The Pay Transparency Directive (EU 2023/970) represents a significant change in how companies manage salary information. Its aim is to move towards fairer working environments by reducing inequalities and promoting greater clarity in pay policies.
This regulatory framework establishes new transparency obligations that affect both the selection processes and the internal management of remuneration.
In a context where equity, diversity, and sustainability are increasingly important, this directive reinforces the need to review how salaries are defined, communicated, and justified. At Eurofirms, we see this change as an opportunity to evolve toward more coherent talent management models, aligned with trust and transparency.
We help companies and candidates manage their talent.
Now we want to help you.
What is the Pay Transparency Directive?
The Pay Transparency Directive (EU 2023/970) is a European regulation that reinforces the principle of equal pay between workers for the same work or for work of equal value.
Its objective is to transform this principle into a concrete legal obligation by introducing mechanisms that make it possible to prevent, stop, and correct potential pay inequalities within organisations.
To this end, the Directive establishes measures that affect both selection processes and internal pay management. These include salary transparency before hiring, access to pay information for employees, and the need to define objective, neutral, and justifiable salary criteria.
Beyond its legal dimension, pay transparency drives an evolution towards more coherent management models, where salaries are understood as part of a relationship based on trust, fairness and clarity.
Regulatory framework of the pay transparency Directive
Within the regulatory framework of the Pay Transparency Directive (EU 2023/970), the principle of equal pay for workers for the same work or for work of equal value.
This framework introduces obligations that affect the entire salary management cycle, from the selection processes to the employment relationship. These include salary transparency prior to hiring, access to compensation information for employees, the definition of objective and neutral compensation criteria, and the need to justify any salary differences.
This framework not only responds to a legal requirement, but also to a social evolution that promotes fairer and more sustainable structures in the workplace.
Implementation schedule for the Pay Transparency Directive
Organizations must move forward in adapting their compensation and selection processes to meet the new requirements regarding salary transparency, equal pay, and access to information.
The Directive states that Member States of the European Union must transpose it into their national legislation by June 7, 2026.
According to the Pay Transparency Directive (EU 2023/970), some specific obligations, particularly those related to the publication of information on the pay gap in companies with 100 or more employees, follow a specific timetable depending on the size of the organization:
- 250 or more employees: first report on June 7, 2027, annually thereafter.
- Between 150 and 249 workers: first report on June 7, 2027, with periodicity every three years.
- Between 100 and 149 workers: first report on June 7, 2031, with periodicity every three years.
Beyond this timetable, the Directive introduces measures with immediate impact in areas such as salary transparency in selection processes, communication of objective remuneration criteria and access to salary information by workers.
How the pay transparency directive affects companies
The Pay Transparency Directive (EU 2023/970) marks a turning point in how companies manage their salary policies. It's not just about complying with a legal obligation, but about thoroughly reviewing how compensation is defined, communicated, and justified within the organization.
This framework directly impacts the entire talent management cycle, from the publication of the offer to the employment relationship, and introduces new requirements regarding transparency, traceability and control of salary decisions.
At Eurofirms we support companies in the process of adapting to the Pay Transparency Directive, helping them to evolve towards more transparent, sustainable and people-oriented models.
Review of salary policies
In reviewing salary policies, companies must analyze their salary structures to ensure they adhere to objective, neutral, documented, and non-discriminatory criteria. This involves reviewing job evaluations, professional classifications, compensation structures, and the components of total compensation.
Greater demands on salary management and justification
Compensation transparency means that companies must be able to explain and justify how and on what basis the compensation structure for each position is established. This requires internal systems that allow for documenting decisions and responding to potential information requests from employees.
Impact on the relationship with employees
Employees have the right to request information about their pay level and the average levels for comparable positions. This obliges companies to ensure that the information is accessible , consistent, and traceable, thus strengthening internal transparency.
Risks of non-adaptation
Failure to adapt to the new requirements may result in penalties—yet to be determined—and potential compensation, as well as significant reputational and legal repercussions. A lack of transparency or justification in salary decisions may lead to claims, a reversal of the burden of proof, and stricter internal controls.
How the Pay Transparency Directive affects workers and candidates
How the Pay Transparency Directive (EU 2023/970) affects workers and candidates represents a step towards clearer, more balanced and information-based labor relations.
This framework introduces new rights that allow for a better understanding of salary conditions and how compensation is defined within organizations, promoting greater equity both in the selection processes as well as professional development.
Access to remuneration information
Employees can request information about their individual pay level and the average pay levels for positions of equal work or value. This right allows for a better understanding of the objective and neutral criteria that structure salaries within the organization.
Greater equity in working conditions
Pay transparency contributes to improving fairness in working conditions and reducing unjustified salary differences between people performing equivalent functions .
Ability to make more informed decisions
Having clear information about salary conditions allows people to better assess their career options and make more informed and confident employment decisions.
Strengthening trust in the employment relationship
Access to transparent information fosters more balanced relationships between companies and workers, based on trust, clarity and consistency in salary management.
FAQ on the Pay Transparency Directive
What is pay transparency?
Pay transparency is the principle by which companies must provide clear information on how salaries are structured, including the criteria used to set them and their progression within the organization.
Who is affected by the pay transparency directive?
The Pay Transparency Directive (EU 2023/970) affects both companies and organizations, as well as employees and job applicants. It introduces obligations for organizations and new rights for individuals regarding access to salary information and transparency in recruitment processes.
What should companies do?
Companies must adapt their compensation policies to ensure transparency and equal pay. This includes, among other measures, disclosing salary ranges during recruitment processes, defining objective compensation criteria, and providing information to employees within the framework established by the Pay Transparency Directive (EU 2023/970).
What rights do workers and candidates have?
Employees and job applicants have the right to know about salaries. This includes access to the salary range before an interview and the possibility of requesting information about their pay level and the average levels for positions of equal work or value.
When does the Pay Transparency Directive come into force?
The Pay Transparency Directive (EU 2023/970) came into force in June 2023. However, June 7, 2026 was set as the deadline for Member States of the European Union to incorporate it into their national legislation.
How does this impact the selection processes?
The Pay Transparency Directive (EU 2023/970) introduces greater transparency from the earliest stages of the recruitment process. Job seekers have the right to receive information from potential employers about the salary or salary range for the position before the interview, and companies cannot request candidates’ pay history.
Pay transparency and talent management: a necessary evolution
The Pay Transparency Directive (EU 2023/970) not only responds to a regulatory framework, but also reflects a change in the way of understanding labor relations and the management of people within organizations.
In line with current talent management models, pay transparency contributes to building fairer and more consistent environments, where people understand how their salary conditions are defined and evolve.
Moving towards more transparent cultures involves strengthening trust, improving commitment, and fostering more sustainable professional relationships. This approach values clarity, fairness, and consistency as key elements in organizational management.
Eurofirms' view on the Pay Transparency Directive
At Eurofirms, we see the Pay Transparency Directive (EU 2023/970) as a positive step in how labor relations are managed. Moving towards models where salary information is clearer and more accessible helps build fairer, more balanced, and more people-centered environments.
Pay transparency not only helps reduce inequality, but also fosters more coherent relationships between companies and employees, based on trust and respect. When people understand how salaries are determined and perceive clarity in the criteria, it strengthens their sense of fairness and well-being.
This approach fits with our culture People first, which puts people at the heart of all decisions. We are committed to talent management models where transparency and consistency are part of everyday life, contributing to building more sustainable organizations and higher-quality professional relationships.