Is Your Organisation Ready for Pay Transparency?

Directive 2023/970 applies to all employers in the public and private sectors in the EU, regardless of size, in respect of the recruitment and information-rights obligations. The pay-gap reporting obligation under Article 9 applies based on size: 250+ workers must report annually from 7 June 2027, 150-249 workers must report every three years from 7 June 2027, and 100-149 workers must report every three years from 7 June 2031. Workers below 100 are exempt from reporting but the recruitment and information-rights obligations still apply.

Member States must transpose the Directive by 7 June 2026. The pay-gap reporting obligations apply from 7 June 2027 (for employers with 250+ workers) or 7 June 2031 (for 100-149 workers). The recruitment transparency obligations under Article 5 and the right to information under Article 7 apply from the date of national transposition. Several Member States are expected to miss the 7 June 2026 deadline; the Commission may open infringement proceedings against late transposing states.

Article 10 requires a joint pay assessment if four conditions are met: (1) the pay reporting under Article 9 reveals a difference in average pay levels between female and male workers of at least 5% in any category of workers, (2) the difference cannot be justified by objective, gender-neutral criteria, (3) the employer has not remedied the unjustified difference within six months of the report, and (4) one of the conditions is met after consultation with workers representatives. The joint pay assessment must be carried out in cooperation with workers representatives and document the methodology, the gap, the underlying factors, and the remedial measures.

Article 5 requires applicants to receive information about the initial pay or pay range to be allocated for the position concerned, based on objective and gender-neutral criteria, before the interview. Member States can specify whether this is in the public job posting, before the interview is scheduled, or at the start of the interview, but the information must be provided in time for the candidate to make an informed negotiation. Member States may also require employers to disclose the gender pay gap and to inform applicants about provisions of any applicable collective agreement. Article 5(2) prohibits asking candidates about their pay history.

A joint pay assessment under Article 10 is a formal review carried out by the employer in cooperation with workers representatives when an unjustified pay gap of 5% or more persists. The assessment must include: an analysis of female and male workers by category and the corresponding pay levels and components; an identification of differences and the underlying reasons; gender-neutral evaluation criteria; remedial measures with a timeline; an evaluation of the effectiveness of previous remedial measures. The assessment must be made available to workers representatives and submitted to the national monitoring body.

Workers can request, in writing, information on their individual pay level and average pay levels broken down by sex for workers performing the same work or work of equal value (Article 7). The employer must respond within two months. Workers can communicate this information to others for the purpose of enforcing the right to equal pay. Workers can lodge a complaint with the national equality body or take judicial action. Article 18 shifts the burden of proof: when a worker establishes facts from which it may be presumed there has been direct or indirect pay discrimination, the burden of proof falls on the employer to demonstrate there has been no breach.

Article 23 requires Member States to lay down rules on effective, proportionate and dissuasive penalties. The Directive does not set EU-wide ceilings; penalties are set in national transpositions and vary by Member State. The Directive specifically requires Member States to ensure that penalties include fines, that recidivism is taken into account, and that consequences such as exclusion from public procurement procedures or the revocation of public benefits and aids are available in cases of serious or repeated infringement. Workers who succeed in equal-pay claims are entitled to full compensation including back pay, related bonuses and payments in kind, compensation for lost opportunities and non-material damage, and any other damage including from the intersection of multiple discrimination grounds.

The Directive does not mandate a specific training programme but the obligations in Articles 5, 7, 9 and 10 create implicit training needs. HR teams need training on the new recruitment rules (the prohibition on pay-history questions, the timing of pay-range disclosure, the documentation expectations). Hiring managers need training on conducting interviews without crossing into prohibited territory and on the new norms around salary negotiation. Reward and benefits teams need training on job evaluation methodology under Article 4 ('work of equal value') and on the data architecture needed for Article 9 reporting and Article 10 joint pay assessments. Management bodies need awareness of the burden-of-proof shift and the compliance risk.