Last Updated on February 27, 2025
The approval of Directive 2023/970, which aims to make the principle of equal pay for men and women for equal work or work of equal value effective through pay transparency, sets a deadline of 7 June 2026 for compliance by Member States through national transposition acts.
As anticipated in our previous in-depth study ‘Pay Transparency and the Gender Pay Gap. The importance of timely preparation before implementation of the Directive’, it is not possible to wait for publication in the Official Journal of the legislative decree implementing the Directive as it contains multiple obligations and requirements that will take time to put in place. These will have a huge impact on organisations’ activities, with effects on both recruitment and employment relationships.
Transparency obligations before hiring
The content of job advertisements will require careful attention, and recruiters will have to be trained appropriately to ensure they carry out job interviews with the same due care.
The Directive requires that job advertisements and job titles be gender-neutral and that recruitment procedures be conducted in a non-discriminatory manner in order not to compromise the right to equal pay for equal work or work of equal value.
Job applicants will be entitled to receive information about their initial pay, which must be provided, for example, in a job advert or before the job interview or in other ways that ensure transparent negotiations.
It will not be possible, on the other hand, to ask applicants for information regarding their current or previous salaries.
Significant action will have to be taken to verify/integrate pay systems, as the Directive requires that employees have easy access to the criteria used to determine pay, pay levels and progression criteria, which must be objective and gender-neutral.
Companies will also have to be prepared to respond to requests made either by workers themselves or through their representatives or an equality body, for information on individual pay levels and average pay levels, broken down by gender, of the categories of workers doing the same or equally valuable work.
This information must be provided in writing, within a reasonable time limit and, in any case, no later than two months from the date the request was submitted.
If the information received is inaccurate or incomplete, workers may request, either personally or through their representatives, clarification and further details regarding the data provided.
The Directive also requires employers to inform all workers annually of their right to receive the above-mentioned information and how they can exercise this right.
It will, therefore, be necessary to put in place a procedure for the exercising of workers’ right to information so that the timing and modalities of requests and responses are clear.
Analysis of the gender pay gap
In addition to the obligations towards workers relating to information, companies will be called upon to fulfil the reporting obligations that will be phased in from 7 June 2027according to the size of the company.
Employers will have to meet the following reporting deadlines:
- Businesses with at least 250 workers: by 7 June 2027 and annually thereafter.
- Businesses with 150 to 249 workers: by 7 June 2027 and every three years thereafter.
- Businesses with 100 to 149 workers: by 7 June 2031 and every three years thereafter.
Businesses with fewer than 100 workers may send the data on a voluntary basis or be included in those obliged to do so by national laws.
What must be included in these reports?
Reports to the specially established monitoring body will include:
- The gender pay gap in fixed and complementary or variable components;
- The median gender pay gap in fixed and complementary or variable components
- The percentage of female and male workers receiving complementary or variable components;
- The percentage of female and male workers in each pay quartile;
- The gender pay gap between workers by category of workers broken down by normal basic wage or salary and complementary or variable components.
The information at point 5 shall also be forwarded to all employees and their representatives and, on request, to the Labour Inspectorate and the Equality Body. These organisations also have the right to request clarification and further details regarding any data provided, including explanations regarding any gender pay gap. If there is a gender pay gap, employers will have to correct this within a reasonable time, in close cooperation with workers’ representatives, the labour inspectorate and/or the equality body.
Joint assessment
Employers who have to provide a report are obliged to carry out, in cooperation with the employees’ representatives, a joint assessment of pay when the disclosure of pay information has revealed a gender pay gap and especially a median gender pay gap
- of at least 5% in any worker category,
- not justified by objective, gender-neutral criteria and
- not remedied within six months from the date of communication of the pay information.
Conclusion
As analysis shows, there are multiple obligations for companies and unions will be extensively involved in various activities such as the identification of objective, non-discriminatory and gender-neutral criteria on which to base pay systems, requests for information on pay levels, requests for clarification of information and data provided by the employer, and joint evaluation.
Companies must therefore act quickly without waiting for implementation of the legislative decree transposing the Directive if they are to organise and fulfil these obligations in time.Toffoletto De Luca Tamajo is at your disposal to help with implementation of the obligations arising out of this EU Directive. We can also carry out a preliminary analysis of your gender pay gap using specific software that checks compliance with the Directive parameters, with a view to the adoption of any necessary pre-emptive measures.
Discover more about Gap IQ, request a meeting today.
