The EU Pay Transparency Directive: The Deadline Has Passed – What Multinationals Must Do Now

The EU Pay Transparency Directive (Directive 2023/970/EU) entered into force in June 2023. The deadline for its transposition into national law across the 27 EU member states passed on 7 June 2026. Only four member states – Slovakia, Italy, Lithuania and Malta – met that deadline.

At its core, the Directive does four things:

• it requires employers to disclose initial pay or a salary range, and, where applicable, the relevant provisions in an applicable collective bargaining agreement, to candidates before interview and bans questions about pay history;
• it gives employees the right to ask for written information on their own pay level and the average pay levels by gender for workers performing the same work or work of equal value;
• it introduces mandatory gender pay gap reporting, scaled by employer size and covering not just headline figures but pay gaps broken down by worker category, pay quartile and various pay components; and
• where a gap of 5% or more cannot be justified (and not remedied in time), it triggers a formal joint assessment process with workers’ representatives.

These obligations build on and go materially further than many existing EU and domestic laws and sit within a reinforced enforcement framework with no cap on compensation, a burden of proof placed on an employer and fines designed to genuinely deter.

While the Directive applies to both public and private sector employers, the discussion below focuses on the private sector position; organisations should check carefully that they are not treated as public sector for these purposes (in which case the Directive is capable of producing vertical direct effect).

Must an organisation comply? Why waiting for domestic implementation is not an option

Failure to implement is no excuse for inaction

Employers should be preparing for compliance now against the requirements of the Directive and draft domestic legislation, even where transposition has not yet occurred. Pay transparency legislation of EU member states – as far as already in effect or once implemented into local law – is binding for all employment relationships governed by the law of an EU member state. As the transposition deadline has passed, one has to expect that legislation in transposition of the Directive will enter into force once published. While reporting obligations are triggered by threshold numbers and only applicable as of June 2027, organisation size is irrelevant to pre-employment obligations and individual pay information rights – these apply to every employer and every advertised vacancy from day one.

While draft legislation may be reshaped during domestic processes and intense discussions are ongoing in several countries, the general principles of the Directive will apply. Employers should already assess the impact of the new obligations on their current job structure, pay systems and HR processes. The experience of employers in Italy, who met the deadline, may provide helpful lessons for those in other jurisdictions.

Relevance for interpretation of existing law

The Directive does not have direct horizontal effect for private sector employers. However, according to ECJ case law, EU Directives not transposed within the deadline must already be taken into account for the interpretation of existing local law, influencing the understanding of existing open legal concepts such as the understanding of “pay” or “work of equal value”.

Implementation status at a glance

The following summarises the current implementation status in each of the jurisdictions covered in this guide, as at July 2026.

• Italy: Fully implemented. Legislative Decree No 96 of 7 May 2026 entered into force on 7 June 2026. Technical details of reporting methodology to be established by ministerial decrees, which remain outstanding.
• Poland: Partially implemented. Pre-employment transparency obligations entered into force on 24 December 2025. A draft bill addressing outstanding requirements was published in April 2026; full implementation is expected during 2026.
• Belgium: Not yet implemented. Transposition deadline missed; extension request formally declined. Social partners are working on amendments to Collective Bargaining Agreement (CBA) No 25 and CBA No 38, and a new implementing law is under development, but progress is slow.
• France: Not yet implemented. Revised draft bill submitted to the Conseil d’État on 5 June 2026. Parliamentary debate expected from end of 2026, with implementation law most probably to be adopted before the French presidential election in April/May 2027.
• Germany: Not yet implemented. Draft implementation act prepared by the Federal Ministry but not yet published. Implementing legislation expected at earliest in early 2027; the Federal Ministry is considering postponing reporting duties to 2028.
• The Netherlands: Not yet implemented. Implementing bill submitted to Parliament on 21 May 2026; expected to come into force on 1 January 2027. Draft implementing decree and ministerial regulation published for consultation.
• Spain: Not yet implemented. Draft Royal Decree formally presented to social partners on 1 July 2026. Main trade union confederations submitted strong opposition; the Ministry has committed to revising the draft. Constitutional issues may require some obligations to be addressed by statute rather than Royal Decree.

Scope: individuals and pay

Who counts as a worker

The Directive’s reporting obligations apply where there are at least 100 employees, but domestic implementing legislation may set a lower threshold. Workers are broadly defined to include anyone with an employment contract or employment relationship under national law, collective agreements or practice, aligned to ECJ case law. This is likely to include part-time, fixed-term, and temporary agency workers, managers, and, where criteria are met, atypical workers such as zero-hours workers, trainees, apprentices and platform workers. Employers will need to watch domestic implementing legislation closely; for example, Italy’s implementing legislation includes executives within its scope but excludes domestic work and intermittent contracts.

Wide notion of pay

The Directive’s definition of pay covers base salary plus any benefit payable in cash or in kind, including bonuses, variable pay, and other benefits granted in monetary or non-monetary form.

A new era in pay transparency

Pre-employment, the Directive requires all employers to disclose initial pay or a salary range to job applicants before interview, prohibit questions on salary history, and conduct non-discriminatory, gender-neutral recruitment processes.

During employment, the Directive provides for employees to have the right to access objective, gender-neutral pay and progression criteria; to request written information about their own pay level; and the average pay levels by gender for comparable workers, to be provided within two months of a request. Employers must inform employees annually of this right. Pay secrecy clauses preventing disclosure for equal pay enforcement purposes are prohibited.

Handling salary disclosure diligently is a talent and retention issue

For most employers, pre-employment salary disclosure will be genuinely unfamiliar territory.

Once salary information becomes more accessible, increased internal comparison and scrutiny should be anticipated. This can translate into worker dissatisfaction where differences appear unexplained or unjustified, especially in mixed-gender teams or where historic practices have led to inconsistent pay decisions.

To manage these risks, employers should develop clear narratives around how pay is determined, train managers and plan targeted remedial measures where pay differences cannot be objectively justified.

Publishing a range is not enough – it has to be the right one

The Directive requires the actual internal pay or range for the specific role to be disclosed, based on objective, gender-neutral criteria. Pay ranges simply picked up from third-party sources, or overly broad ranges, are unlikely to satisfy the spirit of the Directive.

“In Germany, salary range disclosure in job postings is a genuine cultural shift, not just a legal one and we are seeing many clients reluctant to change their current practice yet. However, some also take the opportunity to experiment with job postings with or without pay range information, preparing for the transposition.”

Existing pay transparency schemes not sufficient

Even jurisdictions with advanced existing pay transparency regimes will need to adapt. In Belgium, despite a sophisticated equal pay regime already in place, the Directive introduces materially new requirements; social partners have been working on amendments to CBA No 25 and CBA No 38 but progress has been slow. Spain similarly has had compulsory pay register and pay audit obligations since 2019 and 2021 respectively, but the Spanish government itself acknowledges that the current framework does not fully meet the Directive’s standards.

“Belgium is one of the most experienced countries in Europe when it comes to workforce pay analysis, meaning there is a real risk of employer complacency. Belgian employers should use their existing works council infrastructure as a head start, not as an excuse to wait. In contrast to the Netherlands, Belgian works councils will typically have no veto right on pay transparency matters, as they will not have a co-determination right on such matters.”

“Spain’s existing equality framework was built on the premise that collective agreements reflect equal value; the Directive demands something more analytical.”

Reporting: the first deadline is June 2027

The Directive requires extensive gender pay gap reporting:

• employers with 250+ workers: annually, first report due by 7 June 2027;
• employers with 150 to 249 workers: every three years, first report due by 7 June 2027; and
• employers with 100 to 149 workers: every three years, first report due by 7 June 2031.

Pay gap information encompasses the mean and median gender pay gap (overall and in variable components), the proportion of each gender receiving complementary or variable pay, gender distribution across pay quartile bands, and the gender pay gap broken down by category of workers performing the same work or work of equal value.

Employers with existing domestic reporting obligations should not assume that existing reports can be relabelled as Directive-compliant. The Directive provides for specific methodology which will differ materially from most existing national frameworks. Employers should now map existing obligations against the Directive’s requirements.

In Belgium, for example, whilst existing laws require companies employing more than 50 employees to prepare an analysis report of their remuneration structure every two years – a comprehensive report for those employing more than 100 employees, and a concise report for those employing between 50 and 99 employees – this existing framework does not satisfy the Directive’s requirements.

In France, the existing Index Egapro is being substantially overhauled and replaced with a seven-indicator framework applicable to all companies with 50 or more employees (same thresholds and reporting deadlines).

“Work of equal value”: the concept at the heart of compliance

The concept of “work of equal value” is the structural spine of the Directive, underpinning both transparency and reporting requirements; it determines which workers must be compared for pay gap reporting, defines the categories within which gaps must be measured, and governs which workers may rely on the right to pay information.

Unless an employer properly defines its categories of work of equal value – using objective, gender-neutral criteria and documented methodology – neither the reporting regime nor the pay information rights can operate correctly. “Work of equal value” requires grouping roles using objective, gender-neutral criteria – skills, effort, responsibility, and working conditions – even where job titles and functions differ. The Directive expressly requires that relevant soft skills are not undervalued.

The Directive does not mandate a particular job evaluation methodology. Some companies have an organically grown, rather unstructured job architecture, making it challenging to define categories of workers, particularly where job titles and responsibilities have evolved without a formal grading system.

Collective bargaining agreements and job architecture

In many jurisdictions, existing collective bargaining agreements play a significant role in shaping the equal value categorisation exercise. Companies subject to CBAs generally hope that collectively negotiated pay structures will enjoy a certain presumption of reasonableness. Multinational employers will need to assess carefully how any internal global job architecture aligns with sector-level or national CBA classifications in each jurisdiction.

“Italy’s approach is distinctive: the definition of ‘work of equal value’ is anchored to national collective bargaining agreement classification systems. The implementing legislation also permits employer-designed job classification systems provided they are based on objective and gender-neutral criteria. Multinational employers operating in Italy will need to reconcile any internal global grading models with Italian bargaining structures.”

Practical tools are available

Different jurisdictions are producing a number of practical tools and guidelines to support employers in implementing the new obligations. In all jurisdictions, employers should familiarise themselves with the EU-wide guidelines on gender-neutral job evaluation and classification published by the European Commission and the European Institute for Gender Equality in April 2026.

Workers’ representatives: a jurisdiction-by-jurisdiction variable

Workers’ representatives play a central role in the Directive’s key obligations, including agreeing objective gender-neutral criteria for assessing equal value, accessing pay data on a worker’s behalf, being consulted on gender pay gap statistics, and receiving details of any joint pay assessment. The Directive defines workers’ representatives by reference to “national law and/or practice”, which conceals significant variation across member states. Multinational employers should map co-determination matters and plan timelines accordingly.

The most significant distinction is where co-determination rights are in place – where a works council’s prior agreement is required before an employer can act (like in the Netherlands and Germany for a larger number of pay and pay structure matters) – in contrast to pure information or consultation rights, where the employer must engage but retains the final decision (which is the case in France, Belgium and Spain).

“Under the draft Polish implementing legislation, workers’ representatives for the purposes of the Directive will be company-level trade union organisations and ad hoc employee representatives elected for a specific issue. Where no such representatives exist, an employer will be required to initiate a process to elect ad hoc representatives. Multinationals should not underestimate this: running an ad hoc election process takes time. Employers without existing trade union structures should plan ahead rather than wait for a gap to be reported.”

Joint pay assessments: mitigating the consequences

A top priority will be to avoid triggering the Directive’s joint pay assessment provisions which apply for employers bound by the reporting obligations (see Section 5).

A joint pay assessment in conjunction with workers’ representatives is required where a gap of at least 5% is reported in any category of workers, which cannot be justified by objective, gender-neutral factors and is not remedied within six months of reporting.

The factors most likely to withstand scrutiny are those anchored to the Directive’s own criteria:

• skills and qualifications;
• degree of responsibility;
• effort; and
• working conditions.

Performance may also be relied upon as justification of pay differences within categories of workers where the assessment process is transparent and consistently applied. Reliance on length of service and market forces is less certain, depends on the individual argumentation line and may be an area of future litigation.

Domestic implementing legislation which may set out specific considerations should be monitored closely and employers should document and justify each factor they rely upon, given that the burden of proof will increasingly fall on them under the Directive’s framework.

Enforcement, burden of proof and fines

The Directive’s enforcement regime is significant:

• compensation with no cap;
• the burden of proof placed on the employer;
• a minimum three-year limitation period;
• court powers to stop infringements; and
• effective, proportionate and deterrent fines.

What sanctions are being proposed?

• France’s draft bill imposes penalties of up to 1% of total payroll for failures relating to indicator declarations, joint assessment failures and related obligations, doubling to 2% for repeat offences within five years. Flat-rate fines of EUR450 apply to specific breaches, including failure to respond to information requests, failure to inform job applicants of pay for the role and failure to comply with the prohibition on requesting salary history, with doubled rates for repeat offences.
• Spain’s anticipated sanctions range from EUR7,500 to EUR225,018 depending on classification of seriousness. However, the trade unions have called for stricter sanctions and procedural rules as part of full transposition.
• Poland’s draft implementing legislation provides for a fine of between PLN2,000 and PLN60,000.

The shifting burden of proof

The impact of the Directive’s burden of proof provisions should not be underestimated. Where a prima facie pay gap exists within a group of employees doing equal or equivalent work, there is already now an obligation to demonstrate that the difference is based on objective, gender-neutral criteria. The relevance and frequency of this obligation will increase significantly as the much broader right to information under the Directive takes effect.

One global framework or jurisdiction by jurisdiction?

The fragmented transposition landscape raises a strategic question for multinational organisations: should they adopt a jurisdiction-by-jurisdiction approach or a framework of global principles with local execution?

In practice, companies tend to start by gathering data and assessing the situation in the country where they are headquartered or have the largest European workforce. Non-transposition creates significant uncertainty and reluctance to move forward, but a wait-and-see approach carries real risk: 2026 pay data is accruing now, and the window for remedying pay gaps before disclosure is closing.

Practically, the ultimate approach will necessarily be dictated by the jurisdictions in which the organisation is operating and its internal culture, as well as the existing collective agreements and policies in place.

“For multinationals designing a single global pay transparency framework, the Netherlands is the jurisdiction that most directly shapes the project timeline. The works council’s right of consent over pay systems, equal value categorisation, and any remediation plan is not a formality – it means you cannot finalise and roll out a global model and then localise it for the Netherlands afterwards. You need works council agreement before changes take effect. That changes the sequencing of the entire project and, for organisations with significant Dutch workforces, it should be driving the timetable from day one.”

Confidential internal equal pay audit recommended

Conducting a privileged or otherwise confidential internal pay equity audit, completed and with any pay gaps remedied prior to external disclosure, will be a priority. A well-structured audit should:

• cover all components of pay;
• map employees to categories of work of equal value;
• identify pay gaps above 5% by category;
• document objective justifications; and
• identify remedial actions.

The legal rules around keeping such exercises out of the public domain and/or non-disclosable can be complex but it is one that external counsel can provide valuable assistance on.

GDPR and whistle-blowing risks

Personal data processed pursuant to the Directive’s pay information, reporting and joint assessment provisions may not be used for any purpose other than applying the principle of equal pay. Pay data broken down by gender and linked to individual employees may, in small teams, engage the special category data provisions under Article 9 GDPR. Employers should take advice in each jurisdiction rather than assuming a uniform GDPR approach applies.

Under Germany’s existing Pay Transparency Act, employees may be denied direct pay information if the comparison group contains fewer than six employees of each gender. It is not yet clear whether this threshold will survive the implementation of the Directive.

Conclusion: maximising the opportunities to prepare and comply

Despite the slow progress on implementation across many member states, now is not the time for complacency.

• Review recruitment processes: Update job posting templates and train hiring managers not to ask about salary history. Pay ranges must reflect actual internal pay positions. Pre-employment obligations are already live in Italy (from 7 June 2026) and Poland (since 24 December 2025).
• Remove pay secrecy clauses: Review all employment contract templates – including existing contracts – for pay secrecy and non-disclosure provisions. Such clauses are already void under Italian law.
• Put in place a pay information request process: Ensure a process is in place to respond to employee requests for pay information within two months, including information on average pay by gender within their category of workers.
• Conduct a privileged pay equity audit: The first reporting deadline for employers with 250+ employees is 7 June 2027, using 2026 data already accruing. Commission a privileged internal audit now and remediate before the first public report.
• Map job architecture: Identify tools and methodologies for equal value assessments using gender-neutral, documented criteria. Consider the impact of collective bargaining arrangements.
• Consider a global framework: Multinationals should consider adopting global principles with tiered local execution to reduce legal and financial risk and create competitive and reputational advantage.
• Implement regulatory monitoring: Assign designated accountability per jurisdiction and maintain a structured process to track evolving domestic legislation.
• Align with board-level ESG governance: Brief the board on litigation exposure and the timetable for first public disclosures. A proactive board-level pay equity narrative is significantly more credible than one assembled reactively.

“Multinational organisations should also consider their operations outside the EU; many countries are implementing legislation requiring increasing pay transparency and reporting, including Brazil, Japan and New York City. The Pay Transparency Directive is in many respects leading the way. The UK is not required to implement the Directive and has its own existing gender pay gap reporting rules; however, the UK Government published a consultation in July 2026 proposing pay transparency measures which align broadly with the Directive’s pre-employment approach. A coherent approach across jurisdictions will be operationally more efficient than treating each as a separate exercise.”