Purpose of EU Directive 2023/970

The purpose of EU Directive 2023/970 is to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through enhanced pay transparency and reinforced enforcement mechanisms.

• Establishes minimum requirements to ensure transparency of pay before and during employment.
• Mandates employers to report on gender pay differences.
• Grants workers rights to information about their pay and the average pay divided by gender for comparable work.
• Strengthens tools and procedures for enforcing these rights.

Enactment Date

The directive was enacted on May 10, 2023.

Applicability

EU Directive 2023/970 applies to:

• All public and private sector employers.
• All workers who have an employment contract or employment relationship as defined by national law, collective agreements, and/or established practice, taking into account Court of Justice case law.
• Applicants for employment (for the purposes of Article 5 on pay transparency for job applicants).

Main Requirements for Employers

The main requirements of EU Directive 2023/970 for employers include:

• Ensuring Pay Transparency: Guarantee transparency of pay before and during employment.
• Reporting on Gender Pay Differences: Provide regular reports on gender pay gaps within the organization.
• Providing Workers with Pay Information: Furnish employees with their own pay details and the average pay by gender for comparable roles.

Promoting Pay Transparency

• Right to Information Before Employment: Applicants must receive information on initial pay or pay range based on objective, gender-neutral criteria, and relevant collective agreement provisions before or during recruitment (e.g., in job vacancy notices).
• Prohibition on Pay History Inquiries: Employers may not ask applicants about their current or past pay history.
• Gender-Neutral Vacancies & Recruitment: Job titles and vacancy notices must be gender-neutral, and recruitment processes non-discriminatory, to uphold equal pay principles.
• Transparency of Pay Setting & Progression: Employers must make accessible the criteria used to determine pay levels and progression—ensuring they are objective and gender-neutral.
• Right to Information for Workers: Workers can request and receive in writing their individual pay and the average pay by gender for comparable roles; employers must inform all workers annually of this right.
• Accessibility of Information: All transparency information must be provided in formats accessible to persons with disabilities, addressing their specific needs.

Through these measures, the directive ensures informed pay negotiations, encourages gender-neutral recruitment, and makes pay structures transparent—promoting equal pay for equal work or work of equal value between men and women.

Rights Granted to Workers

• Right to Information Before Employment: Applicants must receive information on initial pay or its range based on objective, gender-neutral criteria and relevant collective agreement provisions.
• Transparency of Pay Setting & Progression: Employers must make criteria for determining pay levels and progression easily accessible and objective.
• Right to Request & Receive Pay Information: Workers can request written information on their individual pay and the average pay by gender for comparable roles.
• Protection Against Less Favourable Treatment: Workers and their representatives are protected from dismissal or adverse treatment for exercising equal pay rights or supporting others.
• Non-Discrimination in Recruitment: Vacancy notices and job titles must be gender-neutral and recruitment non-discriminatory.
• Prohibition on Pay History Inquiries: Employers cannot ask applicants about their current or past pay history.
• Accessibility of Information: All transparency information must be provided in formats accessible to persons with disabilities.

Penalties for Non-Compliance

Yes. Member States must establish effective, proportionate and dissuasive penalties for breaches of equal-pay rights and obligations under Directive 2023/970. These penalties:

• Must guarantee a real deterrent effect and may include fines under national law.
• Should consider aggravating or mitigating factors, including any intersectional discrimination.
• Include heightened penalties for repeated infringements to ensure practical enforcement.

Enforcement of Equal Pay Principles

• Pay Transparency Requirements: Mandates transparency before and during employment, including reporting on gender pay differences and providing pay-by-gender data for comparable work.
• Right to Information: Guarantees workers and applicants the right to obtain information on pay levels and the criteria used to set pay.
• Prohibition of Pay Secrecy: Forbids asking applicants about pay history and requires gender-neutral job titles and non-discriminatory recruitment.
• Penalties for Non-Compliance: Requires Member States to establish effective, proportionate, dissuasive penalties (including for repeated infringements).
• Defence of Rights & Legal Support: Ensures accessible court proceedings and allows associations, equality bodies, and representatives to act on behalf of workers.
• Monitoring & Awareness Raising: Obligates Member States to designate a monitoring body and run awareness-raising activities on equal pay.

Workers’ Remedies

• Request Pay Information: Workers can request in writing their individual pay level and the average pay by gender for comparable work.
• Through Representatives or Equality Bodies: This request may be made directly, via workers’ representatives, or through an equality body in accordance with national law.
• Seek Clarifications: If the information is incomplete or inaccurate, workers can ask for additional details and must receive a substantiated reply.
• Annual Notification: Employers must inform all workers annually of their right to request this information and the procedure to do so.
• Timely Response: Employers are obligated to provide the requested information within a reasonable period, but no later than two months from the request date.

Interaction with National Laws

EU Directive 2023/970 complements rather than diminishes existing national equal-pay laws. It sets minimum standards, allowing Member States to maintain or introduce more favourable provisions for workers. Its implementation may not be used to reduce existing levels of protection in any covered field, ensuring it reinforces and builds upon national efforts toward equal pay.

Preparing for Implementation

• Review Current Pay Structures: Assess existing pay systems to identify gender pay gaps.
• Enhance Pay Transparency: Clearly communicate pay levels and ranges in job ads, interviews, and contracts.
• Develop Reporting Mechanisms: Establish processes for regular, accessible reports on gender pay differences.
• Provide Training & Support: Educate HR and managers on equal-pay requirements and best practices.
• Implement Gender-Neutral Job Evaluation: Use or update evaluation systems to exclude pay discrimination.
• Prepare for Worker Requests: Set up clear procedures to respond to information-rights requests promptly.
• Engage Workers’ Representatives: Collaborate with staff representatives on pay assessments and adjustments.
• Monitor & Adjust: Continuously track measures’ effectiveness and refine processes as needed.
• Consult Legal & HR Experts: Seek specialist advice on legal obligations and implementation strategies.
• Communicate with Employees: Inform staff about steps taken to ensure equal pay and build transparency.

Implementation Challenges

The directive’s objectives may face practical hurdles. Key challenges include:

• Administrative & Financial Burden: Updating payroll and HR systems can be resource-intensive, especially for SMEs.
• Data Privacy Concerns: Balancing transparency with protection of personal pay data.
• Legal & Practical Adaptation: Aligning national laws and diverse employment practices with the directive’s requirements.
• Monitoring & Enforcement: Establishing effective, consistent mechanisms to track compliance and address discrepancies across Member States.
• Cultural & Behavioral Change: Shifting entrenched workplace attitudes and practices to prioritize gender pay equity.

Addressing these challenges requires careful planning, stakeholder engagement, and ongoing review to ensure successful implementation of equal-pay objectives.

SMEs and Directive Compliance

EU Directive 2023/970 applies to all employers, including small and medium-sized enterprises (SMEs), but recognises the potential administrative burden on smaller organisations.

To facilitate SME compliance without imposing excessive costs, the directive provides:

• Technical Assistance & Guidance: Support tools and resources to help SMEs understand and implement requirements.
• Possible Exemptions: Tailored exemptions for very small employers where appropriate.
• Simplified Procedures: Streamlined reporting and transparency processes suited to SME capacities.

This framework ensures small businesses can effectively meet the minimum requirements on pay transparency and reporting while maintaining operational efficiency.

Impact on Gender Pay Gaps

EU Directive 2023/970 is designed to enforce greater pay transparency and strengthen enforcement measures for equal pay for equal work or work of equal value between men and women.

• Visibility of Disparities: Employers must report detailed gender pay difference data and grant workers access to pay information by gender, making disparities visible and accountable.
• Enforcement & Penalties: Non-compliance triggers penalties and corrective actions, motivating employers to proactively address unjustified pay gaps.
• Worker Empowerment: Access to information empowers employees and applicants to challenge discrepancies and seek redress.
• Continuous Monitoring: Mandatory reporting encourages ongoing assessment and adjustments to pay structures, driving progressive narrowing of gaps over time.

Through increased transparency, accountability, and enforceable sanctions, the directive promotes systematic identification and elimination of gender pay disparities, contributing to a long-term reduction of the gender pay gap across the EU.

Role of National Governments

• Transposition into National Law: Adopt all necessary laws, regulations and administrative measures by 7 June 2026 and notify the Commission.
• Effective Implementation: Ensure the Directive’s objectives are met at all times, involving social partners where appropriate.
• Support for Employers: Provide technical assistance, guidance and training—particularly to employers with fewer than 250 workers.
• Monitoring & Reporting: Designate a monitoring body to oversee application of equal-pay principles and report annually to Eurostat with unadjusted gender pay data.
• Dissemination of Information: Make Directive provisions and related national rules widely known to all affected persons.
• Statistical Reporting: Submit up-to-date national data each year to calculate and track the unadjusted gender pay gap.

Learning About Your Rights

• Consult National Labour Authorities: Visit your country’s labour ministry or equality body for official guidance and FAQs.
• Seek Legal Advice: Contact an employment lawyer or legal aid centre to understand how the directive applies.
• Engage Workers’ Unions: Unions often offer resources, workshops, and support on equal-pay rights.
• Use Official EU Resources: Refer to the European Commission’s and EUR-Lex websites for the full text of Directive 2023/970 and explanatory documents.
• Explore Online Portals: Check national and EU portals that consolidate labour-law information and complaint procedures.

Measures Against Repeat Violators

• Effective, Proportionate & Dissuasive Penalties: Fines under national law that escalate with each repeated infringement to ensure a real deterrent effect.
• Consideration of Aggravating Factors: Sanctions may be increased for intersectional discrimination or particularly severe breaches.
• Specific Sanctions for Repeat Infringements: Higher penalty tiers or additional legal consequences for employers with multiple violations.
• Administrative Oversight: Designated national bodies may issue compliance orders or require corrective action plans.
• Legal Remedies for Workers: Workers can seek compensation or back pay through courts or equality bodies for ongoing or repeated non-compliance.

Member States must ensure these measures are applied effectively to uphold equal-pay rights and prevent recurring breaches.

Monitoring Compliance

• Designated National Authorities: Member States appoint bodies responsible for overseeing enforcement of the directive.
• Periodic Reporting: Employers must submit regular pay transparency and gender pay gap reports to these authorities.
• Audits & Inspections: Authorities may conduct audits or inspections to verify that employers adhere to transparency and reporting requirements.
• National Procedures: Specific monitoring mechanisms and procedures are defined by each Member State within the framework of the directive.

Exemptions to the Directive

EU Directive 2023/970 establishes minimum requirements on equal pay, but does not itself list specific exemptions. Any exemptions or adaptations will be defined by each Member State when transposing the Directive into national law.

To determine whether certain employers or employment situations are exempt, refer to:

• The full text of Directive 2023/970 on EUR-Lex for any EU-level provisions.
• National implementing legislation, where Member States may provide exemptions or simplified procedures tailored to their legal and economic context.
• Guidance from national labour authorities or equality bodies, which will clarify any country-specific exemptions or thresholds.

Anticipated Long-Term Effects

The EU expects that full implementation of Directive 2023/970 will lead to:

• Substantial Reduction of the Gender Pay Gap: Transparent pay data and enforcement will drive employers to correct unjustified disparities.
• Promotion of Workplace Gender Equality: Equal pay practices will become standard, fostering a culture of fairness.
• Eradication of Gender-Based Discrimination: Persistent monitoring and penalties will deter discriminatory pay practices.
• Inclusive and Equitable Labor Market: Enhanced accountability will support a more balanced, diverse workforce across all sectors.
• Long-Term Cultural Change: Regular reporting and awareness will shift organizational norms toward valuing all work equally, regardless of gender.

Article 9 – Reporting on pay gap between female and male workers

1. Member States shall ensure that employers provide the following information concerning their organisation, in accordance with this Article:
   • (a) the gender pay gap;
   • (b) the gender pay gap in complementary or variable components;
   • (c) the median gender pay gap;
   • (d) the median gender pay gap in complementary or variable components;
   • (e) the proportion of female and male workers receiving complementary or variable components;
   • (f) the proportion of female and male workers in each quartile pay band;
   • (g) the gender pay gap between workers by categories of workers broken down by ordinary basic wage or salary and complementary or variable components.
2. Employers with 250 workers or more shall, by 7 June 2027 and every year thereafter, provide the information set out in paragraph 1 relating to the previous calendar year.
3. Employers with 150 to 249 workers shall, by 7 June 2027 and every three years thereafter, provide the information set out in paragraph 1 relating to the previous calendar year.
4. Employers with 100 to 149 workers shall, by 7 June 2031 and every three years thereafter, provide the information set out in paragraph 1 relating to the previous calendar year.
5. Member States shall not prevent employers with fewer than 100 workers from providing the information set out in paragraph 1 on a voluntary basis. Member States may, as a matter of national law, require employers with fewer than 100 workers to provide information on pay.
6. The accuracy of the information shall be confirmed by the employer's management, after consulting workers' representatives. Workers' representatives shall have access to the methodologies applied by the employer.
7. The information referred to in paragraph 1, points (a) to (g), of this Article shall be communicated to the authority in charge of compiling and publishing such data pursuant to Article 29(3), point (c). The employer may publish the information referred to in paragraph 1, points (a) to (f), of this Article on its website or make it publicly available in another manner.
8. Member States may compile the information set out in paragraph 1, points (a) to (f), of this Article themselves, on the basis of administrative data such as data provided by employers to the tax or social security authorities. The information shall be made public pursuant to Article 29(3), point (c).
9. Employers shall provide the information referred to in paragraph 1, point (g), to all their workers and to the workers' representatives of their workers. Employers shall provide the information to the labour inspectorate and the equality body upon request. The information from the previous four years, if available, shall also be provided upon request.
10. Workers, workers' representatives, labour inspectorates and equality bodies shall have the right to ask employers for additional clarifications and details regarding any of the data provided, including explanations concerning any gender pay differences. Employers shall respond to such requests within a reasonable time by providing a substantiated reply. Where gender pay differences are not justified on the basis of objective, gender-neutral criteria, employers shall remedy the situation within a reasonable period of time in close cooperation with workers' representatives, the labour inspectorate and/or the equality body.