Equal pay for equal work

Authors: Lisa-Martina Köberl and Fabian Blumberger

Pay transparency is becoming mandatory across Europe – with far-reaching consequences for employers and employees alike. Until now, the salary structure in many companies has remained a black box, but this is set to change fundamentally with the new EU Pay Transparency Directive (Directive [EU] 2023/970), which came into force on June 6th, 2023. Employees are gaining new rights to compare their salaries with those of their colleagues. Employers must be prepared to openly disclose their remuneration models and actively eliminate inequalities. The new requirements are not only intended to reduce gender-specific pay gaps, but also to ensure greater fairness and motivation in the workplace.

1. What is new?

Transparency before and during employment

Some elements of the new EU Pay Transparency Directive have been known in Austria for a long time: For example, it requires applicants to be informed about starting salaries and salary ranges during the application process to enable transparent salary negotiations. Additionally, job postings must be written in a non-discriminatory and gender-neutral way. What is new for Austrian employers, however, is that applicants may no longer be asked about their current salary or salary history.

In existing employment relationships, employers are obliged to provide information on the pay structure as well as the criteria used to determine salary levels and salary development. Employees have the right to request information about their individual salary and the gender-specific average for comparable positions. Furthermore, contractual clauses prohibiting salary discussions among colleagues may no longer be used. Additionally, employers are required to inform their employees annually about their right to information.

Reporting obligations for employers

Employers with more than 100 employees must regularly produce and publish reports on gender pay gaps. These reports are intended to raise awareness of existing inequalities and encourage companies to establish fair pay structures.

Reversal of the burden of proof

Previously, employees who claimed pay discrimination were required to substantiate the allegation, while employers had to justify the unequal treatment with objective reasons. The Pay Transparency Directive now stipulates that employees must substantiate facts that suggest the existence of direct or indirect discrimination. Employers, on the other hand, must prove that there is no direct or indirect pay discrimination.

Claims for damages and compensation

Employers who violate the new regulations face claims for damages and compensation. Future claims are expected to be comprehensive and include, for example, back payments as well as bonuses associated with lost wages.

2. Outlook

Even though the EU Member States still have until June 7th, 2026 to transpose the directive into national law and there is currently no draft law in place, employers should already begin preparing for the upcoming requirements of the Pay Transparency Directive.

Our labor law expert Fabian Blumberger will be happy to answer any further questions on this topic and provide support with practical implementation.

Disclaimer

This article is for general information only and does not replace legal advice. Haslinger / Nagele Rechtsanwälte GmbH assumes no liability for the content and correctness of this article.