In order to fight against gender inequalities at work, French law no. 2018-771 adopted on 5 September 2018 introduces an obligation for employers to achieve the principle of equal remuneration between women and men (as opposed to a best efforts obligation). To do so, companies with 50+ employees will be required to calculate an “equal pay index”, based on gender equality indicators. They must then publish their results on their website and remedy inequalities in the event of insufficient results. They must also disclose the result to their personnel representatives and to the French labor authorities.
The gender equality indicators that must be taken into account are:
– the gender pay gap, calculated according to the average pay of women as compared to men, by age group and equivalent job category;
– the difference in the rate of individual salary increases between women and men;
– the percentage of employees who were granted an increase in the year following their return from maternity leave, if increases were granted during the period during which the leave was taken;
– the number of employees of the under-represented sex among the ten employees with the highest remuneration.
In addition, companies that have 250+ employees must take into account a fifth indicator: the gap in promotion rates between women and men.
Points will be granted for each indicator depending on the results achieved. The results are then aggregated in order to obtain an overall result ranging from 0 to 100 points. French Decree n° 2019-15 of January 8, 2019 sets out means of calculation, in particular how to define the headcount (e.g., only those employees present for six months continuously or not) and what elements of compensation must be taken into account (e.g., included are benefits in kind, paid vacation indemnities, excluded are seniority bonus, bonuses linked to job constraints, overtime, profit-sharing). The French Ministry of Labor has also issued Q&As and a calculation spreadsheet to assist companies. Regional referrals have also been appointed to help in calculating the index and implementing corrective measures.
Companies that do not achieve a result of at least 75 points out of 100 will have three years from the publication of the insufficient result to achieve a required result of at least 75 points. Failure to comply within three years shall expose the company to a penalty, the amount of which shall be determined by the labor authorities, with a cap at 1% of the payroll.
Companies with 1,000+ employees in France had until March 1, 2019 to publish their first gender equality results. Companies with 251 to 999 employees have until September 1, 2019 to publish their results and those with 50 to 250 employees until March 1, 2020.
It is still too soon to assess whether the publication of this index will accurately reflect the reality and improve gender pay gap. It can already be noted that at the end of March 2019, 66% of the companies of 1,000+ employees had published their results indicating that they had attained an average score of 84/100. The French Ministry of Labor will issue an initial assessment on the conditions of implementation of the calculation and publication of the various gender equality indicators by 30 November 2019.
Bryan Cave Leighton Paisner LLP has a team of knowledgeable lawyers and other professionals prepared to help employers address the French gender equality index. If you or your organization would like more information on this or any other employment issue, please contact an attorney in the Employment and Labor practice group.