New EU directive to bring more transparency and equal pay
The European Commission has proposed new rights and obligations for workers and employers in the public and private sectors to strengthen the application of the principle of equal pay for men and women for equal work or work of equal value. It will be up to the member states to put in place mechanisms to ensure pay transparency. These should consist, e.g., in the employees’ right to information or mandatory reporting on the gender pay gap.
In March 2021, the European Commission presented a proposal for a directive aiming 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 final wording is now being negotiated at the level of the European Parliament, the European Commission, and the Council of the EU. Member states will have two years to put in place appropriate mechanisms and implement the directive in their national legislations. They will also have to introduce specific sanctions for breaches of the equal pay rule, including a minimum level for financial penalties.
The draft directive includes, e.g., the applicants’ right to salary or wage information before job interviews without having to request it.
It also gives workers the right to request information from their employer on their individual pay level and on the average pay levels, broken down by sex, for categories of workers doing the same work or work of equal value, as comparing wages or salaries is one of the easiest ways for employees to find out whether their employer observes the equal pay principle.
Employers with at least 250 employees are required by the draft directive to publish on their website or otherwise information on the gender pay gap in their organisation. Where differences in average pay for equal work or work of equal value between women and men not justifiable by objective and gender-neutral criteria are revealed, employers shall be obliged to remedy the situation in close cooperation with, e.g., workers' representatives or the competent labour inspectorate. Workers who have suffered harm from a breach of any of the rights or obligations related to the equal pay principle should have the right to claim full compensation.
Equal pay is a very relevant topic in the Czech Republic, as courts deal with unequal pay quite often. As an example, we can mention the Constitutional Court’s ruling in a Czech Post driver’s case: here, the Constitutional Court sided with the Supreme Court's decision stating that external social and economic conditions, such as the labour market or the cost of living in a given region, cannot affect the level of remuneration of employees in individual regions.
It is yet too soon to predict what the final wording of the directive will be. However, we recommend that employers already at this point review their remuneration system and in particular check whether it meets the requirements for transparency and equality in the light of the latest case law and the Labour Code.