EU pay transparency directive: what HR needs to anticipate

In May 2023 the Directive (EU) 2023/970 to strengthen the pay transparency and application of the principle of equal pay for men and women for equal work or work of equal value. This directive reflects a strong political will to reduce the persistent pay gap, estimated at almost 12-13 % on average in the EU, and the resulting negative economic impact on employees' living conditions and pensions.

The aim is twofold:

• Strengthening employee rights on access to information on remuneration 

• Impose clear obligations on employers to structure and justify their remuneration policies

Each Member State must transpose this directive into national law by 7 June 2026, This will entail an overhaul of the legal obligations applicable to companies.

📋 Main measures of the directive

1. Transparency at the recruitment stage

• Employers must provide, in job advertisements or before the interview, the starting salary or salary range envisaged.

• It is prohibits asking candidates for their current or previous salary.

This rule is designed to prevent pay histories from perpetuating inequalities and to reinforce fairness in negotiations.

2. Employees' right to information

Once in post, employees will have the right to ask their employer :

• Their own detailed remuneration levels.

• The average pay levels by gender, for employees doing the same work or work of equal value.

• The objective criteria used to set salaries and career development.

3. Pay gap reporting

Depending on the size of the company, different reporting obligations will apply:

• Companies with ≥ 250 employeesAnnual reporting.

• Companies with 150-249 employeesreporting every 3 years.

• Companies ≥ 100 employees: obligation

These reports must include information on pay differentials by gender and pay criteria, as well as action plans if unjustified differentials are identified.

4. Reversal of the burden of proof and penalties

In the event of a pay discrimination challenge :

• The employer must prove that there has been no discrimination.

• Penalties must be effective, proportionate and dissuasive, including fines and the possibility for the employee to claim compensation.

These measures significantly strengthen employee protection by facilitating recourse.

📊 Practical impact for HR and businesses

1. Overhaul of recruitment practices

The inclusion of salary ranges in advertisements is becoming an obligation: internal processes for publishing vacancies, ATS systems and advertising templates need to be adapted quickly.

2. Structuring remuneration grids

Companies must document and make accessible :

• Salary scales by job category.

• Objective rules for salary progression (seniority, performance, skills).

This means updating remuneration policies and communicating transparently with employees.

3. Setting up reporting tools

HR departments must :

• Set up dashboards to monitor pay differentials.

• Building analysis and diagnosis processes.

• Prepare corrective action plans.

4. Legal risk management

The reversal of the burden of proof increases the importance of an rigorous documentationContracts, pay scales, appraisals and objective evidence must be available to demonstrate compliance.

🧭 Recommended action plan for HR departments

✔️ Internal audit of pay and recruitment practices
✔️ Updating job offers and internal policies
✔️ Development of automated reporting on remuneration data
✔️ Training managers and HR officers on new employee rights
✔️ Clear communication with employees about their rights