EU Pay Transparency: Don't Wait to Prepare

Author: Emily Scace, Brightmine Senior Legal Editor

In May 2023, the European Parliament adopted a directive (2023/970) aimed at advancing pay equity and increasing pay transparency. The 27 member states of the European Union have until June 7, 2026, to enact and implement national legislation carrying out its requirements.

As of May 2025, just five member states - Belgium, Ireland, the Netherlands, Poland and Sweden - have drafted legislation to transpose the directive. Yet employers with an EU presence should not take the slow rollout as a license to delay preparations. The implementation date is approaching fast and implementing a pay transparency and pay equity strategy takes time. Employers that wait risk finding themselves rushed and out of compliance when deadlines arrive.

All national legislation must address the same core elements, and employers need not wait for final details of each member state's approach to begin their own preparations.

Even when implementation is complete, EU member states will not have identical requirements. While all member states must adopt the directive's minimum requirements, some will opt to exceed these standards, and countries with existing equal pay and pay gap reporting legislation may take a different approach than those starting from scratch. Yet all national legislation must address the same core elements, and employers need not wait for final details of each member state's approach to begin their own preparations.

Along with tracking progress towards implementation and details in EU member states of interest, employers should begin by addressing these core elements:

Pay Transparency and Recruiting Practices

  1. Provide job applicants with a pay range for positions for which they have applied. This information must be provided in a manner that ensures "an informed and transparent negotiation on pay, such as in a published job vacancy notice, prior to the job interview or otherwise." Note that some member states may take a stricter approach to this requirement by requiring all job postings to contain a pay range.
  2. Do not inquire into applicants' pay history with their current or previous employers.
  3. Ensure that job titles and job vacancy notices are gender-neutral.
  4. Conduct all recruitment processes in a nondiscriminatory manner.
  5. Make the criteria used to determine workers' pay, pay levels and pay progression - which must be objective and gender-neutral - easily accessible to employees. Individual EU member states may choose to exempt employers with fewer than 50 workers from this requirement.
  6. Provide information to employees annually on their right to receive information about their individual pay level and the average pay level, broken down by sex, for workers performing comparable work, and the steps to exercise this right. Respond to a request from an employee to receive this information no later than two months from the date of the request.

Pay Gap and Demographic Reporting

Begin collecting information on the organization's gender pay gap and workforce gender composition in preparation for reporting to the applicable government entity.

The directive specifies the following phased-in reporting schedule:

  • Employers with 250 or more workers: Initial reporting by June 7, 2027; annual reporting thereafter
  • Employers with 150 to 249 workers: Initial reporting by June 7, 2027; reporting every three years thereafter
  • Employers with 100 to 149 workers: Initial reporting by June 7, 2031; reporting every three years thereafter
  • Employers with fewer than 100 workers: Voluntary reporting unless an individual EU member state requires otherwise.

Pay Equity

  • Eliminate any gender pay differences that are not justified on the basis of objective, gender-neutral criteria within a reasonable period of time. Objective, gender-neutral criteria may include skill, effort, responsibility, working conditions and any other factors that are relevant to a particular job or position.
  • If an unjustified gender pay gap greater than 5% exists for an employer subject to reporting, carry out a joint pay equity assessment in cooperation with worker representatives according to the criteria set out in the directive.

Employee Rights

Under the directive, employees will have the rights to:

  • Request and receive written information on their individual pay level and the average pay level, broken down by sex, for workers performing comparable work to theirs.
  • Disclose and discuss their pay. Employers will be prohibited from implementing contractual terms that restrict workers from disclosing their pay, although they may require employees with access to other employees' pay information not to use that information for any purpose other than exercising their own equal pay rights.
  • Inquire and receive answers about an employer's gender pay gap data within a reasonable time after the inquiry.

Bottom Line

Pay transparency is here to stay. Employers with an EU presence should take the opportunity to prepare now by developing a pay transparency strategy that meets the requirements of the Directive while also advancing their own goals and organizational priorities. The opportunities for missteps are abundant, and an employer that takes a haphazard approach risks fines and other penalties - not to mention damage to employee morale, public reputation and more.