As part of ongoing efforts to close the gender pay gap, the European Union has introduced Directive (EU) 2023/970, mandating greater pay transparency and equal compensation for work of equal value.
This directive impacts employers across all EU member states, and with a compliance deadline of 7 June 2026, now is the time to prepare. For organizations managing teams in Europe, or planning to expand there, understanding this directive is essential for remaining compliant and competitive.
What Is the EU Pay Transparency Directive?
Directive (EU) 2023/970 reinforces the long-standing principle of “equal pay for equal work or work of equal value.” This means that employers must ensure employees in roles that are objectively equivalent in terms of value to the business receive equal pay, regardless of gender.
Employers must evaluate roles based on a consistent, gender-neutral set of criteria:
Skills – Required experience, knowledge, and qualifications
Effort – Mental or physical exertion necessary to perform the role
Responsibility – Level of accountability or decision-making involved
Working Conditions – Any risks or specific conditions attached to the role
Each member state can implement its own approach to job comparison, as long as it aligns with the directive's minimum requirements.
Key Employer Obligations Under the Pay Transparency Directive
To comply with Directive (EU) 2023/970, employers will need to:
Disclose pay information: Employees and applicants can request and receive data on their own pay and the average pay of colleagues doing similar or equivalent work, broken down by gender.
Report pay gaps: In the first implementation phase, companies with 150 or more employees must report on average gender pay gaps across the company and within each job category. This threshold will be lowered to 100 by 2031.
Address unjustified pay gaps: If a gender pay gap of 5% or more is discovered and left unresolved for six months without objective justification, the organization will be subject to a joint pay assessment, which includes a full equal pay audit.
Planning Ahead of the 2026 Deadline
With the 2026 deadline on the horizon, employers in the EU should begin reviewing how they assess job roles and determine pay. This includes creating or refining job evaluation systems, applying pay criteria consistently and transparently, keeping detailed records of salary structures and building strategies to address existing disparities.
How Atlas Helps
Whether you're already operating in the EU or expanding into new markets, Atlas supports businesses with local compliance expertise and Employer of Record (EOR) services in 160+ countries. We help you to navigate evolving EU pay transparency laws, establish objective, compliant compensation frameworks, manage gender pay gap reporting requirements and onboard and support diverse global talent.