The French Government has introduced a new set of obligations on employers, aimed at promoting professional equality between men and women in the workplace, including the introduction and publication of specific pay gap indicators and penalties for failure to address pay inequality.
By: Marion Le Roux and Ji Eun Kaela Kim
Firm: Capstan Avocats
1. Both before and after his election, President Emmanuel Macron committed to the ‘great cause’ of gender equality and more particularly to achieving professional equality between women and men by the end of his five-year term. Not surprisingly, his proposals for achieving this goal were awaited with great anticipation.
At the time of Mr. Macron’s election, the Labour Code already included a vast number of measures designed to promote gender equality in the workplace, including the obligations to consult with the Social and Economic Committee on gender equality every year and to negotiate with labour unions on a regular/annual basis, the latter of which is subject to a fine of up to 1% of the company’s gross wages.
Despite these measures, the average wage gap between men and women remains significant (24% overall, and 9% for equivalent positions and working hours), with many female employees also suffering from other forms of unequal treatment at work.
Thus, the French Government decided to add to and toughen the obligations on companies in order to attain gender pay equality more effectively.
These new obligations were created through the ‘Freedom to Choose a Professional Future Law’ published on 6 September 2018, which includes an entire section dedicated to gender equality. This new piece of legislation contains provisions aimed at promoting professional equality between women and men, particularly in terms of pay and combating sexual and gender-based violence at work. A decree published on 8 January 2019 implementing these provisions further specified the details on the indicators to be used to measure pay gaps between women and men and the reporting obligation for companies with at least 50 employees.
Below is an overview of the major changes that will impact your HR practices.
What's new in terms of equal pay?
Certain employers are now strictly liable to ensure equal pay between women and men. They are also subject to a gender pay gap evaluation system involving the evaluation of specific pay gap indicators, the publication of their scores on these indicators, and a financial penalty in the event that they do not bring their score up to the minimum required level within three years.
Which companies are concerned?
The new law requires all employers to seek to eliminate gender pay gaps. However, the new legal obligations only apply to companies with at least 50 employees, regardless of whether they have trade unions or representative bodies.
What are the new obligations?
Evaluation and publication of indicators on gender pay equality Every year, employers must now measure and publish the following five indicators relating to gender pay gaps (only four for companies with 50 to 250 employees):
the pay gap percentage between women and men calculated on the average remuneration of women and men in the same age group and job category (scale from 0 to 40 points);
the gap in the rate of individual salary increases between women and men (scale from 0 to 20 points or from 0 to 35 points for companies employing between 50 and 250 employees);
the gap in the rate of promotion between women and men (scale from 0 to 15 points; this does not apply to companies employing between 50 and 250 employees);
percentage of women benefiting from a salary increase in the year following their return from maternity leave (scale from 0 to 15 points);
number of employees of the under-represented sex among the 10 highest paid employees (scale from 0 to 10 points).
The overall score is the sum of the points obtained for each of the five indicators (four for companies between 50 and 250 employees). The minimum required overall score is 75 out of 100 points. Failing this, the employer must implement corrective measures.
The overall score for each calendar year must be published by 1 March of the following year on the company website or, if no website exists, communicated to the employees by any means.
The Social and Economic Committee (CSE), if any, must also be provided with the following information on the previous calendar year by 1 March: the indicators, the results, any information necessary for the CSE to understand the methodology applied, and, where applicable, the corrective measures envisaged or already implemented. This information must be included in the Economic and Social Database (BDES) available to all employee representatives and must also be provided to the labour authorities.
Obligation to provide for wage catch-up measures
If the overall score for a given year is below 75 points, the employer will be required to include a wage catch-up plan in the agenda for the mandatory negotiations with trade unions on professional gender equality.
In this case, the employer will have to negotiate with trade unions on ‘adequate and appropriate’ corrective measures, and, where applicable, implement a one-year or multi-year plan of financial measures to close the identified gaps.
In the absence of an agreement providing for such measures, measures must be unilaterally set by the employer, after consultation with the employee representatives. These measures must be taken to improve annual indicators within three years from the publication of the overall score.
What are the penalties for non-compliance?
If, at the end of the three-year period following a year in which the overall score was below 75, the overall score is still below 75 points, a financial penalty may be imposed by the labour authorities. However, depending on the efforts made by the company in terms of gender pay equality, as well as the reasons for its failure, an additional year may be granted to the employer to bring itself into compliance.
A penalty may also apply if the indicators are not published or in the absence of an agreement or action plan.
The amount of the penalty is set at a maximum of 1% of the employer’s annual payroll.
What are the other changes aimed at promoting gender equality?
Mandatory negotiation on gender equality is expanded
The new law extended this list to include subjects relating to access to training and the acquisition of a professional qualification (participation in at least one training course, acquisition of requirements needed for certification through training or validation of prior experience, salary increase, career advancement, etc.).
Until now, mandatory negotiation on gender equality in the workplace focused on measures to combat any gender discrimination in recruitment, employment and access to vocational training.
Gender equality encouraged at the top of certain companies
The board of directors or the supervisory board of all French ‘sociétés anonymes’ (limited companies) and ‘sociétés en commandite par actions’ (companies/partnerships limited by shares) must deliberate annually on the company's policy on professional and pay equity. In listed companies exceeding two of the three applicable thresholds (annual turnover of EUR 40 million, balance sheet total of EUR 20 million and/or 250 employees), the annual corporate governance report attached to the management report must include a description of the gender equality policy applied to members of the board of directors or supervisory board.
Tougher measures against sexual harassment and sexist behaviour
Obligation to inform employees about possible sexual harassment litigation
There was already an obligation to provide information in the workplace on sexual harassment and sexist behaviour laws. The law now stipulates that employers must also provide information about possible civil and criminal sexual harassment litigation claims and the contact details of the competent authorities (labour inspector, occupational health doctor, etc.).
Obligations to appoint a sexual harassment reference person
The CSE must appoint a reference person for the fight against sexual harassment and sexist behaviour.
In any company with at least 250 employees, the company must also appoint a reference person to guide, inform and support employees in the fight against sexual harassment and sexist behaviour.
What are the next steps?
Some of the new measures have been applicable since 6 September 2018 (mandatory annual negotiation on gender equality, obligations on management bodies). Other measures, such as those against sexual harassment and sexist behaviour have been applicable since 1 January 2019. Thus, every company should make sure it has taken appropriate actions to comply with the new obligations. With regard to the publication of wage gap indicators and wage catch-up measures, the first publication of the pay gap indicators shall be on:
1 March 2019 for companies with more than 1,000 employees;
1 September 2019 for companies with more than 250 and less than 1,000 employees;
1 March 2020 for companies between 50 and 250 employees.