Pay Transparency: What Changes with EU Directive 2023/970

An Operational Framework for Equal Pay

EU Directive 2023/970 introduces a structured framework to strengthen the principle of equal pay between women and men for the same work or work of equal value. The Directive uses pay transparency as a practical tool to identify, prevent and correct unjustified pay differences.

Its rules apply to different stages of the employment relationship. They cover the phase before employment, workers’ rights during employment, access to pay-related information and, for larger employers, specific reporting obligations on the gender pay gap. The Directive also requires action to address unjustified pay differences, including joint pay assessments when certain conditions are met.

The main goal is to ensure that pay, pay levels and pay progression are based on objective and gender-neutral criteria. For employers, this means that pay policies, internal salary structures and career progression systems should be clear and justifiable. For workers and applicants, the Directive improves access to information and makes the right to equal pay easier to enforce in practice.

Before Employment

One of the main areas covered by the Directive is the pre-employment phase. Applicants have the right to receive information about the initial pay or pay range for the position. Where relevant, they must also receive information about the applicable collective agreement.

This information is intended to make salary negotiations more transparent before the employment relationship begins. By giving candidates access to pay information at an early stage, the Directive reduces the information gap between employer and applicant.

Employers are also prohibited from asking applicants about their pay history. This rule is important because previous salary levels may reflect past inequalities. If employers use previous pay to define a new salary offer, existing pay gaps may continue in future employment relationships.

Job vacancy notices and job titles must be gender-neutral. Recruitment processes must also be non-discriminatory, so that the right to equal pay is not weakened from the beginning.

During the Employment Relationship

The Directive also gives workers specific rights during the employment relationship. Workers have the right to receive, in writing, information about their individual pay level and average pay levels. This information may be requested directly or through workers’ representatives or equality bodies, in line with national law and practice.

If the information provided is inaccurate, workers may request further clarification and a reasoned reply. Employers must provide the requested information within a reasonable period and, in any case, no later than two months from the request.

Workers must also be informed every year of their right to request this information and of the steps needed to exercise that right. This annual information duty is important because it makes pay transparency a regular compliance obligation, not just a theoretical right.

The Directive also states that workers may not be prevented from disclosing their pay when this is connected to the exercise of the right to equal pay. Member States must introduce measures to prevent contractual clauses that restrict workers from sharing pay information. However, workers may be required to use the information received only to exercise their right to equal pay.

Employers must also make available the criteria used to determine pay, pay levels and pay progression. These criteria must be objective and gender-neutral. Employers with fewer than 50 workers are exempt from the obligations relating to pay progression.

All information provided to workers or applicants must be available in a format accessible to persons with disabilities or other particular needs.

Reporting Obligations

The Directive introduces reporting obligations on the pay gap between female and male workers. These obligations depend on the size of the employer and are designed to provide clear data on gender-based pay differences.

Employers must report information on the gender pay gap, including complementary or variable pay components. They must also provide data on the median gender pay gap, the proportion of female and male workers receiving complementary or variable components, the proportion of female and male workers in each pay quartile, and the gender pay gap by categories of workers, including basic salary and complementary or variable components.

The deadlines are gradual. Employers with 250 or more workers must provide the required information by 7 June 2027 and every year after that, with reference to the previous calendar year. Employers with 150 to 249 workers must provide the information by 7 June 2027 and then every three years. Employers with 100 to 149 workers must report by 7 June 2031 and then every three years.

Employers with fewer than 100 workers are not prevented from reporting voluntarily. Member States may also require them to provide pay information under national law.

The accuracy of the reported information must be confirmed by the employer’s management after consulting workers’ representatives. Workers’ representatives must be able to access the methods used by the employer. The information must be communicated to the competent authority, which publishes the data in an accessible way. Member States may also collect the information themselves using administrative data, such as tax or social security data.

Employers must provide information on the gender pay gap by category of workers to all workers and their representatives, and upon request to the labour inspectorate and the equality body. These parties may ask for additional clarification about the data and must receive answers within a reasonable time.

When gender pay differences are not justified by objective criteria, employers must correct them within a reasonable period, working closely with workers’ representatives, the labour inspectorate and/or the equality body.

Transposition of the Directive into National Laws

As an EU Directive, Directive 2023/970 must be transposed into national law by each Member State. This means that every Member State must adopt national rules to implement the Directive’s requirements, while respecting the minimum standards set at EU level.

This step is important because employers will apply the obligations through national legislation. Although the Directive sets the main rights and duties, national laws may define procedural details, competent authorities, enforcement mechanisms and practical compliance requirements.

For businesses operating in more than one Member State, this may create a complex compliance landscape. The same EU framework may result in different national rules, procedures or administrative practices. Employers should therefore monitor both the Directive and the implementing rules in each relevant country.

If a Member State does not transpose the Directive on time, it may face consequences at EU level. At the same time, delays or fragmented implementation may create uncertainty for employers, HR departments, legal advisors and workers.

The Case of the Czech Republic

The Czech Republic is a sensitive case in the implementation of EU Directive 2023/970. The European deadline for transposing the Directive into national law is 7 June 2026, but the Czech implementation process appears to provide for a postponed application.

The Czech draft indicates that some provisions may apply from 1 January 2027, while most of the new obligations are expected to apply from 1 January 2028. Reporting obligations are also expected to follow a phased approach, with later dates for some categories of employers.

This delay may expose the Czech Republic to the risk of an infringement procedure for failure to transpose, or late transposition of, the Directive. Beyond the institutional risk, the postponement creates practical uncertainty for companies, HR consultants and workers.

Employers operating in Czechia may have less clarity on the final national rules and less time to adapt once the domestic legislation becomes fully applicable. They may need to review salary structures, job advertisements, pay progression criteria, reporting tools and internal documentation within a shorter timeframe.

For workers, delayed implementation may also mean delayed access to the full set of pay transparency rights provided by the Directive. The main risk is therefore not only legal, but also operational: late implementation may increase compliance pressure and slow down the effective protection of equal pay.

The Case of Italy

Italy provides a different example. Unlike Member States that are still finalising implementation, Italy has formally implemented the EU Pay Transparency Directive through national legislation. Legislative Decree No. 96 of 7 May 2026 was published in the Official Gazette on 1 June 2026 and enters into force on 7 June 2026.

This places Italy among the first Member States to complete the transposition process within the EU deadline. From a compliance perspective, this gives Italian employers a clearer national framework for adapting their recruitment practices, internal pay policies, information rights and reporting obligations.

The Italian case is useful because it shows how the Directive can move from EU-level principles to practical national rules. For employers, the focus now shifts from monitoring the transposition process to implementing concrete internal measures. This includes reviewing salary ranges, ensuring that recruitment procedures are aligned with transparency requirements, preparing for worker information requests and assessing whether reporting obligations apply based on workforce size.

For companies with operations in several EU countries, Italy may also serve as an early reference point for understanding how pay transparency obligations can be translated into national law and HR processes.

Summary and Pay Transparency Checklist

The Directive introduces a compliance framework covering recruitment, the employment relationship, access to pay information, reporting and internal pay governance. For this reason, employers should treat pay transparency not only as a legal obligation, but also as an opportunity to review their pay practices and make them clearer, better documented and more consistent.

General Checklist for All Employers

1. Review recruitment procedures to ensure that candidates receive information on the initial pay or pay range for the position.
2. Remove any questions about the candidate’s previous salary from recruitment processes.
3. Ensure that job vacancy notices and job titles are gender-neutral.
4. Verify that recruitment processes are organised in a non-discriminatory way.
5. Identify and document objective and gender-neutral criteria for determining pay, pay levels and pay progression.
6. Prepare internal procedures to respond to workers’ written requests about their individual pay level and average pay levels.
7. Inform workers annually of their right to request pay information and of the steps required to exercise that right.
8. Review any contractual clauses that limit workers from disclosing their pay when this is linked to the exercise of the right to equal pay.
9. Ensure that information provided to workers and applicants is accessible to persons with disabilities or other particular needs.
10. Identify any unjustified pay differences and correct them within a reasonable period of time.

Additional Checklist for Companies Subject to Reporting Requirements

1. Verify whether the company falls within the workforce thresholds for gender pay gap reporting.
2. Prepare internal systems to collect data on pay differences between female and male workers.
3. Collect and verify data on the gender pay gap, the median pay gap, complementary or variable pay components and distribution across pay quartiles.
4. Analyse the gender pay gap by categories of workers, including basic salary and complementary or variable components.
5. Involve workers’ representatives in checking the accuracy of the information and the methods used.
6. Communicate the required information to the competent authority, according to the applicable procedures.
7. Make information on the gender pay gap by categories of workers available to workers, workers’ representatives, the labour inspectorate and the equality body.
8. Prepare to respond to any requests for clarification about the reported data within a reasonable period of time.
9. Assess whether the pay differences identified are justified by objective criteria.
10. Where reporting shows an average pay difference of at least 5% that is not justified and has not been corrected within six months, prepare a joint pay assessment.
11. Use the joint pay assessment to analyse the causes of the differences, review classification systems and identify corrective measures.
12. Monitor the effectiveness of the measures adopted and update internal procedures where necessary.

For employers, early preparation is essential. Pay transparency requires reliable data, documented criteria and internal processes capable of showing that pay decisions are objective, gender-neutral and consistent with the principle of equal pay.

Link: https://eur-lex.europa.eu/eli/dir/2023/970/oj/eng

AI Image