The EU Pay Transparency Directive (Directive (EU) 2023/970) requires employers in EU member states to disclose pay ranges to job applicants, stop asking about pay history, tell workers how pay is set, and report gender pay gaps. Employers with 250 or more workers must first report by 7 June 2027. Member states had to put it into national law by 7 June 2026. It does not apply to employers' workforces in Great Britain, but a UK group with staff in the EU is caught for those staff, through each country's implementing law.
Who it applies to
Article 2 applies the Directive to employers in the public and private sectors, and to all workers with an employment contract or employment relationship under national law. The pre-employment rules also cover job applicants. There is no minimum size for the core rights. Size only matters for the reporting duty and for one optional exemption.
For a UK-headquartered business, the practical test is where people are employed. A subsidiary or branch employing staff in an EU member state is subject to that country's implementing law. The reporting thresholds in Article 9 are expressed per employer, so start by counting workers in each EU employing entity, and check how the national law treats groups.
The core obligations
Each obligation below applies through the national law that implements it, so the detail can vary between member states:
- Pay before employment (Article 5). Applicants are entitled to the initial pay or its range, based on objective, gender-neutral criteria, before the interview or in the job advert. Employers may not ask applicants about their pay history;
- Pay-setting criteria (Article 6). Employers must make the criteria used to set pay, pay levels and pay progression easily accessible to workers. Member states may exempt employers with fewer than 50 workers from the progression part only;
- Right to information (Article 7). Workers can request, and receive in writing, their own pay level and the average pay levels, by sex, for workers doing the same work or work of equal value. The employer must answer within a reasonable period and no later than two months, and must remind all workers of this right every year;
- Pay secrecy. Contract terms that stop workers disclosing their pay for the purpose of enforcing equal pay must be prohibited.
Gender pay gap reporting: thresholds and dates
Article 9 sets the reporting timetable by employer size. Each report covers the previous calendar year:
| Workers | First report due | Then |
|---|---|---|
| 250 or more | 7 June 2027 | Every year |
| 150 to 249 | 7 June 2027 | Every three years |
| 100 to 149 | 7 June 2031 | Every three years |
| Under 100 | Voluntary, unless national law requires it | — |
On the Directive's timetable, the first reports due in June 2027 therefore cover calendar 2026, which is nearly over. The report includes seven measures: the mean and median gender pay gap, the same gaps for complementary or variable pay, the proportion of women and men receiving variable pay, the split by quartile pay band, and the gap by category of workers, split between basic pay and variable components. Management must confirm the data after consulting workers' representatives.
Joint pay assessments: the 5% trigger
The provision with the most bite is Article 10. A reporting employer must carry out a joint pay assessment with workers' representatives where all three conditions are met:
- The gap. Reporting shows a difference in average pay between women and men of at least 5% in any category of workers;
- No justification. The employer has not justified the difference on objective, gender-neutral criteria;
- No remedy. The employer has not corrected the unjustified difference within six months of submitting the report.
The assessment must analyse each category of workers, explain differences, set out remedial measures and review earlier ones. That puts weight on how "categories of workers" and "work of equal value" are defined. Employers without a gender-neutral job evaluation system will find the categories hard to defend.
Enforcement
The remedies are deliberately strong:
- Compensation (Article 16). Full compensation, including full recovery of back pay and related bonuses or payments in kind, and it may not be restricted by a prior upper limit;
- Burden of proof (Article 18). Once a worker shows facts suggesting discrimination, the employer must prove there was none. Where the employer has not met its transparency obligations, the burden falls on the employer in any event, unless the failure was manifestly unintentional and minor;
- Limitation (Article 21). Time limits for equal pay claims must be no shorter than three years, and must not start to run until the claimant is or should be aware of the infringement.
How it compares with UK gender pay gap reporting
In Great Britain, the gender pay gap regulations require employers with 250 or more employees on the snapshot date to publish their data within 12 months. The snapshot date is 5 April for private and voluntary sector employers, giving a reporting deadline of 4 April. It is 31 March for most public authorities, with a deadline of 30 March. The UK regulations themselves contain no equivalent of the pay range disclosure, the individual right to information or the 5% joint assessment trigger.
The UK is moving in a similar direction on action. Employers with 250 or more employees can now publish a voluntary action plan on the gender pay gap service, covering the pay gap and support for employees experiencing menopause. The government says these will become mandatory from spring 2027, subject to legislation. Our guide to ethnicity pay gap reporting covers the parallel UK proposals.
What a UK group with EU staff should do now
- Map employing entities. List each EU employer and its headcount against the 100, 150 and 250 thresholds;
- Check national law. Confirm the implementing law and start dates in each country where you employ people;
- Fix recruitment. Put pay ranges in adverts and remove pay history questions from forms and scripts;
- Build the data. Make sure payroll can produce calendar-year pay by sex and by category of workers, including variable pay;
- Test the 5%. Run the calculation now. Any gap that cannot be explained on gender-neutral criteria needs a remedy before reporting starts the six-month clock.
Acumon's international payroll team can assemble pay data across UK and EU entities in the form the reports need. Our corporate governance advisers can review pay-setting policies and controls before the first reporting cycle.