Impact of directive on transparency and equal pay for men and women in Luxembourg
Background of Gender Equal Pay in Luxembourg
In Luxembourg, the principle of gender equal pay has been set out in Article L.225-1 of the Labor Code since the Law of 15 December 2016. Employers are required to ensure gender equal pay under penalty of a fine ranging from EUR251 to EUR25,000. Starting in March 2018, the Inspectorate of Labour and Mines (ITM) established a specific service for reporting infringements of pay inequality. Its mission is to ensure that gender equality legislation is enforced.
Recent Developments and Directive (EU) 2023/970
In March 2023, the Luxembourg government statistics service, Static, published statistics on the gender pay gap (GPG) between men and women. Luxembourg became the first European country to have a negative GPG. However, this figure does not mean that full equality has been achieved. The average annual income of all female employees is still significantly lower than that of men, partly due to the much higher rate of part-time work among women.
Despite this promising rate, Luxembourg must indeed take further steps to comply with the requirements of Directive (EU) 2023/970 of 10 May 2023. This directive aims to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms which came into force on 7 June 2023.
The Directive applies to all employers in both the public and private sectors and covers both employees and applicants. Once implemented, the Directive will mandate that:
- Prior to the beginning of employment, applicants will have the right to receive information on the initial remuneration or its range for the applied-for position. Employers will not be entitled to ask applicants about their pay history during their former employment relationships.
- During the employment relationship, employers will have to make available to workers and their representatives the gender-neutral criteria used to define their pay and career progression. Furthermore, employees will be granted a reinforced right to information during the employment relationship.
- Employees will not be prevented from disclosing their pay, and Member States will have to implement measures prohibiting contractual terms that restrict workers from disclosing information about their pay.
- Employers will also have to report information regularly on the GPG in their companies, including the median GPG and the proportion of female and male workers in each quartile pay band. The first report should be provided:
- by 7 June 2027 at the latest for employers with 150 or more workers;
- by 7 June 2031 at the latest for employers with between 100 and 149 workers;
- when required by Member States for employers with fewer than 100 workers.
- Employers must perform a remuneration evaluation, in cooperation with employee representatives, if it turns out that the average salary of female and male employees differs by at least 5% per category and the employer has not justified this difference with objective and gender-neutral criteria and has not remedied it within six months. This remuneration evaluation will identify, rectify, and prevent relevant wage discrimination and will be made available to the employees.
- Any worker who has suffered damages due to the breach of a right or obligation relating to the principle of equal pay will have the right to claim and obtain full compensation or reparation for that damage.
Member States must also ensure better access to justice for victims of pay discrimination, notably by implementing specific penalties for infringements of the equal pay rule, including fines, or by shifting the burden of proof to the employer when employees who consider themselves wronged can establish facts from which it can be presumed that there has been direct or indirect discrimination, or where an employer has not implemented the pay transparency obligations.
The Directive must be transposed into national law of the Member States by 7 June 2026. Although the impact of this directive will be relatively limited in Luxembourg due to its already low GPG, a certain number of new regulations are to be expected.
