Equal pay: Swiss Parliament sets new obligations for companies

In 2016, the Federal Statistical Office found that the payslips of women were on average CHF 1,455 less per month than those of men. This creates a wage gap of more than 18%.

44% of this wage gap (i.e. around CHF 640) cannot be explained by any objective factor, such as professional qualification, training or experience, and therefore demonstrates a potential wage discrimination on the basis of gender.

The legislative amendment in a nutshell

Based on this observation, and in order to address this unexplained wage gap, the Swiss Parliament has, for the first time after many years of political discussions, agreed to legislate on the issue of equal pay for men and women in Switzerland.

The constitutional basis was already in place, since the principle of equal pay for men and women for work of equal value is guaranteed by article 8, paragraph 3, of the Swiss Federal Constitution.

The Swiss Parliament has therefore adopted the Federal Act on Gender Equality (“GEA”), which, in particular, allows a female worker who proves the existence of wage discrimination to claim payment from her employer of the difference between the salary she has actually received and the salary that should have been paid to her during the employment relationship.

Unjustified wage differentials can therefore lead to a claim for discrimination and employers need to be aware of their new obligations.

On Wednesday 1 July 2020, new provisions of the GEA and an implementing ordinance came into force in order to improve the implementation of equal pay.

Private and public employers with more than 100 employees (not including apprentices) will now have to create an internal equal pay analysis for the current year by the end of June 2021 at the latest.

The companies will then have this analysis verified by an independent body and, once this has been done, will communicate the result of this analysis to the workers.

It should be noted that the new provisions are, unusually, only valid for a limited period of time. Consequently, the amendment to the law and the ordinance that entered into force on 1 July 2020 will automatically cease to apply after 12 years, i.e. on 1 January 2032.

In concrete terms, what should employers who employed 100 or more workers in January 2020 pay attention to?

Internal analysis

1. Conduct an equal pay analysis, internally, within one year. Employers are therefore free to carry out the analysis between July 2020 and June 2021. However, the analysis must cover the period from 1 July 2020 to 30 June 2021.
2. Use a scientific and lawful method of analysis.
   
   In order to facilitate the analysis, the Confederation has provided all employers (free of charge) with a standard analysis tool “Logib”.
   
   If the equal pay analysis is carried out with a tool other than Logib, employers must prove that the analysis was carried out according to a scientific and lawful method. In particular, the analysis must include all workers and the wage elements of the workers, as well as all necessary data including personal and job-related characteristics.
3. Repeat this analysis every four years whilst the new provisions are valid, unless the first analysis does not revealed any inexplicable difference in wages between male and female workers.

Verification of the analysis

4. Engage an independent body to verify the internal analysis, using either an approved auditing company with specialist training (the criteria for which are laid down in the ordinance) or an organisation tasked with promoting equality between women and men or defending the interests of workers. The company must provide the auditor with all documents and information necessary for the verification of the analysis to be carried out properly.

Duty to provide information

5. Inform workers in writing of the result of the analysis no later than one year after the audit.
6. For listed companies, publish the result of the analysis in the annex to their annual report to inform their shareholders.
7. For public sector employers, publish the detailed results of the analysis and audit.

Results of the analysis

If internal analysis points to unexplained differences between the wages paid to women and men for equal work or work of equal value, this may constitute systematic wage discrimination on the basis of sex in contravention of the GEA.

It is noted, however, that the new provisions do not provide for direct sanctions against employers who do not comply with the requirement to analyse, verify and communicate.

This being the case, proof of compliance with equal pay measures is a guarantee of transparency vis-à-vis employees and third parties. There is no doubt that compliance by companies will generate a favourable reputational impact.

Moreover, if an employee were to individually claim wage discrimination within the meaning of the GEA before the courts, the employer would be able to certify that it has undertaken the analysis by producing the audit report.

What about our neighbours?

For several years now, the European Union has been encouraging its Member States to establish a legal framework to remedy unexplained pay inequalities between men and women by promulgating, in particular, Directive 2006/54/EC47 and Recommendation 2014/124/EU. Many European countries have adopted rules in this area.

For example, France and Belgium require companies employing more than 50 employees to carry out an analysis of their salary structure every year and every two years respectively. These analyses must be published. Since 2017, the United Kingdom requires companies with more than 250 employees to publish average wages on their own website and on a platform provided by the government.

If you have any questions regarding the legislative changes mentioned in this article or in the field of labour law, please contact us.

For more information please contact Olivier Cavadini at olivier.cavadini@crsblaw.com