The Pay Transparency Directive – the countdown is on.

Member states have until 7 June 2026 to implement the provisions of the EU Pay Transparency Directive (the "Directive"), which was approved by the Council of the EU on 24 April 2023 and published in June 2023.

Although some Member States already have practices which overlap to some degree with the Directive, and draft implementing legislation has been published in the Netherlands, most Member States have not yet put in place the necessary local legislation and detailed guidance to enable employers to have a clear understanding of exactly what steps they will need to take to comply in each jurisdiction, and across their EU footprint as a whole. 

We set out below what we do know about the Directive's key provisions, together with a round-up of progress across key jurisdictions, and our practical tips for employers at this stage.

Overview

The Directive's stated aims are to: (i) empower employees to enforce rights; (ii) strengthen transparency; (iii) improve public understanding; and (iv) enhance enforcement.

The Directive aims to introduce consistency in gender pay gap reporting across Europe with prescribed methodology, scope and frequency.  Employers across Europe will need to report gender pay gaps across their organisation and to collect pay data by "categories of workers" - defined as workers performing the same work or work "of equal value". Employers will be required to have analytical tools / methodologies for supporting the assessment of the value of work and establishing pay structures.

Some countries, such as Italy and Spain, already have local labour law enforcement bodies or collective bargaining arrangements, which impose obligations on organisations to classify employee grades and job descriptions and assess whether workers are performing work of equal value, to report to local regulatory bodies. But for other Member States, this is likely to involve significant change.

Key provisions

Access to information - The Directive will give employees the right to request information on pay levels (both individual and average) for employees performing the same work or work of equal value to them. Employers will have to provide this information within two months.

Reporting - The Directive introduces staggered reporting requirements for organisations depending on their size. Employers with 250 or more employees will be required to report annually from June 2027.

Employers with 150-249 employees must also report in June 2027, but the obligations will then be for reporting every three years thereafter. Employers with 100-149 employees must first report in June 2031, and then every three years thereafter. Employers with fewer than 100 employees will have no obligation to report, but may report voluntarily. EU Member States can impose the reporting obligation on smaller employers as well (i.e. those with fewer than 100 employees). Thus far, the only Member State that has published draft implementing legislation (the Netherlands) has opted not to impose a lower threshold.

For some EU countries, gender pay gap reporting will be completely new. For others (such as Ireland, Belgium, France and Italy) some form of gender pay gap analysis exists in local legislation, but may need to be amended to comply with the new Directive. For instance, there may not currently be a requirement to publish the gender pay gap report, nor remedies for failure to comply. It is also worth noting that pay reporting requirements already go further in Italy, Belgium and France where certain obligations apply to smaller employers with 50 employees.

Joint Pay Assessment - Where an organisation identifies a 5% pay gap (in relation to any category of workers doing the same work or work of equal value) which is not justified on the basis of objective, gender-neutral criteria and which is not remedied within 6 months, a joint pay assessment must be prepared.

Access to justice - Member states must ensure that employees have the ability to enforce their rights to equal pay through legal proceedings, with the potential for support from associations, equality bodies, and employees' representatives.

Scope - The protection offered by the Directive extends to prospective employees, who will have the right to receive initial pay ranges for roles at the application stage.

Progress round-up:

France

There are existing legal provisions addressing pay transparency and gender equality in France, specifically the Gender Equality Index for companies with 50+ employees. These measures do not fully meet the Directive's standards, particularly in areas like salary transparency during recruitment and detailed job evaluation methodologies. The Directive will require significant updates to the Gender Equality Index and broader compliance measures, with implementation expected by 2027, already announced by the government.

Germany

In Germany there is currently no draft legislation for implementing the Directive. The existing Pay Transparency Act (2017) provides employees in business units with over 200 employees the right to request pay information.

In practice many organisations do not conduct detailed job evaluation processes. The Directive will require significant changes, including analytical assessments of equal value and we anticipate enhanced roles for works councils, but no timeline for implementation has been confirmed.

Italy

Italy has not introduced draft legislation to implement the Directive. However, Italy has existing frameworks, including a relatively new Gender Equality Certification regime, which incentivises transparency and equal pay. This certification process aligns with many principles of the Directive, and companies are already preparing for compliance by reviewing remuneration data and addressing pay gaps.  We are supporting many employers in Italy with the process of obtaining the Gender Equality Certification in the year ahead, in advance of the implementation of the Directive.  We also expect (hope) that the Directive will not introduce fundamental changes to the methodology which is applied as part of the Gender Equality Certification regime.

Spain

Spain is ahead of many EU countries, with local laws since 2021 requiring gender equality salary registers and audits for companies with 50+ employees. While the Directive will introduce new obligations, such as reducing the acceptable gender pay gap from 25% to 5% and increasing transparency requirements, Spain's existing frameworks provide a strong foundation for compliance.

The Spanish government has provided a job evaluation tool and guide, which require an analytical assessment of multiple factors grouped in the following areas (i) nature of functions; (ii) educational requirements; (iii) professional training or conditions; and (iv) working conditions, in order to identify jobs of equal value.  This detailed evaluation tool may provide a helpful starting point for other Member States and for organisations considering how to introduce analytical evaluation of work of equal value.

The Netherlands

The Netherlands has published a draft legislative proposal for implementing the Directive, which was presented for consultation in March 2025. The proposal represents mostly a 'clean' implementation (i.e., not imposing any further obligations on employers than those that are absolutely necessary under the Directive). Due to the fall of the Dutch government in June, the timeline for presenting the legislative proposal to the House of Representatives has become slightly uncertain. Nonetheless, we anticipate that the outgoing government will still aim for implementation by 7 June 2026.

The initial proposal received significant criticism. One of the points raised is that the role attributed to the works council goes significantly further than what would have been required for a 'clean' implementation. In addition, there are still some unresolved topics. Among other things, the outgoing government has announced that the reporting obligation will be detailed in a general administrative measure. However, the draft for this measure is yet to be presented. We're also still awaiting ready-made templates for the most important obligations arising from the Directive. While these are not available yet, we do know that the outgoing government will use existing guidelines, such as the ILO guide 'Equal Pay for Work of Equal Value', as inspiration. Of course, we are closely monitoring any developments on this topic.

Practical tips one year out

• Employers should consider existing local requirements and practices across their EU footprint, and consider auditing existing practices (including job descriptions, recruitment and categories of staff).

• Employers could consider reviewing and updating existing HR and payroll systems and processes to ensure the ability to collect relevant pay data and comply with the Directive's requirements. Alongside this review or update of employment contracts, company policies and procedures could be carried out to ensure compliance with the Directive (with a particular focus on pay rises and promotions). Employers should check headcounts in each local entity and consider whether a job evaluation process is necessary/ suitable in accordance with existing local legislation or likely new legislation.

• Employers could consider reviewing their existing remuneration structure and pay scales and consider a pre-emptive review of pay gaps. Consider underlying causes of any gender pay gap, what steps could be taken to address structural pay differences and justification for any gender pay gap by reference to gender-neutral factors, particularly where pay gap is 5% or greater. Although Member States will not be required to report their data until June 2027 (at the earliest), those reports will reflect pay data from June 2026. There will be tricky issues to be navigated in relation to matters such as stock awards.

• Employers should develop and implement a gender pay gap reporting process in line with the Directive's requirements. For many employers, the first step will be to develop an approach to categorising employees by reference to the work that they do. There are different approaches to job classification and there may be local guidance accompanying national legislation setting out recommended approaches for particular sectors or size of employer. We anticipate that it is unlikely to be possible to have a single consolidated approach to the classification of work of equal value but we would expect global employers to consider a standardised structure which feeds into national approaches. 

• Develop and implement a process for workers and their representatives to request information on pay data. The Directive introduces a right to information, in particular, a right to receive information on an individual's pay level and on the average pay level, broken down by gender, for categories of workers doing the same work or work of equal value.

• Employers should ensure that they keep up to date with the implementation of the Directive in jurisdictions where they have people.  The Directive sets out minimum requirements. But, of course, it is possible for local legislation to go further by imposing additional reporting requirements or different timings thresholds for compliance by company size.  

• Where a global company has a presence across Europe, it will be important to track the size threshold of each relevant entity against the relevant local law requirements to ensure compliance, as some countries already impose reporting obligations on smaller companies or may gold plate the Directive's minimum requirements. 

• The Directive introduces new information rights for job applicants and employees. Companies may need new systems and processes around job advertisements, on-boarding and training for managers for dealing appropriately with employee requests for pay information.  

• Employers might arrange to provide training and education to HR and management staff on the requirements of the Directive and its implications. There could also be increased interest in collective bargaining on pay by workers in some sectors.

• We anticipate that as practices develop across the EU in relation to pay transparency and gender pay gap reporting, this is likely to change expectations and practices beyond the EU.  Even though this is an EU Directive it could still have a significant impact on the culture around pay transparency, particularly in the financial services sector in the UK. In any event, where a global company has a presence across Europe, it will be important to track the size threshold of each relevant entity against the relevant local law requirements to ensure compliance, as some countries already impose reporting obligations on smaller companies or may gold plate the Directive's minimum requirements.