Despite advances in gender equality, globally, women earn 20% less than men on average. Several countries have introduced laws to tackle the pay gap, creating new reporting payroll requirements.
While individual characteristics such as education, skills and experience, working time and occupational segregation explain some of the disparity, a large part of the pay gap is due to gender discrimination, according to UN Women. Ensuring that men and women receive equal pay is necessary for equitable and sustainable economic growth, the World Economic Forum says. Businesses play a vital role in setting pay trends and global payroll dashboards have made it easier than ever to analyse pay data for a specific job function, location or across an entire organisation. An increasing number of countries have implemented laws requiring businesses to regularly file pay transparency reports. Let’s consider the role payroll plays in gender pay gap reporting and compliance.
Addressing the gender pay gap
The International Labour Organisation’s Equal Remuneration Convention of 1951 was the first international attempt to address the issue of the gender pay gap. The ILO’s convention was followed by many national laws addressing the issue, such as the United States’ Equal Pay act of 1963, UK’s Equal Pay Act of 1970 and the EU’s 1975 directive on equal pay.
Today the pay issue is still complex and relies on private industry to implement government directives. Tactics to monitor and correct the gender pay gap have created more reporting requirements for companies, largely focused on regular reporting of salary averages by gender but also pushes for pay transparency, disclosing salary ranges to employees and applicants.
The 27 countries of the European Union will introduce more pay transparency reporting requirements by June 2026. The EU Pay Transparency Directive, passed in 2023, aims to close the gender pay gap in Europe.
Under new rules, EU companies with more than 250 employees will be required to annually report information on salaries and act if their gender pay gap exceeds 5%. Workers who experience gender pay discrimination will be eligible to receive compensation including back pay and related bonuses. As the new legislation is enacted across the EU over the next two years, payroll departments will have more regular reporting requirements to add to their calendars.
Countries requiring gender pay disclosures
Here are some highlights of pay disclosure laws around the world:
- Australia: All private-sector employers with more than 100 employees must annually file a Gender Equality Report, including details on remuneration, to the Workplace Gender Equality Agency.
- Austria: Employers with more than 150 employees must prepare a biennial report on remuneration, including average or median wages of women and men, and share it with employees. (information in German).
- Brazil: Employers with more than 100 employees must submit employee data to the Ministry of Labor, which uses the data to create pay transparency reports biannually. (information in Portuguese).
- Canada: All federally regulated employers are required to comply with the Pay Equity Act, including filing an annual pay equity statement.
- France: Employers with more than 50 employees must publish a Gender Equality Index annually, and employers with more than 1,000 employees must also publish any gaps in gender representation among their senior executives and governing bodies. (information in French).
- Germany: Employers with more than 500 employees are required to produce wage audits to create annual reports on equal pay. (information in German).
- Ireland: Employers with more than 50 employees are required to compile annual gender pay gap reports and publish them on their websites and submit them to the government.
- Japan: Employers with more than 300 employees must develop action plans on women's participation and advancement and make them public.
- United Kingdom: Employers with more than 250 employees must report their gender pay gap data annually, which is made publicly available.
- United States: All 50 states maintain independent labour laws, which makes compliance particularly tricky. Currently 22 states have pay transparency laws aimed at pay equity.
Global payroll reporting made easy
Payroll plays an increasingly important role in keeping global companies compliant with local tax and labour laws and reporting requirements. The requirements for gender pay gap disclosures vary depending on the jurisdiction. Having a global payroll dashboard makes staying on top of reporting requirements for all territories in which your company operates much easier. Our activ8 software helps our clients keep on track with global payroll requirements and supports ongoing compliance.
The future of pay transparency
While some companies historically have pressured employees not to discuss salaries with each other, discussing pay is a protected right for employees in many countries. If compensation is determined fairly and communicated clearly, employers don’t need to fear employee discussions around pay.
Several jurisdictions have also put a ban on asking job candidates to disclose their previous salaries. Pay transparency plays a big role in closing the gender gap, as women have historically been less likely than men to negotiate the salary of a job offer, which has a snowball effect over the course of their careers.
As the country-level legislation is enacted in the EU, payroll and HR leaders will need to stay abreast of pay transparency rules. The EU directive requires employers to inform jobseekers about the starting salary or pay range of advertised positions, whether in the vacancy notice or ahead of the interview. Being transparent and equitable with pay ranges, promotions and bonus schemes improve morale, productivity and retention among all employees.
Payroll leaders would be smart to utilise payroll platforms that unify global pay data and run regular pay audits on their workforces, even without the pressure of a reporting deadline. Comparing mean and median salaries and bonuses by gender within pay bands, job functions, titles and geographies can reveal interesting information and help the executive team make informed decisions.
With powerful global payroll dashboards at their disposal, payroll leaders can help companies stay compliant with gender pay gap reporting and guide the organisation to a more equitable future with transparent pay policies. If you are interested in consolidating your global payroll operations to one provider, do get in touch.