The EU Pay Transparency Directive (Directive (EU) 2023/970) introduces a new framework to strengthen the principle of equal pay for equal work between men and women. It sets out a range of transparency and reporting obligations for employers across the EU, designed to help close the gender pay gap and ensure fairness in remuneration. Member States must transpose the Directive by 7 June 2026.
What is the EU Pay Transparency Directive and its main objective?
The Directive aims to reinforce the enforcement of equal pay between men and women through enhanced pay transparency and improved access to justice. It also recognises intersectional discrimination, where gender-based discrimination overlaps with other factors such as ethnicity, age, or disability. For employers, the Directive represents a major step towards greater pay transparency and accountability in pay structures.
Who is covered by the Directive?
The Directive applies to all employers, public and private, and to all workers under an employment relationship. It also extends to job applicants with respect to pay transparency before hiring. The scope explicitly includes part-time, temporary, platform, trainee, and apprentice workers.
What pay transparency obligations apply to employers?
Employers must ensure transparency in pay-setting and career progression criteria, which must be objective and gender-neutral. Key obligations include:
- Disclosing pay levels or pay ranges in job postings and during recruitment.
- Avoiding questions about an applicant’s pay history.
- Providing employees with access to information on their individual pay and average pay levels, disaggregated by sex, for comparable roles.
- Ensuring job descriptions and evaluation systems are based on gender-neutral criteria.
Which employers must report pay gap data?
Employers with 100 or more workers will be required to report regularly on gender pay gaps, including:
- Average pay gaps (including variable components);
- Pay quartiles by gender;
- Proportion of men and women receiving bonuses or other benefits.
The reporting frequency will be:
- Annually for employers with 250+ workers;
- Every three years for employers with 100–249 workers.
Reports must be made public, typically via the company’s website.
How should equal value of work be assessed?
Employers must evaluate work of equal value using objective and gender-neutral criteria, such as:
- Skills and competence;
- Effort and responsibility;
- Working conditions;
- Other relevant factors linked to the specific role.
These criteria should be transparent and, where relevant, developed in consultation with employee representatives.
Can employees access information about colleagues’ pay?
Yes. Employees may request information on their individual pay and on average pay levels, broken down by gender, for comparable roles. Requests may be made directly, through employee representatives, or via the designated equality body (in Portugal, the CITE).
What protection is provided against retaliation?
The Directive prohibits any adverse treatment or dismissal of workers who exercise their rights under pay transparency or support colleagues in doing so. This protection extends to employee representatives.
What about public procurement and sanctions?
Public authorities are encouraged to include compliance with equal pay principles in public tenders and concession contracts. Breaches of the Directive may result in effective, proportionate, and dissuasive sanctions, including fines and exclusion from public tenders.
How should employers prepare for implementation?
Employers should begin by:
- Reviewing existing pay structures and ensuring gender neutrality;
- Establishing transparent pay and promotion criteria;
- Implementing systems to collect and analyse pay data;
- Training HR teams on new obligations;
- Engaging with employee representatives to review evaluation methods.
Early preparation will help organisations ensure compliance and foster a culture of transparency and fairness.
What is the timeline for transposition?
EU Member States must transpose the Directive into national law by 7 June 2026. Some countries, such as Belgium, the Netherlands, Poland, and Sweden, have already initiated legislative steps. In Portugal, existing legislation on pay equality (Law No. 60/2018) is expected to be amended accordingly.
Conclusion
The EU Pay Transparency Directive represents a decisive shift towards mandatory pay transparency and equality reporting. Employers should act now to review their remuneration systems, identify potential gender pay gaps, and prepare for compliance ahead of the 2026 deadline.
Upcoming event
CMS Portugal will host – 4th November, from 09 am to 11:30am, at Castillho, 50 Lisbon – an in-person event dedicated to discuss the practical implications of the EU Pay Transparency Directive and the expected national implementation framework.
🔗 Register here: Evento Transparência Salarial
