A new EU directive on pay transparency, which aims to ensure equality between men and women doing the same job, could transform the European job market by guaranteeing more rights to workers.
Women in the EU still earn on average 11 per cent less than men for the same jobs and the average gender pension gap, the difference in pensions between men and women, is at 25 per cent.
To overcome this situation, the EU pay transparency directive establishes new obligations for employers as regards workers with an employment contract, including part-time staff and trainees, but not contractors or freelancers.
All employers in the EU – large or small companies in the public and private sector – will have to comply.
But what does this mean in practice for workers in Europe?
New rights for workers
Employers will have to guarantee a fair and transparent recruitment process. They will have to use gender-neutral job descriptions and titles, and inform candidates about the starting salary or the pay range when they advertise positions or before the interview.
They will no longer be able to ask job seekers about their previous salaries, to avoid that discrimination experienced in the past influences future pay. Contractual clauses or practices that forbid workers from discussing their salaries with colleagues will be prohibited too.
People already in employment will have the right to ask information about average pay levels, by sex and job category, as well as criteria used to decide pay and career progression.
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Discriminated workers will be able to claim compensation, not only related to the salary but also to bonuses and benefits.
For the first time, the directive also covers ‘intersectional discrimination’, the combination of several forms of inequality, such as gender and ethnicity, sexuality or disability.
New obligations for employers
Companies will have to report to national authorities about the gender pay gap, the difference in salaries between men and women for the same type of work, in their organisation. The obligation will take effect on June 7th 2027: companies with more than 250 employees will have to report annually, and companies with 150 to 249 employees every three years. Employers with 100 to 149 workers will be required to report every three years from June 7th 2031.
Companies registered outside the EU with more than 100 employees in EU member states will have to adhere to these requirements in the relevant country.
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If the gender pay gap is above 5 per cent, and this cannot be justified, employers will have to carry out an assessment with workers’ representatives to understand the reasons and come up with solutions. Those that do not comply will face penalties and fines.
Which countries have taken action?
EU member states have until June 7th 2026 to convert the directive into national law.
Several countries, including Austria, Denmark, France, Germany, Italy and Spain, already have equal pay legislation, but they will have to expand it to bring it in line with EU rules. Each country can also decide to put in place even tougher measures.
According to information gathered by law firm Addleshaw Goddard, France already requires employers with more than 50 staff to report about the gender pay gap, but the new law will review remuneration indicators. These changes should be adopted this year to become effective only in 2027.
Denmark and the Netherlands will also start implementing the directive in 2027. Germany and Spain are likely to be late too, while in Italy draft legislation has been published.
Sweden has said it wants to postpone the implementation date and start a renegotiation aimed at simplifying the rules.
Sweden voted against the directive in 2023, arguing that it had not been “adapted to Swedish conditions”, with its labour market model based around collective bargaining agreements between unions and employers.
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Could the deadline be postponed?
The directive also faces resistance from business organisations. In February, BusinessEurope, the confederation of industry associations in Europe, called for a two-year delay in the implementation of the directive.
“With less than four months remaining before the transposition deadline, a majority of member states have not made sufficient progress to date in order to meet the deadline. This delay is not due to a lack of will, but rather the unprecedented complexity of the directive and the significant cultural and systemic shifts it demands,” a letter from BusinessEurope to Ursula von der Leyen says.
In March, however, the European Commission launched a new gender equality strategy promising support to EU countries “in the effective and timely implementation of this directive”.
