I. Background

In December 2018, Parliament added a new section 4a to the Gender Equality Act (GEA), according to which employers must conduct equal pay analyses to check whether wage equality exists between their male and female employees.

Last week, the Federal Council enacted the implementing ordinance, thereby setting the deadline for completion of the first equal pay analysis.

II. Affected Companies

The obligation to carry out equal pay analyses applies to employers with 100 or more employees (regardless of whether they work full-time or part-time) at the beginning of a year. Apprentices are not included. In principle, the analysis must be repeated every four years, provided that the threshold of at least 100 employees is still met.

If, however, an analysis shows that equal pay is complied with within a company, such a company will be exempted from conducting an analysis in the future. In the public procurement sector, where such equal pay analyses already exist, the method used by the Federal Government assumes that equal pay exists if wages do not differ by more than 5%.

Furthermore, companies do not have to conduct analyses if their compliance with wage equality is examined in connection with the award of public contracts or the granting of subsidies.

III. Performing the Analysis

The equal pay analysis is to be carried out according to a «scientific and legally compliant method». For this purpose, the Federal Government provides, free of charge, the equal pay instrument Logib, which is already used in the context of public procurement. After various data (e.g. gender, education, experience, etc.) regarding all employees have been entered, Logib uses a regression analysis to calculate the level of wage equality in the company.

Employers are free to use any other method to conduct their equal pay analysis, but they must prove that the chosen method is scientifically sound and legally compliant.

IV. Reviewing the Analysis

The equal pay analysis must be reviewed by an independent body. The company may choose to have the analysis reviewed by:

• an auditing company that has a license in accordance with the Swiss Audit Supervision Act;
• an organization pursuant to Article 7 GEA (i.e. an organization which, according to its statutes, promotes gender equality or safeguards the interests of employees); or
• an employee representation pursuant to the Swiss Participation Act.

The commissioned auditing company only carries out a formal review of the equal pay analysis. Within one year after the analysis has been performed, it must submit a report to the management of the employer. Lead auditors who review equal pay analyses on behalf of employers will have to attend a special training course.

If the employer chooses to have the review conducted by an organization pursuant to Art. 7 GEA or by an employee representation, it must enter into an agreement with the relevant body on the procedure to be followed.

V. Duty to inform

Employers must inform their employees in writing of the result of the equal pay analysis no later than one year after completion of the review; listed companies must publish the result in the appendix to the financial report.

VI. Sanctions

There are no legal sanctions in case of violation of the provisions on equal pay analysis. However, given the intensity of the current public debate on gender equality and equal pay, failure to comply entails a significant reputational risk. In addition, the lack of an equal pay analysis could lead to procedural disadvantages in litigation related to discrimination.

VII. Deadlines

Employers must carry out their first equal pay analysis by June 30, 2021 at the latest. The analysis must then be reviewed by the end of June 2022 and the employees (as well as the shareholders, if applicable) must be informed of the results for the first time by the end of June 2023 at the latest.

No later than nine years after the new legal provisions come into force, the Federal Council will report to Parliament on their effectiveness. The obligation to conduct equal pay analyses is in any case limited to a period of twelve years.