What are the Key Obligations?
Mandatory Gender Pay Gap Reporting
- Employers must provide information on their gender pay gap including by categories of workers performing the same work, or work of equal value, to the relevant public authority and to workers, among other stakeholders.
- The size of the employer dictates when and how regularly the reporting is required:
| Number of Workers | Date of First Report | Reporting Period | Frequency of subsequent reporting |
| 250+ | June 7, 2027 | Previous calendar year | Every year |
| 150-249 | June 7, 2027 | Previous calendar year | Every 3 years |
| 100-149 | June 7, 2031 | Previous calendar year | Every 3 years |
| <100 | Not required by the Directive, but may be required by individual country legislation | Not applicable under the Directive, but may be established by individual country legislation | Not applicable under the Directive, but may be established by individual country legislation |
Obligations to Investigate and Remedy Gender Pay Gaps
- Covered employers will be required to undertake a joint pay assessment (essentially an audit) to identify, remedy and prevent unjustified differences in pay. An employer must conduct this assessment where its gender pay gap report demonstrates a difference in the average pay level between female and male workers of at least 5% in any category of workers, which is not justified or remedied as set out in the Directive.
- Joint pay assessments cannot be carried out “behind the scenes.” They must be conducted in co-operation with workers’ representatives and be made available to workers, their representatives and the applicable monitoring body.
New Pay Transparency Rights for Workers
- Certain employers must make the criteria (which must be objective and gender-neutral) used to set workers’ pay, pay levels and pay progression easily accessible to their workers.
- Workers will have new rights to request and receive information about their pay and the average pay levels broken down by sex for workers doing the same work or work of equal value.
- Employers must not prevent workers from disclosing their pay for the purpose of enforcing the worker’s right to equal pay, which includes prohibiting contractual terms that restrict workers from disclosing pay information (such as confidentiality clauses).
New Pay Transparency Rights and Obligations During Hiring
- Employers must provide applicants with information about pay or pay ranges in a manner to ensure a transparent and informed negotiation on pay prior to the job interview or otherwise.
- Employers must not ask applicants about their pay history.
- Job vacancy notices and job titles must be gender-neutral and recruitment processes conducted in a non-discriminatory manner.
What are the Penalties if Employers Get this Wrong?
This is for the individual EU countries to set. However, the Directive requires each country to ensure minimum enforcement mechanisms are available, including the right for workers to bring individual claims, with uncapped compensatory remedies (e.g. recovery of back pay and bonuses), non-victimisation provisions, the power for courts or other competent authorities to issue orders for compliance to stop infringement and national penalties.
What Should Employers do to Prepare?
Given the timeframes, it is important to consider the Directive’s impacts now if employers have not started to do so. Remember, employers with 150 or more workers with pay gaps that are unresolved by January 1, 2026 will have these gaps publicized in the organization’s first mandatory report. However, it is not too late to start preparing and there are meaningful actions to take.
Member state implementation, the size and categorization of the workforce, payroll cycles, and other elements will heavily influence the phasing and details of any compliance readiness project.
Important Steps to Prepare Include:
Member state implementation, the size and categorization of the workforce, payroll cycles, and other elements will heavily influence the timing and details of any compliance readiness project. However, we provide some initial guidelines for consideration:
First Step:
- Confirm C-Suite support and resourcing
- Create a working group, including engaging legal early on to advise on the compliance planning process and on issues of legal privilege
- Develop a detailed project plan
- Conduct data gathering harmonizing exercises related to internal job and remuneration structures
Second Step:
- Take action now to identify existing pay gaps, such as conducting an audit or stress-test of current pay practices
- Consider the justification behind any identified pay gaps
- Review recruitment processes and hiring practices to identify gaps with requirements
Third Step:
- Develop a plan to:
- Remedy risks and gaps identified; and
- Implement any new recruitment and hiring practices
- Prepare employee communications, internal policies and training related to remedies and new recruitment and hiring practices
Fourth Step:
- Implement remedies, employee communications, training and new recruitment and hiring practices
Looking ahead, pay equity and transparency is not going to go away. There is an evolving global focus on pay equity and transparency through direct laws and corporate social responsibility initiatives. Compliance is complex requiring both legal documentation, statistical analysis, and local nuances across multiple jurisdictions. It is essential that employers rely on a multidisciplinary team to work through these issues.
How Can Littler Help?
Littler brings deep global, yet local understanding and vital insight to implementation of the Directive. In conjunction with Littler’s team of data analysts, our attorneys focused on this topic are poised to help employers as they navigate the challenges. This support may include conducting pay audits, identifying gaps and advising on solutions, designing pay policies and practices, providing training, and supporting job evaluation assistance.
Implementation Tracker
Littler’s Implementation Tracker is a tool that outlines the current state of the law in various countries and monitors changes as countries introduce legislation to implement the Directive’s new obligations. Access to the tracker is complimentary and provides a basic overview of the status in each member state.
EU Pay Equity and Transparency at a Glance
Stay ahead of the curve with Littler’s practical summary of the Directive. This ‘At A Glance’ global report covers everything from timelines and broad obligations to potential penalties and country-specific baseline requirements. Gain valuable insights on how to prepare and timing recommendations.
