Comparing salaries – and uncovering gender pay gaps – could be easier under these new EU rules

Many companies are still not transparent about salaries – to the frustration of employees who want to make sure they’re being paid fairly.

But there are signs of change, with places like New York enacting pay transparency laws and some companies pledging to share salary ranges — which has led to teething problems as companies share huge salary ranges or find ways to circumvent the laws .

The EU Parliament pointed out the latest step towards more transparency on Thursday approved new rules designed to help employees get important pay information.

“Wage secrecy will be banned,” reads a press release from the European Parliament, which explains that employers cannot prevent their workers from sharing their wages or checking the wages of others. This means employees have the right to access both individual and average compensation details, including a gender breakdown.

“Pay structures for comparing pay levels must be based on gender-neutral criteria and include gender-neutral job evaluation and grading systems,” the statement said.

Research has shown that pay transparency is key to closing the gender pay gap, as women are often less likely to negotiate their pay and tend to undervalue themselves. Knowing what their peers are earning might help mitigate this.

Companies in the EU with a gender pay gap of more than 5% must undergo a salary assessment with employee representatives – and could be fined, the European Parliament statement said. But what the exact consequences of a gender pay gap that is too large is left to the individual member states of the EU to decide.

Those who are negatively affected by unequal pay are entitled to additional compensation, according to the new regulation.

“This law makes it clear that we do not accept any gender pay discrimination in the EU,” said Danish EU politician Kira Marie Peter-Hansen, who worked on the new law.

“In the past, women’s work has been undervalued and underpaid and with this policy we are taking an important step to ensure equal pay for work of equal value,” she added.

Almost half of the countries in the world have recently passed legislation requiring companies to pay all genders equally report from the World Bank points out. This could have a negative impact on economic growth, it said.

And the impact is not just limited to individual countries. A recently report Moody’s found that the gender pay gap could actually cost the global economy as much as $7 trillion.

The newest official Data shows that the gender pay gap in the EU was 13% in 2021. In the US, federal data for this year showed that full-time women were paid 84 cents for every dollar a man was paid.

The new rules also cover the rights of non-binary people for the first time and fight intersectional discrimination, stresses Dutch EU politician Samira Rafaela, who also helped draft the new rules.

“Non-binary people have the same right to information as men and women. I am proud that, with this directive, we have defined intersectional discrimination in European legislation for the first time and taken it into account as an aggravating circumstance when determining penalties,” she said.

The final step in turning the rules into law in the EU is for them to be formally signed by the European Council, made up of the heads of state and government of all EU member states.