The EU addresses in depth the principles of transparency and equal pay between men and women and the promotion of genuine equality of persons with disabilities

Spain - 05 / 19 / 2023

The directive to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms has been published. In addition, a resolution of the European Parliament addressing very diverse aspects relating to disability, forming part of the European Union Strategy for the Rights of Persons with Disabilities 2021-2030.

The Official Journal of the European Union of May 17 has published the Directive (EU) 2023/970 of the European Parliament and of the Council, of May 10, 2023, to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms.

As we mentioned in our alert of April 11, 2023, the directive imposes transparency and reporting obligations on employers, both public and private. It also includes within its scope employees and job applicants in relation to the obligations of employers in selection processes.

First of all, the new legislation stresses that Member States must take the necessary measures to ensure that employers have pay structures to guarantee equal pay for equal work or work of equal value, ensuring that they provide easily accessible analytical tools or methodologies to support and guide the assessment and comparison of the value of work.

In relation to the obligations imposed on employers, it particularly addresses pay transparency, both during the employment relationship and before employment. Thus, among other matters, the directive provides that applicants for employment will be entitled to receive, from the prospective employer, information about:

the initial pay or its range, based on objective, gender-neutral criteria, to be attributed for the position concerned;
where applicable, the relevant provisions of the collective agreement applied by the employer in relation to the position.

During the selection process an employer may not ask applicants about their pay history during their current or previous employment relationships.

The directive also addresses in depth transparency obligations and employees’ rights to information during the employment relationship, establishing, inter alia, the duty to make available to the workforce the criteria that are used to determine employees’ pay, pay levels (gross annual pay and gross hourly pay) and pay progression. Employees may also request, through their representatives, information regarding their individual pay level and average pay levels, broken down by sex, for the category of employees performing the same work or work of equal value to that which they perform.

The directive provides that Member States shall ensure that employers with more than 100 employees (or those with a smaller workforce if they see fit in accordance with national law) provide information regarding the gender pay gap and the median gender pay gap. Also, in relation to the gap and the median gap in complementary or variable components, the proportion of female and male employees that receive them and the proportion in each quartile pay band. The period for providing such information in relation to the previous calendar year will end on June 7, 2027 for employers with 250 employees or more and on June 7, 2031 for employers with 100 to 149 employees.

In relation to this information, the new directive ensures that employers must conduct a joint pay assessment with the workers’ representatives, with the content that it expressly determines, if the information published shows the existence of a pay gap of at least 5% in any category, that difference is not justified using objective, gender-neutral criteria and that unjustified difference has not been remedied within six months of the date of submission of the reporting.

As regards remedies and enforcement, the following are the most important aspects:

The shift of the burden of proof when employees who consider themselves wronged establish facts from which it may be presumed that there has been direct or indirect discrimination, or where an employer has not implemented the above-mentioned pay transparency obligations.
Associations, organizations, equality bodies and employees’ representatives or other legal entities which have a legitimate interest in ensuring equality between men and women, are allowed to engage in any administrative procedure or court proceedings regarding an alleged infringement of the rights or obligations relating to the principle of equal pay, acting on behalf of, or in support of, an employee who is an alleged victim, with that person’s approval.
Entitlement to bring proceedings to claim and the right to obtain full compensation and reparation of persons affected by the violation of rights or breach of obligations relating to the principle of equal pay. The compensation or reparation, which may not be subject to any maximum limit, must include full recovery of back pay and related bonuses or payments in kind, compensation for lost opportunities, non-material damage, any other damage caused by other relevant factors and interest on arrears.
The competent authorities or national courts may, at the request of the claimant and at the expense of the respondent, issue an order to stop the infringement or take measures to ensure that the rights or obligations related to the principle of equal pay are applied.
The directive provides that Member States must lay down rules on the penalties applicable, bearing in mind that the penalties must be effective, proportionate and dissuasive.

The directive, which will come into force twenty days from its publication in the Official Journal of the European Union, requires Member States to transpose it not later than June 7, 2026.

Equal rights for persons with disabilities

In addition, the Official Journal of the European Union of May 17 published the European Parliament Resolution of December 13, 2022 towards equal rights for persons with disabilities.

In that resolution, among numerous matters in this respect, the European Parliament urges the European Commission to review various directives and proposals, inter alia, the updating of the proposed directive on equal treatment and the review of the employment equality directive, in particular in relation to the harmonized minimum standards for reasonable accommodations for employees with disabilities, with a view to fully adapting them to the provisions of the United Nations Convention on the Rights of Persons with Disabilities.

In relation to employment and with the objective of promoting inclusive employment, the Parliament requests the European Authority to work with national inspectorates to implement existing labor legislation; demands that Member States implement the Directive on work-life balance for parents and carers and ensure better living and working conditions including through adequate minimum wages and pay transparency measures in compliance with the Directive on minimum wages and pay transparency. Finally, it calls on the European Commission to develop and promote a European legal framework for inclusive enterprises.