Do I have the right to know how much my work colleague earns?

Following a two-year legislative procedure, the European Parliament and the Council (EU), adopted on 10 May 2023, at first reading, Directive 2023/970 on enhancing the application of the principle of equal pay for men and women for equal work or work of equal value through pay transparency and enforcement mechanisms (the ‘Directive’).

The main reason for the directive was the European Union’s desire levell off pay between men and women for equal work, as the gender pay gap continues at approx. 14% in the EU.

Prohibition of salary secrecy

One of the mechanisms to ensure equal pay for male and female workers, as provided for in Article 157 of the Treaty on the Functioning of the European Union, is to be the disclosure of pay. To this end, the Directive introduces the necessary access for employees to information on how much each of them has been paid. The Directive provides for an absolute prohibition on the secrecy of the salaries of employees of a relevant employer. Employees will have the right to learn their individual level of remuneration and the average level of remuneration, broken down by sex, for categories of employees doing the same job as them or a job of equal value to theirs. This information will have to be provided by the employer who receives a request from the employee concerned.

Bearing in mind also the risks that the disclosure of workers’ remuneration on a wider scale entails, the Directive takes into account the interest of the employer, which may require that any employee who becomes aware of the above information does not use it for any purpose other than that of claiming the right to equal pay for equal work or work of equal value and does not otherwise disseminate the information.

No more job ads without information about salary

The directive also provides a solution to an existing problem which has affected many of us in our job search. Namely, on a standard basis, the employers have not specified in job advertisements the salary for a relevant post. This makes it very difficult to choose the right proposal and often causes both the employer and the potential employee to waste time in a multi-stage recruitment process, after which it turns out that their expectations regarding the employee’s salary are different.

The new legislation will also abolish this practice. Applicants for employment will have the right to be informed by their prospective employer of the starting salary level or range of salaries envisaged for the position, based on objective and gender-neutral criteria. Such information will be included in the published vacancy notice or otherwise communicated to the job applicant prior to the interview, without the job applicant having to ask about this salary. So the amount of remuneration will not necessarily have to be stated in the vacancy notice, but the employer will have then to disclose the applicant the proposed remuneration prior to the interview, without the applicant having to request it (for example in the interview invitation).

Right to compensation or reparation

Enforcing the new obligations on employers may not prove to be an easy task, given the long-standing tradition in which workers’ remuneration has been a so-called ‘secret of the shadows’. The Directive provides for a number of remedies to ensure that the new equal pay provisions are applied. These may include:

compensation,
redress,
court order to stop the infringement,
court order to take measures to ensure that rights or obligations relating to the principle of equal pay are applied.

Compliance with the listed court orders is to be subject to possible recurring fines.

Importantly, it will not be the employees who will have the burden of proving that the employer does not act in accordance with the legislation. The Directive mentions that the employee will only have to present facts before the competent authority to presume direct or indirect discrimination, and it will be up to the employer to prove that this was not the case.

These provisions pose quite a challenge for employers. It seems that from the outset, it will be necessary to ensure that appropriate in-company rules are in place and that ongoing documentation is kept to prove the absence of pay inequalities.

International trend

This idea is not unusual when you look at other developed countries. There is a noticeable global trend regarding the disclosure of employees’ salaries. For example, in December 2022, the Governor of New York State signed Senate Bill S9427A, which requires employers to provide salary ranges in proposals and job advertisements. Salaries are to be stated in a range from the lowest to the highest annual or hourly wage for the position.

Summary

The new provisions may finally ensure that the obligation for each Member State to apply the principle of equal pay for male and female workers for equal work or work of equal value is not just an empty slogan designed to introduce a false atmosphere of equality. Wage transparency and measures to compel employers to eliminate wage discrimination will not only make it possible to intervene in a specific case, but also to monitor globally how the pay structure of employees of different genders develops and changes.

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