The Council of the European Union approved the Directive (EU) 2023/970, which aims to combat discriminatory practices based on gender regarding remuneration. Member States must transpose this directive by June 7, 2026, the date from which Portuguese companies will be covered by a set of new obligations.
After an analysis of the remuneration paid by companies in its Member States revealed the existence of pay disparities and a general lack of pay transparency, the EU established new rules to promote gender equality and reduce pay inequalities based on gender, ensuring “equal pay for equal work”.
This imposes new obligations on companies in the EU Member States, starting with the recruitment process, in which companies must provide their candidates with information on their starting salaries and may not ask them about their pay history in past jobs.
Companies must also clearly present their remuneration criteria and levels of progression within their structure, which must be easily accessible to all employees.
There will also be deadlines for companies to report gender pay gaps to their competent national authority:
– companies with 250 employees or more will be obliged to make the first report by June 7, 2031, and will have to do so annually thereafter;
– companies employing between 150 and 249 employees will have to do so by the same date and every three years thereafter;
– companies employing between 100 and 149 employees must make their first notification by June 7, 2031, and every three years thereafter.
– The Directive does not establish this obligation for companies employing up to 100 employees, but gives Member States the possibility to require it through national law.
According to the Directive, there must be no wage differentials of more than 5% in any category of employees, which, if they exist, must be justified on the basis of objective and gender-neutral criteria, and unjustified differences will require a joint wage assessment between companies and employees’ representatives.
This Directive provides for a set of sanctions for companies that fail to comply with its provisions and compensation for discriminated employees, and it will be up to companies to prove that there has been no discrimination.
This Directive represents a significant and necessary step forward in the fight against the pay gap, which will contribute not only to greater pay equality, but also to a better environment within companies. However, it may represent a challenge for most companies, as it requires the implementation of new procedures, which may not only raise doubts but also imply a change in internal company procedures.
