Co-legislators reach provisional agreement on Pay Transparency Directive
On 15 December 2022, the European Parliament and the Council of the EU reached, a provisional agreement on the Pay Transparency Directive.
All companies, regardless of their size, will have to make available to their employers a description of the gender-neutral criteria used to define their pay as well as disaggregated data on pay in the company. The Directive will prohibit contractual clauses that prevent workers from disclosing information about their wages. Sadly, the exemption for micro-enterprises sought by the EU Council will not be included in the final agreement.
HOTREC regrets that companies with more than 100 employees will need to comply with pay reporting and pay assessment obligations. This was the result of a compromise between a threshold of 250 employees, supported by the EU Council and the Commission, and 50 employees, wanted by the Parliament.
Member States will be required to provide effective, proportionate, and dissuasive sanctions, such as fines, for non-compliance by companies, rather than penalties.
In addition, a worker who feels that he or she has been discriminated against in terms of pay may claim compensation. If the case goes to court, it will be up to the employer to prove that there has been no discrimination.
The European Parliament and the EU Council must now formally adopt the agreement for the text to enter into force (which should take place in three years’ time instead of two).
Overall, we consider that the measures will not influence the gender pay gap and will bring a lot of administrative and financial burdens to companies