BDA AGENDA 06/21 | REPORT FROM BRUSSELS

The European Commission presented a proposal for a directive on pay transparency on 4 March 2021. It assumes that despite progress, there are still problems with the implementation of the principle of equal pay for equal work or work of equal value.

The legislative proposal focuses on measures to ensure wage transparency for workers and access to justice. The scope of the Directive is intended to cover all employers without exception, with no exemptions for SMEs. No exemptions are foreseen for companies bound by or applying collective agreements. An individual right to information is to be introduced. In addition, employers with more than 250 employees will be subject to annual reporting requirements. Even job applicants are to receive information on company salary levels. Furthermore, compensation rights, reversal of the burden of proof and sanctions for enforcement are envisaged.

German employers are extremely critical of the proposed directive on wage transparency: it is based on incorrect statistical assumptions with regard to the unadjusted "gender pay gap" and ignores the actual causes of differences in pay, such as the very different career choices and employment patterns. For companies, the proposal is accompanied by unnecessary bureaucratic burdens and stirs up mistrust in the company. Important issues, such as an exemption for small and medium-sized enterprises and data protection for sensitive pay data, are ignored. The important role of collective agreements in equal pay between men and women is also unfortunately not taken into account: Collective agreements guarantee equal pay for equal work.

The proposal will be submitted to the European Parliament and the Council for examination. Once the procedure has been completed, Member States will have two years to transpose the Directive into national law and to communicate their implementing legislation to the Commission.

The BDA short position on the draft directive can be found here.