The European Union’s Pay Transparency Directive (Directive (EU) 2023/970) is set to come into force in June 2026, introducing significant new obligations for employers across the EU. This legislation aims to close the gender pay gap and strengthen enforcement of equal pay for equal work or work of equal value.
We encourage all clients with operations in the EU to begin preparing now to ensure compliance and avoid potential legal or reputational risks.
Key Provisions
Pay Transparency for Job Seekers
Employers must disclose the initial pay level or pay range in job postings or before interviews. Salary history questions will be prohibited during recruitment.
Right to Information
Employees will have the right to request information on their pay level and the average pay levels of colleagues doing the same or equivalent work, broken down by gender.
Reporting Obligations
Employers with 100+ employees must report on gender pay gaps. For employers with 250+ employees the reporting obligation is annual, and every three years for those with 100–249 employees. Significant pay gaps (>5%) may require a joint pay assessment with employee representatives.
Pay Structure Transparency
Employers must ensure that pay policies are gender-neutral and based on objective, gender-independent criteria.
In cases of alleged pay discrimination, the burden of proof shifts to the employer to prove no discrimination occurred. Stronger sanctions for non-compliance will come into force. Workers affected by pay discrimination can claim full back pay and compensation.
This directive marks a significant shift in employment law and equality policy in the EU. Compliance will not only be a legal requirement but also a signal of your organization’s commitment to fairness and transparency. Clients are encouraged to start planning to conduct an Internal Pay Audit to assess existing pay structures, identify gaps, and develop plans to close unjustified disparities. Companies should also review Recruitment and HR Policies, update job descriptions, advertisements, and interview practices, and are to define clear criteria for pay, promotion, and career progression. Finally, management and staff are to be educated about the new rights and obligations under the directive.
3a will be organising an online information session at the end of August. Should you be interested in attending, kindly express your interest by sending an email by 30th July to [email protected] so that we may share details of this session with you, closer to the date.
