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Article | Executive Pay Memo – Western Europe

Fair Pay Regulatory Update – UK, Europe and Middle East

Executive Compensation|Compensation Strategy & Design|Total Rewards
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By Tamsin Sridhara and Daniel Puckey | November 30, 2020

Our experts provide you with an update on, and guidance for, the latest developments of fair pay legislation.

Governments across Europe and now the Middle East continue to introduce new legislation to reinforce employer responsibilities around equal pay and equal opportunity. We provide an update of the latest developments.

UK – GPG developments

  • The UK Government Equalities Office (GEO) have confirmed by email that the Gender Pay Gap (GPG) Regulations remain in force for 2020/21 while reserving the right to respond to circumstances.
  • Willis Towers Watson recommends that clients prepare for disclosure.
  • GEO confirmed that furloughed employees receiving less than full pay do not count as full-pay relevant employees, as they were paid a reduced rate due to being on a period of leave. They should be excluded from hourly pay gender pay gap calculations (but not bonus pay).
  • In contrast furloughed employees whose salaries were topped up to their normal levels while on furlough, will count as full-pay relevant employees for the purposes of calculations.
  • Willis Towers Watson recommends that if the exclusion of furloughed employees provides an unrepresentative picture, clients consider supplementary numbers and narrative.
  • Willis Towers Watson are aware that many clients are considering supplementary disclosure either this year or in future on ethnicity pay gaps. Download the BBC’s Pay Gap Report 2020 for a recent example.
  • In our latest client roundtable on fair pay, the most common approach to ethnicity classification is to use local market classifications, with Office of National Statistics’ classifications being the common UK starting point.

EMEA – new fair pay, equal opportunity developments

  • Spain: The government adopted two new Royal Decrees in October to address equal pay and ensure the effectiveness of equality plans. All employers will need to ensure their pay management systems deliver their equal pay responsibilities (or take action) and will need to draw up and register equality plans (where not already done so).
  • UAE: In September an updated labour law took effect which requires equal pay for men and women who perform "the same work" or work of "equal value“ building on existing equal pay legislation. Further guidance is expected. As in Spain, employers will need to ensure their pay management systems deliver on equal pay responsibilities.
  • Germany: A mandatory requirement for the boards of listed companies to have at least one female board director is being introduced.

And as a reminder:

  • Switzerland: companies with 100+ employees need to complete their first in-house pay equity analysis by end of June 2021.
  • France and Sweden: pay equity reporting requirements remain in place.
  • Germany: enhanced employee rights for equal pay information remain in place.
  • Ireland: a new gender pay gap reporting bill is still in the process of becoming law.

Employers must be confident that their arrangements are delivering their legal responsibilities. This involves analytics, individual adjustments, process improvements and communications. The Willis Towers Watson team can help.

Contacts

Senior Director, Talent and Rewards (Europe)

Daniel Puckey
Director - Rewards 

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