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13 September 2019

Obligation to analyse wage equality comes into force on 1 July 2020

First equal pay analysis due at the end of June 2021

The mandate to achieve equal pay has been enshrined in the Swiss Federal Constitution since 1981. The Gender Equality Act (GEA), which aims to eliminate gender discrimination, has been in force since 1996. Nevertheless, in reality there is still an inexplicable gender pay gap. The legislature has therefore decided to amend the GEA in order to promote equal pay.

In future, employers will be obliged to carry out an internal equal pay analysis every four years. The aim is to uncover systematic wage discrimination based on gender. The obligation to analyse wages comes into force on 1 July 2020 and is valid for a period of 12 years (sunset clause), i.e. until 30 June 2032. The first equal pay analysis is due by the end of June 2021 at the latest.

Who is subject to the obligation to analyse wage equality?

Employers who employ 100 or more persons at the beginning of a year are obliged to carry out an equal pay analysis. The working hours of the employees is irrelevant; part-time employees and employees on an hourly wage are included. However, apprentices are not included. Note that for temporary employees, the temporary employment agency is the employer, not the hiring company. Accordingly, temporary employment agencies with at least 100 employees – even if they are hired out – are subject to the analysis obligation.

If the result of the analysis shows that equal pay is achieved, the employer in question is exempt from carrying out any further equal pay analysis. In addition, certain exceptions apply to employers who are already subject to controls on compliance with equal pay as part of public procurement or subsidy schemes.

What duties must be complied with?

Employers must carry out the analysis according to a scientific and legally compliant method. The federal government provides a free standard analysis tool ("Logib") to assist the employers with their analysis of the gender-specific wage situation.

Unlike other European countries (e.g. United Kingdom), there will be no reporting obligation to the state and no state inspection. Once the equal pay analysis is available, employers must have it reviewed by an independent body. The review will be carried out, at the employer's discretion, by an audit firm approved under the Audit Supervision Act. In this case, the audit firm conducts a formal review of the equal pay analysis and must prepare a report for the employer's management within one year of the analysis being completed.

Alternatively, the review may be carried out by an organisation which, in accordance with its statutes, promotes equality between women and men or protects the interests of employees and which has existed for at least two years, or by an employee representation body in accordance with the Worker Information and Participation Act. In such a case, the employer must conclude an agreement on the procedure for reviewing and reporting.

No later than one year after completion of the review, the employer must inform its employees in writing of the result of the equal pay analysis. Companies listed on a stock exchange are obliged to publish the result of the analysis in the notes to their annual report and accounts.

However, no sanctions or mandatory measures are provided for in the event of a breach of the obligation to analyse wage equality or if a gender-specific pay gap is established.

Businesses should start preparing now

Although employers still have 9 months before the new law comes into force and more than 1.5 years before the deadline for the first equal pay analysis expires, employers should start making the necessary preparations promptly. Affected employers must first ensure that the necessary processes for collecting, processing and analysing the required data are in place. For example, data on the training and professional experience, etc., of the workforce must be collected and linked to data on their remuneration (i.e. basic salary, variable parts of the salary, ex gratia bonuses, allowances, benefits in kind, etc.) in order to be fed into equal pay analysis. Compiling the required data can be time-consuming and costly. Employers should therefore plan with sufficient lead time.

In addition, employers should proactively address the problem of pay discrimination by voluntarily carrying out an equal pay analysis before the legal obligation comes into force. Employers may have a considerable interest in knowing what their data might indicate before they have to disclose the results of the analysis internally or, in the case of listed companies, publish them in their annual report.

It is certainly worthwhile identifying as soon as possible any existing systematic pay gaps based on gender and to take appropriate measures to eliminate inexplicable wage differentials. This can reduce the risk of damage to reputation and any procedural disadvantages in the event of discrimination claims. First and foremost, however, this should be a further step towards achieving 'equal pay for equal work'. Companies could use this to their advantage in recruitment, by showing that they are also an attractive employer for female professionals.

Our employment law team will be happy to answer any questions you may have.

Author: Anela Lucic

Topics: Employment LawDiscriminationGender EqualityEmployerEqual Pay

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