Pay transparency in the EU: New rules from 2026 – what should companies prepare for?
From summer 2026, new EU rules will come into force, introducing far-reaching changes in employers’ obligations regarding pay and pay transparency. The objective of Directive (EU) 2023/970 is to ensure effective equal pay for equal work and work of equal value, as well as to strengthen the transparency of recruitment and pay practices.
The upcoming rules raise a number of questions and practical challenges for employers, who should already start preparing now.
Background and purpose
The issue of the gender pay gap has received increasing political and legal attention in the EU. According to Eurostat, the average hourly wage of women in the EU in 2023 was 12% lower than men’s.
The Directive seeks to address these inequalities through binding requirements on pay transparency, pay structure and the possibility of sanctioning discrimination.
Deadline for implementation
Member States have until 7 June 2026 to transpose the Directive into national law. Although the legislation is not yet available in many member states, work on implementation is already underway in several places – including Sweden, Finland and Poland.
The employer’s main obligations
The Directive sets out a number of specific requirements for employers. These include:
- Equal pay for equal and equivalent work
Companies must establish pay structures that ensure equal pay based on gender-neutral criteria. The assessment of the value of posts must be carried out on an objective and transparent basis. - Pay transparency in recruitment
Already when job advertisements, employers must provide information about the starting salary or salary range. It will also be forbidden to obtain information about the applicant’s previous salary. - Duty of disclosure and reporting
Companies with 100 or more employees must publish gender-disaggregated salary data. If the pay data reveal a pay gap of more than 5%, and the difference cannot be explained by objective and gender-neutral factors, the gap must be addressed. If it is not remedied within six months, the company must carry out a joint pay assessment with employee representatives.
The frequency of reporting and the timing of the first report depend on the size of the company:
Number of employees
Reporting frequency
First reporting deadline
100–149 employees
Every three years
7 June 2031 (based on 2030 data)
150–249 employees
Every three years
7 June 2027 (based on 2026 data)
250+ employees
Annually
7 June 2027 (based on 2026 data)
Employee rights
Employees will be entitled to information about the average salary – broken down by gender – for colleagues in the same or similar position. They will also gain insight into the criteria for salary increases and promotions, which must be objective and gender-neutral.
If an employee has suffered a loss as a result of unlawful discrimination, full compensation can be claimed – including back payment of salary, bonus and benefits. The employer must be able to prove that the rules have been complied with – the burden of proof has thus been reversed.
Preparations and recommendations
Although the rules will not come into force until 2026, companies should start work now. Preparations should include at least:
- Pay audit and equal pay analysis: Review the existing pay structure and identify any gender-based pay gaps.
- Job architecture and salary structure: Update job descriptions and internal salary criteria.
- Recruitment practices: Adapt the recruitment policy to meet the requirements for salary disclosure.
- Data collection and reporting: Establish systems for ongoing collection and analysis of salary data, broken down by gender and job category.
Mette Klingsten Advokatpartnerselskab notes
Mette Klingsten Law Firm assists companies in their work to prepare for the new rules. We have prepared a document package that can be scaled according to the size and needs of the company. Contact Mette Klingsten or Mads Bernstorn for further information.
