Pay Transparency Directive 2023/970: Get Ready for New EU Rules

The Directive sets out minimum requirements to ensure transparency and fairness in pay practices.
Employers will need to demonstrate that all pay-setting criteria are objective, clear, and gender-neutral.

In practical terms, companies will be required to:

• Communicate transparently the criteria used to determine and increase salaries, such as skills, responsibilities, and working conditions;
• Ensure that pay decisions are properly documented and accessible;
• Review job classification systems to ensure that “equal value” is consistently assessed.

These measures will help prevent indirect discrimination and encourage more consistent, equitable pay policies across organisations.

Employees will gain stronger rights to access information about their pay.

Under the Directive, every employee will have the right to request written information on:

• Their individual level of remuneration;
• The average remuneration levels (broken down by gender) for workers performing the same or work of equivalent value.

Employers will have a maximum of two months to respond to such requests and must inform staff annually of their rights.
This new transparency framework will require HR teams to implement clear communication procedures and data management systems.

Depending on their size, companies will be required to calculate and disclose specific gender pay gap indicators.

The frequency of reporting will vary as follows:

• ≥ 250 employees: annually from 2027;
• 150–249 employees: every 3 years from 2027;
• 100–149 employees: every 3 years from 2031.

The indicators will include:

• The average and median pay gap between women and men;
• The distribution of women and men across salary quartiles;
• The proportion of employees receiving bonuses or additional remuneration by gender.

If an unexplained pay gap of 5% or more is identified, employers will need to conduct a joint pay assessment with employee representatives and take corrective measures within a reasonable timeframe.

Member States are required to establish effective, proportionate and dissuasive penalties for breaches of the Directive.

Possible sanctions include:

• Fines based on company turnover or total payroll;
• Exclusion from public tender procedures in cases of repeated breaches.

These sanctions highlight the importance of preparing for compliance early and ensuring robust HR governance.

At Coffra group, our multi-professional team — lawyers, chartered accountants, and Payroll/HR specialists — can support you in:

• Assessing your current pay structures and identifying potential risks;
• Reviewing and updating your internal policies to ensure alignment with the Directive;
• Implementing compliance and reporting processes tailored to your company’s needs.