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Looking forward | Coming in March 2019: Gender Equality in Businesses

Published on : 09/01/2019 09 January Jan 01 2019
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Newsletter / Looking Foward

Starting this year, French companies with over 50 employees (headcount by French entity) will have a new reporting obligation in relation to gender equality in France. Using a 100 point scoring system based on 4 or 5 government-approved criteria employers will report on the comparative situation of men and women and identify any pay gaps within their organisation. Companies will have to publish their overall score on their website. A draft decree explaining the mechanisms for such reporting has been issued and the official version is expected to be published soon. Depending on their score, employers may have to define and implement corrective measures to eliminate any inequalities. Failing reaching the minimum requirement of 75 points within 3 years, companies face a penalty of up to 1% of total salaries paid by the French entity. Some companies will have to report as early as March 2019…

1. When will the reform come into effect?

Reporting obligation on gender pay gap will be effective on:
  • March 1st 2019 for companies employing over 1,000 employees (report results for 2018)
  • September 1st 2019 for companies employing over 250 employees (report results for 2018)
  • March 1st 2020 for companies employing between 50 and 250 employees (report results for 2019) 

2. What are the indicators used to identify potential gender pay gaps?

The French Government issued a scoring system based on 4 or 5 criteria (depending on the headcount) for companies to use to measure gender pay inequalities on a yearly basis. Each indicator is assigned a rating as follows, for a total score out of 100 points.
  1. salary gaps between men and women, based on the comparison between the average remuneration of women and men of comparable age and equivalent positions - 40 points
  2. difference between women’s and men’s rates of individual salary increases, which are not related to promotions - 20 points
  3. percentage of women who received a salary increase in the year following their return from maternity leave, provided that salary increases were granted during their absence - 15 points
  4. number of employees of the under-represented sex amongst the 10 highest salaries - 10 points
        And a fifth indicator for companies of over 250 employees:
  1. difference between women’s and men’s promotion rates - 15 points
Companies are required to obtain at least 75 points every year. This overall score will be published on the company’s website every year by March 1st at the latest. Detailed results for each indicators will also have to be submitted to staff representatives. 

3. Reporting period

These indicators have to be calculated each year based on data from the previous year. However, companies employing between 50 and 250 employees may decide to calculate the 2nd indicator over a multiannual reference period based on data from two or three previous years;
 
From a practical standpoint, it is expected that payroll software should be adapted to facilitate the automatic calculation of this score. 

4. What happens if a company does not reach the minimum score? 

If companies fail to reach 75 points, they will have to negotiate and implement adequate corrective measures and, if need be, financial measures to resolve unjustified discrepancies.
 
They will have 3 years to progress and reach the minimum standards, failing which they may be sanctioned. For now, no sanction will be enforced until:

  • March 1st 2022 for companies with over 250 employees;
  • March 1st 2023 for companies with 50 to 250 employees.

However, after these dates, companies that failed to reach satisfying level despite implementing remedial actions will face a penalty of up to 1% of its payroll (although the efforts made by the company in trying to improve gender equality may be taken into account to determine the exact amount of the penalty).
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