Companies in the EU will have to disclose how much they pay men and women. There will also be penalties and compensation

On Thursday, the European Parliament and the Council finally agreed on rules obliging companies operating in them to disclose the pay gap between women and men they employ.

Although the principle of equal pay is provided in Art. 157 of the Treaty on the Functioning of the EU (“each Member State shall ensure the application of the principle of equal pay for male and female workers for equal work or work of equal value”), it is estimated that in the EU women still earn an average of 13% of men’s wages. less than men doing the same job for the same employer. When it comes to individual Member States, the highest wage inequalities were recorded in Latvia, where they earn an average of 22.3% less than in Latvia. less than men, and lowest in Luxembourg (0.7%). In Poland, women earn 4.5 percent. less than their desk colleagues, while in Germany as much as 18.3 percent. less (Eurostat data for 2020), giving the country a score well below the EU average.

Pay inequalities largely affect private sector employees and, to a greater extent, older people than those just entering the labor market. This means that the salaries of young women and men are more equal than the salaries of, for example, their parents.

Wages should be equal. Companies will have to disclose earnings data

According to the new regulations, companies employing more than 100 people will be forced to disclose information on the salaries of women and men, which, firstly, will allow to compare the earnings of employees of a given company in general, and secondly, to expose possible differences between the sexes. Originally, the regulations were to cover only companies employing more than 250 people, but during the negotiations it was possible to extend this group to include smaller enterprises as well. “The structure of remuneration should not be based on gender criteria, but should include gender-neutral job evaluation and classification systems,” the legislators said. Under the new regulations, recruitment rules will also have to change, vacancy announcements and job titles will have to be gender-neutral, and recruitment processes will have to be conducted in a non-discriminatory manner.

In the event that the remuneration reports submitted by the companies show a difference between the wages of women and men at the level of at least 5%, or more, employers, in cooperation with employee representatives, will have to carry out a joint assessment of remuneration. Those who do not comply with the new regulations will be punished. Member States will be required to introduce effective, proportionate and dissuasive penalties, including financial ones, for employers who infringe the rules. An employee who has been harmed as a result of a violation of the regulations by the employer, e.g. in a situation where he finds out that he earns significantly less than a colleague of the opposite sex holding the same position, will have the right to apply for compensation. “We are one step closer to achieving true gender equality in the EU,” said Dutch MEP Samira Rafaela from Renew.

Companies will not be able to keep salaries secret

Employers will also no longer be able to oblige employees in employment contracts to keep the amount of remuneration secret. “There should be no contractual terms that restrict workers from disclosing their pay or seeking information on the same or different categories of workers’ pay,” say EU officials. An agreement reached between the institutions on Thursday provides that workers and workers’ group representatives will have the right to receive clear and complete information on both specific salaries and average levels of remuneration broken down by gender. With regard to wage inequality, the burden of proof will shift from the employee to the employer. In practice, this means that if an employee decides that the company employing him has broken the principle of equal pay and brings the case to court, it will be up to the employer to prove that such discrimination did not occur.

“Today’s agreement shows that the EU has no intention of accepting gender pay inequalities. Historically, women’s work has often been undervalued and underpaid. Pay transparency, of course, does not eliminate all forms of discrimination, but it does shed light on the issue of pay inequalities between women and men and ensure that action is taken where needed, comments Danish MEP Kira Marie Peter-Hansen from the Greens.

Following formal approval by the European Parliament and the Council, which is essentially a formality in the event of an agreement, the new rules will enter into force 20 days after publication in the EU’s official journal.