New EU Directive on Wage Transparency

Jul 14, 2023 Benn-Ibler Rechtsanwälte

Recent EU rules on pay transparency will be strengthening the principle of equal pay for men and women for equal work. To this end, the European Pay Transparency Directive (EU) 2023/970 has come into force on June 6, 2023. In future, companies will be required to publish information on the wages they pay and to compensate gender-specific wage discrimination appropriately.

The EU Pay Transparency Directive aims to reduce the gender pay gap within the EU, thus combating pay discrimination in the workplace. The drafting of the directive was triggered by the lack of transparency of pay systems and the lack of legal certainty regarding the concept of work of equal value. By disclosing pay structures, it should now be possible to take appropriate measures for guaranteeing the principle of equal pay. Since such discrepancies often go unnoticed, pay transparency will hopefully help raise awareness among employers and to identify gender pay gaps.

Employers will be required to inform jobseekers about the entry-level pay or pay range of the job a company is advertising. Applicants may also no longer be asked about their previous pay.

When accepting a job, employees will be entitled to the following information:

• Average level of pay for the group performing the same or equivalent work, broken down by gender
• Objective and gender-neutral criteria used for career development and pay setting

Companies with more than 250 employees have additional obligations. They must report on their company’s gender pay gap annually to the relevant national authority. This obligation to report does not apply to companies with fewer than 100 members of staff.

The directive also provides for a right to damages in cases of gender pay discrimination, with the onus on employers to prove that that they have not breached EU rules.

The directive also provides protection against intersectional discrimination, i.e., the combination of different forms of inequality such as gender, ethnicity, or sexual orientation.

Member states have until 7 June 2026 to implement the directive.

Directive (EU) 2023/970 (10 May 2023)