In response to the EU Pay Transparency Directive, which requires employers operating in European Union member states to report on pay data, Trusaic will be evaluating the state of each country in the EU’s current gender pay gaps and the path toward compliance.
While some European Union countries have relatively minuscule gender pay gaps to address, Austria is among the group where the most progress is needed.
Austria’s gender wage gap was at 18.8% in 2021 and has mostly held steady since then. The country is well above the 12.7% average gender pay gap in the EU.
The impetus for the EU Pay Transparency Directive is to increase the accountability and transparency of employers when it comes to compensation. Austria has an existing pay transparency law that went into effect in 2011. The law initially required employers with more than 1,000 employees to provide their employees a pay report every two years. The law was progressively broadened, and now organizations with at least 150 employees are required to comply with the legislation.
To comply with the EU Directive, Austrian organizations with 250 or more employees will have to adapt to much more stringent requirements by 2026. By 2031, all smaller employers (100 or more employees) will have to comply with the legislation.
Quick Action Items for Austrian Employers
Austria’s existing pay transparency legislation will have to be adapted to fit the EU Directive criteria. And, overall, employers will have to go much further to address all the components of the law once implemented.
Applicable Austrian employers will have to comply with the following:
- Providing sufficient salary range information to job candidates.
- Not asking job candidates about their salary history.
- Yearly pay gap reporting and acting when it exceeds 5%.
- Accounting for intersectional discrimination in pay practices and considering needs of workers with disabilities.
As we’ve previously noted, the EU Directive deliberately uses the wider term of “worker” versus “employee” to account for contractors.
Austrian employers should proactively evaluate their current pay practices and overall compensation philosophy. Employers can lean on pay equity software solutions to expedite this process and determine root causes of potential pay disparities.
Austrian Employers’ Current Requirements
EU countries have until June 2026 to adopt the EU Pay Transparency Directive into law, which primarily introduces gender pay gap reporting measures.
Austria’s “Supports Equal Treatment Act” amended in 2013, requires employers to:
- Develop gender pay differences
- Do a pay gap significance test
- Do an equal pay risk assessment
- Provide comprehensive pay gap analysis
- Provide a wage distribution analysis
The Austrian Senates of the Equal Treatment Commission, when requested to do so, investigate whether the principle of equal treatment has been violated. They may also investigate on their own authority.
Austria employers are still waiting for the government to implement the new EU directive into law, which will provide a clearer picture of associated requirements and potential penalties for non-compliance.
In addition to the equal pay legislation, Austrian employers with 150 or more employees adhere to a pay transparency law. The legislation requires applicable employers to provide their employees with a pay data report every two years.
The report must at least give the number of men and women in each remuneration group and their mean and median wages. Employees are not allowed to communicate the results with third parties. Austrian employers can sue employees for a breach in confidentiality. This will be a drastic shift for Austrian employers under the EU Directive, as they will have to be fully transparent about pay and justify pay gaps.
An analysis of the Austrian pay transparency law found no evidence that it reduced the gender pay gap. Empirical evidence, however, suggests pay transparency laws do reduce gender pay gaps. Other countries, such as Canada and Denmark, saw wage gaps decrease from the time legislation was implemented.
Suffice to say, Austria’s existing approach to pay equity is ripe for disruption, and the EU Directive will offer a prudent path forward.
Complying with the EU Directive
For many employers in Austria, they will have until June 2026 to comply with the following:
- Provide information about the pay level of their job listings prior to job interviews.
- Provide workers information on their individual and average pay levels, categorized by gender, for workers doing the same work or work of equal value.
- In cases of alleged pay discrimination, the burden of proof is on the employer.
- For the first time, intersectional discrimination is defined in EU legislation. Employers must also consider the needs of workers with disabilities.
In addition to the quick action items above, Austrian employers should reevaluate recruitment processes to comply with salary range and salary history ban requirements. One way to achieve this is to create equitable, explainable, and competitive salary ranges. For example, is the base salary competitive and commensurate with employee skills?
Other items include:
- Pay explainability. Prepare to explain how you differentiate and define performance in setting base salaries. Pay transparency legislation means workers must be given access to criteria used to define salary and pay raises.
- Analyze pay gaps. Identify the causes where pay disparities exceed 5%. If there is no objective justification, we recommend addressing any anomalies to remove those unexplained gaps.
- Intersectional pay equity audit. Intersectionality is essential to close the gender pay gap. It recognizes that individuals can experience discrimination and inequality based on the intersection of multiple identities, such as race, gender, disabilities, age, and more. As noted above, intersectional discrimination is defined in the EU Transparency Directive.
Trusaic is GDPR compliant and can assist any organization in any EU state in meeting its obligations under both the EU Corporate Sustainability Reporting Directive and the EU Pay Transparency Directive.
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