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United Kingdom: Pay Transparency Directive – lifting the veil

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In brief

In an article for PLC Magazine, Monica Kurnatowska and Rob Marsh outline employers’ obligations under the new EU Pay Transparency Directive.  It considers key elements including pay reporting, pay transparency, pay assessments and equal value, and remedies and enforcement as well as the practical implications for employers in the EU and in the UK in the light of the UK’s withdrawal from the EU. 

Key takeaways

  • The EU’s recently adopted Pay Transparency Directive (2023/970/EU) (the Directive) is intended to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms.
  • For employers in the EU, the measures in the Directive are significant and touch on many aspects of the employment lifecycle. They include pre-employment pay transparency requirements and worker and representative rights to workforce pay information. The most significant and onerous obligation is likely to be the requirement to conduct detailed pay audits in certain circumstances, including an equal value assessment, and to co-operate with worker representatives to address pay gaps.
  • While the Directive does not apply to Great Britain, there may be considerable indirect effect as multinational employers with operations in EU member states grapple with its implications and consider whether to adopt a harmonised approach across their international operations.
  • British employers should prepare for expectations to be raised and for increasing calls to match the requirements of the Directive. Increased transparency and rights to information will also give British employees access to the pay information of any colleagues in the EU. Therefore, although the Directive does not apply directly in Great Britain, British employers cannot simply ignore it.
  • This article first appeared in the November 2023 issue of PLC Magazine. Click here to access the full briefing.
  • To discuss what these issues mean for your business, please get in touch with your usual Baker McKenzie contact.
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Author

Monica Kurnatowksa is a partner in the Firm’s London office. She is recognised by The Legal 500 and Chambers UK as a leading individual. Chambers say she has “impressive experience of handling complex employment disputes and advisory matters for major clients. She is known for her expertise in trade union matters.” "The breadth of her experience is phenomenal." "She is an outstanding lawyer who provides a first-class service while juggling the intense demands of running high-profile matters on behalf of her clients. She is unflappable, courteous and extremely knowledgeable”. Monica is a member of the Consultation Board of PLC Employment On-line and is a regular speaker at internal and external seminars and workshops.

Author

Robert Marsh is a Senior Associate in Baker McKenzie London office.

Author

Rachel Farr is a Senior Knowledge Lawyer in Baker McKenzie, London office.

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