Over the summer, the European Commission published some frequently asked questions (FAQs) on the European Pay Transparency Directive.
By way of reminder, the Directive had to be transposed into national law by 7 June of this year, but only a few Member States met this deadline.
Are the 13 pages of FAQs worth your time? Not really, so we have summarised the most interesting takeaways for you:
- The FAQs confirm that the information that must be provided to job applicants on expected pay does not necessarily have to be included in the job vacancy notice, but it must be provided prior to the job interview.
- Obligations under the Directive do not apply to genuinely self-employed workers. However, bogus self-employed workers (i.e. those that really ought to be considered employees) may be caught.
The principle of equal pay applies to all employers, even when pay is set through collective bargaining. This point is a helpful reminder that pay structures are not necessarily compliant with the Directive purely because they are based on collective bargaining agreements (CBAs). If these CBAs are not weighing jobs on the basis of the criteria put forward by the Directive and European case law (skills, effort, responsibility and working conditions), the company’s pay structures may still be called into question.
- When determining pay, either as part of a pay assessment or in response to a request for information, all elements of pay should be included.
- Employers’ contributions to occupational schemes always need to be taken into account.
- In line with the objective of the Directive, it may not be useful to include:
- Payments and benefits in cash or in kind that are not subject to any eligibility criteria and are collectively paid to all employees without exception (same amount or benefit to every employee), such as lunch vouchers, smartphones, laptops, Christmas gift cards, collective learning courses, etc. These benefits do not need to be included if they are available to all workers without preconditions or exceptions;
- Payments and benefits in cash or in kind that are accessible to workers on a voluntary basis, without eligibility criteria and without exception (e.g. gym membership).
- Relationship with the GDPR: According to the European Commission, the Directive does not ever require the disclosure of individual pay data, only average pay levels. It states that in situations where there might be a risk of disclosure of personal data, when the number of comparators is very small, the Directive does not infringe the GDPR. The Commission considers that “ensuring compliance with the equal pay principle, as a Treaty principle and a fundamental right, represents an objective of ‘public interest’ within the meaning of Article 6(3) of the GDPR” and “the processing of the payroll data is necessary for achieving this objective”. The Commission reminds Member States that they may set additional safeguards for situations where the disclosure of aggregated payroll data could lead to the disclosure of personal data. This additional safeguard allows a Member State to decide that only workers’ representatives, labour inspectorates or equality bodies should have access to the information to let the worker know whether pay discrimination based on sex can be presumed. The safeguard is optional for Member States. This part of the FAQs is clearly aimed at rebutting criticism from certain Member States which have argued that the Directive needs to be amended and that GDPR compliance is one of the weak spots in the Directive. The Commission’s response is unfortunately not very helpful in remedying this rightful concern.
- Definition of “category of workers”: Workers performing the exact same work would, by definition, fall within the same category. However, different types of work may also be of the same value. In such cases, the workers holding these positions should be considered as belonging to the same category and pay range. The assessment of work of equal value should be done in a way that is not arbitrary, and should be based on gender-neutral criteria, including at least skills, effort, responsibility and working conditions. Beyond these minimum requirements, employers may include other relevant gender-neutral and bias free factors and are free to weigh each criterion differently depending on their relevance for evaluating the job role. It is up to employers to define categories of work of equal value, based on a combination of weighted criteria in cooperation with workers’ representatives where they exist. When taking into account additional elements, the employer must be able to justify the importance and relevance of each element; the element must be gender-neutral and non-biased; and its application must be proportional. While market conditions could influence the determination of the level of pay, the Commission warns that they are less likely to be directly linked to the intrinsic value of the job itself and should be treated with caution.
The FAQs do not contain an official interpretation of European law, but reflect the current view of the European Commission. Only the Court of Justice of the European Union can provide an authoritative interpretation of European law.