Sanctions for not closing the gender pay gap

French companies that have not taken steps to close the pay gap between women and men, through a collective agreement or unilateral action plan, may be fined up to 1% of their payroll costs from 1 January 2012. Despite much legislation on this issue over the past decade, there are still inequalities. It is hoped sanctions will remedy this in companies with 50 or more workers, which will also have to report annually on the comparative status of employment and training for both sexes.

Background

The legislative pressure on the social partners over wage inequality between women and men has been increasing for the last 10 years. In 2001, the law of 9 May 2001 (in French) obliged companies to negotiate on the question of workplace gender equality. In 2006, this obligation was extended by the law of 23 March 2006 (in French) in order to eradicate the wage gap between men and women, but without any sanctions being imposed. Finally the law of 9 November 2010 (in French), reforming the pension system, included a penalty of up to 1% of the payroll costs for companies with at least 50 employees, and which had not met their responsibilities to reduce the pay gap by 1 January 2012. This law was supplemented by a decree dated 7 July 2011 (in French) and a circular dated 28 October 2011 (in French, 2.31Mb PDF) detailing how the penalty will be applied.

The idea of imposing sanctions to tackle the gender pay gap stems from a similar policy introduced in 2008 to increase the employment of older workers. Noting that France was employing fewer older people than its neighbours, in the law of 17 December 2008 (in French) the state compelled businesses and companies with at least 50 employees to negotiate on the employment of older workers by imposing a penalty of 1% of their total remuneration costs on those companies that did not comply.

New legislation demands targets and monitoring process

Similarly, to deal with the gender wage gap, companies with at least 50 employees must now negotiate a collective agreement or draw up a unilateral action plan in consultation with employee representatives. Failure to comply will result in sanctions.

The most recent legislation not only stipulates the agenda for negotiations, but also compels the negotiators or company management to identify progress targets and the means of achieving them, and to put in place ways of measuring whether targets for narrowing the pay gap have been met (Labour Code, art. L. 2242-5 to L. 2242-7).

To support negotiations or the drawing up of an action plan, companies must compile an annual report on the comparative status of overall employment and training conditions for women and men (Labour Code, art. L. 2323-57). The Ministry of Labour has issued a practical guide (in French, 632Kb PDF) to help companies. Companies that have fewer than 300 employees must draw up agreements or action plans that include measures addressing at least two of eight topics listed in the guide, and at least three topics for companies with more than 300 workers. The topics are:

  • recruitment;
  • training;
  • promotion;
  • qualification and grading;
  • working conditions;
  • actual remuneration;
  • work–life balance;
  • dialogue with the administrative authority.

The agreement or action plan must be forwarded to the administrative authority so the overseeing officer can check its compliance with the legal requirements. Employers without a suitable agreement or plan will be given a statement detailing their shortcomings and formal notice to remedy this within six months. If the company is unable to complete the agreement or plan it must give reasons why. Valid reasons include economic difficulties, ongoing restructuring or mergers, or the existence of a collective procedure. This correspondence is essential, since the administrative authority has the power to vary the penalty to reflect the reasons for non-compliance. Where the authority is satisfied that the company has been prevented from complying by unavoidable circumstances, it has the authority to reduce the penalty or even revoke it.

Commentary

Until now the negotiation of wage equality has been inadequate within the various sectors and even at company level, where this topic is rarely addressed specifically. This is underlined by the Review of collective bargaining 2010 (in French, 2.21Mb PDF) published by the Ministry of Labour. There seems to be little trade union involvement in such negotiations. In general, employee representatives do not put forward proposals of their own and instead allow company managements to draw up whatever measures they see fit. In the trade unions’ defence, they are often engaged in other essential negotiations at the same time. These include improving working conditions to reduce hardship at work (employers will be subject to penalties if an agreement or action plan to deal with reduction of hardship at work had not been produced by 31 December 2011. It is hoped the fear of a penalty will have induced companies to introduce formal measures. However, it remains to be seen whether the administration will try to speed up progress by resorting to the threat of financial sanction, given the pressures many companies face from the current economic crisis.

Sandrine Jean, Human and Employment Research Agency (HERA)

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