The landscape of employment law in Malta and across the EU is poised for significant changes. The new EU Pay Transparency Directive (Directive (EU) 2023/970) is expected to be integrated into Maltese law by June 2026, with initial reporting deadlines set for 2027. This directive represents a crucial shift towards pay equity, fairness, and transparency in the workplace.
Why Was The Directive Introduced?
Despite years of progress, the gender pay gap in Europe has remained persistent. The EU Pay Transparency Directive aims to tackle this issue head-on by requiring greater openness around pay and empowering both employees and job seekers. Its core mission is simple: ensure that women and men who perform the same work, or work of equal value, receive equal pay.
What Does The Directive Require?
For Employers
· Salary Disclosure for Job Seekers: Employers must include salary ranges in job postings or provide them before interviews. Asking candidates about their current or previous salary will no longer be allowed.
· Transparency for Employees: Employees can request information about pay levels and the criteria used for pay progression, which must be objective and gender-neutral.
Gender Pay Gap Reporting
· Companies with 250+ employees must report their gender pay gap annually, starting in June 2027.
· Companies with 150to 249 employees must report every three years from June 2027.
· Companies with 100 to 149 employees start reporting every three years from June 2031.
· Joint Pay Assessment: If a gender pay gap of 5% or more is found and cannot be objectively justified, companies must conduct a joint pay assessment with employee representatives and take corrective action.
· No Pay Secrecy: Employers cannot prevent employees from discussing or disclosing their pay.
· Objective Pay Structures: Pay decisions must be based on transparent, gender-neutral criteria, and companies are encouraged to implement structured job grading systems.
For Employees And Job Seekers
· Right to Information: Employees can request data on average pay levels for comparable roles, broken down by gender.
· Transparent Access: The burden of proof in pay discrimination cases shifts to the employer, making it easier for employees to assert their rights.
What Are The Implications For Maltese Businesses?
This directive is not just a compliance exercise, it’s a chance for Maltese companies to demonstrate leadership in fair employment practices, such as early compliance, signalling a genuine commitment to fairness, and enhancing your employer brand in a competitive talent market. Adopting proactive measures which will help avoid reputational damage and potential financial penalties for non-compliance. A cultural shift towards transparent pay structures fosters trust and can improve employee engagement and retention.
How Should Employers Prepare?
Review and Update Pay Structures: Ensure all pay and progression criteria are documented, objective, and gender neutral.
Train HR Teams: Equip HR with the tools and knowledge to conduct regular pay reviews and gender pay gap analyses.
Communicate Transparently: Clearly inform employees and job applicants about pay policies and their rights under the new law.
Plan for Reporting: Start collecting the necessary data now to ensure streamlined and accurate reporting when deadlines are due.
To Sum Up
The EU Pay Transparency Directive is more than just a regulation, it’s an opportunity for Maltese businesses to lead the way in workplace equality. By embracing transparency and fairness, companies can build stronger, more inclusive teams and position themselves as employers of choice in Malta and the EU.
At AIMS International Malta, we are committed to helping you navigate changes in compliance and turn them into a competitive advantage. We provide clients with comprehensive executive search, talent acquisition and recruitment services, expert guidance on employment contracts and pay practices, and strategic advice to promote transparency and fairness within the workplace culture.
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