EU: Companies with more than 100 employees must disclose wages to make pay gaps visible

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The European Council, the Commission and the Parliament have agreed on the main points of the new EU Pay Transparency Directive. The directive aims to end the pay gap between women and men. In the future, companies with more than 100 employees will have to publish average salaries for the same work or work of equal value. Gender pay gaps must be eliminated in cooperation with social partners. Otherwise, there is a threat of fines. 

Today is a good day, not just for women, but for all workers,” says Evelyn Regner, vice president of the EU Parliament. She has fought for years for the EU directive for pay transparency. In December, the European Council, the EU Commission and the Parliament have now agreed on the most important points of the directive. An essential step, because in Europe, women still earn on average 14 percent less than men in comparable positions. 

Employees gain insight into wage levels

Above all, a lack of transparency makes it difficult to reduce the gender pay gap. It is considered one of the main obstacles. The new directive aims to change that. In the future, all employees of a company will be able to see the wage structures of their colleagues—at least for people who do the same or comparable work. It does not matter how large a company is. 

Information about individual wages or the average wage for the same or comparable work forms the basis for fair pay regardless of gender. After all, this is the only way to make discriminatory wage differences visible and correct them through complaints or legal action. 

“With the new law, we have made good progress towards reducing the gender pay gap and ensuring that all employees in Europe receive the same pay for the same work or work of equal value” Evelyn Regner, Vice President of the EU Parliament. 

Companies must disclose any wage differentials between male and female employees

Companies with more than 100 employees must make wage structures publicly available and report them to a monitoring body. It must be made clear whether there are differences or pay gaps between the sexes. 

If the wage gap exceeds 5 percent, the company must develop and implement measures in cooperation with the social partners (e.g., employee representatives, trade unions). However, only if the difference cannot be attributed to objective factors. 

The disclosed data will make cross-industry comparisons possible. This will make the full extent of wage inequality (even) more visible. This will also increase awareness of the problem for employers and employees. 

Penalties and sanctions for violating the EU Pay Transparency Directive

The directive places greater responsibility on individual companies and EU member states. They must publish wage data, make it available to the public and the workforce, and report it to a monitoring body. In the event of violations, the companies concerned face fines. These are to be set and enforced by the member states. 

The newly gained transparency gives employees the opportunity to stand up for their rights from the outset. Companies that pay women and men unequally will have a harder time in the future. 

HR managers are no longer allowed to ask about applicants’ current salaries.

Wage inequality often begins in the job interview. Applicants are asked about their current salary, which then serves as the starting point for negotiations. This deepens gender pay gaps. With the new directive, HR managers will no longer be allowed to do this.

The EU-Parliament also agreed on a new directive to give platform workers more rights. Including minimum wage, social security and paid vacation.

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