Gender Pay Equality in France: March 1 Brings Three Important Events

Companies in France should pay attention to the date of March 1, 2020, for three reasons: First, it is the date on which the index on professional equality between men and women will be extended to companies with 50 to 249 employees. Second, companies with more than 250 employees will have to publish their results for the second time. Finally, it is the date when companies that have not reached a professional equality score of at least 75 may be publicly named and may be sanctioned.

Since our previous LawFlashes on gender pay equality,[1] companies with more than 1,000 employees and companies with more than 250 employees have had to put into place their indexes on professional equality between men and women.

Index Extends to Smaller Companies

While companies with 1,000 or more employees were required to publish their indexes on gender pay equality on March 1, 2019, and those with 250 to 999 employees on September 1, 2019, as of March 1, 2020, companies with 50 to 249 employees will have to publish their indexes with only these four criteria set by the law:

• The gender pay gap, calculated based on the average pay of women compared to men, by age group and equivalent job category
• Difference in the rate of individual increases between women and men
• Percentage of employees who returned from maternity leave during the reference period and who benefited from an increase upon their return during the same period
• Number of employees of the underrepresented sex among the 10 employees who received the highest remuneration

For these companies with 50 to 249 employees (about 30,000 companies), the government will provide advisory support. Companies of this size were given additional time because the government took into consideration that they did not always have the tools in place to calculate the index. However, given the complexity of the calculations and the determination of the various parameters, it is advisable for these companies to start the preparatory work for the calculation of the index now.

Index Publication

As of March 1, 2020, all companies with 50 or more employees must have published their indexes. This means that companies with more than 250 employees that published their indexes based on the year 2018 will have to repeat the exercise based on the year 2019 by March 1, and each year thereafter. In other words, 2019 is a year of implementation; the following years will be years of recurrent publication.

It is therefore crucial for companies that have had difficulties in determining, for example, occupational categories, and allocating employees to these categories, to work with their advisors and possibly with their employee representatives to put in place reliable tools that can be used from one year to the next.

This is all the more important as the French Minister of Labour has made a rather harsh observation of the first results obtained (concerning companies with 250 employees or more).

Of the 4,772 companies that published their indexes, only 167 companies ensured real equality, i.e., obtained scores of 99 or 100. No company listed on the CAC 40 or SBF 120 has maximum ratings. Worse, nearly 17%—almost 800 companies—score below 75.

The Minister of Labour recalled that there is still a glass ceiling preventing women from accessing management positions in companies. Another point: Companies continue to "forget" to increase their employees returning from maternity leave by the same amount as their colleagues in the same types of positions. In this respect, and for many years now, the law and case law have been reminding employers that companies are prohibited from "making their employees pay" for maternity leave by slowing down their professional or wage progression.

Minimum Index Scores

The Minister of Labour also noted that professional equality is achieved with a score of 100 out of 100. A score of 75 is a good start, but it is certainly not an end point in achieving gender pay equality.

Companies that have scored less than 75 have a maximum of three years to reach the score of 75, so they must take the necessary measures to improve their scores and promote gender equality as soon as possible.

The government has provided three tools to compel them to do so:

• Labor inspectors will increase the number of companies controlled to ensure their compliance. Already 5,500 controls have been carried out, and 7,000 are planned for the year. Seventeen companies were given formal notice by the French Labour Inspection to rectify the situation. The formal notices precede sanctions.
• Financial fines for companies that have not taken the necessary measures to improve their scores may reach 1% of all wages paid.
• Above all, the government intends to play on the fear of the reputation effect. The names of companies that have not promoted equal pay for men and women may be published. This "name and shame" is perhaps the most effective measure, as the consequences can be disastrous for companies, which would be cited in terms of hiring and retaining quality collaborators.

Although the government intends to allow time for companies to apply the new rules, it also intends to use the “carrot and stick,” or a reward and punishment approach. March 1, 2020 is close enough that companies should address seriously gender equality.

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

[1] See New French Rules on Gender Pay Equality Enacted, France Presents Tool to Measure Gender Pay Gap in Companies, Gender Equality: France Issues Decree on Application of New Legal Framework for Equal Pay, and French Decree on Gender Workplace Equality Specifies New Sanctions.