Gender Equality Index – Follow-Up on Compliance Requirements

The Gender Equality Index, created in France in September 2018, helps companies measure professional inequalities between women and men. 

By 1 March of each year, companies with at least 50 employees must calculate and publish the results of their Gender Equality Index. 

In practice, the index provides a score out of 100 points that is calculated by taking into account the following criteria, depending on the number of employees (more or less than 250):

• The gender salary gap; 
• The gender salary gap for individual increases;
• The number of female employees receiving a salary increase after returning from maternity leave;
• Parity among the 10 highest paid employees; and
• The promotion differences between men and women (for companies with at least 250 employees).

The results of the 2022 edition of the Gender Equality Index show an average score of 86 points, one point higher than the previous year. However, on 1 March 2022,¹ only 61% of the companies subject to the Gender Equality Index requirement had published their index.

Companies with a score below 75 must pay close attention to the steps which they need to take in order to improve their situation. If they fail to do so, such companies face the risk of financial penalties. A recently implemented decree dated 25 February 2022, (decree n°2022-243) sets out specific obligations for companies with a score below 85. Below is a global overview of the main actions to be implemented. 

Below 75 Points: Corrective Measures to be Implemented and Published

Companies with a score of less than 75 points fail to meet the criteria of gender equality and have three years to comply with gender equality requirements. If a company reaches the target of 75 points before the three-year deadline and then falls below it the following year, it benefits from a new period of three years to make itself compliant.²

In such cases, corrective measures must be determined using a process of mandatory negotiation on professional equality. In the absence of an applicable collective agreement, the employer may define these measures unilaterally after consulting the Social and Economic Committee.³ Such measures must be defined before 1 September 2022.

In practice, companies must implement the following actions in collaboration with their employee representatives (if any): 

• Define appropriate and relevant corrective measures: for example, the implementation of staggered salary adjustments; and
• Set improvement targets for each of the index criteria. 

In addition, for 2022, all actions set by collective agreement or unilateral decision must be published on the company’s website. Companies face the risk of a penalty if they fail to do so (see below). The publication should be visible and readable and should be mentioned on the same page as the results of the Gender Equality Index. Companies must circulate this information to their employees by all means (email, letter etc.) and cannot just publish the results on the company’s intranet. The results of the Gender Equality Index must remain available to anyone outside the company until the company reaches the 75-point threshold.⁴

Companies must also i) integrate all corrective measures into their Economic, Social, and Environmental Database (BDESE) and ii) send them to the Ministry of Labor.⁵

Between 75 and 85 Points: Implementation of Improvement Targets 

New for 2022: companies with a score between 75 and 85 points must define and set improvement targets for each gender equality criteria for which the maximum score has not been reached.

Such companies are also required to i) publish the contemplated action on their website, ii) send them to the Ministry of Labor, and iii) integrate them into the BDESE.

Risk of Financial Penalties

Companies failing to publish their Gender Equality Index, their corrective measures (companies with a score below 75), or their improvement targets (companies with a score below 85), may be sanctioned by a formal notice of compliance issued by the labor inspector. 

In practice, and given the new requirements implemented in 2022, it is likely that inspectors will pay particular attention to compliance with the Gender Equality Index during future inspections. 

If no corrective action is taken following a formal notice from the labor inspector, the French Administration (DREETS) may impose specific sanctions such as a financial penalty of up to 1% of the company’s wage bill for the month following the formal notice of compliance. 

In addition, if a company fails to be compliant at the end of the three-year period, DREETS can decide to impose a financial penalty of up to 1% of the company’s wage bill for the calendar year. 

Such sanctions are potentially very expensive, which is why companies should now take urgent steps to make sure that they are compliant with gender equality obligations.