Employers May Be Barred From Asking Candidates’ Pay by EU Rules

(Bloomberg) -- Employers may be prevented from quizzing job candidates on their current earnings under European Union rules that aim to help women secure higher pay, EU Equality Commissioner Helena Dalli said.

“If it happens, it would be a form of discrimination. We are saying it shouldn't happen. The candidate can report this,” she told reporters ahead of the Thursday publication of draft rules on pay transparency. “Previous pay has no bearing on skills and the abilities of the applicant for work and that's why we believe this must not be revealed if the employee does not want to.”

The European Commission is proposing binding pay transparency legislation to help close a pay gap that sees women paid 14.1% less than men across the 27-nation bloc. The proposals are subject to potential amendments and approval by EU governments and the European Parliament before they become law applying throughout the EU.

Candidates should have the right to ask prospective employers for pay information under the proposal “which aims at empowering workers in the negotiations on pay,” Dalli told reporters. Exposing pay information will help women see if they are being paid fairly for the same work, regulators say, and may help equality advocates and trade unions seek compensation for pay discrimination.

Women have been hit particularly badly by the pandemic, she said, since many are in precarious employment. The pay transparency rules are only “one tiny move” in larger efforts to help women gain equal pay, including efforts for men to take more leave for child-rearing. Women's reduced hours or maternity leave can hit their pension contributions. Women receive pensions that are 30% lower on average.

Effective Penalties

The EU's proposal requires governments to set penalties, including fines, at a level they think will be effective, if companies aren't supplying information on potential pay gaps. Large firms with more than 250 employees should publish information on the pay to female and male workers and supply more detailed information to their staff. Smaller firms will be required to supply pay information at a worker's request.

The rules cover basic salary, bonuses, overtime pay, pensions and expenses such as travel and housing allowances. The proposal isn't asking for women to be paid the same as men but that any pay differences must be based on clear criteria.

Publishing the information could also help women negotiate higher wages, researchers say. Sweden, Austria, Denmark and Finland already gather data on gender pay differences which has helped raise some wages. The U.K., which left the EU at the end of January, requires companies with at least 250 employees to disclose the difference between men's and women's mean pay.

Only 7% of chief executive officers in the EU are female, with women taking just 17% of executive posts. Women managers earn 10 euros less than men per hour, according to the European Institute for Gender Equality.

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