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France Presents Tool to Measure Gender Pay Gap in Companies

November 27, 2018

The French government completes its arsenal to fight wage inequality between men and women as it introduces the tool that will be used to measure any discrepancies in pay based on gender. Companies will be given a score based on certain criteria, including gender equality in salaries increases and promotions, among others.

The tool for measuring wage inequalities between women and men in companies was officially presented on November 22 by the French Minister of Labour and the Secretary of State for Gender Equality and the Fight Against Discrimination. As we have previously reported, equal pay for women and men in companies is now an obligation of results.

In order to ensure compliance with this obligation, companies in France will have to respect four main criteria:

  • The introduction of an equal pay index for women and men, composed of five indicators
  • Transparency (each company will have to publish its results on its website)
  • A three-year period for companies to catch up on wages (i.e., March 1, 2022, but companies with 50–250 employees are granted a supplementary period of one year)
  • A penalty of up to 1% of the total payroll in the event of noncompliance

Although a company is required to publish its score on its website, there is no obligation to provide the details that led to the score. However, these details will be communicated to the company's social and economic council.

It was initially intended for the tool for measuring gender pay inequalities in companies to be in the form of software, but this idea was quickly abandoned in favor of an index based on these five criteria:

  • Elimination of gender gap differences in compensation
  • Increase of remuneration upon return from maternity leave
  • Gender equality in salary increases
  • Gender equality in promotions
  • At least 4 of the 10 highest-paid employees are women

While the criteria remain unchanged from those presented in July 2018, their precise content has been modified, as has their weight within the evaluation. The calculation is now based on 100 points (an increase from the 20 points previously proposed), broken down as follows:

  • 40 points depend on the elimination of the wage gap between women and men of comparable position and age. The indicator compares the average earnings of women and men, including performance bonuses and benefits in kind, but excludes bonuses related to working conditions and severance and precariousness bonuses. To obtain all 40 points, the difference must be null. A tolerance threshold of 2–5% has been introduced.
  • 20 points depend on the percentage of men and women whose remuneration has been increased. The full 20 points are awarded when the company has increased remuneration for as many women as men, with a tolerance of 2% or two employees.
  • 15 points are linked to maternity leave and the number of women who receive an increase upon their return to the company, provided that increases have been granted in their absence. If only one woman does not obtain an increase in such circumstances, the score will be null. On the other hand, all 15 points will be awarded if all women are granted increases in remuneration upon their return from maternity leave.
  • 15 points depend on the percentage of employees promoted in each professional category. The maximum number of points is awarded when the company has promoted as many women as men, with a tolerance of 2% or two employees.
  • 10 points depend on the number of women among employees with the highest salaries; the company will be awarded 10 points if 4 of the 10 highest-paid employees are women.

Further details of this scale will be available when the decree implementing these provisions is published. After the measurement is complete, the labor inspectors will tally the company’s score. Fines will be imposed for companies with fewer than 75 points if no corrective measures are taken.

Timetable

March 1, 2019: Companies with more than 1,000 employees must comply by this date. Companies with 250–1,000 employees could be accompanied by a network of delegates to equality during a support period until September 1, 2019, to implement the index.

July 2019: From the second half of 2019, the indicators should be automatically calculated via payroll software.

September 1, 2019: All companies with more than 250 employees must publish their overall scores for 2018 on their websites.

March 1, 2020: Overall scores for 2019 must be published no later than March 1, 2020, for all companies with more than 50 employees.

March 1, 2020: All companies that would not have achieved the objective will be subject to a fine of up to 1% of the company payroll. In certain cases, labor authorities may give companies an additional year to become compliant, especially small companies with more limited budgetary maneuvers.

March 1, 2023: Companies with more than 250 employees that would not have achieved the objective will be subject to a fine of up to 1% of the company payroll.

Corrective measures should pursue these five objectives:

  • Reduce the pay gap between women and men by allocating a three-year salary catch-up package, the amount of which is negotiated within the company
  • Apply the law on maternity leave
  • Give individual increases on an equitable basis between women and men
  • Ensure fair promotions between women and men
  • Ensure fair representation of both sexes at the head of the company

France’s ambitious program to eliminate gender pay inequality is now in place. However, it should be noted that none of these obligations will apply to companies with fewer than 50 employees, which represents the majority of companies in France.

Contacts

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:

Paris
Sabine Smith-Vidal
Laetitia de Pelet