The 5% Rule: Understanding Joint Pay Assessments
If the pay gap exceeds 5% in a worker category and cannot be objectively justified, the employer must conduct a joint pay assessment with worker representatives within 6 months.
What Does the 5% Rule Mean?
According to the EU Pay Transparency Directive, a specific threshold applies: if the pay gap between women and men exceeds 5% in any worker category, and the employer cannot justify the difference with objective, gender-neutral factors, a requirement for a joint pay assessment is triggered.
Joint Pay Assessment — What's Included?
The joint pay assessment must be conducted in cooperation with worker representatives (trade unions) and must include: a detailed analysis of pay differences per worker category, identification of causes of the pay gap, concrete measures to correct unjustified differences, and a timeline for implementation and follow-up.
Timeline and Process
The employer has six months to complete the joint pay assessment after the pay gap report shows the threshold has been exceeded. If the analysis shows that pay differences cannot be objectively justified, corrective measures must be taken. Follow-up on the measures shall occur in the next reporting period.
Objective Justifications
Not all pay differences are discriminatory. Employers can justify differences with objective, gender-neutral factors such as: education and skills, work experience, performance and results, market factors, or geographical pay differences. However, the justification must be factual, proportionate, and documented.