Worldwide: Equal Pay Audits: For Multinational Businesses, It's Not Just About Gender

Last Updated: November 23 2017
Article by Brian S. Cousin

According to the United States Bureau of Labor Statistics, in 2015, women working full-time in the US had median weekly earnings that were only 81 percent of those of male full-time workers. Similarly, in the UK in 2016, women were paid roughly 18 percent less than their male counterparts, according to the Office for National Statistics. Indeed, equal pay for women has become a global issue, attracting attention from national and local governments around the world as well as from leading multinational companies.

Acknowledging the persistent wage gap between men and women, many multinational companies, including behemoths like Apple, Gap, Google, Salesforce and SpaceX, have committed to conducting internal pay audits as a first step toward combating gender pay inequality. Last year, Salesforce announced the results of its own internal pay audit for 17,000 global employees. According to Fortune.com, Salesforce spent US$3 million to make salary adjustments for approximately six percent of workers to eliminate discrepancies. Google, in an effort to address the wage gap, sets an incoming employee's salary based on the market rate of the job rather than the person's prior salary. Because it offers salaries based on market rates, Google found that, on average, women receive larger pay increases than men when they join the company.

Numerous governments around the world have also joined the movement to address equal pay for women. In the US, the Equal Employment Opportunity Commission (EEOC) announced plans to collect detailed pay information from US employers. Australia, Austria, Canada, Denmark, Finland, France, Italy, Norway, Sweden and the UK have all passed legislation requiring private sector employers to report on the gender pay gap. Specifically, these countries place a duty on private companies to report on gender pay differences. All except Norway and the UK require companies to make these reports available internally to employees and/or employee representatives. France and the UK even require the report to be published on the company's website.

However, in a world that includes nearly 80,000 multinational companies, the gender pay gap is not the only discrepancy attracting government attention. Numerous legislatures are expanding the focus of the equal pay for equal work movement to include protections against other types of discrimination, such as nationality. For example, at least seven states in the US have passed legislation requiring employers to show that a disparity in wages among workers generally (not just between men and women) is warranted by business needs. These state laws go further than the US Equal Pay Act, which only protects against pay disparities based on gender.

As a result, multinationals must take heed of more than just the various gender equity pay laws at play in the countries in which they do business. They must also be cognizant of the growing number of pay-related discrimination laws aimed at protecting employees on the basis of other factors, like nationality.

In Brazil, for example, equal pay for equal work laws provide that all employees are to be protected, irrespective of age, sex, nationality or other protected status. The Brazilian Federal Constitution lists, as a fundamental right, the equality of all persons before the law, and prohibits any difference in wages based on an individual's sex, age or race. The Brazilian Labor Code states that, when employees' functions are identical, provide equal value and are provided to the same employer in the same locality, the employees shall be compensated with equal salaries, regardless of sex, nationality or age.

Bahrain has adopted a local citizenship law that protects local employees from pay-specific discrimination. Under Bahrain's labor law, "wages and remuneration" of "foreign workers" cannot exceed pay for local "citizens" with "equal skills" and "qualifications" unless necessary for "recruitment."

As legislation protecting against nationality-based pay discrimination becomes more popular, the mantra of "equal pay, equal work" is slowly expanding to include pay equality for all employees, irrespective of both gender and nationality. Multinationals are in a unique position as they must not only be careful to abide by a country's pay discrimination laws, but also must be wary of discriminating against workers in different countries who perform the same functions for the company. As part of a culture of fairness within their organizations, multinational corporations should carefully examine the causes of pay differences for the same jobs performed in different locations (after controlling for local market differences, cost of living adjustments and local currencies)*.

In this edition, we feature articles from China, Germany, Italy, Spain, Turkey, the United Kingdom and the United States. Please let us know what you think of the articles and if you have suggestions for how we can improve our content. As always, we thank you for your readership and look forward to your comments and suggestions.

*Special thanks to my colleague Christina Dumitrescu for her assistance in drafting this note.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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