Closing the gender pay gap has long been on the agenda of the European and national legislators. Despite the right of equal pay between women and men for equal work or work of equal value having been enshrined in Article 157 of the Treaty on the Function of the European Union and in Directive 2006/54/EC and despite legislative action from legislators throughout the EU Member States, recent studies show that a gender pay gap of approximately 13% on average still exists in the EU.
The lack of transparency was found to be one of the main obstacles to close the gender pay gap. The European legislator therefore decided to adopt new rules to strengthen the application of the principal of equal pay for equal work or work of equal value between men and women, through increased pay transparency and enhanced enforcement mechanisms.
On 24 April 2023, the European Parliament and the Council of the European Union adopted a Directive (EU) 2023/970 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms (hereinafter referred to as: the Pay Transparency Directive).
The Pay Transparency Directive was published in the EU’s Official Journal on 17 May 2023 and will enter into force on 6 June 2023. The EU Member States will then have until 7 June 2026 to implement this Pay Transparency Directive into their national laws.
The Pay Transparency Directive impacts all employers in the public and private sectors, employees who have an employment contract or employment relationship and applicants for employment.
We hereby summarise some of the main provisions of the Pay Transparency Directive’s.
Right to access information – Job applicants will have the right to receive from the employer the initial pay level or its range to be attributed for the position concerned.
The precise way in which this information must be provided has not been prescribed in the Pay Transparency Directive, but it shall allow an informed and transparent negotiation on pay (e.g. in a published job vacancy notice, prior to the job interview, or otherwise).
In addition, the employer will be forbidden to ask the applicants about their pay history.
Employees will have the right to request information on their individual pay level and the average pay levels, broken down by sex, for categories of employees performing the same work as them or work of equal value.
Reporting obligation – Employers with more than 100 employee will be required to provide information on salary differences (i.e. the gender pay gap, the gender pay gap in complementary or variable components, the proportion of female and male employees receiving complementary or variable components), allowing employers to evaluate and monitor their pay structures and policies and incentivising them to timely take action.
Such reporting will have to be done on a yearly basis by employers with at least 250 employees and every three years by employers with between 100 and 249 employees
Joint pay assessments – Employers who report a pay gap between female and male employees of at least 5% and who are unable to justify such pay gap on the basis of objective, gender-neutral criteria are granted a 6-months’ period of time to remedy such situation.
Employers who then fail to remedy the situation in due time will be obliged to perform a joint pay assessment in cooperation with the employees’ representatives.
The joint pay assessment should allow to identify, remedy and prevent the pay differences between female and male employees. It will include, among other things, an analysis of the proportion of female and male employees in each category of employees and measures to address differences in pay if they are not justified on the basis of objective, gender-neutral criteria.
It remains to be seen how the Belgian legislator will define the employees’ representatives. In Belgium, it is anticipated that the Works Council, the Trade Union Delegation and/or the Committee for Prevention and Protection at Work will have to be involved.
Support to smaller employers – EU Member States will have to provide support to employers with less than 250 employees and to the employees’ representatives concerned to help them in their compliance with their obligations pursuant to the Pay Transparency Directive.
The Belgian legislator will have to determine what type of support will be offered to these smaller employers, which support will in any case consist of technical assistance and training.
Right to compensation – Any employee who suffered damage as a result of an infringement of a right or obligation relating to the principle of equal pay will be entitled to a full compensation or reparation for that damage.
This compensation will include, among other things, full recovery of back pay and related bonuses or payment in kind.
Sanctions – EU Member States will have to establish rules on effective, proportionate and dissuasive penalties applicable to infringements of a right or obligation relating to the principle of equal pay.
The Pay Transparency Directive requires that those sanctions guarantee a real deterrent effect with regard to the aforementioned infringements and include fines.
Burden of proof – The Pay Transparency Directive shifts the burden of proof generally applied to pay discrimination cases in order to provide a stronger support to employees.
Indeed, pursuant to the Pay Transparency Directive, it will be up to the employer to prove the absence of pay discrimination whenever an employee presents elements (simply) suggesting a pay discrimination in front of a court/authority.
The Pay Transparency Directive allows EU Member States to adopt rules which are more favourable to the employees. It therefore remains to be seen how the Belgian legislator will implement the Pay Transparency Directive in order to find out if stricter requirements are imposed to Belgian employers.
In 2020, Belgium had a gender pay gap of 5.3% which puts the country in 6th position among the other EU Member States. The Belgian law of 22 April 2012 regarding the gender pay gap provides for a good protection of the principle of equal pay. Among other things, the law requires employees with 50 employees or more to carry out, every 2 years, a detailed analysis on the remuneration structure within the company to determine whether the company has a gender-neutral pay policy.
As a reminder, the Belgian legislator will have to transpose the Pay Transparency Directive into Belgian law by 7 June 2026. Employers are however advised not to wait until then and to already take action now to start preparing for their obligations under the new legislation.
Our Employment & Benefits team would be delighted to address any queries you may have in relation to this new Pay Transparency Directive.