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New directive on closing gender pay gap and advancing pay transparency | Labour Law
On 24 April 2023, the Council of the European Union, following the adoption of the European Parliament, approved the Directive of the European Parliament and of the Council to endorse the principle of equal pay for equal work or work of equal value between men and women (so-called Pay transparency directive).
What is the purpose of the Pay Transparency Directive?
To respect the right to equal pay between men and women provided for in Article 157 of the Treaty on the Functioning of the European Union, employers must ensure that women and men are paid equally for the same work or work of equal value. Therefore, the purpose of the directive is to establish minimum requirements in the public and private sectors strengthening the application of the principle of equal pay between men and women and the prohibition of discrimination on grounds of sex.
What changes should the employer prepare for?
The member states will have up to three years to transpose the directive so let us have a glance at the scope of the upcoming legal act and how it could affect employers and workers throughout the European Union. The Directive provides, inter alia, for:
- Pay transparency prior to employment;
- Transparency of pay setting and career progression policy, making available to workers a description of the gender-neutral criteria used in determining their pay and career progression;
- The right of workers and their representatives to information about their individual pay level and the average pay levels, broken down by sex, for categories of workers doing the same work or work of equal value;
- Reporting on the pay gap between female and male workers by employers who employ at least 150 workers;
- Joint pay assessment, if pay reporting demonstrated that the average pay between female and male workers in the organization differs by at least 5 percent for any of the categories of workers doing the same work or work of equal value, which has not been justified by objective and gender-neutral factors;
- The right of worker who has suffered harm caused by an infringement of any right or obligation related to the principle of equal pay has the right to claim and to obtain full compensation for the harm caused in a way, which is dissuasive and proportionate to the damage suffered.
Speaking in the words of President of the Commission Ursula von der Leyen, “Equal work deserves equal pay. And for equal pay, you need transparency.” LEADELL Vītols team of labor law experts led by attorney at law Ilze Jankeviča is already working on solutions that will be necessary for the implementation of the new requirements. Draft Pay transparency directive can be found here.
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