EU Pay Transparency Directive 2023/970
EU directive on pay equality + transparency
Practitioner's note: This article is practice-oriented compliance documentation, not legal advice. We are a compliance specialist, not a law firm. For legally binding information please consult a licensed lawyer.
TL;DR
The EU Pay Transparency Directive (Directive (EU) 2023/970) requires EU Member States to enact national laws on pay transparency by 07 June 2026. Objective: closing the gender pay gap through pay gap reporting, rights of access for employees, and joint pay assessment from a 5% gap.
What is the EU Pay Transparency Directive 2023/970?
Core obligations of the directive:
- Pay gap reporting: from 100 employees every 3 years, from 250 employees annually
- Right of access for applicants: salary range in job postings is mandatory
- Right of access for employees: median salary by gender for comparable work
- Joint pay assessment: for an unexplainable gap >5%, root cause analysis is mandatory
- Reversal of burden of proof: in case of discrimination allegations, the employer bears the burden of proof
- Damages: full pay differential + non-material damages
DACH implementation as of 04/2026:
- Germany: BMAS draft as of 02/2026 - adoption expected Q2/2026
- Austria: draft amendment to the Equal Treatment Act, Section 11a GlBG
- Switzerland: not directly applicable (not an EU Member State), but the Gender Equality Act is likely to follow
Practical example
Mid-sized company, 200 employees: from 06/2026, pay gap report every 2 years. Pay gap calculation yields an 8% unexplainable gap. Joint pay assessment is mandatory: root cause analysis + action plan + reporting to the Federal Ministry of Labour. Fine exposure for delay: up to EUR 50,000 (BMAS draft).
Frequently asked questions
When does the directive apply?
Transposition deadline: 07 June 2026. From that date, national implementing laws apply. DACH drafts as of 04/2026 are pending adoption.
What thresholds apply?
100+ employees: reporting every 3 years. 150+ employees: every 2 years. 250+ employees: annually. Joint pay assessment mandatory from a 5% gap.
What is an 'unexplainable gap'?
Pay gap after adjusting for objective factors (professional experience, position, pay grade, performance). Any remaining residual gap is considered 'unexplainable'.
How is it calculated?
Multiple regression in Excel or Python (pandas/statsmodels). Variables: gender, professional experience, position, pay grade, performance. R-squared indicates the explanatory share.
What are the fines?
DE BMAS draft: up to EUR 50,000 per violation. The EU Directive requires 'effective, proportionate, dissuasive' sanctions.
Impact on SMEs?
Mid-caps (100-249 employees) become subject to reporting obligations for the first time. Small SMEs (<100) are not directly affected, but de facto are through applicant expectations (salary ranges in job ads).