The final content of the Pay Transparency Directive has been agreed and all that remains is the formal handling in the EU Parliament and the Council as well as a legal language review. In three years, the directive is to be by the Member States. Swedish representatives have worked hard to create significant room for the preservation of national wage models. In Sweden, our model has resulted in minimal pay differences and high labour force participation for both women and men.
The Directive is binding and establishes a minimum level of protection for workers. In so doing, the EU takes a hold on the wage formation in the Member States, which is to be based on job evaluation, transparency in the form of comprehensive public pay statistics from companies, and court action on wage discrimination.
For Sweden, this may negatively affect the tradition of decentralised wage formation, especially for businesses that provide individual pay based on assessments of employee performance. According to the Directive, certain objective and gender-neutral criteria are to be used to evaluate jobs or positions. These are to be evaluated and compared, and any objectively unexplained pay differences are to be addressed by the employers or in court.
“Yet again, the EU wants us in Sweden to dismantle our model because of problems in other Member States. It’s difficult to understand how the problems of other EU countries will become smaller when our problems become bigger,” says Mattias Dahl Deputy Director, Confederation of Swedish Enterprise.
Member states are to ensure that wage formation is not affected by gender. Among other things, this is to be done by ensuring methods and tools for evaluating work are available and gender neutral. Four criteria are to be considered when evaluating work: skills, effort, responsibility, and working conditions.
At time of hiring, new recruits are to receive information about the pay situation and pay range for the job(s) concerned. Employers may not ask applicants for details about previous pay. Information about pay criteria as well as pay and career development are to be provided by the employer.
Upon request by an employee, all companies are obliged, regardless of their size, to provide information annually on the same individual’s pay as well as statistics on average pay for jobs that are equal or of equal value to that held by this individual. The statistics are to be broken down by gender.
Companies with more than 100 employees are to produce, with different frequency depending on the number of employees (100-149,150-249, and 250-and above), comprehensive statistics broken down by gender. This includes pay, other remuneration, and career structures. These findings must be reported publicly and made available to employees and equality bodies. If there is a pay gap of more than five per cent between women and men in any category that cannot be justified by objective and gender-neutral criteria, a pay assessment must be carried out. The assessment must be based on a number of different parameters that have to be analysed and addressed.
To make it easier for employees to pursue discrimination cases in court, there are rules on limitation periods, distribution of legal costs, and shifting the burden of proof. If a comparator of the opposite gender does not exist within a company, a comparison must be made within the collective agreement area or group (i.e. single source) or with a hypothetical comparator.
Member states are obliged to submit comprehensive national data to Eurostat/EU Commission on an annual basis.