Pay Transparency Directive: what is the role of workers’ representatives?

In this article, we take a closer look at the role of workers’ representatives in the Pay Transparency Directive and explain why employers will need to work constructively with representatives once the new obligations are in force.

Workers’ representatives and equal pay disputes historically

The idea that worker’s representatives should play a key role in driving pay equity is nothing new. Across Europe, workers' representatives have long played a significant role in equal pay disputes.

Throughout the 1960s and 1970s, female workers – backed by their representatives – organised a series of impactful equal pay strikes and campaigns. In Belgium, strikes by women in the textile industry led to the passage of the Belgian Equal Pay Act in 1972. Female machinists at Ford in the UK ignited the iconic 1968 strike, demanding equal pay for equal work, and ultimately contributing to the UK's Equal Pay Act in 1970. In Spain in 1971, the SEAT strikes campaigned for improved working conditions, higher wages, and gender pay parity.

Further north, women in Iceland embarked on a series of strikes in 1975, supported by trade unions and workers’ representatives, culminating in Iceland passing equal pay legislation in 1976. In Sweden during the 1980s, trades union and workers' representatives played a pivotal role in implementing pay equity measures and job evaluation systems, facilitating progress toward gender pay equity.

This continues today, as trades union and workers’ representatives continue to campaign and litigate on these issues. With the increased role for workers’ representatives under the Pay Transparency Directive, this trend will only continue.

Key requirements of the Pay Transparency Directive

The Pay Transparency Directive introduces a range of new pay equity requirements for employers in the EU.

Employers will have to publish the average gender pay gap within their organisation - similar to existing requirements in the UK and Ireland.

Employers will also have to report gender pay gaps within "categories" of employees (those doing the same work, or work of an equal value). Where the gap within any single category is greater than 5%, and this cannot be objectively justified or remedied, employers will have to carry out a joint pay assessment. That is a form of compulsory equal pay audit.

Alongside requiring employers to report – and investigate – pay gaps, the Pay Transparency Directive also grants employees new rights to pay information, including details of how their employer sets pay, and data about what those performing work of equal value to them are being paid.

The role of workers’ representatives in the Pay Transparency Directive

The Pay Transparency Directive gives a significant role to worker’s representatives. They will have rights to access previously restricted pay data, challenge an employer on its gender pay gaps, compel employers to carry out a Joint Pay Assessment, and get information on the employer’s pay structures.

Right to receive pay information

All employees will have the right to receive information on their own pay and the average pay levels, broken down by sex, for others performing the same work as them, or work of equal value to theirs

The Pay Transparency Directive says that employees should have the right to request and receive this information personally - and that their workers’ representatives should be able to exercise that right on their behalf. Employees can request additional and reasonable clarification and details – also, if preferred, through their representatives.

This gives an important role to workers’ representatives. Reticent employees who are curious about pay equity may prefer to channel requests for information through representatives who, in turn, will gain access to previously-restricted pay data and start to build up a bank of knowledge and experience about the employer’s pay practices.

Gender pay gap reporting

The Pay Transparency Directive requires employers to publish a series of gender pay gap statistics. The accuracy of those statistics must be confirmed by the employer’s management, after consulting worker’s representatives. The Directive does not define exactly what is envisaged by “consulting” in this context but it is likely to mean an establishment of dialogue and exchange of views enabling the workers’ representatives to express an opinion on the information provided to them. To facilitate this, the workers’ representatives will have access to the methodologies used by the employer.

Article 9 says that workers’ representatives have the right to ask employers for additional clarification and details regarding any of the gender pay gap statistics that the employer publishes, and the employer must respond to these requests within a “reasonable time”.

Joint Pay Assessments

When pay gaps for workers doing work of equal value are 5% or greater, and these gaps cannot be objectively justified, an employer will be required to carry out a Joint Pay Assessment. This is essentially an equal pay audit of the entire organisation.

The Pay Transparency Directive does not set out clearly where ultimate power lies in deciding whether objective justification exists and a Joint Pay Assessment is required. Do the workers’ representatives have the power to say “these gaps are not objectively justified”, even when presented with clear and unambiguous evidence that they are? Presumably, there must be some degree to which agreement cannot be unreasonably withheld, but the Directive does not address this. It just says (at recital 43) that the Joint Pay Assessment should be carried out if the employer and the workers’ representatives “do not agree”.

Clearly, it will be in employers’ interests to work constructively with workers’ representatives so that they understand the reasons for pay differentials which are genuinely justified and do not press for unwarranted audits of the entire organisation.

Pay structures and equal value roles

Article 4 of the Pay Transparency Directive says employers must adopt pay structures that “enable the assessment of whether workers are in a comparable situation in regard to the value of work on the basis of objective gender neutral criteria agreed with workers’ representatives.” In practical terms, this means that employers are expected to adopt pay structures that show which groups of employees are doing work of equal value and, moreover, the criteria for assessing equal value must be agreed with worker’s representatives. That means that employers will have to open up pay setting and progression policies to workers’ representatives and likely – as a minimum – consult with them on the principles in those policies with a view to reaching agreement.

Selecting and electing workers’ representatives under the Pay Transparency Directive

The Pay Transparency Directive defines “workers’ representatives” in Article 1 as “the workers’ representatives in accordance with national law and/or practice”.

At recital 24, the Directive also explains that “In order to protect workers and to address their fear of victimisation in the application of the principle of equal pay, they should be able to be represented by a representative. This could be trade unions or other workers’ representatives. If there are no workers’ representatives, workers should be able to be represented by a representative of their choice. Member States should have a possibility to take into account national circumstances and different roles concerning workers’ representation”.

Although the recitals are not binding and not a formal part of the Pay Transparency Directive, they provide some assistance as to how employers should identify appropriate representatives.

Member states could set out their own rules under implementing law but it’s clear from both the text of the Pay Transparency Directive - and the wider context – that, unless member states provide otherwise in their own implementing legislation, existing workers’ representatives (e.g. existing works councils) would be expected to take on the additional responsibilities under the Directive. It might be possible for a local works council to appoint a subset of its members to act as the workers’ representatives for pay transparency purposes, meaning that there could be a smaller, more specialised, group of representatives rather than the whole works council. It is unlikely that different representatives would be involved in different aspects of the Directive, however.

Where there are no representatives in place, an election or appointment process will need to be followed.

How many workers’ representatives should there be?

There is no maximum or minimum number of representatives. Where possible, employers are likely to want to keep the number of representatives down so that there are not too many people involved in the process, and so that those who are involved can be well-versed in the complex underpinning principles.

Training, education, support and resources to workers’ representatives

The Pay Transparency Directive requires member states to provide training and technical assistance to workers’ representatives, although it seems doubtful that all member states will fully embrace this new obligation and provide high quality support at state level.

Should employers train workers’ representatives?

Generally, yes. The selection of workers’ representatives will be outside of the employer’s control. The individual(s) selected may be effective campaigners and strong leaders, but may lack technical knowledge about statistics and pay equity issues. By providing training, employers can keep workers’ representatives focused and on topic. That way, discussions are more likely to be efficient and effective.

For example, legal training on equal pay can give the workers’ representatives the knowledge they need to understand when a pay gap within a category of employee which is 5% or greater is objectively justified. This is critical because – as explained above- where gaps are beyond this amount, a Joint Pay Assessment must be carried out unless the worker’s representatives agree that the differential is objectively justified in the circumstances.

Similarly, statistical training should be provided. When the UK implemented gender pay gap reporting, we saw many misunderstand the statistics. Basic concepts like the difference between mean and median were not appreciated, and many misinterpreted what a gender pay gap meant. Statistical training can give representatives the confidence and skills to better understand the data. Statistical training may also make it easier to consult worker’s representatives on the accuracy of data that needs to be published.

Attitudes to workers’ representation across the EU

Attitudes toward involving workers’ representatives can be influenced by historical factors, legal frameworks, and cultural norms. Employers should be alive to this – as well as the particular context in their organisations – when planning to navigate those parts of the Pay Transparency Directive where consultation with workers’ representatives will be important. In some countries, the emphasis is on collaboration and consultation between employers and employees, while in others, the relationship can be more adversarial. For example:

• France has a strong tradition of workers' representation. The French labour code mandates the presence of works councils (Comités Sociaux et Économiques - CSE) in companies with 11 or more employees. These councils are actively involved in various aspects of company decision-making, including economic and financial matters. Employers must consult CSEs on issues such as layoffs, working conditions, and health and safety. This reflects a culture of active employee involvement and consultation.
• Germany is known for its co-determination system, which means that workers have a significant say in the management of larger companies. In such companies, they have seats on the supervisory boards (Aufsichtsrat) alongside shareholders. This arrangement emphasises collaboration between workers and management and underscores the importance of worker representation in decision-making.
• Italy has a mix of worker representation mechanisms. Workers' representatives are involved in company boards and also have the right to be informed and consulted on various issues. There is a significant role played by trade unions in Italy, which are often involved in negotiations related to workplace conditions and collective agreements.
• In Spain, the legal framework allows for the existence of workers' councils (Comités de Empresa) in companies with over 50 employees. These councils are responsible for representing workers' interests and can be involved in decision-making processes, particularly those related to employment conditions and layoffs.
• Sweden has a well-established tradition of social dialogue, with strong trades union and employer organisations. Collective bargaining agreements negotiated between unions and employers play a central role in shaping employment conditions. The involvement of workers' representatives is widespread, and they often sit on boards and are consulted on key workplace issues.
• In Ireland, the role of workers' representatives is relatively limited compared to some other EU countries. While trade unions and employee representative bodies exist, their influence on company decision-making tends to be less pronounced. Employee involvement often depends on voluntary arrangements and individual employer policies rather than being mandated by law, reflecting a more decentralised approach to industrial relations.

Conclusion – a major role for workers’ representatives

In conclusion, the Pay Transparency Directive gives a significant and highly influential role to worker’s representatives, placing them front and centre of the new rights. Representatives will gain new insight into the employer’s pay structures and policies, valuable intelligence about what different groups are paid and new powers to compel company-wide equal pay audits in some instances.

A role for worker representatives in driving pay equity is nothing new, and employers in many countries across the EU already have collaborative relationships with worker representatives, but for many employers this is likely to mark a shift in approach.

Whatever your attitude is toward workers’ representatives, and however successfully you are collaborating with worker’s representatives now, you are likely to want to invest in specialised training for the representatives on pay equity, equal pay law and statistics. Without the benefit of that training, representatives may struggle to be effective and constructive and you, as the employer, face an increased risk of hostile interrogation of your pay data and unwarranted calls for pay audits.

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