In May 2023, the European Parliament and the Council adopted Directive (EU) 2023/970 on strengthening the application of the principle of equal pay through pay transparency measures. The goal is to reduce the gender pay gap and ensure that the principle of “equal pay for equal work” is effectively enforced in practice.
Member States must implement the directive by 7 June 2026, but employers – particularly mid-sized and large companies – are advised to begin preparing well in advance.
Key obligations for employers:
- Transparency in recruitment: Employers must disclose the initial pay level or salary range for a given position in job postings or at the start of the recruitment process. They are also prohibited from asking candidates about their previous salary.
- Right to pay information: Employees can request information about how their pay compares to the average pay levels of workers in the same or similar roles, based on objective criteria (not individual salaries).
- Pay audits obligations: Employers with 100 or more employees will be required to conduct periodic pay gap analyses. If a gender pay gap of 5% or more is identified, corrective measures must be taken.
- Reporting obligation:
- Employers with at least 250 employees must report on the gender pay gap by 7 June 2027, and annually thereafter.
- Employers with 150 to 249 employees must report by 7 June 2027, and every three years thereafter.
- Employers with 100 to 149 employees must report by 7 June 2031, and every three years thereafter.
- Transparent pay structures: Employers must establish and maintain pay systems based on objective and gender-neutral criteria. Internal policies may need to be reviewed and adjusted accordingly.
Although the implementation deadline is set for 2026, these transparency requirements imply not only administrative changes, but a shift in workplace culture. Compliance may involve internal audits, reviewing current pay practices, and updating HR and compliance frameworks.