News from Employment

NEWSLETTER JUNE 2024

The implementation of the EU Directive on the transparency of equal pay for men and women for work of equal value (the "Pay Transparency Directive") imposes new requirements on employers

 
Last year, the EU adopted new rules on pay transparency. The purpose of the Pay Transparency Directive is to reduce the pay gap between men and women in the EU Member States by giving employees greater opportunities to assert their right to equal pay for equal work or work of equal value. The Pay Transparency Directive must be implemented in Sweden by June 2026.

Background

The principle of equal pay in the EU is enshrined, inter alia, in Article 157 of the Treaty on the Functioning of the European Union (TFEU). The right to equal pay for equal work has long been a priority issue in the EU and several measures have been taken to address the existing pay gap (see for example Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation).

Despite the measures taken at EU level, the gender pay gap persists and is estimated to be around 13% in the EU. In Sweden, the pay gap is lower, but the unexplained gender pay gap still amounts to 4.8%. Lack of transparency in pay setting, particularly regarding information on the pay levels of categories of workers performing equal or equivalent work, has been identified as one of the main obstacles to reducing the gender pay gap.

The Pay Transparency Directive is intended to provide workers with greater transparency in the pay system and thus increase the possibility for workers to claim their right to equal pay before, during and after employment through a range of measures. 

New obligations for employers

The Pay Transparency Directive means, among other things, that employers will have to: 

• carry out an annual salary survey, which must be documented,
• be obliged to inform jobseekers of the starting salary or salary range for advertised posts, 
• be prevented from asking jobseekers about previous salaries,
• need to provide employees with information on the average salary levels, broken down by gender, of categories of employees doing the same or equivalent work, as well as the criteria used to determine salary and career progression (which must be objective and gender-neutral),
• need to pay compensation to individuals who have suffered pay discrimination; and
• impose sanctions, including penalties, for breaches of the rules.  

In addition, companies with at least 100 employees will have to regularly report on pay differences between men and women in the organisation to the relevant national authority. In Sweden, such pay reporting must be done to the Discrimination Ombudsman (DO), which must publish the data and report back to the European Commission.

The burden of proof, traditionally placed on the employee in cases of pay discrimination, is shifted by the Pay Transparency Directive to the employer, meaning that it is the employer's responsibility to prove that it has not violated EU rules on equal pay for equal work between men and women.

Criticism from the Swedish social partners

The Wage Transparency Directive has been criticised in Sweden, including by the Confederation of Swedish Enterprise, which believes that the directive threatens the Swedish labour market model. The criticism from Sweden has mainly concerned the directive's provisions on the introduction of common rules for wage formation. Given that in Sweden it is the social partners who regulate wage setting in collective agreements (which are based on the parties' willingness to resolve conflicts without legislative interference), Sweden has come further than most countries in the EU when it comes to equal pay.

The Swedish inquiry into the implementation of the Pay Transparency Directive

In Sweden, a government report on the implementation of the Pay Transparency Directive was submitted to the responsible ministers on 29 May 2024. In brief, the report proposes to introduce a new chapter in the Discrimination Act regarding transparency in pay setting. The intention is that employers will use the information in the pay survey and share with employees the information they are entitled to receive, such as information on the rules and practices on pay applied by the employer. The proposal also requires employers to provide certain information to job applicants, such as the starting salary or the range of starting salaries applied and not preventing employees from informing other employees of their salary. 

For more information, see Implementation of the Pay Transparency Directive - Regeringen.se. 

Things to consider

If you have not already done so, now is the time to conduct a feasibility study on how the Pay Transparency Directive affects your organisation. If you belong to a group with operations in several different EU countries, it is a good idea to make a gap analysis and checklist of the various measures that may be needed in each individual country. National legislation is expected to be proposed in all EU countries. 

Want to know more?

Questions about equal pay for equal work are constantly relevant, both before and after the transposition of the Pay Transparency Directive into Swedish law. If you work in an organisation that you believe needs to review the company's pay policy, please contact our labour law experts at MAQS Advokatbyrå and we will tell you more. The same applies, of course, if you want help to make the above gap analysis or checklists for the implementation of the Pay Transparency Directive.

We would like to take this opportunity to mention that we are in the process of planning the next event in our labour law seminar series MAQSAD Workplace, which will take place on 10-12 September 2024. More information are available on MAQSAD Arbetsplats 6 | MAQS

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