This article was originally published on 20 January 2023. It was last updated on 26 March 2024.
The transparency era is here. Last year, we saw a steady drumbeat of new pay reporting requirements in Europe and around the globe, a post-pandemic revival of Gender Pay Gap reporting in the UK, a laser focus on pay range transparency in the U.S., and more employees openly discussing and sharing their pay. With the passage of the new EU Pay Transparency Directive and publication in the Official Journal on 17 May 2023, even more transparency is on the horizon.
If you are feeling unprepared, don’t worry. You’re not alone. To help, our team of experts has put together a comprehensive cheat sheet outlining the key features of the EU Pay Transparency Directive and how organisations might start preparing.
Key requirements of the EU Pay Transparency Directive
| Key requirement | Key details | Employee threshold | |
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01 Equal pay for work of comparable value |
Employers will need to develop tools or methodology to compare value of work with objective criteria
Workers who have suffered gender pay discrimination can receive compensation, including full recovery of back pay and related bonuses or payments in kind
The Directive includes protection for nonbinary employees |
Most provisions apply to all employers with any employees in the EU. Member States can, but are not required to, exempt employers with fewer than 50 employees within that Member State from the obligation to provide the criteria for pay progression |
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02 Pay and career progression transparency |
Pay scale transparency is coming to the EU. Employers will have to provide information about the initial pay level or its range in the job posting or vacancy notice or before the job interview and provide, where applicable, the relevant portion of the collective agreement applied by the employer in relation to the position Pay secrecy will be banned. Employers will not be allowed to ask prospective workers about their pay history. Bans pay secrecy confidentiality clauses Job titles must be gender-neutral (i.e., no “fireman”) Employers must make accessible to workers a description of the gender-neutral criteria used to define their pay, pay levels, and and pay progression |
Most provisions apply to all employers with any employees in the EU. Member States can, but are not required to, exempt employers with fewer than 50 employees within that Member State from the obligation to provide the criteria for pay progression |
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03 Right to information |
Employees can request individual pay level and on the average pay levels, broken down by sex, for categories of workers doing the same work or work of equal value
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All employers with any employees in the EU |
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04 Public pay reporting |
Covered employers will be required to complete public pay gap reporting on base pay and “any other consideration” The report will include:
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Ultimately, employers with 100+ employees, though this threshold could be modified by individual member states 7 June 2027 Reporting (based on 2026 data)
7 June 2031 Reporting (based on 2030 data)
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05 Joint pay assessment |
If average pay gap is at least 5% in any category of workers and this gap is not explained by objective and gender-neutral factors, and the gap has not been remediated within six months of the submission of the gender pay gap report, employers must perform a joint pay assessment in all groups. This will require assessing:
The joint pay assessment is in coordination with works council or other worker representatives |
Ultimately employers with 100+ employees (See threshold details in Section 04 above) |
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What comes next?
The Directive was published in the Official Journal on 17 May 2023 so the Directive entered into force on 6 June 2023, twenty days after publication in the Official Journal. Each Member State will then need to transpose the new elements of the Directive into national law no later than 7 June 2026.
Be warned: Member States don’t need to wait until 2026 to transpose the law — provisions in some Member States may come sooner! The final version of the Directive, however, did not waste any time, locking down the deadline for submission of the first public pay gap reports in all 27 Member States. Public pay reporting across all Member States will be due 7 June 2027, based on calendar year 2026 data for employers with 150+ employees (this will not be due until 2031 for smaller employers).
→ Get more details about the EU Pay Transparency Directive in our FAQ and glossary of common terms
The Directive is the epicenter of a global cross-pollination of workplace equity law
There’s a very clear trend of global cross-pollination of pay equity laws in recent years. While pay scale transparency and rises in litigations are aspects of U.S. regulation that have influenced Europe in its latest Directive, we can also see Europe’s influence in the other direction too. Europe’s focus on the median pay gap, public reporting, and representation metrics were all features also borrowed by the U.S. that have proven successful.
How leading brands are responding
It may feel tempting to surgically implement transparency only in the locations that require it. However, many leading companies are embracing pay scale transparency as a principle, not a mandate. This means they’re universally sharing ranges, regardless of whether or not it’s required. So while the EU Pay Transparency Directive will not impact UK employees following Brexit nor impact countries not admitted to the EU, you may wish to plan a strategy that applies across Europe, or across the globe, for better alignment across your workforce.
Regardless of what companies choose to make of pay transparency, the trend of global harmonisation is clear evidence that similar laws will be making their way to the UK very soon.
So, what are the benefits? While this approach is more expansive, it also simplifies your strategy and makes it consistent.
Additionally, current and prospective employees love transparency. As we face a looming global economic downturn, brands that set themselves apart by going above and beyond the status quo are best positioned to retain and motivate the talent they need to get them to through economic downtimes.
Lastly, employees are now more mobile than ever before. If you set a precedent of transparency in one location but not another, you may face confusion and dissatisfaction from employees who have changed locations.
Build your pay reporting strategy
To ensure comprehensive compliance with pay reporting requirements around the world, a global pay reporting strategy is essential. Syndio helps our customers analyze and complete pay reports for compliance with many pay reporting requirements around the globe. Global pay reporting can seem overwhelming due to varying deadlines, thresholds, and requirements. Syndio’s Global Pay Reports is your one-stop solution for efficient and accurate reporting in 29 jurisdictions jurisdictions worldwide.
Not sure where you owe reports? Use Syndio’s free online Global Pay Reporting Calculator to get a list of jurisdictions where you meet employee thresholds for pay reports — then get even more details on deadlines and requirements.
