European Parliament adopts Pay Transparency Directive: addressing the gender pay gap

According to the World Economic Forum's Global Gender Gap Report, “at the current rate of change, the gender gap in economic participation and opportunity won't close for another 257 years, up from 202 years in last year's estimate”.  In the EU, women would have to wait for nearly 60 years (until 2086) to be remunerated equally. But EU legislators are making changes that might speed up the rate of change.

On 30 March, the European Parliament adopted the Pay Transparency Directive to address that concern (see press release).  

In a nutshell, the key provisions of the Directive are as follows:

• End of pay secrecy: workers will have the right to information on pay of their colleagues in their category of work and candidates must be provided with pay ranges about prospective jobs;
• Dissuasive penalties, including fines (potentially based on a company’s turnover), for employers that do not comply with the rules;
• Pay reporting: companies with over 100 employees will have to report on their gender pay gap;
• Companies will have to perform joint pay assessments if their gender pay gap is over 5%;
• The Directive also defines intersectional discrimination for non-binary people for the first time in European legislation, and includes it as aggravating circumstances when determining penalties.

Next steps

The Council will have to formally approve the agreement before the text is signed into law and published in the EU Official Journal. The new rules will come into force 20 days after their publication. Member States will then have three years to transpose the Directive into national law as of its entry into force, so by 2026.

While the deadline may seem far away, companies are rightfully starting to plan now for the transformational shift the new rules will bring.

Further resources 

Read our detailed briefing or reach out to your usual Linklaters contact for a step plan towards practical implementation of the Directive.