France: New Rules on Gender Pay Equality

Equal pay for women and men has been obligatory under French law since 1972. Yet women are paid 9.9 percent less for like work than men according to the French minister of labor.

In order to ensure compliance with the principle of equal pay, the Professional Future Act of September 5, 2018 (Loi “Avenir professionnel,” n°2018-771) requires employers to pay men and women equally within three years. This impacts employers with 50 employees or more. Affected employers must measure the wage gap between women and men and, if necessary, negotiate or take actions to address it.

To help companies reach this objective, this law provides employers with four guidelines:

I. Measuring Methodology

To measure gaps in pay, five indicators were selected from a 100-point index:

1. Wage gap (base salary plus bonus plus individual incentives)
2. Gap of individual salary increases
3. Promotion gap
4. Percentage of employees whose salary was increased upon their return from maternity leave
5. Number of women and men in the top 10 highest paid jobs

A draft decree specifies the methodology for calculating the indicators used to measure pay gaps.

II. Transparency

Each company must publish their results on their website. On March 1 of every year, companies will be required to publish their results for the previous year on their websites. If they don’t have a website, employees must be informed by some other means. The first publication of the results obtained must take place before March 1, 2019 for companies with 1,000 employees or more; before September 1, 2019 for companies with between 250 and 1,000 employees, and before March 1, 2020 for companies with between 50 and 250 employees.

III. Five Corrective Actions

Each company will have three years to make up for lost wages. Companies must implement the following corrective measures if the result obtained is less than 75 points out of 100:

1. Reduce the pay gap between women and men by allocating a salary catch-up amount over three years, the exact amount of which is negotiated within the company ;
2. Properly apply legal requirements on maternity leave;
3. Give individual increases in an equitable manner between women and men;
4. Ensure fair promotions between women and men; and
5. Set up a pool to ensure a fair representation of both sexes in the company management.

Mandatory negotiations on professional equality will then have to cover appropriate and relevant corrective measures and, where appropriate, the annual or multiannual programming of financial measures to catch up on salaries. Failing agreement, a decision by the employer will determine these measures, after consultation with the Social and Economic Committee.

This decision must be filed with the administrative authority, which may submit comments on the measures.

IV. Verification

Companies that have not caught up within three years could be sanctioned with a fine of up to 1 percent of total payroll.

Companies with a result level below 75 points have three years from publication to comply. If they do not exceed 75 points by then, they may be subject to a financial penalty of up to 1 percent of the total payroll in the calendar year preceding the three-year period. Depending on the efforts made by the company on the subject and the reasons for its failure, the company may be given an additional year to comply.

Written by Marie Millet-Taunay of Ogletree Deakins

© 2019 Ogletree, Deakins, Nash, Smoak and Stewart, P.C.