EU Wage Transparency Directive: What employees and companies need to know and how to take action should know and how to act
The new Pay Transparency Directive (Directive (EU) 2023/970), adopted by the European Parliament and the Council on May 10, 2023, represents a significant change in the fight against the gender pay gap in Europe. Its purpose is to ensure that all workers receive fair remuneration, without discrimination based on gender.
Companies and employees must prepare for its implementation, which will be mandatory for Member States from 2026. Here we explain what the
directive entails, how it will affect companies and employees, and what steps they should take from now on.
What does Directive (EU) 2023/970 establish?
Right to information on salaries
Workers will be able to request and receive information on:
Starting salary and salary progression criteria prior to accepting employment.
The average remuneration, broken down by gender, of workers performing the same work or work of equal value.
This information shall be provided in a clear, accessible and free manner.
2. Prohibition of salary confidentiality
Companies may not impose contractual clauses that prevent employees from disclosing their salary or requesting information about it from other colleagues.
3. Objective criteria for setting salaries
Salary structures and performance evaluation systems must be based on objective and non-discriminatory criteria.
4. Mandatory wage gap reporting
The companies of:
100 or more employees: they will be obliged to report every 3 years (or annually if they have more than 250 employees) the wage gaps between women and men.
If the gap exceeds 5% and there is no objective justification, a joint wage audit with employee representatives will be required.
5. Reversal of the burden of proof
In the case of wage discrimination litigation, it will be up to the employer to prove that there was no discrimination.
6. Compensation and penalties
Workers who have suffered wage discrimination may claim full compensation, including back wages and damages.
Financial penalties and other measures are foreseen in case of non-compliance.
What must companies do to comply with Directive (EU) 2023/970?
✔ Internal audit and salary gap analysis.
Carry out a detailed diagnosis of the current remuneration structures and detect possible inequalities.
✔ Review of hiring and promotion policies.
Update selection, evaluation and promotion procedures with transparent, objective and accessible criteria.
✔ Design of pay equity reports.
Prepare tools to collect and present the salary information required by the board.
✔ Training for HR managers and leadership.
Train human resources personnel and managers on pay equity, job analysis and unconscious bias.
✔ Promote a culture of equity.
Establish channels of communication and dialogue with workers to foster a transparent and equitable organizational culture.
What can employees do?
✔ Know your rights
Workers should be informed of their right to access wage information and to complain in case of inequality.
✔ Request information with legal basis
They may request data on average salaries in their category, on evaluation criteria and on the remuneration system.
✔ Seek union or legal support.
In situations of suspected discrimination, they can turn to union representatives, works councils or legal advisors.
✔ Participate in joint audits.
In companies that are obliged to carry them out, employees must be represented in the wage audit process.
Final Considerations on the EU Wage Transparency Directive EU
The Pay Transparency Directive not only strengthens pay equity in Europe, but also redefines the relationship between employers and employees in terms of transparency, fairness and labor rights. Companies that anticipate this by adopting clear pay policies and inclusive pay systems will be better positioned to attract talent, build internal trust and avoid litigation.
The challenge is significant, but so is the opportunity: to build fairer and more efficient organizations, where merit and the value of work are recognized without bias or
barriers.
🔗 More information on the new Wage Transparency Directive (Directive (EU) 2023/970) here.
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