France to fine companies for unjustified gender pay gaps

France to fine companies for unjustified gender pay gaps © Sheila Sund
© Sheila Sund

French Prime Minister Edouard Philippe has proposed a new plan to monitor unjustified gender pay gaps, which could result in fines for companies that don’t comply with equality rules.

The regulation would mean companies would have to install software into their payroll systems, which would automatically monitor unjustified gender pay gaps. If companies are unable to reduce their gender pay gap before 2021, they could potentially be subject to fines until they comply.

The planed regulation will eventually apply to all French companies with more than 50 employees, but under the government’s current projected rollout, the software will be offered to companies with more than 250 employees in 2019, and to companies with 50-249 employees in 2020.

If the software detects unjustified gender pay gaps which are not corrected within three years, the French government will be able to impose a fine of up to 1% of the company’s total expenditure on wages.

Why is the new regulation needed?

Equal pay for men and women has been enshrined in French law for over 45 years, but according to Eurostat statistics published earlier this week, women are paid on average 15.2% less than men in the country.

Announcing the introduction of the new software, Philippe told reporters that while it would not be a comprehensive solution, it would be a first step towards gender parity. He said: “The software is not a magic wand, but it will reveal certain differences in the pay between men and women”.

The announcement also suggested that France will enhance current transparency requirements around the public reporting of pay, ensuring that companies will need to publicly report on unjustified gender pay gaps.

Such a measure may resemble a new regulation in the UK, under which all companies with over 250 employees will have to publish gender pay gap information before next month. Data will be organised by seniority level within the company, allowing for direct comparison.

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