By 7 June this year, Luxembourg will need to put in place an EU law to bolster equal pay between men and women and ensure salary transparency.
The ‘Directive (EU) 2023/970 of 10 May 2023’ will bring major changes to companies across the bloc, including the Grand Duchy. While in the past, equal pay issues were mainly addressed through the courts once a dispute had arisen, the new legislation aims to prevent problems upfront by requiring formal pay policies, neutral job classification rules, and for employers to explain and justify how they set salaries.
The new law also aims to enhance transparency and trust between staff and their employers, and strengthen the consistency of remuneration policies.
Manuel Bordignon, Head of Payroll, HR and Employment Advisory Services at Ancorius, explains the major changes this law will bring.
What will be the key changes for employers?
When recruiting, companies will need to communicate pay levels or salary ranges for relevant positions and will not be allowed to request candidates’ previous salary history. These requirements aim to prevent inequalities from the outset of the employment relationship.
How will things change for employees?
Employees will be entitled to request information regarding their own remuneration level and the objective criteria used to determine pay and career progression. Employers will therefore need clear, consistent and communicable remuneration frameworks.
Will it be possible to monitor pay gaps between staff members?
Depending on company size, employers will be required to disclose indicators relating to gender pay gaps. Where unjustified disparities are identified, corrective measures will be expected.
What procedures will be in place if a dispute arises?
In the event of a dispute, the employer will be required to demonstrate that pay differences are based on objective and non-discriminatory factors. Insufficient internal structuring and documentation may significantly increase legal exposure.
What are the next steps for Luxembourg?
At this stage, no draft bill has been formally published. The Directive will be transposed through the forthcoming Luxembourg legislative process, during which the practical implementation details will be clarified.
At Ancorius, we closely monitor legislative developments in Luxembourg and support our clients in anticipating these upcoming requirements.