Government to sanction ‘unjustified’ pay gaps by 2022

Pay gaps will be monitored more closely under the new system, including between men and women

Businesses with “unjustified” gaps between employees’ pay are to be sanctioned financially from 2022 onwards, the government has announced.

The new rules, announced this week by Prime Minister Edouard Philippe, state that businesses (of a size of more than 50 employees) that are found to have “unjustified” gaps in salary will be fined up to 1% of their company’s total salary budget.

Pay gaps between men and women will be particularly sanctioned, but those between employees of similar responsibility and qualifications will also be targeted.

The definition of an “unjustified gap” would equate to over 9% difference for equal positions, where the gap is not due to a difference in qualifications, responsibility levels, or working hours between employees.

The new rules will be enforced by up to four times as many inspections of company salary levels than is normal today, Philippe said.

Mandatory software - French-created and free to install - will also be introduced to collect information on all employees and monitor pay levels.

The exact information to be collected has not yet been decided, but it is likely to include employees’ age and qualifications, plus their professional job title, rank or company position.

It will be rolled out to all companies with more than 250 employees by 2019, and to those with 50-249 employees by 2020.

Ahead of the final 2022 deadline, inspections will focus on companies’ plans to install and implement the software, and will also seek to encourage a new culture of transparency within companies overall.

Businesses found to have significant differences between employees will be asked to create a “salary catch up plan”, especially where the gaps are between the pay of men and women.

They will also be subject to increasing financial sanctions if the pay gaps are not closed.

The announcement this week coincided with International Women’s Day, which takes place every year on March 8 and seeks to heighten awareness of issues such as the continued gender pay gap and violence against women.

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