EU Pay Transparency Directive: complete legislation guide and FAQs

The EU Pay Transparency Directive will be implemented across Europe by 7 June 2026, making pay transparency the norm in order to shine a light on the causes of pay equity and push employers to close the gender pay gap.

For many companies, major changes will be necessary to align with the new legislation, including:

• Compliance with stricter gender pay gap reporting
• Transparency on salaries and progression pathways for employees
• Transparency on the salary band for all new roles advertised.

We know this is a big cause for concern for People Teams – suddenly there’s a whole new set of regulations to be the company expert on, and pay transparency plans need to turn into action much more quickly than originally thought.

That’s why we’ve put together this guide to cover all the FAQs on the EU Pay Transparency Directive, and give you a summary of what the legislation actually includes.

Firstly, let's tackle all the most frequently asked questions about the new EU Pay Transparency Directive.

What is the EU Pay Transparency Directive?

The EU Pay Transparency Directive is a new piece of legislation introduced by the European Council to increase transparency about pay for employees throughout the EU. 

It represents a significant change in employment law on pay transparency and pay equity.

The use of the term ‘directive’ means that this set of rules are fairly top level and represent a consistent goal or framework which EU countries must achieve – but it’s up to individual countries to determine and implement their own laws to reach those goals.

That’s as opposed to a ‘regulation’ set by the EU which would mean that the rules are binding legislation and must be rolled out exactly as stated across the impacted member states.

We’re therefore likely to see differences in how the 27 EU member states choose to implement the new rules. So far, only Sweden has made any announcement about transposing the EU Pay Transparency Directive into local law, with their draft proposal on changes to existing Swedish equal pay laws (see FAQ below).

Where can I read the full text of the EU Pay Transparency Directive?

To read the EU Pay Transparency Directive in full, go to the EUR-Lex website, where all EU legal publications are housed.

Why the focus on pay transparency in the EU Pay Transparency Directive?

The central purpose of the EU Pay Transparency Directive is to close the gender pay gap in the EU, ensuring that men and women receive equal pay for equal work.

Research has shown strong evidence that pay transparency is currently lacking and that introducing pay transparency laws is a major factor in closing the gender pay gap. 

This is because without transparency about pay, it’s impossible for employers and employees to be aware when differences in salary are occurring that could be a result of discrimination – especially because a lot of the time it comes as a result of unconscious bias. Without awareness about pay discrimination, it’s also impossible to challenge and address those differences.

And there’s still a long way to go to close the gender pay gap in Europe, which is why the EU Pay Transparency Directive is such an important piece of legislation.

In fact, research from Ravio's pay equity report shows that women are still paid 25% less than men across the entire European tech industry when we don’t consider any external factors (the unadjusted gender pay gap). Even when we adjust this data to control for workers in the same job function, job level, and country, women are still paid 2.5% less than men.

What is pay transparency?

Pay transparency refers to companies openly and honestly sharing their compensation approach with both current and prospective employees.

The core aim is to improve pay equity by making it possible for employees to identify when they may be a victim of pay discrimination due to gender. Pay transparency also has additional positive benefits on employee engagement because of the increased understanding of pay practices and fairness.

Different companies will take different actions to improve pay transparency, but some of the key elements include:

• Including the salary range for a new role within the job description or advert
• Openly and clearly communicating key compensation practices to employees, such as the company’s compensation philosophy, job levels, salary band structure, compensation review process, and so on.
• Disclosing employee salaries – most companies will only disclose the salary band for each job role and level, but some companies are going further to fully disclose all salaries, such as Buffer.

Why is pay transparency important?

Pay transparency has a vital role to play in reducing pay discrimination and closing the gender pay gap.

Research shows that there is a strong link between a lack of transparency about pay practices and a large gender pay gap. 

This is because without transparency about pay, employers and employees aren’t always aware when differences in salary are occurring that could be arising as a result of discrimination – especially because a lot of the time it comes as a result of unconscious bias. Without awareness about pay discrimination it’s impossible to challenge and address those differences.

Because increased transparency about pay brings the causes of pay discrimination to light, it results in an improved assessment of differences in pay between genders – and a more accurate adjusted gender pay gap calculation (the adjusted pay gap being a calculation that takes into account factors like job level or location which contribute to pay differences). 

Pay transparency can also be a great way to improve employee engagement and increase retention. Increasing employee understanding of how compensation works in the company builds their trust in the company and reduces feelings of unfairness in pay.

What is the difference between the adjusted gender pay gap and the unadjusted gender pay gap? 

There are two ways to calculate the gender pay gap when we assess pay equity, which are broken down below. 

• Unadjusted pay gap: The unadjusted pay gap refers to the raw difference in median earnings between men and women, without accounting for any factors such as job level, job function, or the country they perform their work in. It provides a straightforward comparison but does not reflect differences in job roles or other relevant factors.
• Adjusted pay gap: The adjusted pay gap takes into account factors that contribute to pay differences between men and women, including job function, job level, and country. ‘Adjusting’ the raw data to account for these helps us paint a like-for-like comparison, which helps to answer the question of whether men and women are receiving equal pay for equal work. Because there are so many factors which impact pay discrimination towards women, the adjusted gender pay gap can be a more valuable metric to help companies identify where pay discrepancies are coming from.

Who does the EU Pay Transparency Directive apply to?

The EU Pay Transparency Directive applies to all public and private sector employers in the European Union.

There will be a staggered rollout, with large companies impacted first:

• Employers with 150 or more employees will need to submit gender pay gap reporting in June 2027, reporting on the calendar year of 2026
• Employers with less than 150 employees will need to submit gender pay gap reporting in June 2031, reporting on the calendar year of 2030.

The gender pay gap reporting requirements also vary depending on company size, as follows:

• Companies with more than 250 employees will be required to report annually
• Companies with 100-249 employees will be required to report every three years
• Companies with less than 100 employees will not be required to report (though individual EU member states could choose to change this during implementation).

When will the EU Pay Transparency Directive be in force?

The EU Pay Transparency Directive is already in force and has been since 6 June 2023 – meaning it has been official EU legislation since that date.

However, individual EU member states have three years to implement the legislation within their own national laws, by 7 June 2026. It’s possible some will transpose the Directive into local law more quickly than this – but so far the only country to make any announcement is Sweden.

There will be a staggered rollout of gender pay gap reporting requirements, with the first deadlines as follows:

• Employers with 150 or more employees will need to submit gender pay gap reporting in June 2027, reporting on the calendar year of 2026
• Employers with less than 150 employees will need to submit gender pay gap reporting in June 2031, reporting on the calendar year of 2030.

Does the EU Pay Transparency Directive apply to UK companies?

The UK is no longer an EU member state following Brexit, and so is not directly impacted by the EU Pay Transparency Directive.

However, if a company is registered in the UK (or anywhere else non-EU) but has more than 100 employees based in EU member states, they will need to comply with the legislation and reporting requirements for that location.

The EU Pay Transparency Directive rulings also go above and beyond existing pay transparency and gender pay gap reporting legislation in the UK, and so UK employers may find that they need to align with the rulings anyway to remain competitive as the wider talent market trends towards pay transparency.

On 21 May 2024 the UK government paused its pay transparency pilot for job applicants. This was a pilot looking at how to enforce salary ranges for all new job positions and banning employers from asking candidates about salary history – both important rulings within the EU Pay Transparency Directive. At first glance this seems to suggest that the UK may fall behind the EU on pay transparency laws. However, the language of the announcement suggests that they may simply be waiting to see how the roll out of the EU Pay Transparency Directive goes first:

Given this, we should expect to see changes to UK pay transparency laws during or after the roll out of the EU Pay Transparency Directive in 2026 and beyond.

Does the EU Pay Transparency Directive apply to contractors or freelancers?

No, the EU Pay Transparency Directive does not apply to contractors or freelancers.

The wording used is that the Directive “applies to all workers who have an employment contract or employment relationship as defined by law” which excludes contractors.

How does the EU Pay Transparency Directive differ to existing pay transparency legislation across Europe?

The EU Pay Transparency Directive introduces much stricter rules on pay transparency practices and gender pay gap reporting to all EU member states. 

The exact impact will differ from country to country depending on their current pay transparency legislation – and we won’t know the full impacts until each EU member state announces how they intend to transpose the Directive into local law.

France, for instance, already mandates gender pay gap reporting for all employers with 50+ employees and makes the results of this public via their Gender Equality Index. Germany, on the other hand, has less rigorous pay transparency laws currently with only employers with 500+ employees required to report on equal pay.

What changes are required for employers under the EU Pay Transparency Directive?

Whilst it’s too early to know how each EU member state will implement the new legislation, there are four main areas of ruling covered by the EU Pay Transparency Directive which result in changes for employers:

1. Stricter gender pay gap reporting. Companies with over 100 employees will be required to submit gender pay gap reports. Any company with a gap of over 5% will be required to conduct a joint pay assessment alongside employee representatives to further analyse the gender pay gap and put an action plan in place to close it.
2. Employee rights to pay information. Employees will be entitled to request information about the company’s compensation approach, particularly: job levels, salary bands, career progression, pay progression. Employees will also be entitled to request information about the pay of colleagues who perform equal work or work of equal value to them. 
3. The burden of proof shifts to the employer. The employer will need to prove that pay discrimination has not taken place in the case of complaint – whereas historically the employee would have to prove that pay discrimination has taken place. 
4. Increased access to pay information for job applicants. Employers will be required to disclose the salary range for all new roles to candidates before interviews. Employers will be banned from asking candidates about their salary history. 

For a comprehensive overview of what’s included in the EU Pay Transparency Directive, head to Part 2 of this article (after the FAQs).

What needs to be included in gender pay gap reporting under the EU Pay Transparency Directive?

The gender pay gap reporting must include:

• Mean and median gender pay gap for base salary
• Proportion of men and women receiving variable pay
• Mean and median gender pay gap for variable pay
• Proportion of men and women in quartile pay bands i.e. lower pay, lower middle, middle upper, upper.

What is a joint pay assessment in the EU Pay Transparency Directive?

Article 10 of the EU Pay Transparency Directive rules that any employer which identifies a gender pay gap of over 5% in any category included in the reporting requirements and:

• cannot justify that gender pay gap through objective, gender neutral explanations
• does not rectify the gap in average pay within six months of submitting the report

… must then conduct a joint pay assessment.

The joint pay assessment is further analysis of the gender pay gap data, including identifying the root causes of gender pay differences and measures to address them. This assessment must be conducted in cooperation with employee representatives, and must be made available to all employees once complete.

Is salary confidential by law in the EU?

The EU Pay Transparency Directive will make it illegal for employers in the European Union to include confidentiality clauses (also known as pay secrecy clauses) in employee contracts. 

This means it is illegal to try and stop employees from discussing their salary – employees have a right to discuss pay with their colleagues in order to identify any potential pay discrimination issues.

How should employers be preparing for the EU Pay Transparency Directive?

The EU Pay Transparency will be fully in place in 2026 (with first reporting in 2027) which will come around fast. It’s therefore important for employers to start preparing now – assessing what changes will need to be made within the company to comply with the legislation, and making a plan to implement those changes.

To help make the transition nice and smooth, we’ve put together a guide with all the key steps employers need to take to prepare.

What are the key changes the EU Pay Transparency Directive will mean for employers?

There are four main areas of ruling covered by the EU Pay Transparency Directive which result in changes for employers:

1. Stricter gender pay gap reporting. Companies with over 100 employees will be required to submit reports on their gender pay gap, and any company with a gender pay gap of over 5% will be required to conduct a joint pay assessment in cooperation with employee representatives to further analyse the gender pay gap and take action to reduce it. Read more about gender pay gap reporting under the EU Pay Transparency Directive.
2. Increased access to pay information for employees. Employees will be entitled to request information on pay levels and the criteria for career and pay progression. Read more about the rulings on worker rights to pay information within the EU Pay Transparency Directive.
3. The burden of proof shifts to the employer. In any case regarding pay discrimination, the employer will need to prove that pay discrimination has not taken place – whereas historically the employee would have to prove that pay discrimination has taken place. Read more about enforcing ruling and potential penalties within the EU Pay Transparency Directive.
4. Increased access to pay information for job applicants. Employers will be required to include the salary range for all job positions to candidates before interviews. Employers will be banned from asking candidates about their salary history. Read more about the rulings for job applicants within the EU Pay Transparency Directive.

For a more comprehensive overview of what’s included in the EU Pay Transparency Directive, head to Part 2 (after the FAQs).

The FAQs above cover the basics, but to be the company expert on the EU Pay Transparency Directive you need to get stuck into the text of the Directive itself. 

Unfortunately, as you might expect, it’s a long, dense document full of legal language, which makes it tricky to read and digest. 

To help you out we’ve read through the full document ourselves and in this section you’ll find a full summary of the text includes – chapter by chapter, article by article.

Chapter 1 of the EU Pay Transparency Directive: purpose, scope, key concepts

Chapter 1 covers all the context for the conditions under which the EU Pay Transparency Directive applies:

• Article 1 explains the purpose of the Directive is to ‘strengthen the application of the principle of equal pay between men and women… through pay transparency.’
• Article 2 sets the scope of the Directive as applying to all employers across public and private sectors, and to all workers with an employment relationship.
• Article 3 defines key concepts used within the Directive, importantly including defining that ‘pay’ refers both to base salary and other cash or non-cash compensation received from an employer for work completed.
• Article 4 establishes the need for EU member states to put in place tools or methodologies for objectively assessing the relative value of work performed within a company in order to be able to determine what ‘equal work or work of equal value’ means – as this is core to the Directive, which aims to ensure that men and women receive equal pay for equal work or work of equal value.

Chapter 2 of the EU Pay Transparency Directive: pay transparency rules

Chapter 2 contains the rules on pay transparency for employers – of the whole Directive, this is the chapter that’s really worth reading in detail. 

The articles covered are:

• Article 5 covers pay transparency prior to employment, with two key rulings that applicants must receive the salary range of a new job position before interview and employers must not ask about an applicant’s salary history during the hiring process.
• Article 6 covers pay and progression transparency for existing employees, ruling that employers must make gender neutral criteria for pay levels and career progression ‘easily accessible’ to employees.
• Article 7 covers employee rights to pay information, ruling that employees have the right to receive information on pay levels for employees doing equal work or work of equal value to them – and that employers must make employees aware of this right annually. It also rules that employees cannot be prevented from discussing salaries.
• Article 8 rules that employers must make any information shared relating to articles 5, 6, 7 accessible for employees with disabilities.
• Article 9 explains the gender pay gap reporting requirements introduced by the Directive, including how often reporting must be conducted and in what format (a ‘user-friendly way on its website or otherwise publicly available). It also highlights that employees have the right to request further information on explanations for gender pay gaps identified.
• Article 10 rules that any employer with a gender pay gap over 5% must also conduct a ‘joint pay assessment’ with employee representatives including further analysis on the gender pay gaps identified and measures to address differences in pay across men and women. The joint pay assessment must also be made available to all employees.
• Article 11 rules that EU member states must provide ‘technical assistance and training’ to all employers with less than 250 employees to help them comply with reporting requirements.
• Article 12 covers data protection for the reporting, which must be in line with GDPR.
• Article 13 establishes that EU member states should ensure ‘social dialogue’ as they roll out the Directive in national law. Social dialogue is a key concept in EU law which simply means that ‘social partners’ i.e. employers and workers organisations must be consulted.

Chapter 3 of the EU Pay Transparency Directive: enforcement and penalties

Chapter 3 establishes how EU member states should enforce the rulings within the EU Pay Transparency Directive.

There’s a lot of articles in this Chapter and the nuance will be better understood once individual countries implement the legislation in their national law, so we won’t dive into every single detail until this is in place – but let’s take a look at some of the key inclusions:

• Legal cases against pay discrimination. Official court procedures will be available to employees to enforce their right to equal pay (Article 14) and employees who have been discriminated against will have a legal right to compensation which must include ‘full recovery of back pay and related bonuses or payments in kind, compensation for lost opportunities and moral prejudice’ (Article 16).
• Burden of proof shifts to the employer. The ‘burden of proof’ in pay discrimination cases shifts from employee to employer i.e. the employer will have to prove that pay discrimination has not taken place for a case to be dropped (Article 18).
• Penalties. EU member states must implement ‘effective, proportionate and dissuasive’ penalties for companies who do not comply with the legislation on pay transparency (Article 23). What these penalties are is open to interpretation, but we’d expect substantial financial penalties to be on the table.

Chapter 4 of the EU Pay Transparency Directive: horizontal provisions

Chapter 4 of the EU Pay Transparency Directive covers horizontal provisions. 

This refers to the ‘horizontal direct effect’ in EU law, which means that citizens of EU member states can rely on EU law against other citizens within a national court – as opposed to an EU court (this is vertical direct effect). 

So, in essence, this final chapter covers all the rules that make sure that EU member states can effectively transpose the Directive into national law.

Like with chapter 3, therefore, much of the text applies only at a country-level and so the implications won’t be clear until we see individual EU member states start to make changes, but here are some of the important highlights:

• EU member states can choose to introduce legislation which goes above and beyond the Directive in favour of workers – but cannot use it to reduce the level of worker protection in any area (Article 27)
• EU member states must establish a monitoring body responsible for tasks such as raising awareness about pay transparency and the right to equal pay and publishing insights on the data gathered through gender pay gap reporting (Article 29)
• EU member states must bring the rulings into force in national law by 7 June 2026 (Article 34).

Last updated: 2nd May 2025.

EU member states have until 7 June 2026 to transpose the EU Pay Transparency Directive into their own national laws.

The Directive represents mandatory rulings that all EU member states must introduce by this time, but individual countries could choose to implement those rulings in different ways, so it’s important to understand local laws as they are determined.

So far, one one member state has officially adopted the Directive: the Wallonia-Brussels Federation in Belgium.

Draft proposals for transposing the EU Pay Transparency Directive have been published by:

• Sweden
• Poland
• Ireland
• Netherlands

Germany has also indicated that their draft proposal will be released in 2025. 

Let’s take a closer look at each of these.

Belgium – Wallonia-Brussels Federation: EU Pay Transparency Directive decree

The Wallonia-Brussels Federation is located within Belgium, but has its own separate government. In November 2024 they passed a decree for transposing the EU Pay Transparency Directive into national law – which will come into effect in June 2026.

The decree applies to all companies within the Federation which covers: companies created by the Federation, educational institutions within the Federation, and government institutions within the Federation’s control. 

The decree largely follows the rulings of the Directive, with a few key differences and additions:

• Timing for salary range disclosure during hiring. The Federation’s decree specifies that employers must disclose the salary range and any relevant collective agreement provisions for new roles as soon as they are advertised i.e. within the job advert itself – the Directive only specifies that candidates must have this information before interviews.
• Parental leave disclosure. The Federation’s decree adds to the Directive’s reporting requirements by mandating that employers must also report on the amount of leave granted to male and female workers for family responsibilities (maternity, paternity, parental, adoption) and the equivalent in pay.
• Penalties for non-compliance. The decree rules that employers who fail to comply with the requirements or fail to reduce their pay gaps to an acceptable level will be fined up to 3,900 euros per year or the equivalent of the actual damages suffered.

Sweden: EU Pay Transparency Directive draft proposal

The Swedish government released their ‘Genomförande av lönetransparensdirektivet’ (implementing the EU Pay Transparency Directive) proposal in May 2024.

Sweden’s draft proposal goes beyond the minimum requirements of the EU Pay Transparency Directive, in a few key ways:

• Sweden’s existing Discrimination Act already mandates equal pay reporting for employers with 10+ employees, and this will remain in place – whereas reporting in the Directive only applies to those with 100+ employees.
• Gender pay gap reporting must include the impact of parental leave on pay progression through a comparison of pay progression for men and women who take parental leave, compared to their peers who do work of equal value but do not take parental leave. 
• Explicit requirement for employers to communicate to employees the methodology behind how they have categorised workers into categories of equal workers for the ‘equal pay for equal work’ requirements, including the reasoning behind the relative value given to each job role and job level. 
• Employers with a pay gap of more than 5% in any reported category must submit their report to Sweden’s equality body (the Diskrimineringsombudsmannen or DO) who will collect and publicly present aggregated data.
• Employers who fail to submit their report to the DO will be fined for non-compliance, with a maximum penalty of 50,000 euros.

As you’d expect, the proposal is also tailored to align with employment law and local working culture in Sweden, particularly:

• Alongside the salary range, employers must also disclose applicable collective agreement provisions to job applicants before any salary negotiations begin. 
• Employees can exercise their right to equal pay information via employee representatives (all companies with at least 25 employees have these) rather than requesting the information directly from their employer. 

The draft proposal was open for consultation from May to October 2024, before being reviewed again by the government. 

Read more about pay transparency in Sweden.

Poland: EU Pay Transparency Directive draft proposal

On December 5 2024, a group of Parliament Members suggested proposed changes to Poland’s existing labour laws to align with (and go beyond) some of the rulings in the EU Pay Transparency Directive, including:

• Salary range in job advert. The proposal included a requirement for employers to include the salary range for all open roles within the job advert itself, whereas the Directive only specifies that candidates must have this information prior to interview.
• 2 weeks to provide salary information to employees. Employers would be required to share information on equal pay within 14 days of an employee requesting it – a quicker turnaround than stipulated in the Directive.
• Disclose how categories of workers have been determined. Employers with 50+ employees would be required to provide information on how pay levels have been determined, and all employers would be required at employee request to provide the objective criteria used to determine pay levels. 
• Fines for non-compliance. Fines of 1,000-30,000 zloty were proposed for failing to comply. 

Notably, this proposal did not cover all areas of the Directive, such as gender pay gap reporting – and Poland does not have existing gender pay gap reporting requirements in place, as many other member states do.

In February 2025 the Sejm (Poland’s parliament) voted against these proposed amendments. It is now with the Extraordinary Committee for Amendments to Codifications to determine next steps on the transposition. 

Ireland: EU Pay Transparency Directive draft proposal

In January 2025 the Irish government published ‘General Scheme of the Equality (Miscellaneous Provisions) Bill 2024’ – which includes a draft proposal for transposing the EU Pay Transparency Directive into national law.

The bill only includes the pay transparency requirements for employees and job candidates, and does not cover the planned changes to account for the Directive’s gender pay gap reporting requirements.

The bill goes beyond the requirements of the Directive in one key way. As with Sweden, Poland, and the Federation, Ireland’s proposal specifies that employers must disclose the salary range for all new roles within the job posting itself – whereas the Directive only mandates that this must be provided before interview.

The Irish government will now decide whether the draft will become a formal bill and eventually law, or if amendments will be made before this.

Netherlands: EU Pay Transparency Directive draft proposal

In March 2025 the Dutch government released a draft proposal for implementing the EU Pay Transparency Directive into national law.

The proposal is largely in line with the minimum requirements of the Directive itself, and focuses on how existing employment laws in the Netherlands will be amended to incorporate the new legislation (Equal Treatment Act, Works Councils Act, and the Law on the Allocation of Workers by Intermediaries).

One area where the Dutch proposal does differ is the inclusion of works councils – a key element of labour law and working culture in the Netherlands. 

All companies in the Netherlands with 50+ employees are required under law to have a works council – a body of elected employee representatives who serve as a bridge between management and the workforce.

The wage transparency implementation proposal mandates that companies must consult with their works council on their pay gap reporting and request the works council to confirm its accuracy before finalising. This is not included in the Directive, as not every country has works councils as standard. The proposal also clearly states that non-compliant companies who do not have a works council are inherently unable to fulfil their obligations on pay transparency, and no alternative arrangements will be made.

The Dutch proposal on implementing the EU Pay Transparency Directive is open for consultation responses until May 2025, after which the government will either move the proposal forward or make further amendments.