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HR Legal

Rules on pay transparency on the way

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Legal news
calendar 27 March 2024
globus Denmark, Norway, Sweden

The EU has adopted the Pay Transparency Directive, which aims to reduce the pay gap between the genders. The Directive was adopted in April 2023 and must be implemented before June 2026 in the member states.

There still is a pay gap between men and women in the EU and in the Nordic countries. Lack of pay transparency has been pointed out to be one of the biggest reasons for the difference.

The rules contain a number of points that should help to equalize the pay gap between men and women:

Information

Companies must inform the starting salary or the salary range of a position before a job interview, for instance, in the job posting. Companies will not be able to ask about the applicants’ salary in their current or present jobs.

Employees are given the right to ask about the average salary levels in the company. The salary levels must be categorised by gender and show employees doing the same work or work of equal value.

The company must make sure that employees easily can see the objective and gender-neutral criteria the salary is determined by. Companies with fewer than 50 employees can be exempted.

Sanctions

Employees can receive reimbursement or compensation if they are paid a lower salary for the same work or work of equal value. There is no maximum amount, and employees must be compensated as if they had not been treated differently. Companies will potentially be sanctioned if they do not fulfil the requirements.

Annual report

Companies must regularly report their employees’ salaries with objective and gender-neutral criteria. It is the size of the company that decides when the company must report for the first time after the rules have entered into force. Companies with fewer than 100 employees can be exempted.

Salary assessment

If there is a difference of more than 5% that is not justified by objective and gender-neutral criteria, and the difference has not been corrected after six months, the company must review the salary with the employee representatives.  

IUNO’s opinion

The new rules from the EU have been a long time coming, and the countries still have until 2026 to implement the rules. We are keeping an eye on the development of the rules.

IUNO recommends that you, as a company familiarize yourself with the new rules already now. Although it is not yet clear how the Nordic countries will implement all the rules, there are some requirements that are fixed.

[The European Parliament and the Councils Directive on pay transparency of 24 April 2023]

There still is a pay gap between men and women in the EU and in the Nordic countries. Lack of pay transparency has been pointed out to be one of the biggest reasons for the difference.

The rules contain a number of points that should help to equalize the pay gap between men and women:

Information

Companies must inform the starting salary or the salary range of a position before a job interview, for instance, in the job posting. Companies will not be able to ask about the applicants’ salary in their current or present jobs.

Employees are given the right to ask about the average salary levels in the company. The salary levels must be categorised by gender and show employees doing the same work or work of equal value.

The company must make sure that employees easily can see the objective and gender-neutral criteria the salary is determined by. Companies with fewer than 50 employees can be exempted.

Sanctions

Employees can receive reimbursement or compensation if they are paid a lower salary for the same work or work of equal value. There is no maximum amount, and employees must be compensated as if they had not been treated differently. Companies will potentially be sanctioned if they do not fulfil the requirements.

Annual report

Companies must regularly report their employees’ salaries with objective and gender-neutral criteria. It is the size of the company that decides when the company must report for the first time after the rules have entered into force. Companies with fewer than 100 employees can be exempted.

Salary assessment

If there is a difference of more than 5% that is not justified by objective and gender-neutral criteria, and the difference has not been corrected after six months, the company must review the salary with the employee representatives.  

IUNO’s opinion

The new rules from the EU have been a long time coming, and the countries still have until 2026 to implement the rules. We are keeping an eye on the development of the rules.

IUNO recommends that you, as a company familiarize yourself with the new rules already now. Although it is not yet clear how the Nordic countries will implement all the rules, there are some requirements that are fixed.

[The European Parliament and the Councils Directive on pay transparency of 24 April 2023]

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Anders

Etgen Reitz

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Søren

Hessellund Klausen

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Kirsten

Astrup

Managing associate (on leave)

Sofie

Aurora Braut Bache

Managing associate

Cecillie

Groth Henriksen

Senior associate

Johan

Gustav Dein

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The team

Alexandra

Jensen

Legal advisor

Anders

Etgen Reitz

Partner

Caroline

Thorsen

Junior legal assistant

Cecillie

Groth Henriksen

Senior associate

Johan

Gustav Dein

Associate

Julie

Meyer

Senior legal assistant

Kirsten

Astrup

Managing associate (on leave)

Maria

Kjærsgaard Juhl

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Rikke

Grønlund Holm

Senior associate

Sofie

Aurora Braut Bache

Managing associate

Søren

Hessellund Klausen

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