Will the new EU transparency directive reduce the #GenderPayGap?

Women in the European Union earn on average 14% less than men. To finally change this, the EU Commission has mandated companies to ensure greater wage transparency.

The EU directive that came into effect in June 2023 represents a significant tightening compared to the Pay Transparency Act of 2017. Member states have until 2025 to implement the directive into national law.

According to FOCUS-Business, it is advisable for companies not to simply wait until the corresponding German law is in place. Those who prepare for or even implement the planned changes now will find it much easier when the deadline arrives.

The key points of the directive are as follows:

  • Employers must inform job seekers about the starting salary for the advertised position before the interview. Additionally, during the interview, they are not allowed to ask applicants about their previous salary.

  • Anyone who has accepted the position is entitled to receive information on the following:

    • The average salary for equivalent work within the company, broken down by gender
    • The (objective and gender-neutral) criteria that determine the salary

    Companies are expected to remind employees annually that they are entitled to this information.

  • Large companies must report annually (medium-sized companies every three years) to the relevant national authority on the gender pay gap in their organization. If there is a pay gap of more than 5% that cannot be justified by objective, gender-neutral criteria, the company must take action in collaboration with employee representatives.

  • Employees who have experienced gender-based pay discrimination can claim compensation (or lost wages). The burden of proof lies with the employer.

Stefanie Hornung writes on LinkedIn that the topic is likely not high on the priority list for many companies; many HR managers are only vaguely familiar with the EU transparency directive.

For this reason, the New Pay Collective has created a survey that is intended to be both a knowledge test and an information source (link in the comments).

Do you feel that your company is already adequately aware of this issue—and are you confident that the new transparency directive will help reduce the gender pay gap?

herVIEW - Natascha Hoffner

Posted by Natascha Hoffner, Founder & CEO of herCAREER, WiWo columnist, LinkedIn TOP Voice 2020, W&V 2019 – 100 Köpfe
published on LinkedIn on 13.08.2024

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