Pay Equity Laws Keep Multinational Companies Hopping


Laws aimed at narrowing the gender pay gap have become increasingly common around the globe, and keeping up with their requirements can be particularly challenging for multinational employers, according to Louise Balsan, an associate in the law firm of Baker & Mckenzie.

Speaking in a recent webinar, Balsan said the statutes share the same goals but are evolving at different stages. "Some laws focus on the pay gap between men and women in similar roles, while others look across the company at all roles. The thresholds for reporting, conducting audits, or taking action also vary," she said.

One of the countries with new requirements is Sweden, which updated its work rules to require that employers conduct salary reviews annually—instead of every three years—in order to identify gender pay gaps. And the obligation to create a written action plan for achieving equal pay now applies to employers with 10 or more workers, instead of those with at least 25 employees.

The U.K. has enacted a law requiring employers with 250 or more employees to publish data showing the differences in pay between men and women. Although employers have until April 4, 2018, to publish their first set of data, it must be based on a ‘‘snapshot’’ of pay levels that existed on April 5, 2017. The data must be posted on the employer's website for three years and submitted to the government for publication on a federal website.

Looking ahead, Germany will require companies to report on their compensation of men and women beginning Jan. 1, 2018. Individuals working in companies with more than 200 employees also will have the right to obtain data on the pay that employees of the other gender receive for comparable work, as well as information on the criteria for determining pay in the company.

More laws may be on the horizon, especially in countries that are implementing legislation aimed at increasing female participation in the workplace. "This has historically been a precursor to gender pay gap legislation," Balsan said.

Given how pay equity laws can vary from one country to the next, it will be difficult for multinational employers to adopt a one-size-fits-all approach that works everywhere, Balsan warned. At a minimum, employers must keep apprised of their obligations wherever they have operations, as these laws are changing rapidly.

At the same time, they must ensure that when complying with pay equity laws they do not run afoul of data privacy rules. "This will be especially relevant in European countries that have strict employee data privacy requirements, because reporting numbers could raise questions about how the data was collected and processed in the first place," Balsan said. Employers will also want to ensure they are complying with privacy laws related to storing the information once it has been collected.

In any case, employers need to be proactive and conduct internal audits to identify areas of concern in pay practices, Balsan said. And following such audits, employers must be ready to take action to correct gender pay gaps and ensure adequate training is in place for management and HR staff. Finally, the organization must build a thoughtful narrative accompanying the data and ensure that communications are drafted carefully, she said.

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