The EU Pay Transparency Directive

In a bold step forward in tackling and enforcing equal pay, the EU Pay Transparency Directive was published in the Official Journal of the EU on 17 May 2023. This means the Directive will be in force by 7 June 2023 with Member States having three years to transpose it into national law. 

The central plank of the Directive is to introduce gender pay gap reporting measures, similar to those that already exist in the UK. However, the reporting requirements are backed up by powerful enforcement mechanisms, not present in the UK regime. Other key provisions include an obligation to remedy pay gaps of 5% or more and increased pay transparency for prospective and current employees.

Although the Directive (once locally implemented) will only strictly impact EU employers and non-EU employers operating in EU member states, it is likely to raise employees’ expectations regarding pay transparency and pay gaps, and influence the development of future regulation in jurisdictions outside the EU.