EU Directive 970/2023 requires companies to adopt concrete measures to guarantee equal pay between men and women, setting strict requirements for pay transparency and protection against salary discrimination.
But what does this mean for companies and workers in practice?
One of the key novelties concerns the obligation for candidates to receive, before being hired, clear and detailed information about the initial salary or salary range for the offered position. This information must be gender-neutral, in order to prevent any form of discrimination. Additionally, employers are prohibited from asking candidates about their previous salaries, to avoid past salary experiences unfairly influencing the salary offer.
Furthermore, employers must ensure full transparency regarding the criteria used to determine salaries and define salary progression pathways. Every worker should be able to understand how their salary is set and how it may evolve over time. However, EU member states may exempt employers with fewer than 50 employees from the obligation to provide accessible criteria for salary progression. This exemption does not apply to the obligation to provide information about individual and average salary levels, which remains applicable to all companies.
The new rules apply to all companies, but the reporting obligations vary based on company size: companies with more than 250 employees must comply by June 7, 2027, while those with more than 100 employees must comply by June 7, 2031.
In cases of salary discrimination, the EU Directive provides that employees can take legal action. Specifically, if a worker believes they have been discriminated against compared to colleagues of the opposite sex, they can take legal action, and the burden of proof is on the employer to demonstrate no discrimination occurred. If discrimination is found, the worker is entitled to full compensation for lost wages, potential bonuses, and, in some cases, moral damages.
Another crucial aspect concerns the penalties foreseen by the Directive: EU member states are required to introduce measures that are effective, proportionate, and deterrent. Companies that fail to comply risk facing penalties, which may increase in the case of repeated non-compliance. Therefore, it is essential for companies to comply with the Directive promptly to avoid legal consequences and reputational damage
Finally, the Directive promotes social dialogue between companies and social partners to actively collaborate in reducing salary discrimination.
Companies have until June 7, 2026 to comply with the EU Directive, but acting in advance is essential to avoid penalties and to benefit from a more equitable work environment.
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