by Elena Verona*
On May 17th 2023 Directive 2023/970/EU was published in the Official Journal of the European Union: in the context of the EU Gender Equality Strategy 2020-2025 the Directive aims to reinforce the principle of equal pay for the same work or work of equal value between women and men imposing on employers to disclose information about pay levels. Only through pay transparency workers can make informed decisions about their expected salary and effectively exercise their right to equal pay.
The definition of equal pay in the EU law
Article 157 of the TFEU defines the concept of equal pay for equal work or work of equal value between women and men. Pay is intended in a broad meaning: in fact, it can be any wage, salary or sum of money, in cash or in kind, present or future, that the worker receives directly or indirectly from his/her employer due to his/her employment. The Court of Justice has also determined that occupational pension schemes fall within the scope of the principle of equal pay (Case C-262/88, Barber v Guardian Royal Exchange Assurance Group).
Article 157 then proceeds to prohibit any discrimination on grounds of sex regarding pay: equal work or work to which is attributed equal value must be remunerated the same way, whether it is performed by a man or a woman, unless the difference is objectively justified. On this point, Article 4 of Directive 2006/54/EC clarifies that, for the purpose of avoiding direct and indirect discrimination between women and men, the job classification system used for determining salary must be grounded on the same gender-neutral and bias-free criteria and it should be developed in order to exclude any discrimination based on sex.
It is settled case-law of the Court of Justice that, in order to assess whether employees perform the same work or work of equal value, it is necessary to compare a number of factors, such as the nature of the work, the training requirements and the working conditions: only in the light of the actual nature of the concrete activities carried out by the employee claiming discrimination and the comparator of the other sex, it can be attributed equal value to their work by national courts. For example, according to the Court of Justice, the fact that a female worker and the male comparator are classified in the same job category under their collective agreement isn’t in itself sufficient for affirming that they perform the same work or work of equal value (Case C-381/99 Brunnhofer v Bank der österreichischen Postsparkasse AG).
The difficulties in applying the equal pay principle
In order to reduce the wage gap between women and men, the principle of equal pay for equal work or work of equal value was laid out through the adoption of the already mentioned Directive 2006/54/EC and the adoption of the 2014 Pay Transparency Recommendation. However, the 2020 Commission Evaluation pointed out that the concepts of “same work” and “work of equal value” aren’t clearly defined in Member States’ national legislations, preventing claimants from finding a valid comparator in pay discrimination cases; as a result victims of discrimination aren’t encouraged enough to claim equal pay.
Another issue regarding the access to justice was identified with the lack of transparency in pay systems: the 2014 Recommendation promoted the employees’ right to obtain information on pay levels and the employers’ obligations on pay reports and pay audits, but overall it had a limited impact on narrowing the gender pay gap in companies. For instance, in Denmark only 42% of the employee representatives stated that pay reports were made available to their colleagues, 30% said they weren’t made available to them and 11% didn’t know.
The solutions of Directive 2023/970/EU
The Directive directly addresses the vagueness of the expression “work of equal value”: Article 4 provides for a more precise definition of the criteria used to assess whether workers are in a comparable situation. In fact, pay structures within companies must be based on gender neutral criteria agreed with workers’ representative that take into consideration skills, effort, responsibility, working conditions and any other relevant factor for the specific position, including significant soft skills.
Moreover, the Directive acknowledges the obstacle many workers face in identifying a valid comparator of a different sex: Article 19 aims to ease the burden of proof on claimants. In particular it states that in order to evaluate whether male and female workers are performing the same work or work of equal value it is sufficient that pay conditions are established by a single source, while it isn’t necessary that they work for the same employer or that they are employed at the same time. Even more striking is the provision that, when there is no real-life comparator, workers are enabled to refer to how a hypothetical comparator of the other sex would have been treated in an analogous situation.
For what concerns the lack of transparency issue, Chapter 2 of the Directive provides for some specific indications: not only it reaffirms the workers’ right to receive in writing information on pay levels (Article 7), but it now establishes that applicants for employment have the right to obtain information about the pay level attributed for the position concerned (Article 5).
Besides employers must report periodically on gender pay gap within their organisations (Article 9): the deadlines vary depending on the size of the company, but it must be said that several Member States have already provided for such measures (for example in Italy employers with more than 50 workers are obliged to report on the male and female workers’ occupational situation). Whereas it is recorded a gender pay gap of at least 5%, Article 10 imposes on employers to conduct a joint pay evaluation with workers’ representatives: employers then must take action to fix the unjustified differences in pay within a reasonable period.
In case of non-compliance by employers to the mentioned above obligations, the Directive presents various consequences. Employers must face the penalties Member States shall establish to infringements of the principle of equal pay (Article 24); furthermore, if any worker claims damages as a result of gender based discrimination and the employer hasn’t implemented the pay transparency obligations displayed in Articles 5, 6, 7, 9 and 10, the burden of proof that such discrimination didn’t occur falls back on the employer (Article 18).
Ultimately the Directive strengthens the principle of equal pay through substantive and procedural provisions: the most significant novelties are the ones facilitating the burden of proof for claimants, which will probably have an impact on encouraging more workers to claim in court their right to equal pay.
*PhD Candidate, University of Pisa
