Equal pay for women and men, as well as pay transparency, constitute topics that have been appearing in social dialogue for a long time. Due to their importance, they are also of interest to the legislator, including the EU legislator. This interest resulted in the issuance of an extremely important legal act – the Pay Transparency Directive.
1. Pay Transparency Directive
The full name of the Pay Transparency Directive is Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms (Text with EEA relevance). It results from the title of the legal act that the main purpose of the document is to ensure the equal remuneration for women and men for the same work or work of equal value. Ensuring disclosure of salaries is to aim the realisation of this objective. Indeed, the EU legislator noted that the question of equal pay for women and men, as well as transparency of remuneration are closely connected. The recitals to the Directive explain: The 2020 evaluation of the relevant provisions of Directive 2006/54/EC found that the application of the principle of equal pay is hindered by a lack of transparency in pay systems, a lack of legal certainty on the concept of work of equal value, and by procedural obstacles faced by victims of discrimination. Workers lack the necessary information to make a successful equal pay claim and, in particular, information about the pay levels for categories of workers who perform the same work or work of equal value. The report found that increased transparency would allow revealing gender bias and discrimination in the pay structures of an undertaking or organisation. It would also enable workers, employers and the social partners to take appropriate action to ensure the application of the right to equal pay for equal work and work of equal value′.
Member States are obliged to bring into force the laws, regulations and administrative provisions necessary for the implementation of the provisions of the Directive by 7 June 2026.
2. Who is affected by the provisions of the Directive?
The provisions of the Directive apply to both private and public sector employers.
The Directive applies to workers engaged under an employment contract or being in an employment relationship in accordance with the provisions and collective agreements in force in individual Member States. Its content also concerns persons seeking employment.
3. Concept of remuneration
The concept of ′remuneration′ is crucial for the Directive. The EU legislator defined it in Article 3(1)(a) of the Directive. provision states: ‘pay’ means the ordinary basic or minimum hourly wage or monthly salary and any other consideration, whether in cash or in kind, which a worker receives directly or indirectly (complementary or variable components) in respect of his or her employment from his or her employer.
Therefore, the concept of remuneration is very broad. It includes not only the basic wage, but also various types of salary allowances, e.g. bonuses, allowance for overtime, allowance for night work.
4. Equal pay for equal work or work of equal value
The creation of remuneration structures that ensure equal pay for women and men for equal work or work of equal value will be the primary obligation of employers. These structures should be shaped using objective and gender-neutral criteria, e.g. skills, effort put into work, scope of job responsibilities and working conditions.
5. Protection of employees at the recruitment stage
5.1. Pre-employment pay transparency
The imposition of an obligation on employers to inform job applicants of the initial pay or salary range for a given position constitutes a novum.
The employer may include information concerning the initial pay or salary range for a given position in the job advertissement. He/She may also include it in the application form or in correspondence with the candidate. It’s important that information in question is provided to job applicants before the interview. Indeed, this is to ensure informed and transparent salary negotiations.
The job candidate also has the right to become familiar with the provisions of collective labour agreements used by the employer.
5.2. Prohibition on asking questions about remuneration at the current and previous employer
Article 5(2) of the Directive prohibits employers from asking job applicants questions about their remuneration with the current employer, as well as with previous ones.
5.3. Gender-neutral job advertissement
The EU legislator imposed an obligation on employers to formulate job advertisements and name the positions for which recruitment is carried out in such a way as to be gender-neutral. Moreover, the recruitment process itself should be conducted in a way that doesn’t lead to discrimination and doesn’t undermine the right to equal pay for equal work or work for equal value.
6. Transparent rules for determining remunerations
Another obligation that the directive imposes on employers is the duty to provide workers with easy access to the criteria that apply in determining employees’ remuneration, pay levels and pay progression. These criteria should be objective and gender-neutral.
It should be noted here that Member States may exempt employers with fewer than 50 workers from the pay progression obligation. It’s about protecting micro and small entrepreneurs from excessive burdens from the State. As explained in recital 35 of the Directive: ′When implementing this obligation, Member States should pay particular attention to avoiding excessive administrative burden for micro and small enterprises. Member States should also be able to provide, as a mitigating measure, ready-made templates to support micro and small enterprises in complying with the obligation. Member States should be able to exempt employers which are micro or small enterprises from the obligation related to pay progression, for instance by allowing them to make the pay progression criteria available upon request by workers.′
7. Information concerning remuneration
Article 7 of the Directive is extremely important for workers. This provision establishes the employee’s right to receive information from the employer on his/her individual remuneration and on the average salaries of workers performing the same work or work of equal value. Information concerning average wages should be provided with breakdown by gender.
It should be emphasised that the employer will only be able to provide information on the average salaries of other workers. It won’t be permitted to supply information on the amount of remuneration of individual employees engaged in the workplace.
Workers will be able to request information in person or through employees’ representatives or the equality body.
In the event that the information provided would turn out to be inaccurate or incomplete, it will possible to request additional and justified explanation, as well as detailed information concerning the data transmitted.
Employers will be obliged to make the information in question available within a reasonable time, no later than two months after requesting it.
Each year, employers will have to communicate to workers their right to receive information on wages, as well as the actions to be taken in order to obtain this data.
In the event that a worker making use of the right to information obtains data other than that concerning his/her remuneration or salary level, the employer will be able to require him/her not to use this information for any purpose other than that of exercising the right to equal pay.
8. End of the prohibition of non-disclosure of information on salaries
Very often, employers introduce, in employment contracts, provisions under which they prohibit the personnel to disclose information concerning their remuneration. The Directive will end this practice. Pursuant to Article 7(5) of the Directive: Workers shall not be prevented from disclosing their pay for the purpose of the enforcement of the principle of equal pay. In particular, Member States shall put in place measures to prohibit contractual terms that restrict workers from disclosing information about their pay.
It’s worth noting that the provision in question also prohibits employers from taking action to prevent workers from disclosing their salaries in connection with the enforcement of the principle of equal pay.
9. Form of providing information
Any information made available to both workers and job applicants by the employer will have to be in a format that is accessible to persons with disabilities and that takes into account their specific needs.
10. Wage gap reporting
Closing of the wage gap between male and female employees constitutes the goal that the creators of the Directive are pursuing. This gap shows pay differences between men and women. Currently, it’s approximately 14% in EU countries. The creators of the Directive aim to reduce the wage gap and bring it to a maximum of 5%.
Therefore, the Directive imposes reporting obligations on employers. They will be required to provide the following information concernig their workplace:
- gender pay gap;
- gender pay gap in the form of complementary or variable components;
- median gender pay gap;
- median gender pay gap in the form of complementary or variable components;
- percentage of female and male workers receiving complementary or variable components;
- percentage of female and male employees in each salary quartile;
- gender pay gap among workers broken down by categories of employees, according to the usual basic hourly or monthly wage and complementary or variable components.
The obligation in question is to be introduced gradually. The deadline for submitting the first report and the frequency of presenting subsequent ones were made dependent on the number of workers engaged by the employer. The table below contains the dates and frequency of introduction of the reporting obligation for individual groups of employees:
|Number of workers employed
|Date of submission of the first report
|Frequency of submission of subsequent reports
|250 employees or more
|until 7 June 2027
|from 150 to 249 workers
|until 7 June 2027
|every three years
|from 100 to 149 employees
|until 7 June 2031
|every three years
It’s up to the Member State to decide whether employers engaging less than 100 workers will be obliged to submit reports concerning the wage gap. Member States won’t be able to prevent this group of employers from reporting voluntarily.
Employers with reporting obligations will conduct a joint assessment of remuneration in cooperation with workers’ representatives. This will occur in the event that:
- the difference in the average pay level between female and male workers will be at least 5%;
- the employer didn’t justify the difference in the average level of remuneration on the basis of the objective, gender-neutral criteria;
- the employer hasn’t remedied the pay difference within six months from the date of submission of the report concerning salaries.
The joint assessment of remuneration should be made available to workers and employees’ representatives, as well as transferred to the monitoring body. In addition, it should be made available to the labour inspectorate and the equality body upon request.
11. Means of legal protectionj
Workers whose employer has committed a breach of the principle of equal pay will be able to seek ′enforcement of rights and obligations related to the principle of equal pay′ by legal proceedings (see Article 14 of the Directive). Moreover, any employee harmed by infringement of the principle of equal pay will be able to claim compensation or reparation. However, the national legislator won’t be able to set an upper limit for compensation and reparation in advance. Pursuant to Article 16(4) of the Directive: The compensation or reparation shall not be restricted by the fixing of a prior upper limit.
Member States were obliged to provide legal means allowing the relevant institutions or courts to issue:
- an order to bring the infringement to an end;
- an order to take measures to ensure that rights or obligations concerning the principle of equal pay are applied.
In the event that the defendant would fail to comply with the above orders, the appropriate authorities or courts will be entitled to impose a recurring penalty payment.
In matters relating to violation of the principle of equal pay, the burden of proof rests with the defendant, i.e. the employer.
12. Legal notice
The study is a work within the meaning of the Act of 4 February 1994 on Copyright and Related Rights (OJ 2006, No. 90, item 631, consolidated text, as amended). Publishing or reproducing this study or its part, quoting opinions, as well as disseminating in any other way the information contained therein without the written consent of Crede sp. z o.o. is prohibited.