Pay transparency: EU Commission presents proposal for a Directive

Many measures to improve pay transparency

The proposal for a Directive contains some binding measures on pay transparency. These include mandatory information on the amount of pay prior to employment as well as the ban on asking applicants to disclose their previous salary. During the employment relationship, employees shall be entitled to information regarding the average pay of colleagues, who carry out equal work, itemised by gender and independent of company size. Larger companies with at least 250 employees are obliged to publish an annual report (e.g., on their website) specifying the gender pay gap. Apart from that, in case of a pay gap of at least 5 %, these reports have to undergo a more detailed analysis (“joint pay assessment”) by a group of employees in cooperation with the work council, if this pay gap cannot be explained objectively. Furthermore, confidentiality clauses are not allowed if they obstruct the legal enforcement in respect of equal pay for equal work.

Pay transparency strengthens the rights of employees

The proposal also strengthens the tools, which employees can use to assert their rights. The proposal for a Directive provides, among other, for a comprehensive compensation for victims of discrimination, including compensation for missed opportunities, immaterial damage, and default interest. The burden of proof will be transferred to the employer to an even greater degree. In the event of regulatory breaches, sanctions including (minimum) fines, which are effective and act as a deterrent shall be imposed. Apart from that, courts shall be able to oblige employers to take structural or organisational measures to ensure equal pay. Equality bodies and labour representatives shall be able to act on behalf of employees in court of administrative procedure as well as in the event of class action.

In addition, Member States have to introduce methods to enable the determination and comparison  of equal work. In doing so, in particular such criteria as educational training and job requirements, qualifications, stress and responsibility, executed work and type of related tasks have to be applied.

Further steps and need for action for Austria?

Some years ago already, Austria took structural measures against pay discrimination, such as stating the minimum pay in job adverts and mandatory income reports. In any case, many provisions of the Commission´s proposal mean an extension of the existing regulations, which Austria – following agreement having been reached with European Parliament and Member States - could build on.

Companies with 151 employees and over have been legally obliged since 2014 to prepare income reports, thereby ensuring that the income structure in large companies is continuously documented. Hence, the annual publication provided for in the proposal for a Directive is not too much of an effort and may have benefits: the currently strict non-disclosure obligation will be relaxed, publication can make access to information easier and apart from that, make comparisons between employers possible, which can also have a preventative effect in respect of possible pay discrimination. However, one has to criticise  the too highly set lower limit of 250 employees, which would exempt many companies from their reporting duty, which in turn is in conflict with the target of pay transparency. Sanctions and (minimum) fines have been planned in the event of breaches against the reporting duties – this is currently not the case in Austria.

The mandatory joint pay assessment, as well as determining measures, which have to be taken to remove any inequalities, would also be a novelty for Austria. To this day, there is no independent – but very important in practice – right to information for employees; only the Ombud for Equal Treatment has the right to information regarding the pay of people who are being compared. From the AK’s point of view, it has to be criticised that employees only receive information on the average income of comparison groups and not on the concrete amount and composition of the salary/wage, which in particular within smaller enterprises would make a comparison easier.

Even though contractual confidentiality clauses may be classified as unethical in Austria, an explicit ban of these clauses would be a helpful clarification.

Further information:

A&W Blog: Income reports: A useful tool for more pay equality? 

European Trade Union Confederation: Pay Transparency Directive: good principles, inadequate tools