The EU Pay Transparency Directive And Its Implementation In Malta

Directive 2023/970¹ (hereinafter referred to as the “Pay Transparency Directive”) of the 10 May 2023, was implemented in order to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women, through pay transparency and enforcement mechanisms. Member States are to bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by the 7 June 2026.

The Directive's main Principles

Article 157 of the Treaty of the Functioning of the European Union (hereafter referred to as the “TFEU”) and the Directive 2006/54/EC² (the “Equal Treatment Directive”), enshrine the right to equal pay for equal work of equal value. Despite these legal safeguards, enforcing this principle has long proven difficult, largely because pay discrimination often goes undetected in workplaces which lack transparency.

In 2021, women in the European Union (EU) earned on average 12.7% less per hour than men, with significant differences between Member States. To address these disparities, on the 4 March 2021 the European Commission proposed the new Pay Transparency Directive, which was subsequently adopted in 2023. In essence, the Pay Transparency Directive introduces stronger measures built on three pillars: transparency, rectification, and legal remedies.

Transparency

The Pay Transparency Directive requires employers to ensure that pay systems are transparent and comprehensible by granting job applicants the right to receive clear information on initial pay or pay ranges, based on objective, gender-neutral criteria, along with any relevant collective agreement provisions. The Pay Transparency Directive prohibits the asking of questions to job applicants regarding their previous pay history. Employers must make accessible to employees the objective, gender-neutral criteria used to determine pay, pay levels, and pay progression, with possible exemptions for Maltese employers with fewer than 50 workers regarding pay progression. Pay structures must enable the evaluation of whether workers are in comparable situations in terms of work value, using agreed criteria such as skills, effort, responsibility, and working conditions, without undervaluing soft skills. In any case pay structures must not be based on criteria directly or indirectly related to sex.

During their employment, employees will have the right to request and receive, within 2 months from the said request, written information on their own pay level and the average pay levels, broken down by sex, for colleagues performing the same or equivalent work. Any restrictions on disclosing pay for the enforcement of equal pay rights are prohibited, and companies exceeding set employee thresholds in Malta will be required to report detailed gender pay gap data, including overall and median pay gaps, gaps in complementary or variable components, the proportion of men and women receiving such components, the distribution of male and female workers across pay quartiles, and gaps by worker categories. The employers concerned are duty-bound to submit this information to competent authorities and they have an option to make this information publicly available.

Rectification

The Pay Transparency Directive makes it clear that when men and women are not paid equally for the same work or work of equal value, employers must act quickly to fix the problem. If differences in pay cannot be explained by objective and gender-neutral reasons, they must be corrected within a reasonable time, and this process should be done together with workers' representatives, labour inspectors, and the equality body.

When pay reports show a gap of at least 5% between women and men in the same category of work, and no clear explanation is given, the employer is required to carry out a joint pay assessment with employees' representatives. The goal of this assessment is to understand why the gap exists, correct it, and prevent it from happening again.

Once the assessment is complete, the employer must put the agreed measures into practice. This could take the form of a review as to how jobs are evaluated and classified or the introduction of new systems that are fair and gender neutral. The aim is to ensure that both women and men are rewarded equally for the work they do, without any form of direct or indirect discrimination.

Legal Remedies

The Pay Transparency Directive strengthens workers' rights by giving them clear access to justice if they believe they are not being paid equally. Any worker who feels wronged can take their case to the competent court or tribunal. Organisations that promote equality can also step in to support workers or even act on their behalf, provided the worker agrees. Employees who have been discriminated against are entitled to full compensation. This means they should be placed in the financial position they would have been in if the pay discrimination had never happened. Compensation should be real, fair, and proportionate to the harm suffered.

Courts and authorities also have the power to order employers to stop discriminatory practices and take action to ensure equal pay. If an employer fails to comply, financial penalties can be applied until they do. These penalties are designed to be strong enough to deter any future breaches. Importantly, the burden of proof is shifted in cases of alleged discrimination. If a worker can show facts that suggest unequal pay, it is then up to the employer to prove that no discrimination has taken place. Workers and their representatives are also protected from retaliation, ensuring they cannot be punished for standing up for equal pay or supporting someone else who does.

Finally, each country must set up a body to monitor how the law is being applied. This equality body is entrusted to raise awareness, provide support, and collect data to make sure progress on equal pay is being achieved.

Malta's Initial Reaction – Where does it Stand Today?

The concept of equal pay for work of equal value, is not new to Maltese law, despite the Pay Transparency Directive introducing new rights and obligations which are aimed at strengthening pay transparency and closing the gender pay gap further.

Article 27 of the Employment and Industrial Relations Act (EIRA) has long regulated this principle as it requires employers to provide equal remuneration for work of equal value. Employees in the same class of employment are entitled to the same rate of remuneration for work of equal value. That said, an employer and an employee or a trade union may agree on different salary scales, annual increments and other conditions of employment that are different for those workers who are employed at different times, where such salary scales have a maximum that is achieved within a specified period of time.

Besides Article 27 of EIRA, Article 3A of the Equal Treatment in Employment Regulations³ states that it shall be the duty of the employer to ensure that for the same work or for work to which equal value is attributed, there shall be no direct and indirect discrimination on grounds of sex with regard to all aspects and conditions of remuneration. Moreover, the employer shall ensure, particularly that where a job classification system is used for determining pay, it shall be based on the same criteria for both men and women and so drawn up as to exclude any discrimination on grounds of sex.

Notwithstanding EIRA and the Equal Treatment in Employment Regulations, Malta has last month begun its formal steps to transpose the Pay Transparency Directive through the publication of Legal Notice 112 of 2025⁴, amending the Transparent and Predictable Working Conditions Regulations⁵. This amendment, which came into force on 27 August 2025, introduced rights relevant to both the pre-employment stage and the ongoing employment stage as follows;

• Primarily, applicants for employment have the right to receive, from the prospective employer, information about the initial pay or its range, to be attributed to the position concerned before their actual engagement. Where the employer is governed by a collective agreement, the applicant for employment shall also have a right to receive the relevant pay provisions of the collective agreement which are applicable to the role being filled.

• Secondly, the law introduced the right of all workers to request their employer, at any time during employment, their individual pay level and the pay levels for categories of workers performing the same work as them. ‘Pay level' is defined as the “gross annual pay and the corresponding gross hourly pay”, the latter particularly relevant in the case of part time employees. When employees exercise their right to request information about their own pay level and the pay levels of categories of workers performing the same work, the employer is required to provide the information within a reasonable timeframe. In line with the Pay Transparency Directive, a ‘reasonable' timeframe is defined as a period not exceeding 2 months from the date of the request.

Conclusion

Although the principle of equal pay for equal work or work of equal value has existed within the EU since 1957 and has been implemented in our national legislation through various laws, the right itself needed to be further strengthened as statistics have shown that progress was not advancing at the intended pace. The existing regime needed to be supplemented by a further right whereby the employee gains access to crucial information related to his and others' pay levels. Moreover, closing the gender pay gap meant imposition of stricter obligations on the employer. The gender pay gap will indeed remain a problem if the employee is deprived of visibility over information which would help in ensuring compliance and in enforcing his legal rights, and if the employers do not do enough to align themselves with the principle that work is to be compensated equally among the employees entrusted with that work.

Footnotes

1. DIRECTIVE (EU) 2023/970 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 10 May 2023 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms

2. Directive 2006/54/EC (Recast): EU directive consolidating rules on equal opportunities and equal treatment of men and women in employment and occupation.

3. Subsidiary Legislation 452.95

4. EMPLOYMENT AND INDUSTRIAL RELATIONS ACT (CAP. 452). Transparent and Predictable Working Conditions (Amendment) Regulations, 2025

5. Subsidiary Legislation 452.126

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.