From 2026 onwards, public and private employers must comply with the new EU obligations regarding equal pay and pay transparency.
Background to EU Directive 2023/970
EU Directive 2023/970 aims to reinforce equal pay for equal work between people of all genders through binding pay transparency measures. Key provisions of the Directive include:
- Workers’ access to information on pay, including during the recruitment process;
- Mandatory reporting on the gender pay gap by companies with at least 100 employees;
- Obligation to justify or remove differences in pay which are not justified on the basis of objective criteria.
The Directive seeks to close the gender pay gap, eliminate pay discrimination. It also aims to promote a fairer and more inclusive labour market across Member States.
Right to equal pay
The principle of equal pay for male and female workers is enshrined in Article 157 of the Treaty on the Functioning of the European Union (TFEU), which requires Member States to ensure equal pay for equal work or for work of equal value.
Directive (EU) 2023/970 strengthens the application of this principle by requiring employers to adopt objective, gender-neutral criteria when determining the remuneration of workers, with the aim of ensuring fair and impartial compensation for everyone.
Pay transparency and right to information
One of the main pillars of Directive (EU) 2023/970 is pay transparency, an essential tool to identify and exclude gender-based discrimination.
The new provisions grant workers the right to request and receive information on the average pay levels within the company. In addition, applicants for employment are entitled to receive information about the initial pay or its range already prior to employment, thus preventing discriminatory manner in negotiation on pay.
Therefore, pay transparency is not merely a communication obligation for employers, but rather a concrete tool to prevent differences in pay and promote a fairer workplace culture.
Under Article 7 of the Directive workers have the right to request and receive in writing information:
- On their individual pay level; and
- On the average pay levels, broken down by sex, for categories of workers performing the same work as them.
Requests may be made either by the workers themselves or through workers’ representatives.
Employers shall provide this information within two months from the date of the request. The information must be presented in an accessible and user-friendly manner, allowing workers to assess any unjustified difference in treatment.
Within the scope of the right to information, Member States shall also put in place measures to prohibit any contractual term that restricts workers from disclosing information about their pay.
Employers’ obligations
Under Directive (EU) 2023/970, employers must comply with a set of obligations aimed at ensuring equal pay for people of all genders.
Under Article 9 of the Directive, Member States shall ensure that employers provide, in relation to their organisation, information on:
- the gender pay gap;
- the gender pay gap in complementary or variable components;
- the median gender pay gap;
- the median gender pay gap in complementary or variable components;
- the proportion of female and male workers receiving complementary or variable components;
- the proportion of female and male workers in each quartile pay band;
- the gender pay gap between workers by categories of workers broken down by ordinary basic wage or salary and complementary or variable components.
Such information must also be made available to the labour inspectorate and the equality body upon request. Employers shall also provide information from the previous four years, if available, upon request.
Penalties in the event of non-compliance
Directive (EU) 2023/970 establishes a set of tools aimed at strengthening the protection of workers in the event of pay discrimination based on sex, holding employers completely accountable for compliance with the legislation. This promotes a culture of transparency and equality in the European labour market.
The main enforcement mechanisms include:
- Administrative and financial penalties, such as fines, exclusion from participation in public procurement procedures, or revocation of public benefits in the event of serious or repeated infringements;
- Obligation to justify and adopt remedial measures where a gender pay gap of more than 5% is not justified by the employer on the basis of objective, gender-neutral criteria;
- Defence of rights for workers, through prompt and easily accessible proceedings;
- Right to full compensation for victims of pay discrimination;
- Shift of burden of proof, so that it is for the employer to prove that there has been no pay discrimination;
- Competence of equality bodies in assisting and supporting workers.