With the publication in the Official Journal of the European Union of Directive 2023/970 which introduces new employee protections and new employer obligations on equal pay and transparency ‘the Member States of the European Union have the obligation to adapt their local laws by encouraging (and also imposing) pay transparency also in the private employment relationship. What this will entail in practice can be assessed on two levels. The first is ‘what will change in form’. First and foremost, the disclosure obligations of employers will change. The reason for the introduction of these unprecedented transparency obligations in the private sector (where the confidentiality of individual bargaining is still often a critical factor) lies in the fact that gender pay inequality is a rather visible phenomenon’. Thus, with Adnkronos / Labitalia, Alberto De Luca, partner of De Luca & Partners, a law firm specialised in labour law.
De Luca points out that ‘the European average shows in fact a gender pay gap in favour of male workers of around 13%. It must be said, and this figure may seem a good starting point, that Italy is one of the most successful countries in this area, with around only a 5% gap. What will change “in substance” is harder to say,’ he explains.
According to the expert, ‘it will not only be the gender pay balance that will change but the entire system of internal transparency of the pay levels of colleagues and co-workers’.
But when will the directive take effect in our country? ‘The Directive entered into force on 6 June 2023’ explains De Luca ‘and Member States will have three years to comply, namely by 7 June 2026, under penalty of infringement proceedings against those States that fail to do so. In order to comply with the provisions of the Directive, each Member State (including Italy) will have to adopt all the necessary legislative measures to ensure pay transparency also in the private sector,’ he explains.
‘With regard to the “how”, the Directive’ the expert points out, ‘requires the introduction of regulatory obligations requiring employers to provide adequate information on wages and salary levels to both job applicants and existing employees. In this respect, the Directive prescribes that, applicants for a job position must be ensured the right to receive all information on the pay levels related to a specific job (if applicable, on the relevant provisions of the national collective bargaining agreement applied by the employer in relation to the position), while all male and female workers should have access to information on individual pay levels and average pay levels broken down by gender, by personnel categories or by similar duties’.
According to De Luca, ‘employers must then be prevented from seeking information from applicants on pay received in current or previous employment relationships. In order to ensure that the transparency mechanisms introduced operate, an obligation for employers to inform all male and female employees annually of their right to receive this information, which – in any case – will also have to be mandatorily communicated to the designated authority by those employers with more than 100 employees’, he adds.
‘The latter information’ the expert emphasises ‘will also have to be provided to male and female workers’ representatives, labour inspectorates and equality bodies, that will also have the right to ask for further details on any data provided, including explanations on any gender pay differences. Turning to the timeframe, by 7 June 2031, Member States will have to provide the Commission with information on the implementation status of the Directive and its practical impact. Then, by 7 June 2033, the Commission will present a report on the implementation to the European Parliament and the Council’, he notes.
And when fully implemented, in application of the Directive, ‘the legislation’ explains De Luca ‘will have to provide for the obligation for employers to allow, by adopting appropriate mechanisms, all male and female workers to access information on individual pay levels and average pay levels broken down by gender. Employers will also be required to prepare a description of the (neutral) criteria underlying the determination of pay and career advancement and will have to provide employees who request it with all information on the pay level’, he stresses.
According to De Luca, ‘Member States will have to ensure that employers provide information on their organisation, in particular on the gender pay gap (in supplementary or variable components) both in terms of allocation and quantification, describing the number of female and male workers in each pay quartile. It is also envisaged that employers with more than 250 workers, both male and female, will provide, by 7 June 2027 and every year thereafter, this information for the previous calendar year’, he points out.
‘The same obligations’ the expert explains ‘are envisaged for employers with between 150 and 249 employees, who will have to provide the information by 7 June 2027 and every three years thereafter, while employers with between 100 and 149 male and female employees will have until 7 June 2031 and every three years thereafter’.
So what will be the possible effects on labour legislation in our country? ‘Implementing the provisions of the Directive will undoubtedly require’ explains De Luca ‘some adjustments to pre-existing rules (providing for the timing and manner of making the required notifications to supervisory bodies such as, for example, the Italian National Labour Inspectorate or the relevant local offices). National collective bargaining,’ he adds, ‘will also be predictably affected, for instance by introducing specific notification or consultation mechanisms with trade union (corporate and non-company) stakeholders, as is already the case, for instance, with respect to employment and company performance data’.
According to De Luca, ‘in order to have an impact on the implementation of what is provided for, it is also to be expected that a control and/or sanctioning mechanism for breaches of the obligations provided for will be laid down in national legislation. With regard to this last aspect, as is also provided for in the recitals of the Directive, an important role will be reserved for the equality bodies, in terms of both monitoring and sanctioning powers. In this regard, the power to act in the name and on behalf of employees, which is already granted in some cases to equality bodies, would facilitate the effectiveness and economic viability of defending rights for those concerned,’ he emphasises.
And according to De Luca ‘the scope of the newly introduced legislation will add to the protections already in place and may even affect their scope. The first thing that comes to mind is the Italian Equal Opportunities Code [editor’s note, Italian Legislative Decree No. 198/2006], which already contains rules on equal pay. The new legislation will affect, and extend, the employer’s burdens in the event of complaints of pay discrimination behaviour’.
‘In this regard, it must be said’ he explains ‘that the Equal Opportunities Code already provides for a particular mechanism for sharing the burden of proof in the event of discriminatory behaviour, providing for a mitigated, rather than a “full” burden of proof on the complainant, in accordance with the general rules of civil proceedings, the burden of proving the lack of discrimination then resting on the employer. The guarantee regime of this burden, which is already significant, would be further extended, since the Directive expressly refers’, De Luca goes on to add, ‘to a true and proper reversal of the burden of proof” and the employer would in all likelihood also have to prove that he has correctly and promptly fulfilled all the relevant regulatory obligations’.
According to the expert, ‘it will be difficult, however, to think that any new items of damage will arise from the breach of the provisions implementing the legislation in question, since only the damage, in its various forms, that the injured party actually suffered will continue to be compensable. Finally, the arduous challenge posed by implementing legislation will be to answer a series of questions of no small “practical” impact: what will happen when there is no real benchmark? Let us consider the case of jobs assigned to one or only one employee. Will it be possible to use statistical data, or will it be necessary to refer to the real-time situation? What will the implementation of highly differentiated remuneration policies entail? How will employers be able to defend themselves against the risk (not least the certainty) of making their remuneration policies known to competitors? These are questions that will have to be considered in advance by the legislator so as to ensure that the impact of what seems to be a real small regulatory revolution on gender equality can be managed and safeguarded’, De Luca concludes.
Whistleblowing is being redefined . The Legislative Decree implementing the EU Directive 2019/1937 “on the protection of persons who report Union law violations” (the “Directive“) is almost ready. It will bring significant changes compared to the rules that came into force in 2012 (Law 6 November 2012, no. 190) in the public sector and at the end of 2017 (Law 30 November 2017, no. 179) in the private sector.
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On 23 October 2019, the European Parliament and the Council adopted the Directive laying down “common minimum standards” to ensure adequate protection of whistleblowers in the Member States’ legal systems. The aim is to give consistency to heterogeneous or fragmented national regulations and enhance the value of this tool.
On 23 April 2021, Law no. 53/2021 (the European Delegation Law) was published in the Official Gazette. This Law consists of 29 articles containing delegated provisions for transposing European directives and adapting national legislation to certain EU regulations.
With this Law, the Parliament delegated the Government to adopt a legislative decree to implement the Directive. In art. 23 of the delegated law, it is stated that the Government, in the exercise of the delegation, must observe the following principles and directive criteria:
This rule will affect national regulations. The impact of the new European regulation seems to concern its extension more than its content. In the matters covered by the Directive, the protection of whistleblowers does not differentiate between the public and private sectors, as in Law no. 179/2017.
Having said this, let us go into detail on the main innovations introduced by the Directive.
The Directive better defines the reporting person, i.e. the individual who reports or discloses information on violations acquired in their working framework.
This includes (i) self-employed persons working for a public or private sector entity, (ii) shareholders and members of the administrative, management or supervisory body of a company, including non-executive members, volunteers and paid and unpaid trainees, and (iii) any person working under the supervision and direction of contractors, subcontractors and suppliers.
The protective measures may be applied to colleagues or relatives of whistleblowers where there is a risk of retaliation at work due to the report.
The personal scope of application is broader than under Italian Law and, therefore, the list of protected whistleblowers should be reviewed in the light of the new European rules.
Unlike the current Law 179/2017, for the application of the protections provided in favour of the reporting person, it will not be necessary for the reports to be based on unlawful conduct, relevant under Legislative Decree no. 231/2001 and based on precise and concordant facts.
It will be sufficient that the reporting person had, at the time of reporting, reasonable grounds to believe that the information reported was accurate and that the report or public disclosure was necessary to bring to light a violation of public interest falling within the scope of the Decree. The reasons underlying the whistleblower’s report are considered irrelevant to their protection.
The Directive requires the establishment of internal reporting channels before reporting through external channels (i.e., reporting to the authorities designated by the Member States and relevant authorities at a European level), “where the breach can be effectively dealt with internally and the reporting person considers that there is no risk of retaliation.”
Companies with more than 50 employees, regardless of the nature of their activities, and legal entities in the public sector, including those owned or controlled by them, must have internal reporting channels. The exemption of small and medium-sized enterprises from this requirement does not apply to companies falling within the AML/CFT framework scope.
In addition, following an appropriate risk assessment, Member States may require companies with a smaller number of employees to establish internal reporting channels in some cases.
For public disclosures of wrongdoing, the Directive provides that the protection of the reporting person is triggered only if one of the following conditions is met:
The above-mentioned public disclosure (under certain conditions) is not reflected in Italian Law.
According to the Directive, Member States must ensure that the reporting person’s identity is not disclosed, without their explicit consent, to anyone other than the authorised personnel responsible for receiving or following up reports. This is without prejudice to specific exceptions. The same applies to any other information from which the reporting person’s identity can be deduced directly or indirectly.
Under the Directive, Member States must take the necessary measures to prohibit any form of retaliation against a whistleblower, including dismissal, change of job, reduction of salary or modification of working hours and imposition of disciplinary sanctions.
Data collection and processing shall be carried out under Regulation (EU) 2016/679 on the protection of personal data.
Personal data that is manifestly not useful for the processing of a specific report, according to the Directive, must not be collected or, if accidentally collected, must be deleted without delay.
According to the Directive, high sanctions should be applied to those who obstruct reporting persons. Sanctions should be imposed on those who publicly report or disclose information about violations that is knowingly false.
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All that remains is to wait for the publication in the Official Gazette of the Legislative Decree transposing the Directive.
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