“There are things that we don’t know we don’t know” ----- Donald Rumsfeld
Compensation programs many times are the first to be “globalized” as management is anxious to implement global executive rewards initiatives, commission plans, incentives, bonuses, and global stock option awards.
In the push to launch these programs, each country’s pay discrimination laws can easily get lost in the shuffle. These laws include not only U.S.-style “protected groups” but other “protected groups”. In addition “job category” discrimination, which is unknown in the US., is also included.
“Protected Group” Discrimination
Almost every country in the world has its own list of protected groups. In the U.S. the protected groups are: race, color, national origin, religion, sex, pregnancy, disability, age, genetic information and veteran status.
The list of protected groups gets more complicated overseas, because they differ so much by country. Here are some examples:
• Gender, religion and race are protected in most places
• Disability and sexual preference are increasingly protected
• “Gender identity” and “intersex status” are protected in Australia
• Part-time status is protected in the EU
• HIV-positive status is protected in South Africa and Honduras
• Caste is protected in India
• Political opinion, views and beliefs are protected in Argentina, Europe, El Salvador, Mexico and Panama
• Local citizenship
The local citizenship group is important as it impacts how U.S. expatriate packages are structured. Some countries, such as Bahrain and Brazil prohibit companies from paying foreigners/aliens more than locals with equal skills and qualifications. This includes expatriates.
“Job Category” Discrimination
This is the second of type pay discrimination.
Equal Pay for Equal Work: French law says that every employee has a legal right to be paid equally to co-workers in equivalent jobs—even if the employees concerned are in the same protected group.
Here’s an example: Two employees working in the same job have a legal right to the same pay, even if both are black, 50-year-old Buddhist men originally from Cambodia. To pay different wages or benefits to two employees working the same job is illegal. (No mention of whether variances for seniority or performance are allowed.)
Comparable Worth/Equal Value: Comparable worth/equal value laws require equalizing pay across separate job categories traditionally worked by one gender or the other. For example: An employer’s secretaries might argue that their jobs have comparable worth/equal value as the company’s truck drivers, and therefore deserve the same pay rate.
In the U.S., the Supreme Court rejected the comparable worth idea. Their view is that the free market determines comparable worth. And the free market principle says that market wage rates, by definition, reflect the “worth” or value a job. But in Australia, France and Finland, for example, comparable worth is alive and well.
Temporary/Part-time/Contingent Worker Status: Every EU country prohibits this type of pay discrimination. It means these workers cannot be paid lower wages or have fewer benefits than full-time employees. It also forces EU employers to credit part-time service as full-time for calculating years-of-service requirements. This is entirely different from the U.S. where it is common for companies to pay contingent workers less and provide fewer, if any, benefits than full-time employees.
Geographic Pay Equity Rule: In the Czech Republic employers must pay their employees in similar jobs equal pay rates regardless of where they live throughout the country. Czech employees that live in the countryside are happy because their cost-of-living is significantly lower than in Prague --- yet they receive the same pay.
In complying with pay discrimination laws internationally, Compensation professionals must be prepared to study discrimination issues much more thoroughly than those of the U.S. They would be well advised to develop a global pay audit checklist --- maybe a master checklist with addendums for different countries as needed.
Have any of our readers ever encountered problems with overseas pay discrimination laws?
Jacque Vilet, President of Vilet International, has over 20 years’ experience in Global Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expat twice during her career. Her true love is working with local national issues. Jacque has the following certifications: CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology and an MBA. She belongs to SHRM, Human Capital Institute and World at Work. Jacque has been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications.