Yet to be transposed into Portuguese law, the new European directive on salary transparency promises to give access to salary information, according to Executive Digest. Companies will face new obligations, while workers get new rights.

Member states are instructed to incorporate the rules into domestic legislation starting 7 June. The objectives of the new laws are to reduce wage inequalities between genders and reinforce the principle of equal pay for equal work through transparency and monitoring mechanisms.

Equal pay through transparency

The changes will be noticeable starting from the recruitment phase, where all companies are required to disclose the salary or salary range for the applicants’ position.

Concurrently, to prevent the perpetuation of inequalities, employers are no longer allowed to question candidates about their previous salaries. Internally, companies are also obliged to disclose information on pay levels amongst employees.

According to the objectives defined by the European Union, the measure seeks to reduce discrimination and ensure that employers and candidates can negotiate based on symmetrical information.

Salary disclosure requirements

With the new measures, companies must disclose information on wage disparities between genders performing equivalent job positions, including reports and data on the proportion of genders working in different pay brackets.

To guarantee anonymity and protection of personal data, companies will not be required to disclose individual salaries but will be required to give average or median pay values.

Another measure to reinforce the principle of internal transparency is the prohibition of contractual clauses that prevent workers from discussing their salaries.

Sanctions for wage disparities

Should reports reveal salary differences equal to or greater than 5 percent for the same job position, where differences are not justified by objective criteria, the company is required to conduct internal audits.

If the company fails to correct the discrepancies within half a year, this may result in sanctions, and employees are eligible for compensation claims.

Gradual implementation

The implementation of these new rules will be done gradually, determined by the size of the company. Organisations with 250 or more employees are required to submit annual payroll information starting June 7 next year, with data relating to this year.

Organisations with between 150 and 249 employees must do so every three years, starting on the same date next year. For organisations with between 100 and 149 employees, the quarterly obligation comes into effect in 2031. Depending on future decisions, organisations with fewer than 100 employees may also be included.

Portugal has yet to present any formal legislative proposal for the directives, which puts pressure on the Government and Parliament. Several parties have put forward their own legislative initiatives, with parties such as Chega, PCP, CDS and PAN already having general approval, with discussions underway in the committee.

The CDS has amended its proposal in plenary to include an explicit reference to the European directive, emphasising the importance of aligning the national legislation with European rules.