“As EU member states are implementing the Directive on different timelines, companies must be sure they are periodically reviewing the phased reporting obligations by country to ensure compliance. For example, Ireland has required organisations with more than 250 employees to report annually since December 2022, well ahead of it taking effect across the whole EU in June. This requirement has since expanded in Ireland, with all firms with 50 or more employees required to report annually.

“Multinationals should also be aware that the Directive requests that countries implement their own rules, with no one fixed EU standard. If EU countries do nothing, the Directive will transpose its own rules. It is not yet clear what course of action the various member states will take.”

“There are also significant changes to pay transparency that employers must be prepared to meet. Employers will be required to provide salary information to candidates before interviews, and employers will not be allowed to ask for salary history of candidates. Employees will also gain the right to request the pay level for their current role and comparable roles and the criteria used to determine pay and progression.

On penalties for non-compliance:

“If a report reveals an unjustified gender pay gap of at least 5% in a specific employee category, and it is not addressed within six months, a joint pay assessment will be conducted. Where employees can show they have been affected by a gender pay gap, they can claim uncapped compensation from the company, including full back pay, related bonuses, compensation for lost opportunities, and interest in arrears.”

“In addition to penalties for non-compliance, companies face additional exposure should a report reveal an unjustified gender pay gap. In such cases, they will be required to publish remuneration differences along with a narrative setting out their opinion on the reasons for their gender pay gap in their organisation and the measures being taken to revolve. This is where potential reputational damage and employee attrition could come into play, likely resulting in ongoing publishing and transparency of compensation within job roles.

“Should it be determined that a gender pay gap exists, it is possible a company will see an increase in whistleblower complaints across other employee categories and roles. However, taking a proactive approach to preparing to meet the reporting obligations and addressing any identified gender pay gaps will ensure employees are comfortable with the compensation levels across roles and genders.”