Lawyers at Eversheds Sutherland have urged employers to begin assessing the impact that an EU directive on pay transparency will have on current pay and reporting practices.

The EU Pay Transparency Directive came into effect on 6 June 2023, and Ireland has three years to transpose it into domestic law, with reporting requirements starting in 2027.

The directive implements public reporting measures – initially for employers with more than 250 staff. It also creates new information rights and contains new provisions on equal pay.

In a note on the firm’s website, the Eversheds Sutherland lawyers say that Ireland’s measures on gender-pay-gap reporting largely meet the directive’s requirements.

Pay history

Under the directive, where a gender-pay gap of over 5% per category of worker is found, which cannot be justified on objective gender-neutral factors or has not been remedied within six months, a joint pay assessment with worker representatives must be conducted.

Employers will have to provide information on salary ranges in job advertisements or before an interview. It will also be prohibited to ask applicants about their pay history as part of the recruitment process.

The directive gives workers the right to request information on their individual pay level and the average pay levels, broken down by sex, for categories of workers performing the same work as them or work of equal value.

Employers will no longer be able to prohibit employees from disclosing their pay, but any information obtained by employees can be used only to exercise their right to equal pay.

Burden of proof

Under the directive, the burden of proof will rest with the employer to demonstrate that there was no direct or indirect discrimination in relation to pay.

“This is not currently the position in Irish law, where an employee must first establish the primary facts upon which he or she relies, and that those facts are of sufficient significance to raise an inference of discrimination,” Eversheds Sutherland points out.

The lawyers conclude that the directive will have “a significant impact”, urging employers to identify and remedy any potential gender-pay gaps, and to begin conducting reviews of any groups of employees with pay gaps greater than 5%.