The EU Pay Transparency Directive: what employers need to know

What the directive is

Directive (EU) 2023/970 was adopted on 10 May 2023 and published in the Official Journal on 17 May 2023. Its aim is not new: women and men must receive equal pay for equal work or for work of equal value. What the directive adds is pay transparency and stronger enforcement.

A directive does not apply on its own. Each member state had to bring its own national law into force by 7 June 2026. The directive sets minimum rules, so a national law can go further, for example by adding duties or lowering the size thresholds.

The directive applies to employers in the public and the private sector and to every worker with an employment contract or employment relationship. Its rules on pay transparency before hiring also protect job applicants.

Where things stand in October 2026

The deadline has passed, but many member states were late. A June 2026 overview by the law firm Lewis Silkin counted four countries with their law in place by 7 June: Italy, Lithuania, Malta and Slovakia. The same overview noted partial laws in Belgium (public sector only) and Poland, and found most other member states part of the way through their legislative process.

Until a country adopts its law, private employers are generally bound only by the rules already in force there. The same overview notes that courts must interpret those rules in line with the directive, and that workers of public-sector employers may be able to rely on parts of it directly. Check the status in every country where you employ people, because start dates and details differ.

Before hiring: pay ranges and no questions about pay history

Applicants have the right to know the starting pay, or its range, for the job they apply for. The range must rest on objective, gender-neutral criteria, and applicants must also learn about any collective agreement that applies to the position. The information has to reach them early enough for a fair negotiation, for example in the job advertisement or before the interview.

• Employers must not ask applicants about their pay in their current or previous jobs.
• Job advertisements and job titles must be gender-neutral.
• Recruitment must be run in a non-discriminatory way.

During employment: clear criteria and the right to information

Employers must make the criteria they use to set pay, pay levels and pay progression easily accessible to their workers. The criteria must be objective and gender-neutral. Member states may exempt employers with fewer than 50 workers from the part about pay progression.

Every worker can ask, in writing, for their own pay level and for the average pay levels of women and men who do the same work or work of equal value. Workers can also ask through their representatives or through an equality body.

• Employers must answer within a reasonable time and at the latest within two months of the request.
• Once a year, employers must remind all workers of this right and explain how to use it.
• Contract terms that stop workers from disclosing their own pay are not allowed.
• Information must be given in a format that people with disabilities can use.

Reporting the gender pay gap

Employers with 100 or more workers must report on the pay gap between women and men in their organisation. The report covers seven indicators:

1. the gender pay gap
2. the gender pay gap in complementary or variable components, such as bonuses
3. the median gender pay gap
4. the median gender pay gap in complementary or variable components
5. the share of women and men who receive complementary or variable components
6. the share of women and men in each quartile pay band
7. the gender pay gap by category of workers, split into basic pay and complementary or variable components

How often you report depends on the number of workers, and each report covers the previous calendar year:

• 250 or more workers: by 7 June 2027, then every year.
• 150 to 249 workers: by 7 June 2027, then every three years.
• 100 to 149 workers: by 7 June 2031, then every three years.
• Fewer than 100 workers: no reporting duty under the directive unless national law adds one, although reporting voluntarily is allowed.

Management must confirm that the figures are accurate after consulting the workers' representatives, who may see the method used. The seven indicators go to the national monitoring body, and the employer may publish the first six on its website. The breakdown by category of workers goes to all workers and their representatives, and to the labour inspectorate and the equality body on request.

How the gap is calculated

The directive defines the gender pay gap as the difference between the average pay levels of female and male workers, expressed as a percentage of the average pay level of male workers. Pay means the basic or minimum wage or salary plus any other consideration in cash or in kind, and the pay level is gross annual pay with the matching gross hourly pay. The median gap uses the middle value of each group instead of the average.

A simple example: if men earn an average of €20.00 an hour and women €18.50, the gap is (20.00 − 18.50) ÷ 20.00 = 7.5%. The European Commission's services, in an FAQ that gives their preliminary views, say that, as a starting point, every element of pay of the workers employed in the period should be counted, and that employer contributions to occupational schemes, such as company pension schemes, always count.

The joint pay assessment

If the report shows a gap of at least 5% in any category of workers, the employer must justify it with objective, gender-neutral criteria or remedy it within six months of submitting the report. If it does neither, it must carry out a joint pay assessment together with the workers' representatives.

The assessment looks at every category of workers and includes:

• the share of women and men in each category, with their average pay and their complementary or variable pay
• any differences in average pay, and their reasons as established jointly with the workers' representatives
• the share of women and men whose pay improved after maternity, paternity, parental or carers' leave, where pay in their category improved while they were away
• the measures to close unjustified differences, and an evaluation of the measures from earlier assessments

The employer shares the assessment with the workers and their representatives and sends it to the national monitoring body. Unjustified differences must then be removed within a reasonable time, which includes reviewing the job evaluation and classification systems.

Work of equal value and categories of workers

Most of the directive depends on knowing which jobs are of equal value. Employers need pay structures that let them compare the value of work on objective, gender-neutral criteria, agreed with the workers' representatives where there are any. The criteria must include skills, effort, responsibility and working conditions, and relevant soft skills must not be undervalued.

Workers who do the same work, or different work of the same value, form a category of workers. Categories shape the answers to information requests, the seventh reporting indicator and the joint pay assessment. The European Institute for Gender Equality (EIGE) publishes a free step-by-step toolkit for gender-neutral job evaluation, with separate paths and templates for micro, small and medium-sized, and large organisations.

Enforcement and penalties

• Burden of proof: once a worker presents facts that suggest pay discrimination, the employer must prove there was none. An employer that has not met its transparency duties carries that burden in any case, unless the failure was clearly unintentional and minor.
• Compensation: a worker who suffered pay discrimination is entitled to full compensation, including back pay, related bonuses and payments in kind, lost opportunities, non-material damage and interest, with no upper limit set in advance.
• Time limits: national limitation periods for equal pay claims must be at least three years.
• Penalties: member states set effective, proportionate and dissuasive penalties, including fines, with specific penalties for repeated infringements.
• Public contracts: national law can let contracting authorities exclude employers that break the transparency duties or have an unjustified pay gap of more than 5% in a category of workers.
• Protection: workers who use their equal pay rights, and the people who support them, must not be treated less favourably.

If your company is outside the EU

The directive binds the EU member states and reaches employers through national law. A company based in North Macedonia, Albania, Serbia or Bosnia and Herzegovina is therefore not covered directly. Its subsidiaries in EU countries are employers there, so they follow the law of the member state where they employ people.

A group with companies on both sides of the border may still choose to prepare the same figures everywhere, so that its pay structures stay comparable. Outside the EU this is voluntary, but it makes reporting easier if the group expands or a country's rules change.

A checklist for 2026 and 2027

1. Find out which national law applies to each of your employers and when its duties start.
2. Count the workers of each employer to know your reporting cycle and first deadline.
3. Check that you can see every element of pay per worker, including bonuses, benefits in kind and hours worked.
4. Group jobs into categories of workers on objective, gender-neutral criteria, together with the workers' representatives.
5. Write down your criteria for pay and pay progression, and make them easy for workers to find.
6. Decide how applicants will learn the pay range, for example in the job advertisement, and remove questions about pay history from forms and interviews.
7. Set up a way to answer requests for pay information within two months, and remind workers of the right every year.
8. Run a test calculation on your 2026 figures, look into any gap of 5% or more and plan how to close it.

How Office Hero can help

HR Hero, the HR app of Office Hero, has a pay-transparency toolkit built around the directive. It calculates the mean and median gender pay gap and the quartile pay bands, opens a joint pay assessment when the overall gap passes 5% and builds a PDF report of the year's mean and median gap. It also keeps a register of pay ranges per role, checks job applications for English wording about pay history and logs requests from regulators.

Know its limits too. The figures come from the gross pay of the pay runs kept in HR Hero, which today cover employees in North Macedonia, Albania and the United Kingdom only and carry the base salary only. Variable pay and categories of workers are not covered, and requests for pay information under Article 7 are answered outside HR Hero. The pay transparency page explains what is included.