08/27/2024 | News release | Distributed by Public on 08/27/2024 08:31
At one time largely a U.S. concern, pay equity and transparency have rapidly become globally important to all multinational companies wherever headquartered. The EU Pay Transparency Directive is a milestone adopted with clear objectives: closing the gender pay gap and making it easier to bring equal pay claims.
The 24 Member States have until June 7, 2026, to implement the Directive into their own law. Businesses should begin taking appropriate action now to ensure compliance. Powerful enforcement mechanisms back the Directive's new reporting requirements.
The Directive came into force on June 7, 2023, introducing new employer obligations:
Although the Directive will only apply directly to EU Member States, and non-EU employers that employ individuals in the EU, it will undoubtedly raise expectations of pay transparency across Europe and globally. This will impact employee expectations and the war for talent, as well as expectations of customers and shareholders that value environmental, social, and governance strategy and practices.
Employers should prepare for compliance with the new rules. For most multinational organizations, this will take significant time.
Under the Directive:
Canada has addressed pay transparency in several of its provinces. As of the date of this article, the provinces of British Columbia, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island have passed some form of pay transparency legislation.
In particular, in British Columbia, all employers with at least 1,000 employees will be required to post pay transparency reports that include organizational data on gender, salary, hours worked, bonus pay, overtime pay, and overtime hours worked by November 2024. (For employers with at least 300 employees, the deadline is November 2025, and November 2026 for employers with at least 50 employees.) In addition, as of May 2023, all British Columbia employers:
Similar legislation is under consideration in the province of Ontario.
Multinational companies face a myriad of requirements surrounding pay transparency, including the patchwork of pay equity state law obligations. Below are resources from our L&E Global colleagues on navigating the emerging requirements and standards the Directive and other global pay transparency initiatives are sure to have on multinational operations and compensation approaches: