New rules for equal pay analysis as of 1 July 2020
About half of all employees in Switzerland (46%) work for companies that are – as of today – under a duty to:
- perform an equal pay analysis by the end of June 2021;
- have the analysis reviewed by an independent body by the end of June 2022;
- communicate the results to its employees in writing; and
- publish the results in the yearly report to the shareholders in case the company is listed on a stock exchange.
Any company found to have a gender-unequal pay system in place will have to carry out an equal pay analysis every four years. Companies with no gender-relevant pay gap will be free from further obligations.
What does it mean in practice?
The amended legislation and corresponding regulations contain detailed descriptions of the methods to be used to perform the analysis, the quality of the data and the relevant professional expertise of the revisors. They do not, however, provide any guidelines as to what to do with the results. What are the consequences if an equal pay analysis shows inequality in the way a company pays male vs. female employees?
Furthermore, the new law does not foresee any sanctions for non-compliant employers. What happens if companies do not fulfil their obligations to conduct an equal pay analysis? Do employees have an individual right to demand that one be conducted? Will employees be able to claim compensation of salary inequalities based on the equal pay analysis? Is it permissible to make adverse inferences in a labor law dispute concerning alleged unequal pay based on the absence of an analysis?
The legislators have left these questions deliberately unanswered. It will be up to employers and employees, legal practitioners and courts to interpret and shape the meaning of this new tool.
The new legislation was enacted to address the glaring gender pay gap of 19.6% in the private sector and 16.7% in the public sector. Around 43% of this pay gap in the private sector, and 35% in the public sector, cannot be explained by objective reasons such as age, education or economic branch.
The gender pay gap has persisted despite the principle of equal pay for equal work having been anchored in the Swiss Constitution since 1981 and the Gender Equality Act having been in force for some 25 years. From a conceptual viewpoint, the equal pay analysis is therefore meant to not only raise awareness but to effect real change in the salary grid.
Recent cases, such as the one brought by Dr. Urwyler against the University Hospital Berne, show that legal action based on gender pay discrimination by employers is gaining traction. Employees are starting to seek financial compensation for violation of their rights. The equal pay analysis may serve as a tool to overcome some of the legal hurdles and enable individual employees or groups to claim compensation for unexplained salary disparities. The financial impact of such claims for the companies involved may be significant.
Employers are therefore well advised to embrace the new rules, conduct the equal pay analysis and implement measures as necessary to ensure they are providing fair workplace conditions to all employees.