The culture of secrecy with respect to pay traditionally found in workplaces may soon experience a shift, as global lawmakers and governments have enacted or moved toward enacting legislation to mandate greater pay transparency.

The trend is highlighted by the European Union Pay Transparency Directive, which must be implemented by EU member states by June 7, 2026.

The directive aims to strengthen equal pay for equal work (or work of equal value) by establishing new requirements for companies to be transparent in setting pay and reporting gender-disaggregated pay data.

Australia and several Canadian provinces have taken analogous measures and the United Kingdom seems to be heading in a similar direction.

Will Bermuda join in this wave of change?

The directive mandates that during recruitment, employers must disclose salary or salary ranges before the interview stage and that questions about candidates’ previous/current pay are not permitted.

Additionally, during the course of employment:

• Information regarding average pay levels of comparable employees broken down by gender must be provided

• Categories of employees carrying out the same work or work of equal value must be established

• Objective and gender-neutral criteria used to determine pay (salary and bonus) and career progression must be disclosed

• Pay secrecy clauses are banned

Under the directive, companies are required to report on remuneration structure and gender-based pay differences annually, with the frequency of reporting dependent on the size of the company.

If a reported pay gap between genders exceeds 5 per cent and cannot be justified on the basis of objective gender-neutral criteria, the company must correct it within six months or conduct a joint pay assessment in collaboration with employees.

This assessment must include a review of pay structures and policies, an analysis of gender-based pay differences and remedies and preventative measures to eliminate the difference in pay within a reasonable amount of time.

The directive’s measures will be applicable to both public and private-sector employers and employees.

In drafting compliant legislation, EU member states will need to provide employees with the opportunity to claim and obtain full compensation for loss and damages sustained, including full back pay and related bonus or other payments. The directive also contemplates sanctions for discriminatory employers.

Various EU member states have already implemented the directive and several of them have chosen to implement more stringent requirements than those prescribed by law. Significantly, some of the EU member states already had significant pay transparency provisions in place before the directive came into force.

Although Bermuda is not obliged to implement the directive, the sea change with respect to pay transparency has not bypassed it.

Last December, Jason Hayward, the Minister of Economy and Labour, publicly stated that pay transparency was part of the Government’s commitment to protecting Bermudian workers and that the Government has developed a policy that was under review by the Labour Advisory Council to advance pay transparency provisions.

Mr Hayward did not indicate whether, like the directive, the policy would focus on gender pay disparities, or whether it would be broader, including provisions with respect to other pay disparities, such as those related to race or ethnicity.

While employers and employees in Bermuda await the details of any domestic reform with respect to pay transparency, they are bound to be influenced by the directive and the resulting legislation in EU member states, as well as elsewhere around the world. This is especially likely to be the case with respect to multinational employers.

It is therefore advisable for employers to start thinking about some of the following:

• Developing the infrastructure to extract and analyse pay data

• Informing senior management about potential reporting requirements so they can incorporate them into planning and pay decisions

• Categorising workers for the purpose of “work of equal value”

• Managing the impact of increased transparency on workplace culture

• Reviewing HR practices and employment documentation, including contracts and handbooks

• Mitigating risk of litigation resulting from employees having information that could give rise to discrimination claims.

In light of the above considerations, the apparent shift towards pay transparency will no doubt be challenging for some employers. Fortunately, they will likely have both time and the experience of other jurisdictions to guide them in their endeavour.

• Anna Markiewicz is counsel at Appleby who practises employment and immigration law. She has substantial experience in assisting employers to manage new legislative and regulatory requirements. She also advocates for clients in the resolution of commercial and regulatory disputes, including in litigation, arbitration and regulatory proceedings. A copy of this column can be obtained on the Appleby website at www.applebyglobal.com. This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer