The EU Pay Transparency Directive sets a new standard for how employers work with pay equity and transparency across Europe. At the same time, national processes have recently evolved in several countries, which means timelines and implementation may vary.
For employers, this does not reduce the importance of the topic – it makes it more important to understand what is coming and how to prepare in a structured way.
Here, we guide you through what the directive means, what to expect, and how your organisation can prepare.
The EU Pay Transparency Directive (2023/970), adopted on 10 May 2023, is designed to strengthen the principle of equal pay for equal work or work of equal value between men and women. It introduces measures to increase transparency, improve reporting, and strengthen enforcement across the EU.
For employers, the Directive signals a clear shift towards greater transparency in how pay is set and communicated. This includes providing pay information earlier in the hiring process, increasing visibility into pay levels, and preparing for potential reporting requirements. In some cases, organisations may also need to address unexplained pay gaps and strengthen their internal processes.
Member States had until 7 June 2026 to transpose the Directive into national law. The first gender pay gap reports are due by 7 June 2027, for employers with 150 or more employees.
Employers must have pay structures that ensure equal pay for equal work and for work of equal value. Which roles count as work of equal value is decided with objective, gender-neutral criteria.
The Directive names four criteria that must be part of that assessment:
Employers must also make the criteria used to set pay, pay levels and pay progression easily available to employees. Member States may exempt employers with fewer than 50 employees from the part about pay progression.
A structured job evaluation is the most common way to group roles of equal value and show that the grouping is gender-neutral.
The Directive changes how employers talk about pay before someone is hired.
In several countries these rules are among the first to apply. Poland and Estonia, for example, introduced the recruitment rules before the rest of the Directive.
Employers with 100 or more employees must report on the gender pay gap. How often depends on the size of the organisation. The dates below are the Directive's; national law may set earlier dates or lower thresholds.
| Employees | How often | First report |
|---|---|---|
| 250 or more | Every year | 7 June 2027 (for 2026) |
| 150–249 | Every three years | 7 June 2027 |
| 100–149 | Every three years | 7 June 2031 |
| Fewer than 100 | Voluntary, unless national law says otherwise | – |
The report covers seven indicators. The first six are shared with the national monitoring body and can be made public. The last one, the gap by category of workers, is shared with employees, their representatives and the labour inspectorate.
All seven indicators come out of a structured pay audit, which is why most employers start there.
A joint pay assessment is a deeper review that the employer carries out together with employee representatives. It is required when all three of these apply:
The assessment looks at the share of women and men in each category of workers, their average pay and pay gaps, and the reasons for any differences. It also covers the share of employees who got a pay rise after returning from parental leave, the measures to close unjustified gaps, and how well earlier measures worked.
The simplest way to avoid one is to explain or close gaps before the report is due. Pay audit software can flag unexplained gaps as soon as the data is in.
In disputes regarding unequal pay, employers may need to demonstrate that pay practices are non-discriminatory and based on objective criteria.
The Directive strengthens enforcement and may increase the risk of collective claims related to discriminatory pay practices.
The EU Pay Transparency Directive introduces increased requirements for pay transparency and reporting.
With our free checklist, you'll get clear, practical steps to prepare your organisation in a structured way and stay ahead of upcoming requirements.
The checklist helps you to:
Download the checklist and get a clear starting point for your preparations.
Greece has now implemented the EU Pay Transparency Directive through Law 5316/2026, becoming the fifth EU Member State to complete the transposition process. The Greek Parliament adopted the law on 2 July 2026, and it was published in the Government Gazette on 6 July 2026.
Italy has now formally implemented the EU Pay Transparency Directive through Legislative Decree No. 96/2026. The decree was published in the Official Gazette on 1 June 2026 and entered into force on 7 June 2026.
The difference in average pay between women and men, expressed as a percentage of men's average pay.
The portion of the pay gap that cannot be explained by objective, gender-neutral factors such as role, experience, or location.
The midpoint in the pay distribution: where half of employees earn more and half earn less.
Work that is considered comparable based on objective, gender-neutral criteria such as skills, responsibility, effort, and working conditions.
The EU Pay Transparency Directive sets a clear direction toward greater transparency, even as national timelines and requirements continue to evolve.
Starting preparations early allows organizations to build the right foundations for pay structures, data quality, and reporting, regardless of exact timing.
Early action reduces risk, strengthens internal consistency, and creates better conditions for transparent and fair pay practices. It also gives you time to identify and address potential pay gaps, a process that is often more complex than expected.
In short: this is not just about compliance, but about building sustainable and fair pay structures over time.
Pihr Evaluation groups every role with a gender-neutral method based on skills, effort, responsibility and working conditions, the criteria the Directive requires.
Upload your payroll file and Pihr's pay transparency software calculates the indicators the law requires, adapted to each country's rules, with one report for every market.
When an employee asks how their pay compares, Pihr generates the answer from your latest pay audit, ready to send.
Pihr explains most differences automatically, lists the rest and shows what it costs to close them, before they lead to a joint pay assessment.
Most employers already have what the Directive asks for: their pay data. We help them turn it into a pay structure they can explain, long before the first report is due.
Book a free demo and see how Pihr automates your pay equity and pay transparency work.
The Directive entered into force in June 2023, and Member States had until 7 June 2026 to transpose it into national law. Several countries have not yet done so, so when the rules apply to you depends on where you have employees. The first gender pay gap reports are due by 7 June 2027.
All employers operating in the EU are within scope. Specific obligations, thresholds, and timelines depend on national implementation and often on company size.
Employers are expected to provide information about the initial pay level or range for a role, either in the job ad or before the first interview. Employers should also not ask about a candidate's salary history.
Employees can request written information about their individual pay and average pay levels, broken down by gender, for comparable roles or work of equal value.
Roles are compared using objective, gender-neutral criteria such as skills, responsibility, effort, and working conditions, typically supported by a structured job architecture.
Yes, if you have 100 or more employees. Employers with 250 or more report every year and those with 150–249 every three years, both from 7 June 2027. Employers with 100–149 report every three years from 7 June 2031. National law can set earlier dates or lower thresholds.
If a gender pay gap of at least 5% in any category of workers cannot be justified by objective, gender-neutral factors and is not corrected within six months, employers must carry out a joint pay assessment with employee representatives and define corrective actions.
A structured employee dataset (base and variable pay, FTE, allowances), job architecture, comparable-role groupings, and a clear methodology for analysing pay gaps.
Penalties are defined nationally but may include fines, compensation, and procedural changes such as a shift in burden of proof in discrimination cases.
Start by reviewing your pay structure, aligning job architecture, defining pay bands, and running a baseline analysis of pay gaps. Early preparation makes future compliance significantly easier.
