EU Pay Transparency Directive: What Employers Must Do

The EU Pay Transparency Directive (Directive (EU) 2023/970) requires employers to publish pay ranges to job applicants, stop asking about salary history, give workers the right to know average pay levels for comparable roles, and report their gender pay gap. Member states had to write it into national law by 7 June 2026. The first gender pay gap reports are due by 7 June 2027, covering 2026 data, so the payroll data being generated now is what employers will have to report.

This is the most significant pay equity legislation in Europe in decades, and it applies to any employer with workers in the EU, including companies headquartered elsewhere. This guide explains what the directive requires, who it applies to, the deadlines, and what employers should be doing now.

Key takeaways

• Pay ranges must be shared in job adverts or before the interview, and asking about salary history is banned.
• Workers can request information on their own pay and average pay levels by sex for comparable work.
• Employers with 150 or more workers report first, by 7 June 2027, covering 2026 data.
• An unjustified gender pay gap of 5% or more in any category of workers can trigger a joint pay assessment.
• Most member states missed the June 2026 transposition deadline, so national laws are taking effect at different times.

What is the EU Pay Transparency Directive?

Adopted in May 2023, Directive (EU) 2023/970 strengthens the principle of equal pay for equal work, or work of equal value, between men and women. It does so through transparency: making pay information available to candidates, employees and regulators, and requiring employers to explain and address unjustified gaps.

As a directive, it sets minimum standards that each member state must write into national law. Some countries have gone further than the minimum, so employers need to check the rules in each country where they employ people.

Who does it apply to?

• Recruitment rules: apply to all employers hiring in the EU, regardless of size.
• Pay information rights: apply to all employers.
• Gender pay gap reporting: applies to employers with 100 or more workers, phased by size.

The directive applies to employers with workers in the EU even if the company is based elsewhere, so US, UK and other non-EU companies with EU employees are in scope.

What does the directive require?

Before hiring

• Provide the starting salary or pay range in the job advert, or before the interview
• Do not ask candidates about their current or previous pay
• Make job adverts and titles gender-neutral, and run non-discriminatory recruitment processes

During employment

• Give workers access to the criteria used to set pay, pay levels and pay progression, based on objective, gender-neutral criteria
• Respond to worker requests for information on their individual pay and on average pay levels, broken down by sex, for workers doing the same work or work of equal value, generally within two months
• Inform workers of their rights under the directive
• Do not prevent workers from discussing their pay

Reporting

Employers must report gender pay gap data including mean and median gaps in base pay and in variable or complementary pay, the proportion of men and women receiving variable pay, and the distribution of men and women across pay quartiles.

What are the reporting deadlines?

Because the first reports cover 2026 payroll data, employers in scope need accurate, structured pay data for the current year, including variable pay such as bonuses, overtime and allowances.

What is the 5% rule?

If reporting shows a gender pay gap of at least 5% in any category of workers that the employer cannot justify with objective, gender-neutral criteria, and the employer does not remedy it within a set period, the employer must carry out a joint pay assessment with worker representatives. That assessment analyzes the causes of the gap and sets out measures to address it.

Where has it been implemented?

The transposition deadline was 7 June 2026, but most member states missed it. As of August 2026, only a handful had implementing laws in force, including Italy, Slovakia, Lithuania, Malta and Greece, with others expected to follow during 2026 and 2027.

For employers, this creates a tricky position: the obligations are coming everywhere, but the detail, timing and penalties differ by country. Waiting for each national law before preparing leaves very little time to get pay data in order.

Why this matters beyond compliance

• Enforcement is stronger: the directive shifts the burden of proof to the employer in equal pay claims, and requires compensation for workers who suffer pay discrimination.
• Pay data becomes public-facing: pay gaps will be visible to candidates, employees and competitors.
• Recruitment changes: published ranges make pay comparisons easy across employers.
• Internal equity is exposed: unexplained differences between people doing equal work become harder to sustain.

What employers should do now

1. Map your workforce into categories of workers doing the same work or work of equal value, using objective job evaluation criteria.
2. Audit your pay data, including variable pay, and check you can produce it by gender and category.
3. Run a pay gap analysis now, so you know where you stand before reporting.
4. Document objective pay criteria for setting and progressing pay.
5. Update recruitment processes: add pay ranges, remove salary history questions, review job adverts.
6. Prepare a response process for worker pay information requests.
7. Track national implementation in each country where you employ people.
8. Plan remediation budgets in case gaps need to be closed.

Frequently asked questions

When did the EU Pay Transparency Directive take effect?

Member states had to transpose it into national law by 7 June 2026. Most missed the deadline, so national laws are taking effect at different points during 2026 and 2027.

Do I have to publish salary ranges in job adverts?

You must provide the starting salary or pay range either in the job advert or before the interview. Some national laws may be stricter.

Can employers still ask about salary history in the EU?

No. The directive prohibits asking candidates about their current or previous pay.

Which companies must report gender pay gaps?

Employers with 100 or more workers, phased by size: 250 or more report annually from June 2027, 150 to 249 every three years from June 2027, and 100 to 149 every three years from June 2031.

What happens if a pay gap is above 5%?

If a gap of 5% or more in a category of workers cannot be objectively justified and is not remedied, the employer must conduct a joint pay assessment with worker representatives and take corrective action.

Does the directive apply to non-EU companies?

Yes, where they employ workers in the EU. The obligations follow the employment relationship, not the company's headquarters.

Employ people in Europe compliantly

Global Expansion employs your team members under local law across Europe and 214 countries and territories, with structured payroll and pay data. Talk to our team about employing people in the EU.