Pay transparency laws are more common than ever before, with states like California, New Jersey, and (most recently) Delaware enacting their own laws. What’s more, countries across the globe have begun following in the United States’ footsteps, putting their own pay transparency laws and regulations in place.
Most recently, the European Commission imposed a directive across all European Union (EU) countries aimed at addressing pay discrimination and closing the gender pay gap. The deadline for each EU country to enact their own law is June 7, 2026, whether the country decides on a law with just the essentials of the directive or on a more elaborate law with stricter regulations.
Belgium, Sweden, Poland, Ireland, the Netherlands, and Finland have already enacted laws in response to this decree. Other EU countries are expected to soon follow.
Below is the information you need and the steps you should take to prepare your organization for transparency laws.
Requirements of the EU’s Pay Transparency Directive
Directive (EU) 2023/970 attempts to address the simple principle of equal pay for equal work, focusing on the wage differences between men and women. Each EU country must enact a law for all companies within its border to meet the following requirements:
- Recruiting: A reasonable hiring salary range must be disclosed on all job postings. Also, employers are not allowed to ask for salary history information from their candidates.
- Organizational transparency: If an employee asks for their full salary range, or promotion eligibility, employers must provide this information. They must also provide the average pay levels of other employees with the same title or in a similar position. This information must be displayed by gender and given to the employee within sixty (60) days of a written request. Finally, employers must inform their employees that they have the right to ask for this information annually.
- Gender pay gap reporting: Organizations must report on the pay gaps between male and female workers. Employers with at least 250 employees must report every year. Employers with 150 to 250 employees must report every three (3) years. Employers must implement corrective action plans when a gender pay gap of 5% or greater is identified.
Employer Checklist to Comply with the Pay Transparency Directive
The following is a checklist of areas you must address:
- Review current compensation practices and policies to uncover potential gaps.
- Work with talent acquisition to make sure recruiting processes are gender neutral and have a place for salary range information.
- Conduct gender pay analyses regularly, and correct gender pay gaps.
- Categorize positions into appropriate, defined groups based on job evaluation criteria.
- Solidify pay data with defensible market data.
- Ensure salary structures are flexible, and the ranges are market-driven and reasonable for the positions within each grade.
- Stay up to date on legal developments.
Important Information: Compliance Can Be Complex, and Non-Compliance Costly
- Employees determined to be unfairly compensated are entitled to request full compensation or reparation.
- Regardless of where the organization is is headquartered, if it has a workforce in the EU, it must abide by this directive.
- It will be challenging for companies operating across multiple EU countries, as each member state will have its own laws and interpretations.
Pay Transparency Laws Are Here. Prepare Now for Success.
EU member states are moving toward implementing the Pay Transparency Directive. At the same time, states in America are enacting their own related laws. Organizations must act now to establish compliance and prepare for long-term success. By embracing wage and compensation transparency, companies not only mitigate legal risks, but also foster a fairer, more equitable workplace culture.
The team at Compensation Resources can help secure your compliance by reviewing your compensation policies, aligning your recruiting practices, conducting a gender pay analysis, checking proprietary and market salary data, researching laws in your state/country, and more. Reach out today.
