1. Why was this guideline launched?

On May 10, 2023, the European Parliament gave the green light to the new Pay Transparency Directive. The new rules should help eliminate wage discrimination between men and women and help close the pay gap. By making wages more transparent, the EU aims to achieve equal pay for equal work.

Did you know? The lack of wage transparency is proving to be one of the main obstacles to closing the gender pay gap, which remains at around 13% in the EU in 2020. This means that, on average, women earn 13% less per hour than men.

2. What do the obligations under the directive entail?

Access to information

The new rules require employers to inform job seekers, either in the job posting or prior to the interview, of the starting salary or pay scale for the published position.

Furthermore, employers may not ask candidates about their previous salary.

Once hired, employees have the right to ask their employer for information about:

• average wages for categories of workers doing equal or equivalent work, broken down by gender

• the criteria used to determine pay and career advancement - these should be objective and gender neutral

Reporting requirement

Companies with more than 250 employees must start reporting annually to the relevant national authority on the gender pay gap within their organization.

For smaller organizations, that reporting requirement applies every 3 years. Organizations with fewer than 100 employees have no reporting requirement.

If the report shows a wage differential of more than 5% that cannot be justified by objective, gender-neutral criteria, companies should take action in consultation with employee representatives.

Did you know? In Belgium, companies with 50 employees or more are already required to prepare a wage gap report. The directive will make this new reporting obligation much more extensive.

Access to justice

With the new directive, workers who have been victims of wage discrimination based on sex must be fully compensated with at least full payment of back pay and any related bonuses or payments in kind.

The burden of proof in wage discrimination used to be on the employee. Now it is up to the employer to prove that it has not violated EU rules on equal pay and wage transparency.

3. From when are the obligations under the directive effective?

European member states now have three years (until 2026) to transpose the directive into national law. Currently, Belgium is still considering the European measures, with no concrete action to date.

4. What is the concrete impact of the directive for a Belgian SME?

Payflip joins Agoria's vision here:

"HR teams will first have to (even more) structure, coordinate, document and monitor their pay policies to ensure equal pay for equal work. A wage policy "à la tête du client" will become problematic. (...) And more broadly, wage policy and equal pay will likely become an HR topic that will become much more negotiable than is sometimes the case now, and also played out by employers who see this more as a strategic opportunity than as a compliance issue (again)."

5. How do I make my pay policy transparent?

Payflip predicted it five years ago: a pay policy is anything but an unnecessary HR luxury.

Hence, we've been at it since Day 1. Would you like to delve into our own pay policy at Payflip? Download the e-book on creating a logical pay policy here.