Equal pay for equal work: approval of the Pay Transparency Directive

Following initial negotiations at EU level on the Pay Transparency Directive last year, the European Parliament has now voted in favour of adopting the legislative proposal. The directive seeks to provide more transparency in pay across the EU to uncover unjustified gender-based pay differences for equal work of equal value and help victims of pay discrimination to seek redress.

Pay transparency measures

1. Job advertisements: Employers will be required to include the remuneration or the expected pay range for the role in its job advertisements.
2. Pay history: Employers will no longer be permitted to ask employees about their pay history, including their existing salary.
3. Right to information: Employees will have the right to request information from their employer on their individual pay level and on the average pay levels, broken down by sex, for categories of workers doing the same work or work of equal value. This right will exist for all employees, irrespective of the size of the organisation.
4. Gender pay gap reporting: The directive requires organisations employing 250 or more employees to report on their gender pay gap. Ireland has already introduced reporting obligations for organisations under the Gender Pay Gap Information Act 2021. Read more about gender pay gap reporting in Ireland.
5. Joint pay assessment: Where a gender pay gap of at least 5% exists and the employer cannot objectively justify the gap, they will be required to carry out a pay assessment in cooperation with employee representatives.

Tackling pay discrimination

1. Burden of proof: In cases where a worker feels that the principle of equal pay has not been applied and takes the case to court, national legislation should oblige the employer to prove that there has been no discrimination.
2. Right to compensation: The directive requires Member States to ensure that any worker who has suffered harm caused by an infringement of any right or obligation related to the principle of equal pay, has the right to claim and obtain full compensation for the harm caused in a way which is dissuasive and proportionate to the damage suffered. This includes the full recovery of back pay and related bonuses or payments in kind, and compensation for lost opportunities and moral prejudice.
3. Sanctions: Member States should establish specific penalties for infringements of equal pay rules, including a minimum level of fines. Member States must also enable courts to award costs where a claimant is successful or where a claimant is unsuccessful but is found to have had reasonable grounds for bringing a claim.
4. Equality bodies and workers' representatives: Such bodies will be permitted to act in legal or administrative proceedings on behalf of workers as well as lead on collective claims on equal pay.

Next steps

Two Private Members' Bills have been put forward by Sinn Fein and Fianna Fail (the Employment Equality (Pay Transparency) Bill 2022 and the Remuneration Information and Pay Transparency Bill 2023). Both bills are at very early stages and will likely undergo a number of amendments to fully align with the provisions of the directive.

Once the proposal is formally approved by the co-legislators, Member States will have three years to transpose the directive into national law. The introduction of the legislation will be a positive step towards highlighting and addressing pay bias and pay discrimination that currently exists in the EU.

For further information on the Directive or gender pay gap reporting obligations, please contact Bláthnaid Evans or Marianne Norton of our Employment & Corporate Immigration team on 01 639 3000.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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