Changes in labour law
EU legislators are constantly working on bringing the working and pay conditions in the Member States in compliance with each other as much as possible. A directive on gender balance on company boards was published in December 2022. In addition, further work is underway on a proposal to close the gender pay gap.
Directive on gender balance on company boards
The objective of Directive 2022/2381 on improving the gender balance among directors of listed companies and related measures is to balance gender representation on the boards of stock listed companies.
This Directive applies only to stock listed companies. Micro-, small- and medium-sized companies (with less than 250 employees) do not fall under the Directive.
It is assumed that by 30 June 2026, women shall hold at least 40% of non-executive director positions or at least 33 % of all director positions in stock listed companies. However, this does not change the fact that when selecting candidates for a position, merit criteria must still be primarily used and the selection of a particular person must be transparent and non-discriminatory in relation to other candidates. Stock listed companies will have to report to the relevant institutions once a year on the gender structures of their boards. If they fail to meet the directive’s objective, they will additionally have to provide information on planned changes that will achieve the objective. Companies are ordered to present the above information on their websites so that it is publicly available. Member States are required to introduce effective, dissuasive, and proportionate sanctions to be imposed on companies failing to comply with this Directive.
Entry into force and transposition
The Directive entered into force on 27 December 2022. By 28 December 2024, Member States are required to lay down the laws, regulations and administrative provisions necessary to implement this Directive.
Draft Directive on closing the gender pay gap
The main objective of the draft Directive COM(2021) 93 final, 2021/0050 (COD) is to increase wage transparency and improve the enforcement of the principle of equal pay.
The draft Directive applies to both public and private sector employers. It will apply to all employees who are bound by an employment contract or by any another employment relationship as defined by law, collective agreements, or customary practice in each Member State, taking into account the case law of the Court of Justice of the European Union.
The employer will be obliged to make available information on company salaries. Candidates will have the right to receive information from their future employer on the starting salary level or salary range envisaged for the position, based on objective and gender-neutral criteria. Such information must be included in the published job offer or communicated to the candidate prior to the job interview. This means that candidates when going for an interview must have a general idea of the salary they will receive for the position they are applying for. Employees will also have the right to see the criteria based on which salaries of a certain amount and possible increases are awarded. These criteria must be gender neutral. Employees will also have the right to request information on their individual level of salary and the average level of wages of employees performing the same work or work of an equal level. An entity employing at least 250 staff will report to the relevant national authority information on the gender pay gap in its company. Such information will also have to be made available by the employer to its employees and their representatives. If these reports show that the difference in the average wage level between female and male employees is at least 5 per cent and this difference is not justified by objective and gender-neutral criteria, the employer, in cooperation with the employees’ representatives, will have to carry out a collective wage assessment. Furthermore, it is prohibited to oblige employees to keep their salaries secret. If the employer does not comply with this regulation, the employee will have the right to claim compensation or redress. In such a situation, the burden of proof will be with the employer.
Entry into force and transposition
There is currently no information on when the Directive will be adopted. However, it is known that the Member States will have two years to transpose the Directive from its entry into force into local legislation.
Source: The article was created in collaboration with our cooperation partner – sdzlegal Schindhelm Law Office
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