Key Conclusions

• Implementation deadline: 7 June 2026; by this date, EU Member States must transpose the Directive into national law. Some provisions may be introduced earlier at the national level, but this does not stem directly from the Directive itself.
• Scope: The Directive applies to all employers; however, the number of employees determines the extent of certain obligations.
• Pay transparency: Employers will be required to implement transparent pay structures and report the gender pay gap.
• Risk of claims: Implementation may lead to increased salary adjustment requests and employee claims.
• Organizational impact: Significant changes are expected in compliance and HR processes, along with implementation costs and potentially higher employment costs.
• Preparation: Early preparation is essential, in particular conducting job evaluation (job grading) exercises.

Who Is Affected

Categories of Workers Covered

• All employees (regardless of contract type or working time), including temporary workers and managerial staff.
• The Directive may also cover individuals working under other arrangements (e.g. B2B), if they meet the EU-law definition of a “worker”.

Employers Covered

• All employers.
• The scope of obligations (e.g. reporting) depends on workforce size.

Pay Gap Reporting Obligations

Employers with 250+ employees:

• annual reporting,
• first report due by 7 June 2027 (for 2026 data).

Employers with 150–249 employees:

• reporting every 3 years,
• first report due by 7 June 2027.

Employers with 100–149 employees:

• reporting every 3 years,
• first report due by 7 June 2031.

Employers with fewer than 100 employees:

• no mandatory reporting under the Directive,
• voluntary reporting possible,
• Member States may introduce additional requirements.

If a report shows a pay gap exceeding 5% that cannot be justified by objective, gender-neutral criteria, a joint pay assessment with employee representatives will be required.

Right to Information

Employee and Representative Rights

• Employers must inform employees and their representatives about the gender pay gap within categories of workers.
• Employees, their representatives, and competent authorities may request additional explanations and detailed data.
• Employers must provide access to the criteria used to determine pay, pay levels, and pay progression.
• Each employee (including via representatives) has the right to obtain information about:
  • their individual pay level,
  • average pay levels of employees performing the same work or work of equal value (broken down by gender).

This may increase upward pressure on wages. Employers must remind employees of this right at least once a year.

• Member States may exempt employers with fewer than 50 employees from certain information obligations.

End of Pay Secrecy

• Employees cannot be restricted from disclosing their pay for the purpose of enforcing the principle of equal pay.
• Restrictions may still apply in other contexts (e.g. external disclosure), provided they do not undermine the Directive.
• These principles partly stem from existing case law but will be explicitly regulated in national law.
• This may have significant business implications in certain sectors (e.g. outsourcing, consulting).

Comparisons Within Corporate Groups

• The Directive allows pay comparisons not only within a single employer but, in certain cases, also across related entities, where there is a single source determining pay.
• This does not create an absolute prohibition on differences but increases the risk of challenges.

Hypothetical Comparator

• Where no actual comparator exists, employees may rely on other evidence (a “hypothetical comparator”).

Penalties and Sanctions

• The Directive requires Member States to introduce effective, proportionate, and dissuasive penalties.
• These may include fines (e.g. linked to turnover or payroll), but details will depend on national law.
• Additional consequences may apply in public procurement:
  • contract termination,
  • exclusion from public tenders in certain cases (e.g. unjustified pay gap exceeding 5%).