What Italy's new equal pay legislation means for Italian companies

On December 3, 2021 Italy signed a new equal pay law (Law 162/2021) that seeks to tackle the pay gap between men and women and encourage the participation of women in the labor market. The law introduces some important amendments to the Italian Equal Opportunity Code (Legislative Decree 198/2006), which prohibits all direct and indirect remuneration discrimination for the same job or a job considered as having the same status. The new law, focusing on transparency and rewards, is consistent with the Italian National Recovery and Resilience Plan (PNRR), which contains, among other things, a National Strategy for gender equality for the years 2021-2026.

Public and private companies with more than 50 employees must publish a report.

The key points of the new law are:

1 — New reporting obligations for companies with more than 50 employees

Public and private companies with more than 50 employees must publish a report, every two years, about male and female employment and remuneration. Companies with fewer than 50 employees can voluntarily prepare a report.

The reports must include data and information relating to

  • the numbers of male and female workers employed and hired during the year and their professional distribution in the organization as well the distribution of full-time and part-time contracts
  • differences in wages (both base salary and total compensation) and benefits
  • selection and recruitment processes
  • criteria adopted for career advancement, access to professional development and managerial training
  • measures to promote work-life balance
  • diversity and inclusion policies

The companies which submit incomplete or incorrect reports will incur sanctions ranging from a minimum of 1,000 to a maximum of 5,000 euros.

This reporting obligation was already included in the 2006 Equal Opportunity Code, but only for companies with more than 100 employees (instead of 50) and did not provide for sanctions. With the change, the area of interest of the legislation expands to 29,000 companies with more than 50 employees (ISTAT 2019).

The inter-ministerial decree signed on March 29, 2022, defines the procedures for the preparation of the biennial report about male and female personnel by public and private companies that have more than 50 employees. Companies must draw up the report exclusively electronically, via the portal of the Ministry of Labor and Social Policies, at Companies must submit the report no later than September 30, 2022 (only for the two-year period 2020-2021; for all subsequent two-year periods the deadline will be April 30 of the year following the expiry of each two-year period.)

2 — Gender equality certificate

Companies that prepare the equality report and meet certain gender criteria can apply for a “gender equality certificate.”

This new certification will recognize all those companies that take concrete steps to reduce the gender gap in relation to growth opportunities in the company, equal pay for equal jobs, policies for managing differences in gender and maternity protection.

The reference practice UNI / PdR 125: 2022, published on March 16, 2022, provides the first clarifications on the certification of gender equality, defining criteria, technical prescriptions and functional elements.

It identifies 6 areas of evaluation and outlines a series of specific KPIs (Key Performances Indicators) for each area to measure the degree of maturity of the organization regarding gender equality. Each area is characterized by a % weight which contributes to the measurement of the current level of gender equality at the organization and against which improvement over time is measured. These KPIs will be monitored annually and verified every two years, to show the improvements achieved thanks to the implementation of a variety of interventions or remediation plans.

Here are the areas of evaluation and their weights:

  • culture and strategy – 15%
  • governance – 15%
  • HR processes – 10%
  • opportunities for growth and inclusion of women in the company – 20%
  • gender pay equity – 20%
  • protection of parenthood and work-life balance – 20%

The KPIs are of a quantitative and qualitative nature. The quantitative KPIs are measured in terms of percentage change with respect to an internal company value or the average national reference value or the type of economic activity. The qualitative KPIs are measured in terms of presence or absence.

The system is applied starting from micro-organizations (1-9 employees) up to multinationals, with simplifications provided for the smaller organizations.

To access the certification, an organization needs to have an overall summary score of at least 60%.

We are awaiting the implementing decrees which will establish the minimum requirements for obtaining the certification, the methods of acquiring and monitoring data transmitted by employers and the bodies responsible for certification.

3 — Tax exemptions for companies in possession of the gender equality certificate

Starting from 2022, private companies that have obtained the gender equality certificate are provided with an exemption from the payment of social security contributions to be paid by the employer. The exemption will equal 1% of the amount to be paid, with a maximum limit of 50,000 euros per company per year. The public resources allocated by the Italian government will be 50 million euros per year.

Companies that fail to publish the biannual equality report are not eligible for the exemption.

4 — Award scores for virtuous companies in public bids for contracts

The law also recognizes "an award score" for private companies that, as of December 31 of the year preceding the reference year, have obtained the certification of gender equality. This will boost companies' scores for the participation in public bids for contracts launched by public administrations and for European, national and regional funding.

5 — Direct and indirect discrimination

The new law expands the definitions of direct and indirect discrimination. It now includes as potential subjects of direct discrimination not only employees but also candidates in the recruiting phase. It also expands the definition of indirect discrimination to include changes to employment conditions and working time arrangements that disadvantage employees or restrict their opportunities to participate in company life or to progress in their career on grounds of their pregnancy, parental or caring responsibilities, gender or age.

6 — Improved gender balance on boards of unlisted public companies

With the new law, at least 2/5 of the members of boards of unlisted companies controlled by public bodies must be from the under-represented gender. Previously, this requirement applied only to listed companies.

How does PayAnalytics help Italian employers meet the new requirements?

  • PayAnalytics is a global solution that is adaptable to all the main regulatory environments.
  • PayAnalytics fully supports the reporting requirements of the Italian equal pay legislation.
  • Our analytics can analyze differences and compare different job classes of equal value, by any pay component, broken down by gender.
  • The PayAnalytics software suggests salary changes to correct any discrepancies primarily attributable to the pay gap.
  • PayAnalytics goes beyond gender, providing analysis by any secondary demographic value, and their intersection.
  • We help companies around the world find and close all pay gaps and make it easy for them to meet their reporting requirements and regulations.

Do not hesitate to contact us for further inquiries or book a meeting to demonstrate the software. You can find more information on PayAnalytics on our website.

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