EU Pay Transparency Directive

Navigating the New EU Pay Transparency Directive

In April 2023, the European Union took a significant step towards promoting equal pay with the publication of the Pay Transparency Directive. Here's a breakdown of the key provisions and what they mean for employers and employees across the EU:

1. Transparency and right to Information:

   • Employees and prospective employees have the right to request and receive information on average pay levels, broken down by sex, for categories of employees doing the same work or work of equal value and the criteria used to determine pay and career progression, which must be objective and gender-neutral.

   • Employers are mandated to inform all workers annually about their right to access this information.

2. Pay transparency in recruitment:

   • During the hiring process, employers must disclose the pay range for the position and are prohibited from asking about the candidate's previous salary, ensuring the process remains free from gender bias.

3. Reporting and pay assessments:

   • Companies with more than 250 employees will be required to report annually on the gender pay gap in their organisation to the relevant national authority.

   • For smaller organisations the reporting obligation will take place every three years. Organisations with less than 100 employees won't have any reporting obligation and will remain voluntary.

   • If reports show a gender pay gap of at least 5% that cannot be justified by objective criteria and remains unaddressed for six months, a joint pay assessment with worker representatives is mandated.

4. Prohibitions and obligations:

   • Contractual clauses that restrict employees from discussing their pay are forbidden, promoting a culture of openness.

   • Employers must establish systems for handling pay information requests efficiently and transparently.

The Directive took effect upon its publication in the EU Official Journal in April 2023, with member states given a three-year period to incorporate it into national law. The deadline for transposition is 7 June 2026. 

Proactive Steps for Compliance:

While we await further details on Cyprus’s approach to transposing the directive, these steps can help your organization prepare for upcoming changes and demonstrate leadership in pay equity.

1. Conduct a detailed review of pay practices to identify any gender-related disparities and rectify them as needed.

2. Update and maintain a job architecture that accurately reflects each role's responsibilities and requirements, based on objective criteria. This will lay the groundwork for a transparent and fair pay system.

3. Review policies related to recruitment, performance management, promotions, and compensation to ensure they are fair and unbiased. Enhancing these policies can promote a culture of equity and attract and retain top talent.

4. Provide training to raise awareness among managers and HR personnel. This training will help ensure that these practices are implemented effectively and contribute to a workplace culture that supports equal opportunities for everyone.

For more detailed guidance on navigating these changes or for legal consultation, do not hesitate to contact us at info@2e-law.com

Enhancing Structures and Policies for Intercultural Integration in Cyprus

We are honoured and happy to announce that we have been appointed by the Council of Europe to conduct and deliver a comprehensive research paper as part of an impactful joint project with the European Commission, in partnership with the Migration Department, titled "Enhancing Structures and Policies for Intercultural Integration in Cyprus".

Our research focused on the critical area of multidisciplinary coordination against human trafficking in Cyprus. We were tasked to explore several key elements, including the establishment of the multidisciplinary coordinating group against human trafficking, its members and their terms of reference, analysis of other forms of inter-ministerial and intragovernmental memoranda of cooperation or understanding, and strategic recommendations to the Deputy Ministry for Migration and International Protection, which has undertaken the role of the national anti-trafficking coordinator, as of June 2024.

The insights and recommendations we provide will contribute to the project's final report, aiming to enhance the sustainability of the results and propose further actions. This research underlines our commitment to supporting the fight against human trafficking, a grave issue that requires urgent and sustained collective strategies and action.

We note that this project follows from the previous "Building structures for intercultural integration in Cyprus" project, where one of our firm’s partners worked on producing guides addressed to refugees, asylum seekers and prospective employers, concerning rights, obligations and inclusion in the labour market.

The Council of the European Union has now officially adopted new rules aimed at enhancing protection for platform workers.

As a matter of background, this follows a proposal from the European Commission, published on 9 December 2021. Employment and social affairs ministers then agreed on the Council's general approach during their meeting on 12 June 2023. Subsequently, negotiations with the European Parliament started on 11 July 2023 and led to an agreement on 8 February 2024. The Council of the EU formally adopted these new rules on 14 October 2024. After being signed by both the Council and the European Parliament, the directive will enter into force once it is published in the Official Journal of the European Union. Member states will have two years to implement the directive's provisions into their national laws.

The directive is intended to improve working conditions for the over 28 million people currently employed by or engaged in digital labour platforms across the EU, such as food delivery and taxi services, with the number of such workers expected to surpass 40 million by the end of 2025. It also aims to increase transparency in the use of algorithms for HR management, ensuring that automated systems are monitored by qualified personnel and allowing workers to challenge automated decisions.

Moreover, the directive will assist in accurately determining the employment status of platform workers, clarifying whether they should be classified as self-employed or employees, thus enabling them to claim the labour and social security rights they are entitled to. To achieve this, Member States shall also be required to introduce a legal presumption of employment within their legal frameworks, which will apply when specific indicators of control and direction are present.

You can contact us for more information at info@2e-law.com