At a glance
- The EU Pay Transparency Directive (Directive) marks a significant shift in how employers must approach pay equity and transparency across the European Union (EU).
- The Directive, which will impact both EU companies and multinationals with operations in the EU, introduces new obligations that call for careful planning, cross-border coordination, and ongoing compliance efforts.
- Our alert provides a summary of key requirements, the status of legislation in each EU Member State, and next steps for employers.
The Directive marks a significant shift in how employers must approach pay equity and transparency across the EU. The Directive, which will impact both EU companies and multinationals with operations in the EU, introduces new obligations that call for careful planning, cross-border coordination, and ongoing compliance efforts.
By 7 June 2026, all EU Member States are required to pass laws implementing the Directive. At present, not all countries have published their draft laws, and some divergence between implementation is expected. However, all companies with EU operations are encouraged to prepare their organisations for these changes ahead of time.
Scope and applicability
- The Directive applies to all companies with workers in EU Member States, regardless of where the company is headquartered.
- Certain requirements, such as mandatory gender pay gap reporting, are subject to headcount thresholds, with phased implementation from 2027 to 2031.
- The Directive’s requirements will be implemented through Member State national legislation, which could introduce additional or stricter obligations.
Key requirements of the Directive
| Requirement area |
Key obligations |
| Transparency for job applicants |
- A job applicant has the right to receive information about a job position’s initial pay or pay range.
- Employers are prohibited from asking applicants about pay history with current or previous employers.
- Job vacancy notices and job titles must be gender neutral.
|
| Transparency for workers |
- Workers have the right to receive information on individual pay and average pay by gender for categories of workers performing the same or equal value work. Employers must inform all workers on an annual basis of that right and steps to exercise that right.
- Pay confidentiality provisions are banned in contracts and policies.
- Criteria used to determine pay, pay levels, and (for employers with 50 or more workers) pay progression must be made easily accessible to workers and must be objective and gender neutral.
|
| Pay gap reporting and audits |
- Gender pay gap reporting is mandatory for employers with 100 or more workers. Initial reporting for employers with 100 to 149 workers is due by 7 June 2031 (and every three years thereafter). For employers with 150 or more workers, reporting is due by 7 June 2027 (and every three years thereafter for employers with 150 to 249 workers, and every year thereafter for employers with 250 or more workers).
- Joint pay assessments and remedial action are required if unjustified pay gaps of five percent or more are identified. Joint pay assessments must be conducted in cooperation with workers’ representatives to identify, remedy, and prevent differences in pay between female and male workers that are not justified on the basis of objective, gender-neutral criteria.
|
| Sanctions and enforcement |
- Court proceedings must be available to workers who believe they have been wronged by a failure to implement the principle of equal pay.
- Workers must receive full, real compensation for damages, including back pay, bonuses, lost opportunities, non-material damage (such as distress caused by the undervaluation of work performed), and interest, with no cap.
- If an employer fails to meet its pay transparency obligations, the burden of proof is on the employer to demonstrate that there has been no pay discrimination.
- Employers that violate the principle of equal pay may face effective, proportionate, and dissuasive penalties, including fines.
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Current EU Member State implementation status
| Key |
| No activity |
|
| Some activity |
|
| Draft proposal / partial implementation |
|
| Full implementation |
|
| Country |
Status and notable features |
| Austria |
- No activity has been reported.
|
| Belgium |
- A decree has been implemented for the public sector.
- Private-sector legislation is pending.
|
| Croatia |
- A strategic document was published in 2023. No further activity has been reported.
|
| Czech Republic |
- A ban on pay confidentiality took effect in June 2025.
- A broader bill is expected in late 2025.
|
| Denmark |
- No activity has been reported
|
| Estonia |
- Drafting is underway. Legislation is expected to take effect in June 2026.
|
| Finland |
- A draft proposal that is largely consistent with the Directive has been published.
- Final legislation is not expected until late 2025.
|
| France |
- Consultation is underway.
- Draft legislation is expected in July 2025.
- Implementation is expected in fall 2025.
- The legislation is expected to maintain a threshold of 50 employees for reporting obligations, exceeding the Directive’s 100-employee minimum.
|
| Germany |
- A legislative proposal is expected by the end of 2025.
|
| Hungary |
- No activity has been reported.
|
| Ireland |
- Draft legislation partially implementing the Directive, which outlines requirements for pay details in job advertisements and bans questions about current pay, has been published.
|
| Italy |
- No activity has been reported.
|
| Luxembourg |
- No activity has been reported.
|
| Lithuania |
- A draft proposal for partial implementation has been published. Pay gap reporting and pay assessments will be handled separately.
- Consultation on the proposal is underway.
|
| Netherlands |
- A draft bill covering key aspects of the Directive, notably outlining the extensive role of works councils (including various consent rights, such as those related to implementation of pay structures), has been published.
- A final bill is expected in late 2025.
|
| Norway |
- The process is in the preparatory stages. The timeframe for draft legislation and implementation is unclear.
|
| Poland |
- Legislation covering pay transparency (including the requirement to provide proposed salary ranges to candidates) has passed. It will come into force on 24 December 2025.
- Legislation that will implement the remaining parts of the Directive, including gender pay gap reporting, is being drafted.
|
| Portugal |
- No activity has been reported.
|
| Romania |
- Implementation is expected to commence this year, to be completed in the first half of 2026.
|
| Slovakia |
- Plans to establish an internal working group are underway.
- Implementation is expected no later than January 2026.
|
| Spain |
- No activity has been reported.
|
| Sweden |
- Based on initial government reports, draft proposals are based on existing pay mapping for employers with ten or more employees.
- Draft legislation is expected in 2025.
|
Preparing for the Directive: Potential next steps for employers
| Category |
Steps |
| Data collection and analysis |
- Review and centralise pay and benefits data for each EU location.
- Assess current job architecture and pay practices, including how 'work of equal value' is determined.
Identify and document objective reasons for any existing gender pay gaps.
- Consider immediate remediation steps to address pay anomalies.
|
| Review of recruitment and employment practices |
- Audit recruitment processes to ensure compliance with new transparency requirements for job applicants.
- Consider how employees will be notified of the right to information on individual pay and average pay by gender for categories of workers performing the same or equal value work, and how requests will be managed.
- Update employment contracts and internal documentation to remove pay confidentiality clauses.
Deliver training for human resources teams and management on new obligations.
|
| Pay reporting readiness |
- Audit recruitment processes to ensure compliance with new transparency requirements for job applicants.
- Consider how employees will be notified of the right to information on individual pay and average pay by gender for categories of workers performing the same or equal value work, and how requests will be managed.
- Update employment contracts and internal documentation to remove pay confidentiality clauses.
Deliver training for human resources teams and management on new obligations.
|
| Engagement with employee representatives |
- Develop a strategy for engaging with works councils or other employee representatives.
|
| Monitoring and ongoing compliance |
- Track Member State implementation closely.
- Assess whether local implementing legislation exceeds the minimum requirements of the Directive.
- Monitor developments in EU jurisdictions with existing pay transparency laws, (eg, France, Germany, Italy, Spain) as these countries could significantly amend or expand their current frameworks, potentially introducing new or more stringent requirements.
|
Conclusion
The Directive could require companies with operations in the EU, including US-based multinationals, to rethink their approach to pay transparency and gender pay equity in Europe. Early, proactive, and cross-functional preparation could help ensure compliance and minimise legal and reputational risks. Employers are encouraged to monitor legislative developments to help ensure ongoing compliance.
For more information on how the Directive could impact your organisation, please contact the authors.
