Takeaways
- EU Pay Transparency Directive 2023/970 imposes pay transparency requirements and equal pay reporting obligations on employers based in the EU or have employees located in the EU.
- EU Member States have until 06.07.26 to fully implement the Directive into their national law.
- Employers must proactively prepare to inform employees of their rights, disclose salary ranges in job postings, and justify pay differences using objective, gender-neutral criteria.
Article
September 18 marked International Equal Pay Day. This year's International Equal Pay Day carries added significance for employers operating in the European Union as the clock ticks toward implementation of the EU Pay Transparency Directive (Directive (EU) 2023/970). The Directive imposes pay transparency requirements and equal pay reporting obligations on employers and applies to companies based in the EU or have employees located in the EU.
EU Member States have until June 7, 2026, to fully implement the Directive into their national law. Gathering the right data and running the required pay gap calculations for reporting can be a lengthy and time-consuming process. Now is the time for employers to start preparing.
New Legal Landscape
Employers with at least 100 employees face the Directive's new obligations around salary transparency, employee access to pay data, and gender pay gap reporting.
Employers with at least 250 employees must publish their first reports by June 2027. Employers with 100–249 employees will follow on a staggered schedule.
The Directive is not just about disclosure — but also accountability. Employers must proactively inform employees of their rights, disclose salary ranges in job postings, and justify pay differences using objective, gender-neutral criteria.
Key obligations include:
- Pay transparency in recruitment:Employers must
disclose the starting salary or pay range in job postings or before
candidate interviews. They are prohibited from asking candidates
about their salary history.
- Right to information:Employees will have the right to
request information on their individual pay and the average pay
levels for workers doing the same or equivalent work.
- Pay reporting and joint pay assessments:Employers with
at least 100 workers must publish pay gap data. Where gaps exceed
five percent and cannot be justified by objective criteria, a joint
pay assessment with worker representatives will be mandatory.
- Redress and sanctions:Employees who suffer discrimination will benefit from strengthened enforcement mechanisms. Employers will be subject to penalties for non-compliance.
Why It Matters Now
For employers, the Directive is more than a compliance exercise — it requires cultural and organizational change. Pay systems, recruitment practices, HR data infrastructure, and communication policies will all come under scrutiny.
For U.S.-based multinationals, the implications are significant. The Directive extends to any entity with EU-based employees.
Steps for Employers
To prepare, employers should consider the following:
- Audit pay structuresnow to identify potential risks.
- Develop transparent policiesfor recruitment and pay progression.
- Engage employee representativesearly to anticipate collaboration on pay assessments.
- Invest in HR systemscapable of capturing and reporting accurate pay data.
Looking Ahead
Our firm is actively advising clients on these questions and more. From reviewing pay architecture and conducting dry-run gap analyses to developing action plans and training managers, we are helping employers turn compliance into a strategic advantage.
International Equal Pay Day is not just a moment of reflection — it is a catalyst for change. As the EU ushers in a new era of transparency, now is the time for employers to act. The Directive will accelerate that shift, creating new obligations and risks for employers. Taking proactive steps now will not only support compliance but also help organizations position themselves as fair, inclusive, and competitive employers in a changing European labor market.
