Employers across Europe will soon have to disclose gender pay gaps and adopt pay transparency measures under new rules introduced by the EU.
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The EU Pay Transparency Directive requires companies to report pay gaps between female and male workers and promote pay structures reflecting “equal pay for equal work or work of equal value”.
The directive was adopted in May 2023 in response to persistent challenges implementing the right to equal pay under previous EU legislation. A 2023 European Council report revealed that women in the EU earn, on average, 13% less than men, leaving women at higher risk of poverty and contributing to the EU’s pension pay gap.
The new directive aims to “combat pay discrimination and help close the gender pay gap in the EU,” by placing the onus on employers to disclose pay information, justify disparities and ensure pay equity. It applies to all companies with at least 100 employees.
EU member states are required to transpose the directive into national law by 7 June 2026. Businesses will need to start collecting pay data as early as 1 January 2026. Reporting will apply to figures from the preceding calendar year and for some companies even earlier, as prescribed by the EU Corporate Sustainability Reporting Directive. Employers are therefore urged to start preparations now.
Multinational organisations might consider a coordinated approach to pay transparency, especially with regulations in countries like the US and UK highlighting a growing global trend towards transparency beyond Europe.
Lexology PRO outlines which EU member states have implemented the directive so far and considers what it means for employers.
Which countries have implemented it so far? And which haven't.
Sweden, Belgium, Poland and Ireland were early adopters of the directive. Other member states are yet to report progress in integrating the directive into national legislation – despite the deadline being just a year away. However, some countries like Germany already have national legislation that at least in part aligns with the directive.
Sweden
In May 2024, Sweden became the first EU member state to publish draft legislation (Swedish only) implementing the directive, by amending its Discrimination Act 2008 (Diskrimineringslagen). The legislation is currently under consultation but aligns and, in many areas, surpasses the EU’s provisions. For example, Sweden plans to maintain its existing, more stringent reporting threshold for pay gaps, which applies to companies with at least 10 employees compared to the directive's 100+ employee threshold.
The draft also introduces new requirements for employers to provide job candidates with collective bargaining details relevant to the role ahead of salary negotiations, building on the directive’s minimum requirement for access to salary information. Additionally, it will mandate employers to include comparisons between women’s and men’s pay progression after taking parental leave in their annual equal pay salary reports. This exceeds the directive’s standard, which only demands family leave be factored in at the point of a joint pay assessment.
Belgium
Belgium, which has one of the lowest pay gaps in the EU, began implementing the directive with a Fédération Wallonie-Bruxelles decree, effective 1 January 2025. Notably, it marked the first transposition of the directive into domestic law in the EU, cementing Belgium’s status as a frontrunner in pay equality. It only applies to public sector employers under the federation's jurisdiction but is a good indicator of how the directive will be transposed on a national level.
As in Sweden, the decree goes beyond the basic requirements in the directive. Key highlights include mandating employers to disclose starting salaries or salary ranges at the time of job postings. Employers will also have to use non-discriminatory job titles and assess the impact of family-related leave on remuneration as part of gender pay reporting obligations.
Poland
A draft law was proposed on 5 December 2024 (Polish language only) by members of parliament. It focuses on pay transparency provisions, including salary ranges in job postings and possible penalties for slow responses to employee pay information requests, but does not yet cover gender pay gap reporting obligations.
Ireland
Ireland became the fourth European country to initiate the directive in its General Scheme of the Equality (Miscellaneous Provisions) Bill 2024 on 15 January 2025. It includes two key measures for pay transparency: first, employers must disclose salary ranges in job adverts, extending the directive’s requirement to provide this information before interviews; and second, employers will be prohibited from asking applicants about their current or previous pay.
Current legislation for gender pay gap reporting already exists for companies with more than 150 employees and will be extended to companies with at least 50 employees from June 2025. However, the bill as it stands does not cover all the directive’s conditions, so additional legislation will be required.
Netherlands
The Dutch parliament began the implementation process in March 2025 by debating proposed amendments (Dutch language only) to the Equal Treatment for Men and Women Act 2015. The amendments essentially mirror the directive, addressing equal pay for work of comparable value, gender pay gap reporting requirements, and employee access to information. Notably, it also stipulates that in cases of pay discrimination, employers must bear the burden of proof, demonstrating that any differences in pay are not based on the employee's gender.
How can employers prepare for the directive?
The directive's measures compel employers to promote pay equality between men and women by committing to the following:
- stricter pay reporting requirements and pay evaluations;
- pay disclosure requirements before the job interview stage;
- banning salary non-disclosure agreements and asking candidates about their pay history;
- expanding employee rights to information on average pay levels and increased transparency on pay setting and progression;
- stronger enforcement mechanisms, including fines for non-compliance and compensation to victims of pay discrimination.
Review existing pay structures
Employers can proactively evaluate their pay practices before the deadline. Come June 2026, if reporting reveals an unexplained 5% pay gap in any category of workers, employers will need to either eliminate the gap within six months or conduct a joint pay assessment with a workers representative.
Early assessments of potential pay discrepancies, alongside a thorough review of existing salary structures, are essential to ensure these are founded on objective, gender-neutral criteria. Identifying and investigating areas where pay gaps exist now – before the information becomes intensely scrutinised – can help prevent future exposure to allegations of bias or discrimination.
Set up reporting systems
To meet the directive's reporting obligations, employers should implement robust documentation and data management systems. These systems must enable efficient gathering and reporting of all required data for gender pay gap analysis. Establishing clear processes, appropriate governance and reliable reporting tools will be crucial in managing compliance and proving accountability.
Adjust recruitment processes
Employers should adjust recruitment processes by revising standard application forms, removing pay secrecy clauses from employment contracts, publishing pay bands for job vacancies, and training HR teams to understand and adhere to prohibited practices. These adjustments aim to ensure that recruitment practices are fair, transparent and free from biases. Making these changes now lowers the risk of potential future liabilities.
Leverage pay transparency
The directive offers a unique opportunity for organisations to use pay equity as a “competitive advantage”. Companies that demonstrate a genuine commitment to fair pay practices and pay transparency can boost their reputation and enhance their brand, making them more likely to attract values-driven talent.
Establishing transparent frameworks for career progression, outlining clear career paths and promoting criteria based on objective, gender-neutral standards will also foster trust and a more positive working environment amongst the existing workforce.