Last week, on May 17, the Pay Transparency Directive was published in the EU’s Official Journal. Once published in the Journal, Directives become law twenty days later, meaning June 6, 2026, is the deadline for transposition. The Directive is designed to eliminate gender pay differential through pay transparency. EU legislators believe that the more data about pay in their company is available to employees and their representatives, the easier it will be to eliminate unjustifiable gaps.
On average, the gender pay gap across Europe stand at about 13%. Under the terms of the new Directive, where the data shows a gap of more than 5% which cannot be justified by objective, non-gender-neutral criteria, and which cannot be fixed within six months of having been identified, then management will have to engage with employees’ representatives to analyse the reasons for the gap and to agree an action plan to close it. The data will have to be produced by job/grade category, taking into account not just similar jobs but “work of equal value”.
We anticipate that national legislation will have to provide for the election of employees’ representatives where such representatives do not currently exist, as now happens with collective redundancies. However, such representatives could become “permanent” as it may take years to eliminate the pay gaps.
Some EU countries, such as France, Germany, and Spain, already have gender pay laws which will need to be updated in light of the Directive. While Member States have three years in which to transpose the Directive into national law, it is likely that some countries will do so more quickly than others. Some countries may want to go beyond the terms of the Directive. Also, the definition of “employee” differs from country to country so the scope of coverage may also vary between countries.
It is always possible that the EU Commission will bring government experts from the 27 Member States together to agree some common guidelines on transposition, but this remains to be seen.
We will be updating our guide to the Directive shortly. Lewis Silkin LLP have published a comprehensive article on the Directive which can be read here.
We are planning several events to examine in detail what will be required of member companies to comply with the Directive and what they should be doing now.
Published on: May 24, 2023
Authors: Tom Hayes
Topics: Employment Law, Inclusion and Diversity, The UK and European Union
Director of European Union and Global Labor Affairs, HR Policy AssociationContact Tom Hayes LinkedIn