More transparency to ensure equal pay between men and women

The European Parliament and the Council adopted a directive requiring EU companies to disclose information on salaries to shed light on existing gender pay gaps.

The gender pay gap in the European Union remains about 14%, recalled the Commission in March 2021, as it published its proposal for a pay transparency directive. Enshrined in the treaties (art. 157 TFEU), the principle of equal pay between male and female workers is one of the foundational principles of the EU. And yet, despite having been the object of several EU acts, including a directive in 2006, its implementation remains insufficient.

With this new tool, the Commission therefore aims to strengthen the enforcement of the principle of equal pay between women and men through two channels. First, it seeks to increase pay transparency within organisations, since one of the causes of the gender pay gap is that women are often not aware of what their male colleagues earn. Secondly, it gives better access to justice for victims of pay discrimination.

The provisions on pay transparency give applicants for a position the right to receive information about the initial salary before a job interview in order to ensure a transparent negotiation on pay. The directive also gives current employees the right to receive information on the average pay levels, broken down by sex, of colleagues performing the same work. The directive also prohibits contractual provisions restricting workers from disclosing information about their pay. Finally, it requires employers to report to public authorities, workers representatives and the workers themselves on the gender pay gap within the company.

The provisions on legal remedies available to victims of gender discrimination aims to make it easier for them to bring equal-pay claims. It gives for instance associations, organisations, equality bodies and workers’ representatives the right to represent workers in pay discrimination cases. The directive also requires that court proceedings for the enforcement of the principle of equal pay are easily accessible to workers and to persons who act on their behalf, even after the end of the employment relationship. It also shifts the burden of proof from the employee to the employer: the latter will have to prove that there has been no discrimination in relation to pay.

After two years of negotiations, the European Parliament and the Council found an agreement on the text in December 2022, and then adopted this consensus position in March and April 2023 respectively. Member States now have three years’ time to implement its provisions.

While the adoption of the directive is without any doubt a positive development, many observers noted that it represents only a small step in the right direction. Firstly, the reporting obligations mentioned above won’t apply to companies under 100 employees and the other companies will, in the best case, start reporting in seven years. Secondly, transparency alone won’t solve all the causes of the gender pay gap, which also include, among other things, the high concentration of women in low-paid jobs, the role of women in non-paid care roles and the lack of an adequate paternity leave in many member states.