behind the pay curtain
Building and maintaining a sufficiently large and qualified team is one of the main challenges facing any business. It is particularly significant from the perspective of companies operating in sectors with deficit occupations, where there is strong pressure on wages and high employee turnover. This often necessitates the development of ever more attractive employment offers for potential new employees. But how can this be done without being accused of unequal treatment vis-à-vis existing employees in the light of the Directive?
Pay transparency and openness, together with the changes that will come with implementation of the EU Directive are being talked and written about more and more in the public domain. It is often emphasised that the upcoming legislation is primarily aimed at combating the pay gap - the inequality in pay for women compared to men. However, will only female employees benefit from the new solutions?
In addition to pay transparency mechanisms, the directive also introduces a number of facilitations, including procedural ones, so that unequally paid employees will be able to pursue their claims more efficiently.
Legislative developments creating new pay transparency and disclosure obligations will lead to a considerable number of new tasks to be attended to internally, particularly for firms with a workforce of one hundred or more. As we have been reporting each week, the tasks that await include a complete review of the pay structure, responding to queries from employees on pay levels for their employee category, and compiling information regarding the pay gap to be submitted to the competent authorities.
It would be advisable to begin considering now who within the organisational structure will perform these tasks on the employer’s behalf?
The directive does not address this issue, and does not require positions or internal units to be created to take charge of compliance with the pay transparency and disclosure obligations.
While this may mean that employers are free to resolve this as they wish, it would be unwise to wait with determining who will be responsible for coordination and performance of the new tasks on the employer’s behalf, as the new obligations are to be in place by 2026. In the larger firms – where this could trigger a considerable workload – it might be particularly useful to designate a new, separate position, or carry out a meticulous review of responsibilities within the HR department to streamline the mechanisms for compliance with the forthcoming legislative changes.
Employers with at least 100 employees will have to collect and report data on the wage gap between female and male workers. Larger employers (with 150 or more employees) are to provide this information initially by 7 June 2027. But, who is to be the recipient of this information?
The directive obliges employers to put their pay structures in order, as well as to make more information about the salaries paid to employees available to employees, job applicants or relevant state authorities. There are various consequences for failing to comply with these pay transparency obligations.