EU directive will reduce the pay gap between men and women

For many years, the EU has worked to ensure equal opportunities and treatment of men and women on the labor market, including equal pay for equal work. Most recently, they have put forward a salary directive, which will oblige companies to disclose detailed salary statistics to employees. The directive is expected to be adopted during 2023.

Despite the EU’s efforts to ensure equal treatment between genders, a pay gap still exists between women and men in Europe, with women earning less than men for the same work. A comprehensive study carried out by CBS in 2022 shows that women earn on average 7% less than men for the same job in the same workplace in Denmark. In other EU countries the pay gap is even bigger.

To fight this inequality, the EU Commission proposed a new directive in 2021 that will force employers to provide greater pay transparency and ensure that men and women who perform the same work of equal value – i.e. work that requires the same education, skills and responsibilities – gets paid the same.

What does the directive mean?

As mentioned, the directive requires employers to ensure pay transparency, but what does this mean in practice?

The requirement for increased salary transparency means that salary data must be made more accessible to the employees. Employees must, among other things, be given the right to see the salary levels of other employees in the company they work in. In addition, employers must in future prepare a description of the objective gender-neutral criteria that form the basis of the salary determination. The employees must have access to both these criteria and the statistics the company compiles on salaries broken down by gender.

The directive must give both employees and employers the opportunity to see if there are differences in pay between men and women and, if there is, make efforts to correct it.

In addition, employers will also be required to draw up an equality action plan with detailed steps on what they will do to improve equal treatment in the workplace. In the event that an employer does not comply with the rules, they may risk having to pay compensation to the employees. 

What is the directive expected to contain?

The directive has not yet been adopted or published in writing, but it is expected that the agreement will broadly contain the following requirements:

  • In the future, companies must prepare a description of the objective gender-neutral criteria that form the basis of salary formation, and which is available to employees.
  • Companies with more than 100 employees must report on the pay gap between men and women in the company.
  • When negotiating salary in connection with a new employee, the employee must have the right to be informed of the average salary for similar jobs in the workplace.
  • In equal pay cases, discrimination in pay will be considered an expression of discrimination until proven otherwise.
  • The member states must impose sanctions such as fines on companies if they violate the rules.

Timeline for the EU directive

Below, you can find out more about the process for the design and adoption of the EU directive.

  • In March 2021, the EU Commission put forward a proposal for a directive on pay transparency with the aim of equalizing the pay gap between men and women in the labor market.
  • On 15 December 2022, the EU Parliament and the Council of Ministers agreed on the design of the upcoming directive.
  • The directive is expected to be adopted during 2023, and after this it must be implemented in Danish companies with over 100 employees.

When does the directive become effective?

The EU directive is expected to be adopted by the European Parliament during 2023. After this, the member states will have 3-5 years to ensure that the legislation is implemented, and then it will apply to private and public workplaces with over 100 employees. However, it is expected that it will also affect smaller companies.

Are you in control over your salary data?

With the new EU directive, it will be even more important to have control over your administrative data. 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 to your payroll system, you can find an overview of our integration options here

You are also welcome to book free demo or give us a call on +45 26390400, for a talk about your needs.


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