Pay transparency in the EU
The EU wants to strengthen the principle of equal pay for equal work between men and women through new EU rules on pay transparency.
How can EU rules on pay transparency benefit EU citizens?
The Council has adopted new rules on pay transparency on 24 April 2023.
This EU directive aims to combat pay discrimination and help close the gender pay gap in the EU.
Under the new rules, EU companies will be required to share information on salaries and take action if their gender pay gap exceeds 5%.
The directive also includes provisions on compensation for victims of pay discrimination and penalties, including fines, for employers who break the rules.
The new rules on pay transparency should help tackle pay discrimination at work and contribute to closing the gender pay gap.
Pay transparency can support workers' empowerment to enforce their right to equal pay for equal work or work of equal value between men and women through a set of binding measures.
Lack of pay transparency has been identified as one of the key obstacles to closing the gender pay gap, which remains at around 11%. This means that women earn on average 11% less than men per hour, for equal work or work of equal value (Eurostat data from 2024).
The pay gap has a long-term impact on the quality of women’s lives, on their risk of exposure to poverty and on the persisting pension pay gap, which is at around 25% in the EU, (Eurostat data from 2024).
The EU's gender pay gap: facts and figures
The COVID-19 pandemic and the economic and social fall-out from it make it even more pressing to tackle this issue: the pandemic has further highlighted long-standing challenges related to the participation of women in the labour market as women took on the larger share of caring responsibilities during this period.
How do the new EU rules intend to increase pay transparency and enforcement?
Access to information
The new rules will make it compulsory for employers to inform job seekers about the starting salary or pay range of advertised positions, whether in the vacancy notice or ahead of the interview.
Employers will also be prevented from asking candidates about their pay history.
Once in the role, workers will be entitled to ask their employers for information about:
- average pay levels, broken down by sex, for categories of employees doing the same work or work of equal value
- the criteria used to determine pay and career progression, which must be objective and gender neutral
Reporting obligation
Companies with more than 250 employees will be required to report annually on the gender pay gap in their organisation to the relevant national authority.
For smaller organisations the reporting obligation will take place every three years. Organisations with less than 100 employees won't have any reporting obligation.
If the report reveals a pay gap of more than 5% that cannot be justified by objective, gender-neutral criteria, companies will be required to take action in the form of a joint pay assessment carried out in cooperation with workers’ representatives.
Access to justice
Under the new directive, workers who have suffered gender pay discrimination can receive compensation, including full recovery of back pay and related bonuses or payments in kind.
While the burden of proof in pay discrimination cases has traditionally fallen on the employee, it will now be up to the employer to prove that they have not violated EU rules on equal pay and pay transparency. Penalties for violations must be effective, proportionate and dissuasive and will include fines.
Broadening the scope
For the first time, intersectional discrimination (the combination of multiple forms of inequality or disadvantage, such as gender and ethnicity or sexuality) has been included in the scope of the new rules. The directive also contains provisions ensuring that the needs of workers with disabilities are taken into account.
How the new rules address the issue of discrimination?
Pay transparency should allow workers to detect and challenge possible discrimination between women and men.
Gender bias in pay systems and job grading that does not value the work of women and men equally and in a gender-neutral way is very common.
Since such bias is often unconscious, pay transparency can help raise awareness of the issue among employers and help them identify discriminatory gender-based pay differences that cannot be explained by valid discretionary factors and are often unintentional.
Background and timeline
The right to equal pay between women and men for equal work or work of equal value is enshrined in Article 157 TFEU and in the equal pay directive 2006/54/EC.
Nevertheless, implementation and enforcement of this principle has long been challenging. This is in part because pay discrimination often goes undetected due to a lack of pay transparency, meaning that victims are prevented from bringing claims.
Gender pay transparency was included as a key priority in the EU gender equality strategy 2020-2025. On 4 March 2021, the European Commission presented a proposal for a directive on pay transparency.
The main aims of the proposal are to:
- empower workers to enforce their right to equal pay through a set of binding measures on pay transparency (before and after employment)
- strengthen the transparency of pay systems
- improve public understanding of the relevant legal concepts
- enhance the enforcement of the rights and obligations relating to equal pay between men and women
The proposal responded to the Council's call of June 2019 to develop concrete measures to increase pay transparency, and followed repeated calls for more action in this area.
The Council's position
The Council adopted a position (general approach) on the directive in December 2021.
A number of issues were raised during discussions in the Council:
- proportionality and interference with national systems
- increase of financial and administrative burdens for employers (especially micro and small-sized employers)
- candidates for employment
- remedies and enforcement of rights and obligations related to the principle of equal pay
Proportionality and interference with national systems
During discussions in the Council, there was a lot of effort to address the concerns related to the proportionality of the proposed solutions. Several provisions were amended in order to clarify that the proposal should not interfere with national labour market models.
The final Council position takes into consideration the role of social partners and the autonomy of social dialogue. Also, several key concepts in the proposal were newly defined or further clarified in order to address any doubts as regards the understanding of the terminology and ensure the uniform application of the directive.
Increase of financial and administrative burdens for employers (especially micro and small-sized employers)
Concerns were expressed about the anticipated administrative and financial burden for employers when implementing the pay transparency obligations.
Discussions revolved around micro, small and medium-sized enterprises possibly being exempt from some of the obligations amid concerns about excessive data reporting obligations. The presidency retained the threshold of 250 workers in its compromise proposal as well as the data reporting element. However, it introduced several exemptions for micro and small-sized employers and clarified the criteria to be used when applying the concept of work of equal value.
Candidates for employment
It was unclear whether the proposal covers applicants for employment (as opposed to people in employment). The final compromise text clarifies that for the purpose of pay transparency prior to employment the directive also applies for applicants for employment.
Remedies and enforcement of rights and obligations related to the principle of equal pay
Member states raised concerns about whether the provisions were too detailed and would interfere with the national judicial systems. The final Council position allows for more flexibility for the member states while keeping the main elements necessary for the effective application of the principle of equal pay.
It also takes into consideration the different labour market models as well as the role of social partners. It includes exemptions and derogations to micro and small-sized employers to minimise the financial and administrative impact of specific provisions. What is more, it offers more flexibility to the member states as regards the enforcement of the proposal.
Negotiations with the European Parliament
The European Parliament and the Council, led by the Czech presidency, reached a political agreement on 15 December 2022. The European Parliament adopted the directive at its plenary on 30 March 2023.
Adoption in the Council
The new directive on pay transparency was adopted by the Council on 24 April 2023.
Enter into force
The pay transparency directive will come into force upon publication in the EU’s Official Journal. EU countries will then have up to three years to 'transpose' the directive by adapting their national legislation to take account of the new rules.
The EU’s commitment to social issues
Employment and social inclusion policies are primarily the responsibility of EU countries. This means that national governments decide on issues such as wage regulation, pensions systems and retirement age, and unemployment benefits.
The pay transparency directive is part of the work of the EU to support member states with laws, funds and tools to better coordinate national policies, promote employment, improve living and working conditions, provide adequate social protection and combat social exclusion.
Advancing a stronger Social Europe (infographic)
See also
Last review: 14 April 2026