EU Pay Transparency Directive

The EU Pay Transparency Directive, an innovative piece of legislation, was conceived by the European Union as a solution to the enduring problem of gender pay disparity. This directive, originally proposed by the European Commission in 2021, supports the critical principle of equal remuneration for men and women for equivalent work or work of equal value, a principle inscribed in Article 157 of the Treaty on the Functioning of the European Union​. Recognised as a highly comprehensive piece of European law, the directive sets out to eliminate the gender pay gap in all employment scenarios, spanning both public and private sectors and including job applicants​.

Principal Elements of the EU Pay Transparency Directive

Several essential duties for employers are introduced by the Directive to improve transparency in pay. These include:

  1. Reporting Pay Disparities: Entities employing more than 100 individuals are mandated to disclose pay gap data, such as the disparity in average wages between their male and female workers. The reporting frequency depends on the size of the entity, with companies employing over 250 workers obliged to report yearly, and those with 100 to 249 workers reporting every three years. Companies employing fewer than 100 individuals may opt to voluntarily disclose pay gap data, unless the member state enforces mandatory reporting. This data must be disclosed to an authority assigned by each member state, competent in handling gender disparity issues and remedies​.
  2. Collective Pay Assessment: A collective pay assessment is required if the average pay difference between men and women performing the same work or work of equal value exceeds 5%, and there is no objective factor justifying this disparity. This assessment is required if the employer has not addressed the situation within a six-month period from the time the pay gap data was reported​.
  3. Prohibition of Pay Secrecy and Right to Data: Employees are entitled to access comprehensive and transparent information about individual and average pay levels, disaggregated by gender, for those performing the same job or work of equal value as theirs​​.
  4. Pre-Employment Pay Transparency: Companies are required to disclose details about the initial pay level or its range to prospective candidates for particular job openings. Furthermore, companies are prohibited from asking candidates about their pay history from previous or current employment​​.
  5. Transparency Regarding Pay Level and Career Development: Companies are required to provide their employees with a description of the criteria for pay and career advancement​.

Additionally, the Directive establishes remedies and enforcement procedures, such as the right for workers who have been victims of pay discrimination in their workplace to seek compensation. It also provides protection against discriminatory treatment or retaliatory actions​​. Notably, in instances of pay discrimination, the burden of proof is reversed, placing the onus on the employers to present evidence demonstrating that the alleged pay discrimination is unjustified​​.

Upon its official publication in the EU’s Official Journal, the Pay Transparency Directive will become active. From that moment, EU nations will have a maximum of three years to incorporate the directive into their national laws. Initially, only companies with 150 or more employees will be required to report gender pay data. However, two years after the transposition deadline, this obligation will extend to include firms with more than 100 employees, who will then be required to report this information every three years.

Given that the European Union Pay Transparency Directive places new obligations on employers in Cyprus, Chambers & Co provides the following services:

  1. Advisory Services: Our firm can offer advice on how to comply with the new directive, including steps to take to ensure pay transparency and equality in the workplace. We can help you understand what the directive means for your business and how to navigate the new obligations it imposes.
  2. Implementation Support: Our law firm can help businesses implement necessary changes to comply with the directive. This includes setting up new reporting systems for pay gap reporting, developing policies around pay secrecy, and establishing processes for addressing pay discrimination claims.
  3. Training: Chambers & Co can provide training for HR personnel, management, and employees on the new regulations, ensuring that everyone understands the changes and how they impact their roles.
  4. Legal Representation: If a business is accused of non-compliance or faces a pay discrimination lawsuit, the firm can provide legal representation, helping to navigate the legal process and build a strong defence.

  5. Policy Review and Development: The firm can review your current policies and practices to identify areas where they may fall short of the directive’s requirements. They can also assist in developing new policies that are in line with the new regulations.

If you’re looking to understand and navigate the complexities of the EU Pay Transparency Directive, we’re here to assist. At Chambers & Co, we believe in the power of open communication and personalised legal counsel. Get in touch with our expert team of lawyers today to discuss how we can support your organisation through these regulatory changes.  We look forward to assisting you in ensuring your business remains compliant, fair, and competitive in this new legislative landscape.