The revised Swiss Gender Equality Act is set to take effect on 1 July 2020. The amendments will require employers to conduct an equal pay analysis and demonstrate compliance with the new rules.
What does equal pay mean?
The principle of equal pay emphasizes that women and men are entitled to equal pay for performing work of equal value. Equal‑pay provisions typically extend beyond mere base pay and encompass all aspects of the compensation and benefits packages afforded to employees. Although the principle of equality among men and women is firmly established in Swiss law, average differences in pay of nearly 20%* still exist in the Swiss private sector, of which cases around 40%* are estimated to be the result of discrimination. However, the use of regression analysis enables us to discern that many Swiss companies exhibit a gender pay gap of less than 5%, a figure that is far lower than the Switzerland‑wide average*. Additionally, discrepancies in certain cases can often be adequately explained by investigating the particular circumstances at hand.
What are the primary legal changes involved?
The revised Swiss Gender Equality Act featuring new regulations on equal pay is set to become law in July 2020. An overview of the pertinent amendments is provided below.
- Companies with 100 or more employees will be required to complete an equal‑pay analysis by the end of June 2021.
- The analysis must be audited by an independent approved third party by the end of June 2022.
- Any company found to have an unequal pay system in place must undergo this analysis every four years.
- The results of the analysis must be shared with employees and with shareholders if the company is listed.
What challenges does this present for companies?
The compilation of accurate data pertaining to the educational backgrounds, specific job responsibilities, and compensation packages of each and every one of a company’s employees poses a major challenge when it comes to properly conducting the aforementioned analysis. Companies are therefore tasked with allocating the resources necessary to ensure their ability to properly conduct equal‑pay analyses and to develop and implement solutions aimed at mitigating any identified gender‑based pay disparities. Additionally, companies should embark upon this process in a way that minimizes litigation risks as well as personnel‑related and reputational risks and properly accommodates the demands of the various stakeholders.
What should companies do right now?
- Initiate internal conversations in order to gain a firm understanding of what equal pay means for the company and discuss proposals to introduce an equal‑pay strategy.
- Gather the necessary data and start the equal‑pay analysis.
- Identify any gender‑based pay disparities and their magnitude and make any necessary corrections to salaries and policies.
- Establish long-term measures designed to address gender‑related as well as broader diversity & inclusion issues in a sustained fashion.
How can EY help?
Regardless of how far along this journey you are, EY can provide tailored services designed to assist you in effectively assessing the issue of equal pay at your company and in understanding the reasons behind any disparities and how to resolve them in an ideal manner. We possess the capabilities and the global footprint required to provide the full spectrum of services spanning the legal, data analytics, HR advisory, and diversity & inclusion fields. Additionally, our proven methodology and impressive credentials in the area of equal pay and total rewards undoubtedly serve to reinforce the strength of EY’s robust approach.
The approach pursued by EY also sheds light on the interrelatedness of influences from a wide range of different perspectives. Based on our experience, the analysis will reveal connections to broader HR topics and should therefore be viewed as a first step toward better understanding gender‑based pay discrepancies. For example, the addressing of pay gaps merely by increasing base pay without also ensuring nondiscriminatory recruiting and promotion processes can dilute or even entirely negate otherwise positive results.
By taking comprehensive and assertive action, companies can fully capitalize on the opportunity to adopt a sensible approach toward pursuing workplace diversity and toward increasing their appeal as employers.
* Source: Federal Statistical Office ESS 2016