For many years, the EU has worked to ensure equal opportunities and treatment for men and women in the labour market, including equal pay for equal work. Most recently, they have put forward a pay directive that will oblige companies to disclose detailed pay statistics to employees. The directive is expected to be adopted during 2023.
Despite the EU's efforts to ensure equal treatment between the sexes, a pay gap between men and women still exists in Europe, with women on average earning less than men for the same work. A comprehensive study conducted by CBS in 2022 shows that women on average earn 7% less than men for the same job in the same workplace in Denmark. In other EU countries, the pay gap is even wider.
To combat this inequality, the EU Commission proposed a new directive in 2021 that would force employers towards greater pay transparency and ensure that men and women performing the same work of equal value – meaning work requiring the same education, skills, and responsibility – receive equal pay.
What does the directive mean?
The directive, as mentioned, sets requirements for employers to ensure pay transparency, but what does that mean in practice?
The demand for increased pay transparency means that pay data must be made more accessible to employees. Among other things, employees must have the right to see the pay levels of other employees in the company where they work. Furthermore, employers must in future draw up a description of the objective, gender-neutral criteria on which pay determination is based. Employees must have access to both these criteria and the statistics the company compiles on pay broken down by gender.
The directive should enable both employees and employers to see if there are pay differences between men and women, and if so, to make an effort to rectify it.
Furthermore, employers will also be obliged to draw up an equality action plan, outlining the steps they will take to improve equal treatment in the workplace. In the event that an employer fails to comply with the regulations, they may risk having to pay compensation to employees.
What is the directive expected to contain?
The directive has not yet been adopted or officially published in writing, but it is expected that the agreement will, in broad terms, contain the following requirements:
- Businesses will henceforth be required to prepare a description of the objective, gender-neutral criteria underpinning salary formation, which must be accessible to employees.
- Businesses with more than 100 employees must report on the pay gap between men and women within the company.
- When negotiating salary for a new employee, the employee must have the right to be informed of the average salary for similar jobs at the workplace.
- In equal pay cases, pay differentiation will be considered discriminatory until proven otherwise.
- Member States shall impose sanctions on companies, such as fines, if they infringe the rules.
Timeline of the EU Directive
Here you can learn more about the process of drafting and adopting the EU directive.
- In March 2021, the European Commission put forward a proposal for a directive on pay transparency with the aim of reducing the gender pay gap in the labour market.
- On 15 December 2022, the European Parliament and the Council of the EU reached an agreement on the content of the upcoming directive.
- The directive is expected to be adopted during 2023, after which it must be implemented in Danish companies with over 100 employees.
When does the directive come into force?
The EU directive is expected to be adopted by the European Parliament during 2023. After this, member states will have 3-5 years to ensure the legislation is implemented, and then it will apply to private and public workplaces with over 100 employees. However, it is expected to also have an impact on smaller companies.
Do you have your payroll data under control?
With the new EU directive, it is even more important to have your administrative data under control. Intempus integrates with some of the country's leading payroll systems, which can make it easy for you to ensure correct and efficient payroll processing. The data can flow freely between the systems and reduce the administrative time you spend on administrative work.
If you are curious to see if we integrate with your specific payroll system, you can find an overview of the systems here.
You are also welcome to book a no-obligation demo or give us a call on +45 26390400, so we can talk about your needs:
Source: Ritzau.dk, DM.dk, Danish Business.dk
