The principle of equal pay for work of equal value is a long standing one within the European Union legislative framework: it is enshrined in the Treaty of Rome (1957); it was regulated by the Recast Directive (Directive 2006/54/EC) and complemented by the Commission Recommendation on Pay Transparency. It is also part of the European Pillar of Social Rights.

However, given the difficulties in the effective implementation and enforcement of this principle in practice, the European Commission is committed to close the current 14% gender pay gap.

In order to do so it presented a proposal for a Directive “to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms”.

The Directive aims at “laying down minimum requirements strengthening the application of the principle of equal pay between men and women and the prohibition of discrimination on grounds of sex through pay transparency and reinforced enforcement mechanisms”.

The draft article 4 on “equal work and work of equal value” clarifies the meaning of this expression and refers to tools or methodologies that “allow assessing, with regard to the value of work, whether workers are in a comparable situation, on the basis of objective criteria, which shall include educational, professional and training requirements, skills, effort and responsibility, work undertaken and the nature of the tasks involved. They shall not contain or be based on criteria which are based whether directly or indirectly on workers’ sex”.

The assessment shall not be “limited to situations in which female and male workers work for the same employer” or “employed at the same time as the worker concerned”. “Where no real comparator can be established, a comparison with a hypothetical comparator or the use of other evidence allowing to presume alleged discrimination shall be permitted”.

The draft Directive foresees also an obligation for the employer to indicate the initial pay level for a specific position: “such information shall be indicated in a published job vacancy notice or otherwise provided to the applicant prior to the job interview without the applicant having to request it”. According to the proposal, this does not limit the employers’, worker’s or social partners’ bargaining power to negotiate a salary outside the indicated range (article 5).

Besides this, employers shall make accessible to workers a description of the gender-neutral criteria used to define their pay and career progression.

Moreover, the Directive introduces a right to information: “Workers shall have the right to receive information on their individual pay level and the average pay levels, broken down by sex, for categories of workers doing the same work as them or work of equal value to theirs [...]”.

Article 8 of the draft Directive obliges employers with at least 250 workers to publish, on an annual basis, information on:

1. the pay gap between all female and male workers;
2. the pay gap between all female and male workers in complementary or variable components;
3. the median pay gap between all female and male workers;
4. the median pay gap between all female and male workers in complementary or variable components;
5. the proportion of female and male workers receiving complementary or variable components;
6. the proportion of female and male workers in each quartile pay band;
7. the pay gap between female and male workers by categories of workers broken down by ordinary basic salary and complementary or variable components.

If there is a pay gap of at least 5% that cannot be justified by objective gender-neutral factors, employers, jointly with workers’ representatives, shall carry out a pay assessment.

In case of violation Member States shall ensure that the workers obtain full compensation or reparation. Other effective, proportionate and dissuasive penalties must be foreseen.

The draft Directive also shifts the burden of the proof: “Member States shall take the appropriate measures, in accordance with their national judicial systems, to ensure that, when workers who consider themselves wronged because the principle of equal pay has not been applied to them, establish before a court or other competent authority, facts from which it may be presumed that there has been direct or indirect discrimination, it shall be for the defendant to prove that there has been no direct or indirect discrimination in relation to pay”.

The current proposal can be adopted by the end of the year.

The business community at the European level has expressed its view on the matters, as well as its concern on the draft Directive.

In its position paper of 5 May 2021, BusinessEurope said: “European employers fully support the two objectives of tackling the gender pay gap and fighting pay discrimination”. “European employers agree that pay transparency, depending on how it is put in place, can shed some light on existing pay differences and be a tool to discuss wages and the value that the individual worker contributes within the company. However, pay transparency is no silver bullet and there is no guarantee that the measures proposed will in fact bring to light cases of discrimination or will actually help to enforce the principle of equal pay for equal work or work of equal value. The pay transparency initiative should therefore not be seen as the most suitable instrument and needs in any case to be adapted in order to better reach its purpose”.

The draft Directive is introducing “heavy and disproportionate obligations for companies [...] which will create huge administrative burdens and costs for employers, possibly with little effect. We urge the EU institutions to amend the proposal to ensure that it is proportionate and reasonable”.

In addition, the Directive does not allow for: 

• a differentiation based on features like productivity and other wage setting structures;
• flexibility depending on the company size or cost of living;
• differentiation based on diverse industrial relations systems and contexts;
• respecting “national social partners’ competences and prerogatives for wage-setting, by handing over power to the legislator and to courts to shape pay structures, which are an essential part of collectively bargained pay systems”.

Finally, BusinessEurope considers that such a text could promote litigation and create an adversary culture at workplace.

The International Organisation of Employers (IOE) is at the forefront of supporting gender equality and tackling the gender pay gap. Among the activities it conducts, it is a member of the Steering Committee of the Equal Pay International Coalition (EPIC), founded at the UN General Assembly in 2017.  

EPIC mission is to accelerate “progress towards gender pay equity by raising awareness, sharing knowledge, embracing innovation and scaling up initiatives and programmes that have already yielded positive results”. It contains a database of national legislation on equal pay and work of equal value.  

The last IOE Position Paper on this topic dealt with “Harnessing female talent for the digital economy” (April 2020).