Key Points
European Directive 2023/970 on pay transparency was adopted on May 10, 2023. European Union member states must transpose Directive 2023/970 into national law by June 7, 2026, at the latest. The directive requires that candidates be informed of the starting salary or salary range prior to the job interview or in the job posting. Employers will not be permitted to ask candidates about their salary history in their current or previous employment relationships. Companies with at least 100 employees are subject to periodic reporting requirements regarding the gender pay gap. A joint pay assessment may be required when an average gap of at least 5% is not justified by objective, non-discriminatory criteria.
What does the European directive on pay transparency require?
Directive (EU) 2023/970, adopted on May 10, 2023, must be transposed into the national law of Member States by June 7, 2026, at the latest (source: EUR-Lex, Directive (EU) 2023/970). In particular, it introduces:
- the inclusion of a salary range in job postings;
- the prohibition on asking a candidate about their compensation history;
- the right of employees to know the average pay levels, broken down by gender, for the same type of position;
- the requirement to justify pay gaps, particularly those exceeding 5% for work of equal value;
- Reporting on a phased basis according to company size: starting in 2027 for companies with at least 150 employees, and starting in 2031 for those with 100 to 149 employees.
In France, the transposition process was still underway by the deadline: a preliminary draft bill had been presented to the social partners, but had not been adopted by Parliament by the scheduled date. The exact implementation timeline will therefore depend on the final national text.
Why is pay transparency a challenge before it is a requirement?
The main risk is not the directive itself, but rather the inability to explain its compensation policy.
For years, compensation has fluctuated due to hiring, promotions, individual negotiations, and market pressures. While these adjustments are often necessary and justified, over time they create disparities that are difficult to explain.
In the future, employees will have access to more information and points of comparison. One question will come up more often: “Why am I paid differently from a colleague in a similar position?” That is precisely when the company will need to provide objective answers.
Read the article: Pay Transparency: Opportunity or Threat for Management?
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Understand theimplications of European Directive 2026, its impact on yourfixed and variable compensation schemes, and the new requirementsregarding fairness and justification of practices.
Does transparency require perfect pay equity?
No. Pay transparency does not require that all employees receive the same pay. It requires that any differences be based on clear, consistent, and understandable criteria.
Responsibilities, level of expertise, impact on the business, experience, and performance: these criteria generally exist within a company. However, they must be formalized and shared. Without a structured framework, every discrepancy becomes a source of misunderstanding, or even demotivation.
Read the article: What kind of C&B profile is needed to support the implementation of transparency?
How do I know if my business is ready?
Beyond regulatory compliance, one question sums up the challenge:
“Would we be able to objectively explain the pay gaps that exist within our organization?”
If the response is hesitant, it is time to review job classifications, salary adjustment criteria, and the overall consistency of the compensation policy.
Read the article: Compensation 2026: The Start of a Year of Transparency
Pay transparency: a requirement or an opportunity?
The directive is often seen as an additional burden. However, it can enhance perceived fairness, employee trust, and the credibility of the compensation policy.
Forward-thinking companies do more than just ensure compliance: they lay the groundwork for a compensation policy that is more transparent, consistent, and widely understood. Because in the future, it will no longer be enough to simply pay employees fairly. Companies will also need to be able to prove it.
Pay transparency: a legal obligation, a strategic lever
Anticipate the requirements of EU Directive 2023/970 and turn pay transparency into a driver of motivation, fairness and employer attractiveness.
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FAQ
Which companies are affected?
The fundamental obligations (transparency in hiring, right to information) apply to all companies. The reporting requirements apply to companies with at least 100 employees, with a phased implementation schedule based on company size.
Should all employees in the same position receive the same salary?
No. Differences are still permissible if they are based on objective and formalized criteria: responsibilities, expertise, impact, experience, and performance.
What is the real risk for a company?
Not so much the directive itself as the inability to objectively justify existing pay gaps.
What is the deadline for the Pay Transparency Directive?
June 7, 2026, is the deadline for transposing Directive (EU) 2023/970 into the national law of Member States. The directive itself has been in force since 2023.
