The decree, published on 9 January, was issued under the act, “For the Freedom to Choose One’s Professional Future” of 5 September 2018, and introduces measures to eliminate the pay gap between women and men in France.
Decree No. 2019-15 (the Decree) specifies the methods for calculating the indicators relating to the pay gap between women and men and the measures implemented to eliminate them (the Indicators), as well as their publication methods: four for companies with fewer than 250 employees, and five for those with more than 250 employees.
The new article D. 1142-4 of the French Labour Code, introduced by the Decree, sets the deadline for publishing the level of results obtained by companies with regard to the Indicators for the previous year. Companies must therefore publish their results once a year, no later than 1 March of the current year. Companies with more than 1,000 employees should publish their results no later than 1 March 2019.
Transitional publication measures are provided for in the Decree:
All employees of a company present during the annual reference period chosen by the employer for the calculation of the Indicators (the Reference Period) are not to be taken into account. Indeed, apprentices, holders of a professionalization contract, employees seconded to the company by an external company, expatriate employees, as well as employees absent for more than half of the Reference Period considered are excluded from the company's workforce for the calculation of the Indicators.
The remuneration of each employee is reconstituted in full-time equivalent over the Reference Period.
The compensation items taken into account exclude severance and retirement indemnities, bonuses linked to a particular hardship not affecting the employee's person, seniority bonuses, overtime, as well as payments made in mandatory profit-sharing and incentive schemes (“Participation” and “Intéressement”).
As discussed in our prior Lawflash, the Indicators are as follows:
Concerning, for example, the modalities of calculation of the pay gap Indicator:
The Indicators are calculated and evaluated according to a scale ranging from 0 to 100 points, in accordance with the tables annexed to the Decree. Companies must achieve a minimum score of 75 points out of 100; otherwise, they will have to implement measures to achieve a sufficient score in three years. If not, companies will incur a financial penalty of up to 1% of the payroll.
The Decree also forecasts three cases in which the Indicators cannot be calculated:
When one or more Indicators are incalculable, only the calculable Indicators are taken into account and the total number of points obtained is reduced to 100 points, applying the proportionality rule. However, if the maximum number of points obtained before the application of the proportionality rule is less than 75 points, no result level can be determined for the concerned Reference Period. However, the employer remains obliged to make the calculable Indicators available to employee representatives and the labor authorities.
Finally, when a company reaches 50 employees, it has three years to apply the provisions of the Decree.
In conclusion, the first step is to carry out an audit of remunerations based on the Indicators in order to assess the precise situation of the company. Corrective measures can be considered and/or implemented on the basis of the audit results.
Even for the smallest companies (50 to 250 employees), the deadlines are short (one year) and the implementation of the Indicators may require upstream work to be started as soon as possible.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers: