Pay Transparency: obligations and rights of today and tomorrow
Posted: Thu Dec 26, 2024 3:16 am
May be a complete unknown for many employers and workers, but it is already in force. EU Member States have until 2026 to transpose it, employers will have to adapt to the new requirements and workers will have more rights.
This Directive aims to strengthen the application of the principle of equal pay , i.e. the principle of equal pay for equal work or work of equal value between men and women. It aims to do so through new rules on pay transparency and the creation of mechanisms to guarantee it.
What reality do we have today in terms of salary transparency?
Despite the new features of this Directive, pay transparency is a topic that is already covered in some domestic legislation in Portugal, since the principle of equality is provided for in the Constitution and the Labour Code.
On the other hand, Law No. 60/2018, of August 21 , in force since February 2019, brought a set of measures that promote equal pay between men and women for equal work or work of equal value.
The main measures include the following:
Employers must ensure the existence of a transparent hong kong whatsapp number database policy , based on the assessment of the components of the functions, based on objective criteria, common to men and women, such as merit, productivity, attendance or seniority.
In a situation where an employee alleges pay discrimination in relation to the pay of another employee(s), the employer must be able to demonstrate that it does, in fact, have a transparent pay policy, with the criteria indicated above.
If the Authority for Working Conditions (ACT) finds pay differences between women and men by company, profession and qualification levels, it will notify the employer to present an Assessment Plan for these pay differences.
Violation of the Assessment Plan regime constitutes a serious administrative offence , and may also be subject to the additional sanction of deprivation of the right to participate in public auctions or competitions, for a period of up to two years.
The Commission for Equality in Work and Employment (CITE) issues a binding opinion on the existence of pay discrimination based on sex when requested in writing by a worker or trade union representative.
As additional protection for the worker , dismissal or other sanction applied allegedly to punish a labor violation is presumed to be abusive when it takes place up to one year after the aforementioned request for an opinion from CITE.
What new features does the Pay Transparency Directive bring ?
According to the study "Readiness Assessment – Pay Transparency" by Mercer Portugal, 40% of companies are not aware of the obligations under this Directive , despite it having been in force since June 2023 and Member States having to transpose it by 7 June 2026 .
The truth is that the new rules have implications not only for workers, who now have more rights, but also for companies, which must adapt their policies and practices to the new requirements.
Main measures for workers
Even at the recruitment stage, job applicants have the right to know the starting salary or salary range for the position they are applying for to enable informed and transparent negotiations on salary. Candidates should not be asked about their salary history (current or previous).
Workers now have the right to request information from their employers about the level of individual pay and average pay levels , broken down by sex, for categories of workers performing the same work or work of equal value. In other words, they will have the right to know the salary conditions of colleagues in the same category.
Key measures for employers
Employers will have to inform all employees annually of their right to receive the information referred to in the previous point and the steps to follow to exercise this right. They must ensure easy access to the criteria used to determine pay, pay levels and pay progression, which must be objective and gender-neutral.
In addition, employers will have to report to the competent national authority the gender pay gap in their organisation in relation to the previous calendar year.
Employers with 250 or more employees - report by 6/7/2027 and annually thereafter ;
Employers with between 150 and 249 employees - notify by 6/7/2027 and every 3 years thereafter ;
Employers with between 100 and 149 employees - notify by 7/6/2031 and every 3 years thereafter ;
Employers with fewer than 100 employees - are not required to provide this information, but under national law this information may be required.
If the report reveals a pay gap of more than 5% that cannot be justified by objective and gender-neutral criteria, companies will have to carry out a joint pay assessment in cooperation with employee representatives.
Measures in case of violation of the principle of equal pay
National law shall provide that, in the event of a breach of rights or obligations relating to the principle of equal pay, the competent authorities or national courts may, at the request of the complainant, issue an order to cease the breach or an order to take measures to respect the rights or obligations relating to the principle of equal pay. In the event of failure to comply, the competent authority or the court may impose a recurring penalty payment to ensure compliance.
Rules will also be established regarding effective, proportionate and dissuasive sanctions and include fines.
Workers who consider themselves harmed by the violation of the principle of equal pay may bring legal proceedings to enforce rights and obligations related to this principle and may receive compensation , including full recovery of retroactive payments and related bonuses or payments in kind, compensation for loss of opportunity, non-pecuniary damages or other damages caused by relevant factors, default interest .
Although the burden of proof in cases of pay discrimination traditionally lies with the employee, it will be up to the employer to prove that there was no discrimination, direct or indirect, in terms of pay and pay transparency.
In national legislation, Member States will have to introduce the necessary measures to protect workers and their representatives against dismissal or other forms of unfavourable treatment for lodging a complaint with the employer's organisation or for initiating an administrative procedure or judicial proceedings to enforce rights or obligations relating to the principle of equal pay.
Opportunity for companies to rethink salary transparency
The principle of equality was further reinforced with this Directive.
This is an opportunity for companies to improve their communication about salary policy and to revisit this topic, putting an end to any discrimination, whether intentional or not, becoming more compliant and capable of attracting and retaining more and better talent.
To do this, it is necessary to equip yourself with analytical tools that facilitate the verification of possible discrimination.
This Directive aims to strengthen the application of the principle of equal pay , i.e. the principle of equal pay for equal work or work of equal value between men and women. It aims to do so through new rules on pay transparency and the creation of mechanisms to guarantee it.
What reality do we have today in terms of salary transparency?
Despite the new features of this Directive, pay transparency is a topic that is already covered in some domestic legislation in Portugal, since the principle of equality is provided for in the Constitution and the Labour Code.
On the other hand, Law No. 60/2018, of August 21 , in force since February 2019, brought a set of measures that promote equal pay between men and women for equal work or work of equal value.
The main measures include the following:
Employers must ensure the existence of a transparent hong kong whatsapp number database policy , based on the assessment of the components of the functions, based on objective criteria, common to men and women, such as merit, productivity, attendance or seniority.
In a situation where an employee alleges pay discrimination in relation to the pay of another employee(s), the employer must be able to demonstrate that it does, in fact, have a transparent pay policy, with the criteria indicated above.
If the Authority for Working Conditions (ACT) finds pay differences between women and men by company, profession and qualification levels, it will notify the employer to present an Assessment Plan for these pay differences.
Violation of the Assessment Plan regime constitutes a serious administrative offence , and may also be subject to the additional sanction of deprivation of the right to participate in public auctions or competitions, for a period of up to two years.
The Commission for Equality in Work and Employment (CITE) issues a binding opinion on the existence of pay discrimination based on sex when requested in writing by a worker or trade union representative.
As additional protection for the worker , dismissal or other sanction applied allegedly to punish a labor violation is presumed to be abusive when it takes place up to one year after the aforementioned request for an opinion from CITE.
What new features does the Pay Transparency Directive bring ?
According to the study "Readiness Assessment – Pay Transparency" by Mercer Portugal, 40% of companies are not aware of the obligations under this Directive , despite it having been in force since June 2023 and Member States having to transpose it by 7 June 2026 .
The truth is that the new rules have implications not only for workers, who now have more rights, but also for companies, which must adapt their policies and practices to the new requirements.
Main measures for workers
Even at the recruitment stage, job applicants have the right to know the starting salary or salary range for the position they are applying for to enable informed and transparent negotiations on salary. Candidates should not be asked about their salary history (current or previous).
Workers now have the right to request information from their employers about the level of individual pay and average pay levels , broken down by sex, for categories of workers performing the same work or work of equal value. In other words, they will have the right to know the salary conditions of colleagues in the same category.
Key measures for employers
Employers will have to inform all employees annually of their right to receive the information referred to in the previous point and the steps to follow to exercise this right. They must ensure easy access to the criteria used to determine pay, pay levels and pay progression, which must be objective and gender-neutral.
In addition, employers will have to report to the competent national authority the gender pay gap in their organisation in relation to the previous calendar year.
Employers with 250 or more employees - report by 6/7/2027 and annually thereafter ;
Employers with between 150 and 249 employees - notify by 6/7/2027 and every 3 years thereafter ;
Employers with between 100 and 149 employees - notify by 7/6/2031 and every 3 years thereafter ;
Employers with fewer than 100 employees - are not required to provide this information, but under national law this information may be required.
If the report reveals a pay gap of more than 5% that cannot be justified by objective and gender-neutral criteria, companies will have to carry out a joint pay assessment in cooperation with employee representatives.
Measures in case of violation of the principle of equal pay
National law shall provide that, in the event of a breach of rights or obligations relating to the principle of equal pay, the competent authorities or national courts may, at the request of the complainant, issue an order to cease the breach or an order to take measures to respect the rights or obligations relating to the principle of equal pay. In the event of failure to comply, the competent authority or the court may impose a recurring penalty payment to ensure compliance.
Rules will also be established regarding effective, proportionate and dissuasive sanctions and include fines.
Workers who consider themselves harmed by the violation of the principle of equal pay may bring legal proceedings to enforce rights and obligations related to this principle and may receive compensation , including full recovery of retroactive payments and related bonuses or payments in kind, compensation for loss of opportunity, non-pecuniary damages or other damages caused by relevant factors, default interest .
Although the burden of proof in cases of pay discrimination traditionally lies with the employee, it will be up to the employer to prove that there was no discrimination, direct or indirect, in terms of pay and pay transparency.
In national legislation, Member States will have to introduce the necessary measures to protect workers and their representatives against dismissal or other forms of unfavourable treatment for lodging a complaint with the employer's organisation or for initiating an administrative procedure or judicial proceedings to enforce rights or obligations relating to the principle of equal pay.
Opportunity for companies to rethink salary transparency
The principle of equality was further reinforced with this Directive.
This is an opportunity for companies to improve their communication about salary policy and to revisit this topic, putting an end to any discrimination, whether intentional or not, becoming more compliant and capable of attracting and retaining more and better talent.
To do this, it is necessary to equip yourself with analytical tools that facilitate the verification of possible discrimination.