Have you been asked your current salary at a job interview, but not been told what the new role pays? Do you suspect the guy sitting next to you is earning more? What about a colleague’s swish new car – is he getting a sneaky car allowance?
Secrecy around pay in companies is rife, and it often disadvantages women. New European Union (EU) pay transparency rules will lift the lid on practices that unfairly reward some employees over others. So what will it mean for you?
What’s changing?
No one can argue with equal pay for men and women for the same work – it’s been a founding principle of the EU since 1957. Companies’ lack of transparency about coworker salaries and benefit-in-kind perks however, have made it difficult for workers to know how equal things are.
Current gender pay gap reporting requires companies to publicly disclose the difference in the average hourly wage between male and female workers. The reporting reveals a persistent gender pay gap in many EU countries.
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For individuals who perceive unfairness based on gender, it’s been far too hard to get justice.
“If I wanted to bring a case saying someone of a different gender is paid more for the same work, I don’t get access to the information, there isn’t the transparency,” says Breda O’Malley, employment law consultant with Hayes Solicitors LLP.
It’s been up to the alleged victim to do all of the digging about their company’s pay structures to gather evidence. This can make a legal case too costly and burdensome to pursue.
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“To date, it’s been very hard for a woman to say, I’m getting paid differently or less money than my male colleague and he is doing exactly the same work and we have exactly the same qualifications,” says Deirdre Malone, head of employment law at EY.
“You don’t have access to what your male colleagues’ salary is, and you can’t demand that information either” says Malone.
Ireland has until next June to transpose a new EU Pay Transparency Directive that aims to make pay unfairness on the grounds of gender harder to hide and easier to prosecute.
From June 2027, companies will be required to report more granular information on pay. The first reports will be based on payroll data from 2026.
It means employers will have to be more open about starting salaries, pay scales and pay gaps and the information must be shared with employees too.
A lack of transparency on these things is what has made pay discrimination so hidden to date.
“That’s why we haven’t seen a huge number of claims on the grounds of gender discrimination. The EU wants to make this easier,” says Malone.
The new directive will shine a light on any equal-pay-for-equal-work anomalies among male and female colleagues, making it easier for victims to identify unfairness and get justice. This should mean fairer compensation and career progression for all over time.
“Companies will be required to provide transparency in their pay systems – this means more information, and information is power,” says O’Malley.
“The information is not just something that can sit in the press and you hope employees don’t know about it,” says O’Malley.
“Employers will be obliged to proactively tell employees each year that they have an entitlement to know where their personal pay sits relative to their grade, they are entitled to know their band for their range of work,” she says.
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The directive covers equal pay for “work of equal value”. This will involve a complex comparison of roles based on things such as skills, effort, responsibility and working conditions.
So it’s not just about comparing the compensation of people with the same job title. Employers must examine and categorise all work in the organisation. Those doing work of similar value, not just those with the same job title, must be rewarded similarly.
Changes to the legal position in the UK in relation to the issue have resulted in a number of substantial cases being taken. Clothing retailer Next came a cropper when, retail sales consultants, mostly female, were found to be earning less than the company’s mostly male warehouse workers.
In equal pay cases, employers must demonstrate that any pay difference is due to a “material factor” other than sex. Next’s argument that the pay difference was due to the differing “market rates” for the roles was not accepted by the tribunal.
The courts ruled the sales work was of equal value, even though on the face of it, these jobs looked different, says Malone. A similar claim is being pursued by Asda workers, she says.
“If it’s accepted that working on the supermarket shop floor is work of equal value to work in the dispatch centre, this comparator gives you an idea as to how ‘equal value’ can be interpreted,” says Malone.
What if I think I’m being paid unfairly?
So, if you suspect you are being paid differently to colleagues of another gender doing the same work, or work of equal value, what can you do?
First up, if you are a senior accountant, for example, you can’t ask what your senior accountant colleague “Tom” is earning.
“You can ask for the gender pay gap within your cohort of people. You are not going to be able to ask how much ‘Tom’ is earning, but you’ll be given the percentage of the gender pay gap in your category of worker,” says Malone.
“If a company has a gender pay gap of 5 per cent or more and they can’t objectively justify it and they don’t fix it, then employees or their representatives will be able to compel a ‘joint pay assessment (JPA)’”, says Malone.
This is where the employer must collaborate with worker representatives to identify the root cause of the gender pay gap in their organisation and implement remedies to fix it.
For private, non-unionised workplaces, used to paying who they want how they want, this could be an embarrassingly revealing moment.
“If the JPA finds there is a more than 5 per cent gap between pay on grounds of gender in any category of their workers, and if it can’t be justified by seniority, qualifications or other objective things, and that isn’t remedied for six months, an inquisition kicks in that deep dives into the employer’s pay system,” says O’Malley.
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To the worker, or her lawyer or trade union on her behalf, this inquisition effectively “spoon-feeds the evidence” for a case, says O’Malley.
“Before, if you as an employee contacted me and said, ‘I reckon the guys are earning more’, we’d say ‘what proof do you have?’ And very quickly, you run aground.”
“Now the employer must create all the evidence that I would have been trying to pull together at a huge cost.”
If you think you were unfairly paid on the grounds of gender in the past, you will have some recourse too, says O’Malley.
“The directive says there should be a three-year period where I can do a look back, with the trigger for the three years being when I became aware or could have reasonably expected to be aware of the infringement,” she says.
How will the interview process alter?
The new rules mean asking a prospective hire their current salary at a job interview will be prohibited.
“If you are going for a new role with a new employer because it’s a promotional opportunity for you, it’s highly likely, based on all of the statistics published, that if you have one male and one female candidate, the female is earning less,” says Malone.
For a woman who is already paid unfairly compared with male colleagues, asking her salary at an interview can serve to perpetuate the discrimination to their next role.
“Companies won’t be able to ask candidates about their pay history, which really makes it a level playing field,” says Malone.
Instead, employers will be required to disclose salary ranges or pay levels in the job ad or before the interview.
“And, it’s a conversation starter, it doesn’t prevent you from negotiating,” says Malone.
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Employees will also be able to ask what criteria is used to determine pay levels for career progression, says Malone.
“You can find out what the pay is for the role, and what the pay progression for your career will look like,” she says.
This should stop situations where two people doing the same work can end up on different salaries over time, for no objective reason.
The new rules mean employees can talk to each other about pay too, says Breda O’Malley.
“Once the legislation is implemented, you cannot prohibit an employee from discussing salary or disclosing salary,” she says.
What are the changes to benefit-in-kind perks?
Benefit-in-kind perks can comprise a substantial part of a worker’s overall remuneration package. These items are sometimes awarded on a discretionary basis such as a car allowance, a fuel allowance, memberships, courses, stock options, health benefits, car parking or death-in-service benefit.
Until now, companies only had to disclose the percentage of men and the percentage of women receiving a benefit in kind, says Malone.
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The new legislation includes benefit-in-kind perks as part of the definition of pay and requires employers to quantify and disclose their value when assessing pay levels and potential gaps.
If one gender is getting more of the company cars and stock options, you’ll know.
Making a difference?
The pay transparency directive is part of a multipronged approach by the EU to level the playing field for women, says Malone.
Alongside the Work Life Balance Directive for parents and carers, and a directive mandating minimum gender representation for women on boards of publicly listed companies, the new directive recognises that women are more likely than men to step out of the workplace for caring responsibilities, she says.
“Analysis in the UK, which has been reporting on gender pay gap for longer than Ireland, is that women are falling out of the workplace from age 40,” says Malone.
“These directives are really about keeping women in the workplace and enabling them to progress to senior roles,” says Malone.
The new pay transparency directive will bring an initial increase in gender pay-related court cases, O’Malley believes.
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“Cases will be easier to take, and you will have a longer period in which to take them,” she says.
It will change workplaces too, she thinks.
“It will change mindsets, no more than when maternity leave was introduced,” says O’Malley.
“It’s rare enough now, but it still arises, that someone doesn’t know that a woman is entitled to come back to work after maternity leave.”
The message to employers is, “Get your house in order fast”, says O’Malley.
“You have an opportunity before 2026 to understand if there are weaknesses in your pay system and start remedying them. Don’t wait for the deadline, or you will be exposed to claims and publicity.”
