The law of 5 September 2018 introduced new measures in favour of equal pay for women and men. Article L.1142-7 of the French Labour Code now requires that “the employer take into account the goal of eliminating the pay gaps between women and men.”
These new provisions will be mandatory starting from 1 January 2019.

The principle

As stated by the text cited above, the employer must take into account the goal of eliminating the pay gaps between women and men. Companies with more than 250 employees are required to comply with it by 1 January 2019, and companies with 50 to 250 employees have until 1 January 2020. The law does not specify any compulsory policy for companies with fewer than 50 employees, but they are required to adhere to the rule of equality of pay for women and men.

The employer is required to publish indicators showing the pay gaps. The Ministry of Labour has defined a special methodology for assigning an overall grade to the company.

The methodology

The company is required to compose and publish an index on the basis of five indicators:
1. Pay gaps for comparable positions and ages (consideration of the average pay levels including fixed and variable pay);
2. Chances of receiving a raise: as many women as men need to have received pay raises, within 2% or for two people.
3. Chances of receiving a promotion: as many women as men need to have been promoted, within 2% or for two people.
4. Percentage of female employees given a raise upon return from maternity or adoption leave (mandatory since 2006);
5. Have at least four women among the ten highest paid employees in the company.

The scales the company uses to calculate its score:
1. Pay gaps: score from 0 to 40 points
2. Gaps in distribution of individual pay raises: score from 0 to 20 points
3. Gaps in distribution of promotions: score from 0 to 15 points
4. Percentage of female employees given a raise after maternity or adoption leave: score from 0 to 10 points
5. Number of women among the ten highest paid employees: score from 0 to 10 points
Total of the index: 100 points

Note that for companies with fewer than 250 employees, criteria 2 and 3 are merged.

The corrective measures

If the company does not attain the score of 75/100, it will be required to:
– reduce the pay gaps;
– apply the law on pay raises upon return from maternity or adoption leave;
– give individual pay raises and promotions;
– ensure a balanced representation of both sexes among the highest paid staff.

The company calculates its index on the basis of the results of each indicator every year by comparison with the prior year. At the end of the first three years (2019, 2020 and 2021 for companies with more than 250 employees), the companies will be required to have a score greater than 75/100 to avoid penalties.

Penalties

The company has three years to come into compliance. If it does not, a financial penalty may be imposed on the defaulting company. The maximum penalty is one per cent (1%) of payroll.
It is to be noted that if the company shows clear efforts to reach the goal, it may be given an additional one year to come into compliance.

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