Pay Transparency: A New European Framework
The European Pay Transparency Directive, adopted on May 10, 2023, marks a major milestone in the fight against gender pay inequality. By June 7, 2026, France must transpose this directive into national law. The result: new obligations for companies, both in their recruitment practices and in the internal management of pay. The goal is clear — to establish a culture of transparency and fairness while strengthening employer accountability.
The European Pay Transparency Directive, adopted on May 10, 2023, marks a major milestone in the fight against gender pay inequality. By June 7, 2026, France must transpose this directive into national law. The result: new obligations for companies, both in their recruitment practices and in the internal management of pay. The goal is clear — to establish a culture of transparency and fairness while strengthening employer accountability.
Stricter Obligations from Recruitment to Career Development
The EU Directive 2023/970 will apply to companies with at least 50 employees, while allowing smaller organizations to comply voluntarily.
From the recruitment phase, transparency will become the rule. Employers will be required to indicate in job offers the salary or a pay range, and to provide candidates, upon request, with relevant information regarding applicable collective agreements. At the same time, it will become prohibited to ask applicants about their previous salaries, to prevent past inequalities from being perpetuated.
Once hired, employees will have access to the criteria used to determine and review pay levels, including progression mechanisms. This information must be shared in compliance with the General Data Protection Regulation (GDPR).
However, employees will not be allowed to access the individual salaries of their colleagues, as the directive promotes transparency of pay criteria rather than the disclosure of personal data.
Reporting, Adjustments, and Sanctions: Companies Must Prepare
Companies will also have to carry out regular pay gap reports between women and men, depending on their size.
Those with more than 250 employees will have to submit an annual report detailing pay levels by gender and the criteria used to set them. Companies with 100 to 249 employees will be required to report every three years, according to a phased schedule: 2027 for companies with 150–249 employees, and 2031 for those with 100–149 employees.
When a pay gap exceeding 5% is identified, employers will be obliged to correct it, unless they can justify it through objective, gender-neutral criteria such as performance or experience. Businesses with fewer than 100 employees may report voluntarily, without any correction requirement.
These changes will require HR departments to review their internal processes: updating pay grids, formalizing evaluation criteria, adapting HR and legal tools, and rethinking both internal and external communication regarding pay policies.
Another major shift introduced by the directive is the reversal of the burden of proof. In the event of a dispute, the employer will now have to prove compliance with equal pay principles, rather than the employee having to prove discrimination.
Finally, administrative fines will be imposed for non-compliance, either proportionate to total payroll or fixed, depending on the severity of the breach. These sanctions may also apply to job posting platforms and other employment intermediaries.
By reinforcing transparency and employer accountability, this directive aims to reshape Europe’s pay culture for the long term. For companies, the transition period until 2026 should be used to anticipate these changes, review pay practices, and make transparency a central part of their HR strategy.
Reporting, Adjustments, and Sanctions: Companies Must Prepare
Companies will also have to carry out regular pay gap reports between women and men, depending on their size.
Those with more than 250 employees will have to submit an annual report detailing pay levels by gender and the criteria used to set them. Companies with 100 to 249 employees will be required to report every three years, according to a phased schedule: 2027 for companies with 150–249 employees, and 2031 for those with 100–149 employees.
When a pay gap exceeding 5% is identified, employers will be obliged to correct it, unless they can justify it through objective, gender-neutral criteria such as performance or experience. Businesses with fewer than 100 employees may report voluntarily, without any correction requirement.
These changes will require HR departments to review their internal processes: updating pay grids, formalizing evaluation criteria, adapting HR and legal tools, and rethinking both internal and external communication regarding pay policies.
Another major shift introduced by the directive is the reversal of the burden of proof. In the event of a dispute, the employer will now have to prove compliance with equal pay principles, rather than the employee having to prove discrimination.
Finally, administrative fines will be imposed for non-compliance, either proportionate to total payroll or fixed, depending on the severity of the breach. These sanctions may also apply to job posting platforms and other employment intermediaries.
By reinforcing transparency and employer accountability, this directive aims to reshape Europe’s pay culture for the long term. For companies, the transition period until 2026 should be used to anticipate these changes, review pay practices, and make transparency a central part of their HR strategy.
Source(s): DIRECTIVE (UE) 2023/970 DU PARLEMENT EUROPÉEN ET DU CONSEIL