The European Parliament and European Union (EU) Member States’ negotiators have reached an agreement on amendments to the proposed Pay Transparency Directive, which will affect all private and public employers in the EU. The directive aims to ensure equal pay for equal work or work of equal value between men and women by giving employees extensive new rights to information about their own pay and the pay of male and female peers. Formal adoption and publication of the amended directive is expected in the first quarter of 2023. Under its terms, member states will have up to three years to transpose the requirements into local law, with another year for employers to comply, so there is at most a four-year window for employers to prepare their reward arrangements for a significantly higher level of transparency.
The main features of the Directive as initially proposed and amended include requiring:
In terms of overall pay gaps, women's hourly earnings were on average 13.0% below those of men in the EU in 2020, ranging from a 0.7% gap in Luxembourg to a 22.3% gap in Latvia. Though not yet in force, employers should start preparing for the expected pay transparency requirements to ensure that their pay and benefits are ready for this level of transparency and that they are delivering equal pay. Many employers will need to carry out significant preparatory activity.
