There is a lot of noise about the EU Pay Transparency Directive, and most of it falls into one of two traps: either it is vague enough to say almost nothing useful, or it is framed with enough urgency to make the whole thing feel overwhelming before you have even read the text. This post takes a more direct approach: explaining what the directive actually says, what it requires companies to do, what it explicitly does not require, and where the real complexity lies.
The directive, formally known as EU Directive 2023/970, entered force in June 2023. EU member states have until 7 June 2026 to transpose it into national law. Most have not yet done so, which creates a slightly unusual situation: the rules are real, the deadline is firm, but the precise local shape of the obligations is still being worked out in most countries. What follows reflects the directive itself, which sets the minimum standard that all national implementations must meet.
The five core obligations
1. Salary information before or during hiring
Employers must provide job applicants with information about the starting salary, or the salary range, either in the vacancy notice itself or before the interview. The directive does not specify how wide or narrow a range must be, which is a point worth noting: a band so broad it communicates nothing is technically compliant, but unlikely to satisfy the spirit of the obligation or the expectations of candidates who have come to understand what genuine transparency looks like.
Alongside this, employers are prohibited from asking candidates about their pay history, whether from their current role or any previous employment. The intent here is to break the cycle by which historical pay inequity is simply carried forward from one job to the next.
2. Transparency of pay criteria
Employers must make the criteria used to determine pay, pay levels, and pay progression easily accessible to all employees. Those criteria must be objective and gender-neutral, which in practice means they need to be defined, documented, and consistently applied. Skills, experience, responsibility, and working conditions are among the factors the directive points to; what is not permissible is a system where pay decisions are made informally, inconsistently, or in ways that cannot be explained clearly to the people affected by them.
3. The right to information
Any employee may request information about their own pay level and the average pay level of colleagues doing the same work or work of equal value, broken down by sex. Employers must respond within a reasonable period and cannot discourage or prevent employees from making such requests. Related to this, the directive explicitly prohibits pay secrecy clauses: any contractual obligation or internal policy that prevents employees from discussing their pay is, under the directive, no longer enforceable.
4. Gender pay gap reporting
Employers with 100 or more employees are required to publish gender pay gap data on a regular basis. The reporting timeline is staggered: companies with 150 or more employees face their first reporting obligation in June 2027, covering 2026 data, while companies with between 100 and 149 employees have until June 2031, covering 2030 data. The report covers not only the overall gender pay gap but also the gap broken down by category of worker.
Where a reported gap exceeds five percent and cannot be justified by objective, gender-neutral criteria, the employer is required to conduct a joint pay assessment in cooperation with employee representatives. This assessment goes beyond reporting: it is an active review of pay structures, with the expectation that identified gaps are addressed.
5. Reversal of the burden of proof
This is perhaps the provision that receives the least attention relative to its significance. Under the directive, when an employee brings a pay discrimination claim, the burden of proof shifts to the employer. It is no longer the employee's responsibility to demonstrate that discrimination occurred; it is the employer's responsibility to demonstrate that it did not. In practical terms, this means that a company whose pay decisions are poorly documented, inconsistently applied, or difficult to explain faces meaningful legal exposure in a way it may not have before.
Employees who successfully bring claims are entitled to full compensation, including recovery of back pay and any related bonuses or benefits they would have received absent the discrimination.
What the directive does not require
A few things worth clarifying, given the volume of coverage that implies otherwise.
The directive does not require companies to publish individual salaries. It requires transparency of ranges and criteria, not the disclosure of what any particular person earns. The right to information provision allows employees to request comparative data, but this is different from a public obligation to disclose individual pay.
The directive also does not require all employees to be paid identically for similar work. It requires that differences in pay can be explained by objective, gender-neutral criteria. A senior engineer and a junior engineer doing nominally similar work can be paid differently, provided the reasons are documented and consistent.
It is worth noting, too, that the directive sets a floor, not a ceiling. National implementations may go further, and some already are: France's draft legislation, for instance, requires salary ranges in job postings more prescriptively than the directive itself demands. Companies operating across multiple EU jurisdictions will need to track local variations rather than treating the directive as a single unified standard.
Where the real work lies
The obligations themselves are, in most cases, not technically complicated. Publishing a salary range before an interview is not a difficult act; documenting the criteria on which pay decisions are made is not, in principle, a complex task. The difficulty, for most organisations, lies in the fact that these obligations assume an underlying structure that a great many companies have not built.
To publish a meaningful salary range, you need to know what the role is, how it is levelled, and how it relates to other roles in the organisation. To document pay progression criteria that are objective and gender-neutral, you need criteria that actually exist in that form, consistently applied. To respond credibly to an employee's right to information request, you need a pay structure that can withstand scrutiny.
This is why the directive is best understood not primarily as a reporting challenge but as a signal that pay architecture matters more than it used to, and that the informal, intuitive approaches to pay-setting that many organisations have relied on are becoming harder to sustain. The June 2026 deadline is real; the work required to meet it meaningfully runs rather deeper than most compliance timelines acknowledge.
This is the first post in Reshape's EU Pay Transparency series. The series covers what the directive requires, how to build the job architecture and pay structures that make compliance possible, and what the transparency era means for how companies design and communicate pay.
