EU Pay Transparency Directive

What Is the EU Pay Transparency Directive?

Directive 2023/970/EU — officially titled the "Pay Transparency Directive" — was adopted by the European Parliament and the Council of the European Union on 10 May 2023. It represents the most significant change to European employment law in a generation, fundamentally reshaping how companies can discuss, disclose, and manage compensation across all 27 EU member states.

The directive has three core objectives:

• End pay secrecy: Employees must be able to discuss their salaries without fear of retaliation.
• Close the gender pay gap: Companies must actively measure and report on pay differences between men and women.
• Give job seekers more power: Salary ranges must be included in job ads or disclosed before interviews.

The EU gender pay gap currently stands at approximately 12.7% (Eurostat, 2024), meaning women earn on average €0.127 less for every euro earned by men. The directive is designed to tackle structural pay discrimination through transparency rather than direct intervention.

Key Provisions: What Companies Must Do

1. Pre-Employment Salary Disclosure

Before or during the first interview, employers must provide applicants with the starting salary or salary range for the advertised position. This can appear directly in the job posting or be communicated separately — but it must happen before salary negotiations begin.

Crucially, employers cannot ask candidates about their salary history. This prevents employers from anchoring offers to previous (potentially discriminatory) pay, breaking the cycle of pay discrimination following workers across jobs.

2. Pay Transparency for Existing Employees

Current employees gain the right to request — in writing — information about:

• Their own pay level and category
• The average pay level for workers of the opposite gender doing the same or equal-value work

Employers must respond within two months. They cannot prohibit employees from sharing pay information with colleagues, and they cannot penalize any worker who exercises these rights.

3. Gender Pay Gap Reporting

Companies must report annually on their gender pay gap, with phased thresholds:

• 250+ employees: Annual reporting from the directive's transposition date (June 2026)
• 150–249 employees: Annual reporting from three years after transposition (June 2029)
• 100–149 employees: Annual reporting from five years after transposition (June 2031)
• Under 100 employees: Not required (but member states may extend requirements)

Reports must break down pay by worker category and by gender. If the gap exceeds 5% and cannot be justified by objective, gender-neutral criteria, the employer must conduct a joint pay assessment with worker representatives.

4. Pay Structures and Job Evaluation

Employers must establish clear, gender-neutral criteria for determining pay, including pay progression. These criteria must be documented and made accessible to employees. Workers must be informed about the pay category their role falls into.

Timeline: When Does This Happen?

Country-by-Country Implementation Status

Implementation progress varies significantly across EU member states. Some countries had existing legislation that partially meets the directive's requirements; others are starting from scratch.

Data: EuroSalary analysis based on Eurostat data and national legislation tracking, April 2026.

Employee Rights Under the Directive

The directive creates several enforceable rights for workers that go beyond simply knowing what colleagues earn:

• Right to pay information: Within 2 months of requesting it, employers must share average pay by gender for comparable work.
• Right to not disclose salary history: Employers cannot demand or use past salary information in determining your pay.
• Right to discuss pay: Contractual clauses preventing workers from discussing their pay are void and unenforceable.
• Right to compensation: If you've experienced pay discrimination, you can claim back pay, bonuses, and related financial losses.
• Reversed burden of proof: In discrimination claims, the employer must prove their pay practices are justified — not the worker.
• Protection from retaliation: Workers who exercise these rights must not face adverse treatment.

What Employers Must Prepare

Companies operating in the EU should begin preparation now. Key steps include:

1. Audit current pay practices: Identify unexplained pay gaps between comparable roles using gender-neutral criteria.
2. Define job categories and pay bands: Establish transparent, documented structures for how roles are graded and paid.
3. Update recruitment processes: Remove salary history questions from application forms. Add salary ranges to job postings.
4. Train HR and managers: Ensure anyone involved in hiring or pay decisions understands the new rules.
5. Establish reporting systems: Build data infrastructure to track pay by gender across job categories for annual reporting.
6. Review employment contracts: Remove any clauses preventing salary discussions between employees.

Related Resources on EuroSalary

• Pay Transparency by Country — Current Status
• Salary Negotiation Guide for Europe
• Average Salaries in Europe — Country Comparison
• Check Your Salary Against EU Benchmarks
• Compare Salaries Across European Countries