EU Pay Transparency

The EU is strengthening the principle of Equal Pay for Equal Work with the new EU Pay Transparency Directive. The directive introduces measures for gender pay gap reporting and enforcement mechanisms to ensure fair pay across the EU.

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Enhance your company's compliance with our Pay Transparency Summary Report. This comprehensive analysis delves into your organization’s salary structures, examining all employee wages under two main categories: equal and equivalent work, based on gender-neutral criteria. With our report, you'll gain in-depth insights into:

· Your company's gender pay gap,

· Discrepancies in complementary and variable pay components,

· The distribution of positions and gender across the organization,

· Unexplained pay gaps for positions of equal and equivalent value.

Additionally, our report includes a tailored guide outlining the next steps and strategies for preparing and succeeding in future Equal Pay Audits. Secure your company’s future by understanding and addressing pay disparities with precision and become compliant!

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The directive can be summarized in six key areas

Pay transparency for job-seekers

This provision ensures that employers disclose pay levels or ranges in job advertisements, enabling potential employees to make informed decisions before applying.

Joint pay assessment

In cases where significant pay disparities are identified, employers must conduct a joint assessment with employee representatives to analyse and address the causes of these gaps.

Right to information for employees

Employees have the legal right to request and receive information regarding pay levels and criteria used for determining pay within their organization.

Burden of proof falls on the employer

In disputes regarding unequal pay, the responsibility lies with the employer to prove that their pay practices are non-discriminatory and based on objective criteria.

Reporting on the gender pay gap

Companies are required to regularly report on existing gender pay gaps, highlighting disparities in pay between male and female employees.

Risk of collective claims on equal pay

This part allows groups of employees to file collective claims against discriminatory pay practices, enhancing enforcement through group litigation.

What is the EU Pay Transparency Directive?

The Directive, which became effective in 2023, is designed to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women. It introduces measures for gender pay gap reporting and enforcement mechanisms to ensure fair pay across the EU.

Companies operating within the EU will need to comply with new requirements. These include providing pay information before employment, being transparent about pay levels, and reporting on pay gaps. If a company with over 100 employees has a pay gap of 5% or more, it must conduct joint pay assessments. Non-compliance can lead to penalties.

EU Member States Implementation Status

The EU Pay Transparency Directive has a deadline for implementation set to June 7th, 2026. By this time, all member states must have added the minimum standards in the Directive to their national legislation.

The Directive mandates measures such as pay transparency reporting, the right to request salary information for employees, and equal pay audits, aiming to bridge the gender pay gap across Europe. So far, three countries (Sweden, Belgium, and Poland) have presented their plans for implementation, while several other member states are actively drafting their own legislation to meet the requirements. These plans include varying levels of commitment and approaches, reflecting the diverse labor laws and economic contexts across the EU.

Pihr keeps up with the developments and updates the map with each new announcement, offering stakeholders a clear overview of the progress. As the deadline approaches, the rate of activity is expected to increase, with more countries finalizing their frameworks and submitting official proposals.

Why start now?

The EU Pay Transparency Directive will be implemented into national law by 2026, and the first reports are due the following year. Beginning preparations now allows companies ample time to adjust their internal processes, ensuring compliance with the new regulations.

Early adoption of these practices not only mitigates the risk of penalties but also positions a company as a leader in gender equality and fair pay. Proactively addressing these changes can enhance a company’s reputation, attract and retain top talent, and improve employee satisfaction by demonstrating a commitment to fairness and transparency.

Moreover, starting early provides an opportunity to thoroughly analyse and resolve any disparities in pay structures, which can be complex and time-consuming. It’s not just about compliance; it’s about fostering a culture of equity that can significantly benefit your organization in the long run.

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Key definitions

Gender pay gap: the difference in average pay levels between male and female workers for an employer expressed as a percentage of the average pay level of male workers
Unexplained gender pay gap: the difference in average pay levels between male and female workers that can't be explained with objective gender-neutral criteria
Median pay level: means the pay level at which half of the workers of an employer earn more and half of them earn less
Work of equal value: means work that is determined to be of equal value in accordance with the non-discriminatory and objective gender-neutral criteria

Key dates to keep in mind!

7th June 2026

Deadline for EU member states to implement national regulations in line with the new Directive.

7th June 2027

First annual report is due for companies with more than 250 employees.

Companies with 150 to 249 employees must publish their first gender pay gap report and every three years after that.

7th June 2031

Companies with 100 to 149 employees must publish their first report and every three years after this.