirements. So Member States could go further and set the headcount at a lower level, requiring more regular reporting. And there are some rights which will apply irrespective of such.
So workers will also have the right to request information from their employer on their individual pay level and on the average. broken down by gender, for categories of workers doing the same work or work.
Wow, that's a very powerful right. I can see the purpose though. One of the major obstacles to enforcing equal pay between men and women has been the lack of knowledge about But this all sounds like potentially a lot of work for employers and if they're not already across potential pay issues and they haven't done any kind of internal audit to try to identify hidden issues. It sounds like a lot of issues could emerge unexpectedly as a result of this.
And it's called the Pay Transparency Directive. Does it cover anything else?
Well, the main thing is gender pay gap reporting, and that's the thing that will require the most preparation. But the directive contains various other pay transparency measures designed to help ensure equal pay between men. So the key provisions are pay transparency for job seekers. So in job vacancy notices or before job interviews, employers will have to disclose the initial pay level or range for that position.
A ban on asking about pay history, so employers will be prohibited from asking job candidates about their pay history, including their existing salary, and something which is currently banned in over half of the states in the US anyway. And no ban on pay disclosures, so workers should not be prevented from disclosing their pay to others for the purpose of enforcing the principle of equal pay, and contractual terms to this effect must be prohibited.
¶ Diverse Implementation and UK Divergence
Many EU countries have already implemented gender Um I know from your discrimination expert group that there's been recent Um in Ireland the rules currently require employers with 250 or more employees to publish pay gaps. Yeah. But their rules don't require publication by job functions or grades of workers. So it sounds like the requirement under the direction. will present additional challenges for employers there in Ireland.
Whereas in Italy organisations with fifty Sent to the Ministry of Labour, unions, and equality bodies, which provides information on, for example, the number of male and female employees, the number of men and Hired over the period and pay treatment for each contractual level. And also, I know that Italy has introduced a gender equality.
where organisations can obtain a certificate by implementing policies and measures to help reduce And then enjoy a number of benefits, including exemption from certain social security contributions and being awarded. And I gather that in France employers must calculate a gender equality index score, which is obtained from gender pay gap.
And differences in salary increases, promotion data, and the degree of gender diversity in the 10 highest paid roles. And in France, there a low score can result in a So do you think these variations across the EU in methodology and scope and frequency
Potentially, yes. Although the new directive will obviously introduce some consistency, which may be easier for international businesses. I think a practical challenge for international employers is that it is likely that the timescales will differ between jurisdictions.
So rather than having to complete gender pay gap reporting in all jurisdictions by the same date, employers operating in a number of EU countries could face multiple deadlines spread across the year, making management of reporting obligations really difficult. Um it's important to remember that the directive sets out the minimum expectations, and so some countries already go further than is required by the directive. So for example, in both France and Italy, the threshold for reporting is fifty.
Preparation is definitely going to be key, and although twenty twenty six might feel like a long way away now, this is a very significant. From a UK perspective, as we are both in the UK, the directive is the first major piece of European diversity legislation since Brexit, and it marks the start of the UK's divergence from European employment.
This is a much more proactive approach towards addressing pay gaps than we have in the UK. Having been at the forefront of these matters previously, the UK may now fall behind in this area if the current obligation to report is not enhanced.
Thank you, Rebecca. And I I know as a discrimination expert group y you have a working group So lots more on this to follow.
Hope you enjoyed that. In the notes of this episode you'll find a link to our gender pay gap reporting map. We've also put Rebecca's and Gemma's details in the notes along with mine. Rwy'n sicrhau bod yn amlwg mewn gwirionedd yn amlwg mewn gwirionedd, ac rwy'n amlwg mewn gwirionedd yn amlwg mewn gwirionedd yn amlwg mewn gwirionedd yn amlwg mewn gwirionedd yn amlwg mewn gwirionedd yn amlwg mewn gwirionedd yn amlwg mewn gwirionedd.
Do browse around our website by the way, there's loads of information there on all sorts of employment related topics at useboris dot com. That's it for this episode of Talking Work, but we'll be back very soon with more insights from our guests from around the world. If you've enjoyed this episode, don't forget to subscribe to the podcast. You can also visit usaboris.com to access all our content resources and tools.