European Parliament -

A new European Union (EU) Directive on Pay Transparency is due to be approved by late-spring 2023, which will entitle job-seekers the right to know what the salary is ahead of employment, and grant workers the right to know how much each gender in their workplace is earning.

The right to equal pay for equal work has been enshrined in the European Treaties since 1957 however the gender pay gap still exists in the EU, and Malta is no exception. Malta’s gender pay gap is at 10 per cent, below the EU average of 13 per cent, according to Eurostat.

The EU’s Pay Transparency Directive intends to enhance equal pay in two ways:

  1. Ensure pay transparency;
  2. Ensure access to justice for victims of pay discrimination.

In practice, this gives job-seekers the right to know the salary range for positions they are applying for. A similar law was recently implemented in New York City, USA, in November 2022.

Meanwhile, employers in the EU will also be prohibited from asking what the job-seekers previous pay history was.

To further transparency, the Directive will grant employees the right to ask their employers what the average pay of others performing the same job is, broken down by gender.

Employers with at least 250 employees will have even more responsibility, as they will have to disclose their internal gender pay disparity without being asked. If the gender pay gap exceeds five per cent, employers must conduct evaluations if a satisfactory explanation cannot be provided.

If discriminated against, workers will have the right to access justice measures to receive compensation for the injustice. The burden of proof will be on the employer and could result in sanctions for infringements in equal pay.

The measures are expected to come with a level of flexibility for small and medium enterprises, knowing that larger enterprises can absorb the cost of increased scrutiny with less difficulty.

When will the EU Directive on Pay Transparency become law in Malta?

Most likely by the middle of 2026.

The Directive was first proposed by the EU Commission on 4th February 2021. Following multiple rounds of negotiations, on 15th December 2022, the EU Commission, the EU Parliament, and Council of the EU (ministers from each member state), agreed on a final text during a trialogue meeting.

Next, the European Parliament has to formally approve the text during a plenary session in March 2023, and the Council of the EU has to accept it. If that is done the Directive is officially adopted in the EU.

Once the Directive is adopted, Malta, along with other EU member states will have three years to transpose the Directive into national law, meaning workers are expected to receive the rights enshrined in the Directive in 2026.

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