On 6 June 2023, a new European directive on pay transparency (EU pay transparency law) came into force.
Although Luxembourg is a leader in the European Union in terms of equal pay for men and women, it will still have to transpose the directive into national law.
In fact, in 2021, the Gender Pay Gap in Luxembourg will have fallen below 0%, or more precisely -0.2% in favour of women. However, this indicator has its limitations, including the fact that it only compares average salaries and not salaries for equal work.
So what is the added value of this new directive?
The directive aims to combat pay discrimination, including intersectional discrimination, by establishing minimum requirements to reinforce the application of the principle of equal pay for men and women for equal work or work of equal value.
For the first time, intersectional discrimination, i.e. the combination of multiple forms of inequality or disadvantage, such as gender and ethnic origin or sexuality, has been included in the scope of the new rules.
The Directive applies to public and private sector employers and to all workers who have a contract of employment or an employment relationship, including part-time workers, workers on fixed-term contracts, workers in managerial positions and people who have a contract of employment or an employment relationship with a temporary agency. The Directive also applies to job applicants.
Among other things, this new directive lays down new obligations for employers, such as the provision of information by the employer to job applicants concerning pay or the initial pay range. The directive stipulates that employers will no longer be able to ask job applicants about their pay history during current and previous employment relationships.
The directive stipulates that Member States will have to ensure that employers provide information on their organisation concerning, among other things, the pay gap between women and men. Employers will be obliged to take action if the pay gap between women and men exceeds 5%.
The directive also establishes the principle of reversing the burden of proof. If an employee considers that he or she has been adversely affected by a failure to apply the principle of equal pay and establishes facts from which it can be presumed that there has been direct or indirect discrimination, it will now be up to the employer to prove that there has been no discrimination in terms of pay.
Finally, the directive also contains provisions to ensure that the needs of disabled workers are taken into account.
Member States have until 7 June 2026 at the latest to transpose the provisions of this directive into national law.