On 17 May 2023, Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023 on strengthening the application of the principle of equal pay for equal work or work of the same type was published in the Official Journal European Union value between men and women through pay transparency and enforcement mechanisms.

The directive aims to establish standards of wage transparency by:

• introduction of equal pay obligations for large employers;
• regulating the right of employees to information from the employer about the level of wages and the amount of average wages;
• creation of mechanisms that improve the application of the principle of equal remuneration.

Although the transposition deadline is 7 June 2026, given the complexity of the measures introduced, an early analysis of the implications of the new obligations on employers is welcome to facilitate their further implementation.

Transparency of wages before employment

According to the Directive, employers must ensure salary transparency both before and after employment.

During the hiring process, employers will be required to provide candidates with information about the starting salary level or the appropriate range within which it can be set. This information will be shared at an appropriate time, such as through a job advertisement or prior to an interview, to facilitate the salary negotiation process.

The new provision prevents employers from requesting information about applicants’ current salary or salary history. Job postings and job titles must also be gender neutral.

Transparency of wages in the management of labor relations

During the employment relationship, employers will be required to provide employees with, in an accessible manner, objective, gender-neutral criteria used to determine wages, wage changes and wage levels.

Employees or their social partners will be able to request information on their own wage level and average wage levels for categories of workers performing the same work or work of the same value as theirs, as well as clarification and additional information on the data provided. . Employers will have to provide annual notification to employees of the procedure for exercising this right. They will have to respond to requests within a reasonable time, but no later than 2 months from the date of the request.

What does “work of equal value” mean?

“Equal work” is defined according to certain non-discriminatory, objective and gender-neutral criteria. They will form the basis of the employer’s salary structure and will be agreed together with the social partners. Criteria may include, for example, skills, effort, responsibilities, working conditions and, if applicable, any other factors relevant to the specific position or work.

Prohibition of salary confidentiality provisions

Another impactful measure for employers will be the repeal of salary confidentiality provisions. Employees will no longer be prevented from disclosing information about their remuneration in order to ensure the application of the principle of equal remuneration. In relation to information obtained under the right to information, other than that relating to their own wages or their own wage level, employers will be able to require employees to use it only for the purpose of exercising their right to equal pay.

Reporting obligations

Employers will have to report to the competent supervisory authority a range of data on the difference in pay between women and men. This obligation will apply to companies with at least 100 employees.

The reported information will also be passed on to employees and their social partners, as well as to the labor inspectorate and the competent authority for ensuring equality at the request of the latter.

The detection of a difference in the average salary between female and male employees of at least 5% in any category of employees, objectively unjustified and not eliminated within 6 months from the date of submission of the report, will cause the need to start a joint assessment through the cooperation of the employer with social partners .

Measures to protect employees

Employees who consider themselves wronged as a result of non-compliance with the principle of equal remuneration in relation to them, will be able to apply to the court, presenting facts that allow us to assume the existence of direct or indirect discrimination. In such situations, the Directive shifts the burden of proof to the employer.

As for damages, they should include full reimbursement of late payments and related bonuses or payments in kind, compensation for lost opportunities, non-pecuniary damage, any damage caused by other relevant factors, and interest.

Recommendations to employers

Anticipating the transposition of the Directive, employers should take the following measures:

• conducting a pay analysis to identify any existing pay differences between women and men performing the same work or work of equal value and the factors leading to these differences;
• reviewing and updating remuneration strategies and policies to ensure they are based on objective and gender-neutral criteria;
• reviewing the hiring process and procedures to ensure they comply with the principle of transparency and equal remuneration;
• creation of an effective communication mechanism so that employees receive motivated and timely responses to appeals, taking into account their right to information.

The article is signed by Anka Athanasiou, lawyer, senior managing lawyer of the bank, deacon and partners

Article supported by EY Romania