Swiss Require Equal Pay Audits with Third Party Verification

Switzerland recently took a major step forward in ensuring pay equity for Swiss workers. Effective July 1, 2020, amendments to the Swiss Gender Equality Act require businesses with 100 or more employees (including part-time) to 1) conduct an internal gender pay gap analysis (also known as a proactive pay equity audit) every four years through 2032, 2) verify the results of the audit with a third party, and 3) publish the result of the audit to workers, shareholders, or the public (depending on whether the employer is private, publicly traded, or in the public sector). The first pay equity audit must be completed by June 1, 2021.

How must the analysis be conducted? Switzerland has adopted a standard analysis model. The standard analysis model is made up of two parts: one is a statistical method known as semi-logarithmic OLS regression analysis based on the median, and the other consists of a series of individual qualification characteristics (e.g., education, years of service) and job-related factors, such as relevant skills or training. Holding all other variables constant, this model can determine which part of the pay difference can be explained by legitimate, job-related factors, as opposed to unlawful discrimination. Starting July 1, 2020, the Swiss government offers a free analytical tool—“Logib”—that affected companies can use to conduct the audit.

However, conducting the audit is only the first step toward compliance with the new Swiss requirements. According to the law firm Proskauer Rose LLP, after the audit is complete, employers must submit the results of the audit for certification by a third party authorized by the Swiss government. Generally, such auditors undergo training set by the Swiss government. This training must ensure that minimum quality standards are observed in carrying out the certification and that all employers subject to the duty to conduct a pay equity audit are treated equally as a matter of principle. Depending on the results of the equal pay audit verification, Swiss businesses may avoid having to conduct the audit multiple times.

Finally, employers covered by the Swiss gender equality amendments must publish the results of their pay equity audits within one year of certification. For private entities, this requires giving written notice to employees of the results of the audit. For publicly traded companies, audit results must be included in annual financial reports, such as those to shareholders. For employers in the public sector, pay equity audit results must be published publicly. Proskauer Rose attorneys further note that, while there are no penalties for failing to conduct a pay equity audit or failing to achieve pay equity, “employees who file suit against their employers alleging a breach of equal pay legislation will be permitted to use the results of their employer’s analysis as evidence to support their claim.” This means that litigation against Swiss companies is a large part of the government’s enforcement strategy.

If your business operates in Switzerland, or even if your business operates elsewhere, such as the United States, the Swiss gender equality amendments are part of a trend which could reach the U.S. shores. All the more reason to consider a pay equity audit. A pay equity audit is a diagnosis of compensation risk areas based on a deep dive into payroll, HR, time/attendance and other data sources. Experts across the human capital, legal services, and business intelligence industries recommend a pay equity audit as a critical tool in an employer’s risk management tool belt. A pay equity audit provides actionable intelligence to address such risk before a government agency gets involved.

Not sure how to get started? Let Trusaic provide your organization with a free Pay Gap Analysis, which can be conducted confidentially.

Here is what you will get:

  • 1-hour consultation to our pay equity team comprised of regulatory compliance experts and data scientists;
  • Answers to your pay equity questions;
  • A pay gap analysis of your workforce.

To learn more about achieving pay equity, and to receive a free pay gap risk assessment, click here.

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Swiss Require Equal Pay Audits with Third Party Verification
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Swiss Require Equal Pay Audits with Third Party Verification
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Switzerland joins Iceland in requiring businesses to conduct equal pay audits and have the results verified by a third party.
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Trusaic
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