We provide an overview of the new EU Pay Transparency Directive and outline the key compliance requirements, associated risks, and strategic considerations for employers in 2026 and beyond.
On 10 May 2023, the European Union adopted Directive (EU) 2023/970 (EU Pay Transparency Directive) to ensure equal pay for equal work between women and men through enhanced transparency and stronger enforcement mechanisms. EU Member States must transpose the Directive into national legislation by 7 June 2026, including countries across Southeast Europe, the Baltics, and other EU jurisdictions where many international businesses operate.
The Directive introduces pay transparency obligations at the recruitment stage. Employers must disclose the starting salary or its range in job postings and are prohibited from asking candidates about their previous pay. Job advertisements and job descriptions must be drafted using gender-neutral language.
After hiring, employees have the right to request information about their own pay and the average pay, broken down by gender, for comparable roles. Confidentiality clauses preventing discussions on remuneration are prohibited, and employers must inform employees annually about their rights.
Remuneration structures must rely on objective, gender-neutral criteria such as skills, effort, responsibility, and working conditions. Where an unjustified pay gap of at least 5% is identified, employers will be required to carry out a joint pay assessment with employee representatives.
The Directive significantly strengthens enforcement. Employees will have improved access to pay information, and in discrimination claims the burden of proof shifts to the employer. Employers may face substantial compensation claims, fines, and reputational risks, increasing the likelihood of individual and collective actions.
The new pay gap reporting obligations will apply to employers with more than 150 employees from 2027, and to those with 100–149 employees from 2031.
Early preparation, including a review of remuneration policies, job descriptions, and internal procedures – is essential to mitigate legal exposure, manage litigation risk, and position the organization as a transparent and responsible employer.
Our team assists employers with reviewing remuneration policies and HR procedures to ensure compliance with the EU Pay Transparency Directive and pay transparency requirements. For more information, contact us at [email protected]