EU Pay Transparency Directive 2026: What Changes for Employers

Quick Answer: What Is the EU Pay Transparency Directive?

Directive (EU) 2023/970 on pay transparency was adopted on 10 May 2023 and must be transposed into national law by 7 June 2026. It is the most significant EU legislation on equal pay since the original Equal Pay Directive of 1975.

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Pay Range Disclosure in Job Advertisements

The Requirement

Article 5(1) requires employers to provide job applicants with information about:

• The initial pay or pay range (based on objective, gender-neutral criteria) for the advertised position, or
• The relevant provisions of the applicable collective bargaining agreement

This information must be provided in the job vacancy notice or before the job interview, without the applicant having to request it.

What This Means in Practice

• Job advertisements must include a salary range or starting salary
• The range must be set using objective, gender-neutral criteria
• Employers cannot ask candidates about their pay history (Article 5(2))
• Job titles and descriptions should be gender-neutral

Countries Already Requiring This

Several EU member states already have some form of pay transparency in recruitment:

The directive goes significantly beyond any existing national law by making job ad pay disclosure universal across all EU member states.

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Employee Right to Pay Information

Individual Right to Request (Article 7)

Employees have the right to request and receive in writing information on:

• Their individual pay level
• The average pay levels, broken down by sex, for categories of workers performing the same work or work of equal value

Employers must respond within 2 months and must inform employees annually of this right.

Collective Right to Information

Workers' representatives (works councils, unions) have the right to receive:

• Gender pay gap data by category of workers
• Information on the criteria used to determine pay levels and pay progression

Confidentiality Protections

While employees can request comparative pay data, the data provided must be aggregated so that individual colleagues cannot be identified. Where a category contains too few workers to ensure anonymity, the data must be presented in a way that protects individuals.

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Gender Pay Gap Reporting

Phased Implementation by Company Size

Article 9 requires employers to report on their gender pay gap according to the following timeline:

Member states may extend reporting obligations to employers with fewer than 100 employees.

What Must Be Reported

Employers must report to the designated national authority:

1. The gender pay gap (mean and median)
2. The gender pay gap in complementary or variable components (bonuses, allowances)
3. The median gender pay gap in complementary or variable components
4. The proportion of female and male workers receiving complementary or variable components
5. The proportion of female and male workers in each pay quartile
6. The gender pay gap by categories of workers, broken down by ordinary basic salary and complementary or variable components

How This Compares to Existing Reporting

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Joint Pay Assessment

When Is It Triggered?

Article 10 requires a joint pay assessment when:

1. Gender pay gap reporting reveals a gap of at least 5% in any category of workers, AND
2. The employer cannot justify the gap on the basis of objective, gender-neutral factors, AND
3. The employer has not remedied the unjustified gap within 6 months

What the Assessment Involves

The joint pay assessment must be carried out together with workers' representatives and must include:

• Analysis of the proportion of female and male workers in each category
• Details of average pay and complementary components by sex in each category
• Identification of differences in pay between female and male workers in each category
• Reasons for the differences (if any) based on objective, gender-neutral criteria
• Measures to address unjustified differences, including a timeline

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Burden of Proof Shift

The Key Change

Article 18 establishes that in pay discrimination proceedings, where a worker establishes facts from which it may be presumed that there has been direct or indirect pay discrimination, the burden of proof shifts to the employer to prove that there was no breach of the equal pay principle.

This is particularly powerful when combined with pay transparency. If an employee obtains comparative pay data showing they earn less than colleagues of the other sex doing the same or equivalent work, they can bring a claim and it will be for the employer to prove the difference is justified.

Compensation and Penalties

Article 20 requires member states to ensure that workers who have suffered pay discrimination receive full compensation, including:

• Back pay in full and related bonuses or payments in kind
• Compensation for lost opportunities
• Moral prejudice (non-material damage)
• Interest on arrears

Article 23 requires effective, proportionate, and dissuasive penalties for infringements. These must include fines that, where possible, take into account the employer's turnover.

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Pay Secrecy Bans

What Employers Can No Longer Do

Article 7(5) prohibits employers from contractually preventing workers from disclosing their own pay. Specifically:

• Pay secrecy clauses in employment contracts are unenforceable
• Employers cannot prevent workers from disclosing their pay for the purpose of enforcing the equal pay principle
• Workers cannot be penalised for sharing pay information

This does not mean employees are entitled to know specific colleagues' individual salaries. It means employees cannot be punished for voluntarily sharing their own pay information.

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Employer Preparation Checklist

With the transposition deadline of 7 June 2026, employers should be preparing now:

Immediate Actions (2025-2026)

1. Audit current pay structures: Identify and document the objective, gender-neutral criteria used to set pay for each role or category
2. Analyse the gender pay gap: Calculate gaps by category using the directive's methodology before mandatory reporting begins
3. Review job advertisements: Prepare to include pay ranges in all job postings
4. Remove pay history questions: Eliminate questions about candidates' current or previous salary from recruitment processes
5. Remove pay secrecy clauses: Review employment contracts and remove any clauses prohibiting pay disclosure

Medium-Term Actions (2026-2027)

6. Implement a job evaluation framework: Establish a systematic, gender-neutral method for categorising roles as "same work" or "work of equal value"
7. Build reporting capabilities: Set up systems to calculate and report the required gender pay gap metrics
8. Train managers and HR: Ensure hiring managers understand pay range requirements and the ban on pay history questions
9. Establish a DSAR-like process for pay information requests: Create a workflow to handle employee requests within the 2-month deadline

Ongoing

10. Monitor gaps by category: Track gender pay gaps continuously, not just at reporting deadlines
11. Address unjustified gaps proactively: Do not wait for the 5% threshold to trigger a joint pay assessment
12. Document justifications: Keep clear records of objective, gender-neutral reasons for any pay differences

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How Grove HR Supports Pay Transparency Compliance

Grove HR helps employers prepare for and comply with the Pay Transparency Directive:

• Pay band management with salary ranges linked to job categories and levels
• Gender pay gap analytics calculated automatically using the directive's methodology
• Reporting dashboards showing mean/median gaps, quartile distributions, and variable pay gaps by category
• Job evaluation framework for systematically categorising roles as same work or work of equal value
• Recruitment integration that prevents pay history questions and enforces pay range disclosure
• Employee pay information requests handled through a documented, auditable workflow
• Audit trail recording all pay decisions and the objective criteria used