E.U. takes next step to require companies disclose gender pay gap to public

European companies will have to come clean on gender pay gaps under new rules that would also ban them from asking prospective employees about salaries earned in previous jobs.

The European Parliament on Thursday voted to support a new directive that would oblige firms with at least 100 staff to disclose information that will make it easier to compare employee salaries.

"Not only do we finally have binding measures to tackle the gender pay gap, but also all citizens of the E.U. are empowered, recognised and protected against pay discrimination," Samira Rafaela, of the parliament's women's rights and gender equality committee, said in a statement.

As a next step, the E.U.'s members states must formally approve the new rules before they can come into force 20 days after their publication in the E.U. Official Journal, which is expected in May.

Thursday's votes follow an E.U. political agreement reached in June on a law that would require listed companies to move toward 40% female representation in nonexecutive director positions by 2026. Meanwhile, progress toward gender pay parity has slowed across the E.U., which means women in some countries could be waiting until at least the turn of the century for equal pay. Currently, women in the E.U. earn on average 13% less than their male colleagues on average, according to Eurostat.

While female employees are paid less in every E.U. member state, there are large variations between individual countries. Luxembourg has the smallest gap with 0.7%, while Latvian women receive on average 22.3% less than their male colleagues, the largest gap in the bloc.

Under the new rules, vacancy notices and job titles will have to be gender neutral and recruitment processes led in a nondiscriminatory manner throughout the bloc. Employers will also have to provide information about the initial pay level or its range in the job vacancy notice or before the job interview.

The rights of nonbinary people, and protection against discrimination, have also been included in the new rules, a first for European legislation.

Companies will have to send information on the gender pay gap to the national authority and can also publish it on their website. If pay reporting shows a gender pay gap of at least 5%, employers will have to conduct a joint pay assessment in cooperation with their workers' representatives. Member states will have to put in place penalties, such as fines, for firms that infringe the rules.