European Union
On 30 March 2023, the European Parliament adopted the Pay Transparency Directive (the “Directive”) to increase pay transparency and to close the gender pay gap across European Union (“EU”) member states. The Directive imposes, among other things, gender pay gap reporting obligations for larger employers, transparency obligations regarding pay setting, the right for employees to request pay information, as well as protective measures and access to justice for victims of pay discrimination. In due course, the Directive will be submitted to the European Council to be formally approved and published in the EU Official Journal. The Directive will come into force 20 days after its publication date, and member states will be required to pass national legislation meeting the new minimum requirements established by the Directive within three years.


The Directive will affect all private and public employers in the EU and will apply to all employees who have an employment contract or employment relationship as defined by law, collective agreements, and/or practice in force in each EU member state. The Directive establishes minimum requirements to be implemented as the national law of each EU member state. Each member state may, at its own discretion, pass legislation that enhances any aspect of the minimum requirements established by the Directive.

Key details

The primary minimum requirements established by the Directive include the following:

Pay transparency to job applicants

The Directive requires employers to provide information on the initial pay level or its range in the job vacancy listing or prior to the job interview. The Directive prohibits employers from inquiring about the pay history of job applicants.

Pay setting transparency

The Directive requires employers to list the criteria used to determine pay, pay levels, and pay/career progression available to employees. Member states may exempt smaller employers of less than 50 employees from this obligation.

Employee’s right to pay information

The Directive gives employees, or their representatives, the right to request information about their own pay and the pay of male and female peers in the same category of work or work of equal value. The employer must provide this information within a reasonable time, not to exceed two months from the date of request. Employers must inform their employees yearly about their right to request such information.

Gender pay gap reporting

The Directive requires employers with over 100 employees to report any gender pay gap between their female and male employees. The deadline for starting the reporting obligation is linked to the employer’s size, with employers of more than 150 employees starting their reporting within one year from the date of implementation and employers of 100-149 employees starting their reporting within five years after the date of implementation. The frequency of the reporting is also linked to the size of the employer, with employers of 250 employees or more reporting annually and employers of 100-249 employees reporting every three years. Employers of 99 employees or less may report this information voluntarily unless required to do so by a member state.  

Joint pay assessment

The Directive requires employers to perform a joint pay assessment with employees’ representatives when a gender pay gap of 5% or more for the same category of employees or work of equal value exists when that pay gap has not been justified by objective and gender-neutral factors and has not been remedied within six months from the date of reporting. The objectives of the joint pay assessment are to identify, resolve and prevent future gaps in pay. The employer must correct the pay gap within a reasonable time in collaboration with employees’ representatives.

Protective measures and access to justice

The Directive provides the victims of pay discrimination with protective measures and access to justice. For example, the Directive entitles the victims to compensation that includes the full recovery of back pay and related bonuses or payments in kind, as well as interest on arrears. Moreover, the Directive places the burden of proof on the employer to convince the court that there has been no direct or indirect pay discrimination. Furthermore, the Directive protects employees from retaliation when attempting to protect their rights or the rights of others as prescribed under the Directive. Finally, the Directive gives member states the discretion to mandate their own penalties for pay discrimination, which can include fines.

Next steps

The Lockton Global People Solutions Compliance team will update this alert once more details are released. Meanwhile, employers should review their pay and benefits policies and procedures and be prepared to fully comply with the new rules once they are implemented in countries where they have operations.