EU Pay Transparency Directive 2023/970

Gender pay gap under Directive (EU) 2023/970: calculation, 5% threshold, joint pay assessment

26 April 2026 · Category: AGG · Compliance-Kit

TL;DR

Directive (EU) 2023/970 defines the gender pay gap as the difference of average pay levels between female and male workers of an employer, expressed as a percentage of the average pay level of male workers (Art. 3(1)(c)); alongside it stands the same figure based on the median (point (e)). Employers with 100 or more workers report these figures (Art. 9). Where the report shows a difference of at least 5% in a category of workers that is not justified by objective, gender-neutral criteria and has not been remedied within six months, a joint pay assessment follows (Art. 10(1)). This only becomes binding through national law: the transposition deadline (7 June 2026) has passed, and as at 17 August 2026 no German implementing act was yet in place (BT-Drs. 21/7026).

What is the EU Pay Transparency Directive 2023/970?

The gender pay gap under the directive, step by step:

Pay and pay level: pay covers the ordinary basic wage or salary and any complementary or variable components, in cash or in kind (Art. 3(1)(a)); pay level means gross annual pay and the corresponding gross hourly pay (point (b))
Gender pay gap: the difference between the average pay levels of women and men, divided by the average pay level of men, as a percentage (point (c))
Median gender pay gap: the same calculation using median pay levels (point (e))
Reporting indicators: the gender pay gap overall and in complementary or variable components, each as average and median, the proportion of female and male workers receiving variable components and in each pay quartile, and the gender pay gap by category of workers (Art. 9(1)(a) to (g))
5% threshold and joint pay assessment: a joint pay assessment with the workers' representatives where the pay report shows a difference of at least 5% in a category of workers that is not justified by objective, gender-neutral criteria and has not been remedied within six months (Art. 10(1)); among other things it analyses the proportions, average pay levels and reasons for the differences in each category and sets out measures to address them (Art. 10(2))

Further obligations under the directive:

Pay gap reporting: from 100 employees every 3 years, from 250 employees annually
Right of access for applicants: the initial pay or its range before employment, for example in the job advertisement, before the interview or otherwise (Art. 5(1))
Right of access for employees: individual pay level and average pay levels, broken down by gender, for the same work or work of equal value (Art. 7)
Reversal of the burden of proof: where the employee establishes facts from which pay discrimination may be presumed, the employer must prove that there is none (Art. 18)
Compensation: the full pay difference plus non-material damage

Transposition status in DACH (as at 17 August 2026):

Germany: no implementing act; the lead Federal Ministry for Education, Family Affairs, Senior Citizens, Women and Youth is preparing a bill (BT-Drs. 21/7026)
Austria: no implementing act; a petition for swift transposition (2/PET, 28th legislative period) is before the Committee on Labour and Social Affairs. Until then, the income report under § 11a GlBG applies (employers permanently employing more than 150 employees, every two years)
Switzerland: not directly applicable (not an EU Member State)

This entry covers the gender pay gap under the directive in depth: calculation, the 5% threshold and the joint pay assessment. The short definition of the directive with its current status is in the entry EU Pay Transparency Directive (2023/970); all obligations, thresholds and deadlines at a glance are set out in the article EU Pay Transparency 2026: Obligations, Thresholds, Templates.

Practical example

A mid-sized company with 200 employees: first pay gap report by 7 June 2027, thereafter every 3 years. The pay gap calculation shows a difference of 8% in a category of workers that cannot be justified by objective, gender-neutral criteria. If it is not remedied within six months of the report, the directive requires a joint pay assessment with the workers' representatives: root cause analysis plus action plan; the assessment goes to the employees, the workers' representatives and the national monitoring body (Art. 10). Which sanctions apply to delay is only laid down by the implementing act (Art. 23).

Frequently asked questions

From when does the directive apply?

Transposition deadline 7 June 2026 (Art. 34(1)). The directive does not bind employers directly, only through the national implementing act; for the transposition status in Germany and Austria, see above.

Which thresholds apply?

250+ employees: first report by 7 June 2027, thereafter annually. 150-249 employees: first report by 7 June 2027, thereafter every 3 years. 100-149 employees: first report by 7 June 2031, thereafter every 3 years. Joint pay assessment: for the conditions, see "5% threshold and joint pay assessment" above (Art. 10(1)).

What is an 'unexplained gap'?

The part of the pay difference that the employer cannot justify by objective, gender-neutral criteria (Art. 10(1)(b)). In practice, the gap is adjusted for factors such as professional experience, position, pay grade and performance; any gap that then remains counts as 'unexplained'.

How is it calculated?

Multiple regression in Excel or Python (pandas/statsmodels). Variables: gender, professional experience, position, pay grade, performance. R² shows the explained proportion.

What fines apply?

The directive sets no amounts: Member States must lay down effective, proportionate and dissuasive penalties, including fines, with specific penalties for repeated infringements (Art. 23). The specific amounts are only set by the national implementing act (for the transposition status, see above).

What are the effects for SMEs?

Companies with 100-249 employees become subject to reporting for the first time (for the deadlines, see thresholds). Below 100 employees there is no reporting duty under Art. 9; pay transparency before employment (Art. 5) and the right of access (Art. 7), by contrast, are not tied to company size in the directive.