Multinationals Strive to Meet Stringent Pay Equity Requirements

Global HR

​LAS VEGAS — Reporting requirements around the world on pay equity and so-called equal pay for equal work are creating compliance challenges for multinational companies. Some companies are opting to adopt the strictest standards to ensure compliance, according to William David Wright, an attorney with Fisher Phillips in Philadelphia and Arlington, Va. However, he said, it can be hard to apply subjective criteria like “equal pay for equal work” and make a neutral decision that a job isn’t of the same value as another position.

Speaking Sept. 9 at the SHRM Annual Conference & Expo 2021 concurrent session, “Global Pay Equity: A Tour Around the World,” Wright provided an overview of some of the most stringent pay equity requirements.

Ontario

The Ontario Pay Equity Act requires equal pay for work of equal value, including adjustment of wages in “female job classes” to be equal to wages in “male job classes” that are comparable in value.

As a practical matter, Wright said this means employers in Ontario must:

  • Determine job classes.
  • Identify the value of job classes based on skill, effort, responsibility and work conditions.
  • Conduct comparisons for all female job classes.
  • Adjust wages of underpaid female job classes to achieve pay equity.

A CEO may say it’s not feasible to raise wages overnight but would be more receptive to have a pay equity plan over a few years to absorb the costs, Wright said. Plaintiffs’ attorneys, on the other hand, may say pay inequities should have been fixed yesterday, he added.

Australia

Australia requires equal pay to employees performing work of equal or comparable value, Wright said. Entities with 100 or more employees must report to the government the pay for women compared to men.

“Australia is a challenging jurisdiction,” Wright said, noting that some of its various states may implement other pay equity obligations.

United Kingdom

Employers with at least 250 employees in the U.K. must publish data about the difference in average pay between men and women.

Companies have “got to pay attention to total compensation as a factor, not just the base pay,” Wright said.

He added that agreements telling employees they can’t share compensation pay information—”pay secrecy clauses”—are unenforceable in the U.K.

Germany

In Germany, at companies with more than 200 employees, individuals have the right to pay information.

At companies with more than 500 employees, compulsory pay equity reporting and publishing applies.

The burden of proof is on employers to show gender was not a factor behind a woman’s lower pay. “This is a difficult thing to do,” Wright noted.

EU Legislation

The European Union proposed new legislation earlier this year that would require companies in the EU to ultimately face financial sanctions if they fail to pay women and men equitable salaries.

The legislation, if passed, also would give job candidates access to salary information in employment interviews.

Japan

Japan’s laws also focus on equal pay for equal work. If a company has more than 300 employees, it must regularly publish information regarding women’s participation and advancement in the workplace. But in practice, the law often is ignored, which makes implementation of the requirements in Japan a challenge, according to Wright.

Different rules apply in different countries, and some nations have no pay equity requirements. But the trend is toward transparency as a pathway to achieve pay equity, Wright said.

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