EU gender pay gap measures to strengthen pay transparency in Luxembourg

A new EU pay transparency directive (‘the directive’) must be transposed into the law of Luxembourg and other EU member states by 7 June 2026, at the latest. However, its provisions can be implemented earlier, and it is therefore already necessary to anticipate and consider together the legal and practical modifications and adaptations required to comply as soon as possible.

The directive aims to strengthen the application of the principle of equal pay between women and men for the same work or work of equal value, with a focus on remuneration transparency and effective enforcement mechanisms. Its provisions will apply to all employers and workers, both in the private and public sectors, whether under a permanent or temporary contract.

Employers and recruiters will have to ensure that their job offers include sufficiently precise and detailed salary ranges, abandoning the often-used "depending on profile" wording. This seems to be a satisfactory advancement, as a job offer that mentions the salary is more attractive in practice.

To ensure the best pay equity, HR services must also rethink their methods, as certain HR practices and trends will need to move towards greater equity among employees, regardless of their gender, origin, or age.

Why is the directive necessary?

In 2023, according to the European Commission, women earned on average 13% less than men for equivalent work. This observation is repeated every year. In 2024, it is slightly less than in 2023, but there are still nearly two months of unpaid work to be addressed to compensate for the pay inequalities between women and men.

The directive therefore aims to continue international commitments, notably Article 11 of the 1979 United Nations Convention on the Elimination of All Forms of Discrimination Against Women, which calls for appropriate measures to ensure equal pay and treatment for work of equal value.

In 2021, for the first time, Luxembourg’s gender pay gap between men and women fell below 0%, specifically to -0.2% in favour of women – meaning that the average salary of women was higher than the men’s. In 2022, this gap continued to widen in favour of women, reaching -0.7%. However, this indicator has limitations, among others the fact that it only compares average salaries and not salaries for equal work, and that it only takes into account hourly wages, while annual salary gaps remain in favour of men.

The directive will therefore tackle continuing pay inequality, right from the hiring process

What are the main provisions of the directive?

Pay transparency

• Salary information during recruitment: employers must provide details on the expected salary range for a job position before hiring, thus ensuring transparency from the beginning of the recruitment process. Such transparency will, in practice, allow for greater salary negotiation power for the female candidate, as women generally request lower salaries than men.
• Prohibition of asking for salary history: employers cannot ask for information on candidates' previous salaries to avoid perpetuating pay inequalities.
• Right to information for workers: employees have the right to request information on pay levels, both individual and average, broken down by gender, for categories of workers performing the same work or work of equal value.

New obligations for employers

• Reports on pay gaps: companies with more than 100 employees are required to publish detailed information on pay differences between genders, including variable elements such as bonuses and incentives. The Luxembourg Labour Code also provides a semi-annual information obligation to the staff delegation and the equality delegate on statistics broken down by gender on recruitment, promotions, transfers, dismissals, pay, and training of company employees.
• Joint pay evaluation: if an unjustified pay gap of more than 5% is found, a joint pay evaluation must be carried out in collaboration with worker representatives to identify and correct inequalities.
• Reversal of burden of proof: if a worker believes they are a victim of pay discrimination and they establish facts that suggest the existence of direct or indirect discrimination, the burden of proof is reversed: it is therefore up to the employer to prove the absence of direct or indirect discrimination.
• Adjustment of collective agreements: collective agreements and salary progression policies must include a detailed analysis of variables such as bonuses or payments in kind. This transparency extends to pensions and other social benefits. The Directive also requires the documentation of each comparable situation between employees, allowing for the quick identification of any direct discrimination.

This may seem innovative since, in Luxembourg, it is up to the employee who claims a violation of the principle of "equal pay for equal work" to present to the judge facts that may indicate a pay inequality. This is based on article L.244-3 of the Luxembourg Labour Code, which regulates the burden of proof in cases of gender-based discrimination.

The courts in Luxembourg have held that: "it is up to the worker who considers themselves a victim of discrimination to prove that they receive a lower salary than the one paid by the employer to their colleague of the opposite sex and that they actually perform the same work or work of equal value, comparable to that performed by their reference colleague."

The French Court of Cassation, for its part, goes further in the principle of transparency and the burden of proof, ruling in March 2023 that the principle of equal pay justifies the communication of other employees' pay slips, even if this infringes on their personal lives, when it is essential for the exercise of the right to proof.

The French Court of Cassation validated the decision of the lower court judges, considering that "in light of these findings and statements," it had "highlighted that this communication of elements infringing on the personal lives of other employees was essential for the exercise of the right to proof and proportionate to the pursued goal, which is the defense of the legitimate interest of the employee in equal treatment between men and women in employment and work.

To justify its position, the French Court of Cassation relied on several grounds:

• the General Data Protection Regulation (GDPR) which, in its introduction, states that the right to the protection of personal data is not an absolute right and must be considered in relation to its function in society and balanced with other fundamental rights, in accordance with the principle of proportionality, particularly the right to an effective remedy and to access an impartial tribunal;
• article 145 of the French Code of Civil Procedure (CPC), which states that if there is a legitimate reason to preserve or establish before any trial the proof of facts on which the solution of a dispute may depend, legally admissible investigative measures may be ordered at the request of any interested party; and
• articles 6 and 8 of the Convention for the Protection of Human Rights and Fundamental Freedoms, article 9 of the Civil Code and article 9 of the Code of Civil Procedure, which state that the right to proof can justify the production of elements infringing on personal life, provided that this production is essential for the exercise of this right and that the infringement is proportionate to the pursued goal.

The French Court of Cassation thus approved a ruling by the lower courts that ordered the employer to provide an employee with the pay slips of other employees holding positions of comparable level to theirs, with personal data redacted except for names, first names, job classification, and remuneration. This decision was made after noting that this communication of elements infringing on the personal lives of other employees was essential for the exercise of the right to proof and proportionate to the pursued goal, which is the defence of the legitimate interest of the employee in equal treatment between men and women in employment and work.

Enforcement mechanisms and sanctions

The directive provides for a right to compensation for workers who suffer from pay discrimination are entitled to compensation, including full reimbursement of back pay and bonuses. Again, the burden of proof is reversed in favour of the worker: if a worker believes they have been harmed by a failure to apply the principle of equal pay and establishes facts that suggest the existence of direct or indirect discrimination, it will now be up to the employer to prove that there has been no pay discrimination.

Member states must implement effective, proportionate, and dissuasive sanctions, such as fines, against employers who do not comply with the directive's requirements.  A pay inequality between a man and a woman, for the same work or work of equal value, is considered an offense for which the employer is guilty if they do not justify the pay difference with objective criteria such as a difference in professional knowledge. The legislator has provided for a criminal fine between 251 and 25,000 euros for the employer who does not comply with this obligation.

Establishment of two bodies by the Luxembourg legislator

• The Gender Equality Observatory, which would be responsible for supporting actors and professionals working in the field of gender equality at work by providing objective data and information on the matter and monitoring developments in gender equality, and;
• The Higher Council for Gender Equality, which would be responsible for studying and advising on all issues related to gender equality that may be submitted to it.

The Luxembourg legislator has not established a Gender Equality Index. Such a mechanism, introduced in France by the law of 5 September 5 2018, imposes a result obligation on companies. It measures where companies stand in terms of professional equality by aggregating several indicators.