EU aims to toughen pay reporting obligations for companies

The European Commission publishes plans for fines for employers who don’t act on gender pay audits.

Demonstrating the gender pay gap with men on the higher ledge than women


The European Commission has published a series of binding pay transparency measures designed to reduce wage inequality and shrink the EU’s gender pay gap which stood at 14.1% in 2018.

The Commission’s draft proposal requires governments to set penalties, including fines, at a level they think will be effective, if companies are not divulging pay gap information.

“[Women’s] over-representation in lower paid sectors and occupations, such as, for instance, hospitality, retail or personal services, has made them particularly vulnerable in the labour markets struck by the Covid-19 crisis,” says the Commission’s proposal.

“It is important not to continue with the breach of the fundamental right to equal pay and not to continue to apply the biases which worsen women’s economic situation.” Helena Dalli, the EU commissioner for equality who is to present the proposals with Vera Jourova, Commission vice president for values and transparency, said: “Gender-based pay discrimination is a systemic problem but difficult to prove . . . Through the introduction of rules on pay transparency and a mechanism to enforce it, workers will have the tools to get the necessary information on potential pay differentials.”

The UK introduced gender pay audits several years ago, with the first taking place in 2017. There is a provision for employers who don’t comply to face unlimited fines and be publicly named and shamed. So far, no employer has been fined and a spokesperson from the Equality and Human Rights Commission [EHRC] which enforces the audits said: “We have secured 100% compliance with the requirement to report in each year of enforcement, without the need for court action.”

The audits were suspended last year due to Covid and the EHRC has this year told companies that they have an extra six months before they have to submit their reports. Campaigners say it is not enough to submit a report and would like to see a detailed analysis and action plan to address any gaps. They add that it is vital for the audits to go ahead at a time when women’s employment has been hard hit by the pandemic.

Meanwhile, a global workplace equality index has found that most global companies are failing to ban sexual harassment in the workplace or implement policies that enable mothers to work flexibly. The report from women’s workplace equality organisation Equileap said that fewer than half of firms’ policies directly address sexual harassment and that legislation will be a “necessary evil” to force action.

Equileap CEO Diana van Maasdijk said: “It’s only when companies are forced to do something that it’s going to happen. Some studies have shown one in three women will experience sexual harassment in their lifetime, so it’s really important that this is addressed and it is called exactly what it is.”

She cited progress in Spain in the wake of legislation that compelled employers to publish plans to tackle sexual misconduct. The report also highlighted the lack of permanent, flexible working policies at many companies. The data for the Equileap index was sourced from 3,702 companies in 23 countries, including the United States, Canada, Japan, France, Germany, Britain and Australia.

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