EU Pay Transparency Directive

What the directive requires

The directive was adopted in May 2023 to enforce the principle of equal pay for equal work or work of equal value between men and women. It sets minimum rules that each member state must write into national law, and states can go further. The main obligations fall into three groups:

Before employment. Applicants have the right to receive the initial pay or pay range for the role, based on objective, gender-neutral criteria, in the job advertisement or before the interview. Employers may not ask applicants about their pay history in current or previous jobs. Job titles and vacancy notices must be gender-neutral, and recruitment must be non-discriminatory.

During employment. Employers must make the criteria used to set pay and pay progression easy for workers to access. Workers can request information on their own pay level and the average pay levels, broken down by sex, for workers doing the same work or work of equal value; the employer must respond within two months. Clauses that forbid workers from disclosing their pay are not allowed for equal pay purposes.

Reporting. Employers above size thresholds must report gender pay gap data, and some must carry out joint pay assessments with worker representatives.

Reporting thresholds and dates

The directive phases in reporting by employer size, counting employees in the member state:

• 250 or more employees: report every year, starting by 7 June 2027 for calendar year 2026.
• 150 to 249 employees: report every three years, starting by 7 June 2027.
• 100 to 149 employees: report every three years, starting by 7 June 2031.
• Under 100: no mandatory reporting under the directive, though member states may require it.

Reports include the mean and median gender pay gap, the gap in complementary or variable pay, the share of men and women receiving variable pay, the share of each sex in each pay quartile, and the gap by category of workers. If the gap in any category is 5 percent or more, is not justified by objective, gender-neutral criteria and is not corrected within six months, the employer must do a joint pay assessment with worker representatives and put remedies in place. For the underlying metric, see the gender pay gap entry.

Enforcement and risk

The directive shifts the burden of proof. When a worker presents facts suggesting pay discrimination, the employer must prove there was none, and an employer that has not met its transparency duties will find that harder. Workers who suffer pay discrimination are entitled to full compensation, including back pay and related bonuses or benefits. Member states must set effective, proportionate and dissuasive penalties, including fines, and limitation periods of at least three years. Equality bodies and worker representatives can act on behalf of workers.

Transposition is happening country by country, and national laws differ in details such as how the pay range must be shown, how categories of workers are defined and penalty levels. Track each member state where you employ people rather than relying on the directive text alone.

What it means for recruiting

For talent acquisition teams, the changes are concrete:

• Every EU vacancy needs a pay range or starting pay, shared before the interview. Recruiters need approved ranges before a role opens.
• Remove pay history questions from applications, phone screens and agency submittals for EU roles. US teams used to salary history bans in some states will recognize the rule.
• Gender-neutral job titles and ads, which also means reviewing job architecture names in languages with gendered nouns.
• Data protection. Pay data and equal pay requests involve personal data, so handle them in line with the GDPR; see GDPR in recruitment.

US-based multinationals are covered for their EU employees regardless of where headquarters is. Many are choosing to align their global practice with the strictest rule rather than run different processes by country.

How to prepare

1. Build or clean up a job architecture that groups roles by work of equal value, using criteria such as skills, effort, responsibility and working conditions.
2. Set documented pay ranges for each grade and country.
3. Run a gender pay gap analysis now, by category of workers, so you see gaps before you have to publish them.
4. Investigate and fix any unexplained gaps of 5 percent or more.
5. Write down the criteria for pay setting and progression, in plain language, and make them available to employees.
6. Set up a process to answer worker pay information requests within two months.
7. Update recruiting templates, ATS forms and agency agreements for EU roles.

For how this compares with US approaches, see pay transparency. This page is informational, not legal advice.