Major changes are coming to the labor market as European Union member states move to implement the Pay Transparency Directive (2023/970), introducing new obligations for employers and greater rights for workers.
One of the most significant changes will affect job advertisements and recruitment processes. Employers will be required to inform candidates about the starting salary or salary range for a position before a job interview takes place, either in the vacancy announcement itself or at an earlier stage of the hiring process.
The measure is designed to ensure that job seekers have a clear understanding of the financial terms of a position before entering lengthy recruitment procedures.
Salary History Questions to Be Banned
Under the new rules, employers will no longer be allowed to ask candidates about their salary history.
The provision is intended to help reduce wage inequalities, particularly those affecting women, and to promote greater fairness and transparency in the labor market.
EU member states are required to adopt the necessary legislative and administrative measures by June 7, 2026, and subsequently report to the European Commission on the implementation and impact of those measures.
New Reporting and Pay Gap Requirements
Employers that are required to submit pay data will need to conduct a joint pay assessment with employee representatives when a gender pay gap of at least 5% is identified within the same category of workers.
Such an assessment will be mandatory when the difference cannot be justified by objective, gender-neutral criteria and has not been corrected within six months of the reporting process.
Workers will also gain the right to request written information about their own pay level, as well as average pay levels by gender for employees performing similar work. Employers will be required to provide access to the criteria used to determine pay and career progression.
Penalties for Non-Compliance
Member states must establish penalties for employers that fail to comply with the new requirements. These may include financial sanctions calculated on the basis of annual turnover or total payroll costs.
The reporting obligations will be introduced gradually depending on company size.
Employers with 250 or more employees must submit pay data annually beginning by June 7, 2027.
Companies with between 150 and 249 employees will also begin reporting by June 2027, but on a three-year cycle thereafter.
Businesses employing between 100 and 149 workers will have until June 7, 2031, to begin reporting, also on a three-year basis.
For companies with fewer than 100 employees, pay reporting will remain voluntary.
