The impetus for the EU Pay Transparency Directive was to address the 12.7% gender pay gap in the European Union. Switzerland is part of the European single market, but not an EU or EEA member.
However, Swiss organizations with operations or employees in EU member states will be required to comply with the EU Pay Transparency Directive.
Currently, Swiss law requires all public and private companies with 100 or more employees to carry out an equal pay analysis. Publicly traded companies have additional obligations.
Swiss reporting requirements were introduced in June 2020 for a time-limited period of 12 years (i.e., until June 30, 2032). The latest round of employer analyses must be communicated in writing to employees and shareholders by June 30, 2024.
Under Swiss law, men and women have the right to equal pay for work of equal value. At 18%, however, Switzerland’s gender pay gap is higher than the EU average.
Swiss organizations with operations in the EU will need to begin updating their HR policy and practices to prepare for the more in-depth requirements of the upcoming EU Directive.
Quick Action Items for Swiss Employers
In 2020, Switzerland amended its Gender Equality Act requiring applicable organizations to carry out an equal pay analysis. However, Swiss employers operating in the EU are unlikely to be adequately prepared for the in-depth reporting required by the EU Directive. Items include:
- Providing sufficient salary range information to job candidates.
- Not asking job candidates about their salary history.
- Yearly pay gap reporting and acting when it exceeds 5%.
- Accounting for intersectional discrimination in pay practices and considering needs of workers with disabilities.
The EU Directive deliberately uses the wider term of “worker” versus “employee” to account for contractors.
Eliminate the Complexities of Global Pay Data Reporting
Employers with operations in the EU should proactively evaluate their current pay practices and overall compensation philosophy. Employers can lean on pay equity software solutions to expedite this process and determine root causes of potential pay disparities.
In effect, by 2026, all large employers (250+ employees) must report gender pay gaps. By 2031, all smaller employers (100 or more employees) will have to comply.
Swiss Employers’ Current Requirements
As detailed above, public and private organizations are required to carry out an equal pay analysis when they reach the threshold of 100 employees, excluding apprentices. Results must be submitted for independent verification by an authorized body. Under certain conditions, employers in public procurement or subsidy procedures are exempt.
Pay reporting data can be entered via Logib, the Swiss government’s free online tool. Logib guides employers to input employee-level data and consider specific Wage Influencing Factors (WIF) in their analysis. Companies that opt for an alternative method for pay equity analysis must show that it meets both scientific and legal requirements.
Access Switzerland’s Gender Pay Gap Reporting Guide
If the initial audit identifies pay disparities, employers must repeat the equal pay analysis every four years, until pay equity is achieved. Thereafter, no further analysis is required. If the number of employees falls below 100 during this time, companies must repeat the analysis if they reach the threshold of 100 employees again.
Employees and shareholders must be provided with the results of the analysis and audit in writing, within one year of its conclusion. Swiss employers can, in principle, be required to conduct equal pay analyses until June 30, 2032.
To demonstrate their commitment to equal pay, public sector and state-associated organizations can voluntarily sign up to Switzerland’s Charter for equal pay in the public sector.
Complying with the EU Directive
The EU Pay Transparency Directive was approved in 2023, establishing a clear framework for EU member states to apply the principle of equal pay for equal work or work of equal value.
EU member states have three years from June 7, 2023 to transpose the directive into law. Likely implementation dates are 2026, however, some countries may enact legislation earlier. The first large organizations will need to submit pay data reports by June 6, 2027.
The EU Pay Transparency Directive establishes minimum standards. Member states may implement more stringent measures or adapt existing requirements to comply.
Swiss organizations with operations or employees in EU countries can act now to ensure compliance by reviewing hiring processes to comply with pay transparency requirements and create equitable, explainable and competitive salary ranges.
Other items include:
- Pay explainability: Prepare to explain how you differentiate and define performance in setting base salaries. Pay transparency legislation means workers must be given access to criteria used to define salary and pay raises.
- Analyze pay gaps: Identify the causes where pay disparities exceed 5%. If there is no objective justification, we recommend addressing any anomalies to remove those unexplained gaps. In cases of alleged pay discrimination, the burden of proof shifts to the employer.
- Intersectional pay equity audit. Intersectionality is essential to close the gender pay gap. It recognizes that individuals can experience discrimination and inequality based on the intersection of multiple identities, such as race, gender, disabilities, age, and more.
Trusaic is GDPR compliant and can assist any organization in any EU state in meeting its obligations under both the EU Corporate Sustainability Reporting Directive and the EU Pay Transparency Directive.
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