EU Pay Transparency Directive: What Employers Need to Know

The gender pay gap remains one of the persistent issues facing employees across the European Union. Directive (EU) 2023/970, adopted by the European Parliament, strengthens the enforcement of the principle of equal pay between men and women for equal work or work of equal value.

Background

Directive (EU) 2023/970 was published in the Official Journal of the European Union and entered into force on June 5, 2023. It requires companies within the EU to provide employees with the information needed to compare salaries and identify any gender pay gap. The directive was adopted by a large majority in the European Parliament, with 427 votes in favor, 79 against, and 76 abstentions.

Under the new rules, pay structures must be gender-neutral, both in the criteria used and in the systems for evaluating and classifying jobs. Job vacancies and job titles must also be worded in a gender-neutral way, and recruitment processes must be non-discriminatory. The overall goal is to eliminate gender-based wage discrepancies and create a fairer, more transparent working environment.

Who the directive applies to

Directive (EU) 2023/970 applies to both public and private sector employers. It sets minimum requirements for enforcing the principle of equal pay enshrined in Article 157 of the Treaty on the Functioning of the European Union, and it prohibits discriminatory treatment as set out in Article 4 of Directive 2006/54/EC. It covers all workers with an employment contract or employment relationship as defined by each member state's legislation, collective bargaining agreements, or established practices, and under Article 2(3), it also extends to job applicants during the recruitment process.

Salary transparency before employment

Article 5 of the directive establishes job applicants' rights to salary information. Employers must provide candidates with the initial remuneration level or salary range for a position, based on objective and gender-neutral criteria, communicated in a way that allows for transparent and informed negotiation, such as in job vacancy announcements or before the interview. Candidates cannot be required to disclose their salary history from current or previous roles, and job vacancy announcements, job titles, and recruitment processes must all remain gender-neutral and non-discriminatory.

The right to pay information

The directive gives workers the right to request and receive written information about their own remuneration level and the average remuneration levels, broken down by sex, for categories of workers performing the same work or work of equal value. Workers can make this request through their representatives or through an equality body, in line with national laws and practices. Employers must inform all workers annually about this right and how to exercise it, and must respond to a request within two months. Workers cannot be prevented from disclosing their own remuneration information for the purpose of enforcing equal pay, though employers may ask that the information not be used for other purposes.

Implementation timeline

Member states must transpose the directive's requirements into national law by June 7, 2026. As of this writing, Romania has not announced a specific implementation plan for the directive.

Why this matters

Directive (EU) 2023/970 is a significant step toward pay equality across the European Union. By promoting salary transparency and guaranteeing workers' access to relevant pay information, it gives employers a clear framework for identifying and addressing wage inequalities well ahead of the 2026 deadline.

Sources: European Parliament, Directive (EU) 2023/970