In May 2023, the EU Pay Transparency Directive (Directive (EU) 2023/970) was adopted, with the purpose to implement a number of instruments to promote the transparency on the salaries, reducing the gaps, including the gender pay gap and implement a fairer and more accessible environment on the pay market in Europe.
The deadline for the transposition of the Directive into local law by EU member states has been set to 7 June 2026, however only a number of member states implemented the law locally.
What Are the Goals of the Directive?
Specific objectives are the pillars of the Directive.
- The first objective, that is also one of the EU principles, is equality of pay for equal type of work (Art. 4). This guiding principle should aim to reduce the gender pay gap or any situation of unjustified pay discrimination.
- Secondly, the Directive reinforces the rights to information for employees (Art. 7). Those will have the right to obtain adequate information from the employers, that have to demonstrate that there is no pay discrimination. One of the measures to prove this point is implementing instruments for wage transparency, especially in medium and big companies.
- Finally, more instruments will be available to employees, to redress situations of pay discriminations, such as the possibility to be represented by equality bodies and workers' representatives in legal proceedings. The Directive aims also at promoting transparency on salary before the employment. In the phase of publication of the vacancies, employers shall disclose the initial pay or pay range and they are forbidden to ask questions about previous wage to the candidates.
How Is the Transposition Going?
A few EU member states implemented the Directive into laws, those are: Malta, Italy and Slovakia. The implementation is proceeding more or less slowly in the other EU countries. In Germany, the deadline of 7 June 2026 was missed, however, the local law on pay transparency (Entgelttransparenzgesetz of 2017) remains into force, stating similar principles. A draft law is expected to be presented in the Parliament by July 2026 in France. Implementation “in phases” is instead ongoing in countries like Ireland and Belgium, that have either taken some measures to adopt the principles (like commissioning toolkits for gender neutral job evaluations) or implemented partial measures, respectively. Spain also missed the deadline of transposition; however the country relies currently on strong pay transparency requirements, including the right for employees to have aggregated salary information by gender and role category.
What Are the Consequences for Missed Transposition?
The EU Commission has already shown little flexibility for members states that are not taking measures to adopt the Directive into law. In fact, it was made clear that infringement proceedings under Art. 258 may follow for the states that are not moving forward with the transposition.
What Is the Interaction With Data Protection Law?
Art. 12 of the Directive clearly states that to the extent that any information provided pursuant to measures taken under Articles 7 (right to information), 9 (reporting on pay gap between female and male workers), and 10 (joint pay assessment) involves the processing of personal data, it shall be provided in accordance with GDPR. This means that the GDPR principles and obligations are still underlying to the rights granted by the Directive. The Directive, of course, once transposed into national law, would be a requirement to which employers are subject to, therefore, personal data can be processed (taking always into consideration the GDPR principles) to comply with a legal obligation, based on Art. 6 para. 1 lit. b GDPR.
The problem in the current status of the implementation, is that it is difficult to claim this legal basis, until the Directive is implemented or unless local legislations that are imposing similar or equivalent requirements are into force in the countries. Therefore, employers that are willing to take proactive measures, where local legislation does not impose such requirements, have to “work” with different legal bases for processing, mainly, they have to conduct legitimate interest balancing tests, to evaluate if operations involving personal data, such as analysis, statistics, studies or comparisons of the salaries can be performed based on the legitimate interest of the controller (Art, 6 para. 1 lit. f GDPR. This means that, an analysis of the local legislations has to be performed to identify which countries have either implemented the Directive or already implemented legislations in the same line. This is the baseline to understand if legal requirements fall already on the employers’ duties.
Secondly, the processing of personal data has to be balanced and performed carefully, due to the categories of personal data involved, such as: gender, salary, career history and other valuable information for the employees. This means that all the security and minimisation measures have to be taken and adopted. Many companies, especially of big size, are supported on those procedures, by specialized consultants and agencies, that are able to provide benchmarks and support with the gap analysis, if required. The relation with those business partners from a data protection perspective, should also be evaluated and governed by appropriate agreements, if required, including transfer mechanism safeguards.
Conclusions
The EU Pay Transparency Directive aims at strengthening the rights of the workforce in Europe and will hopefully improve the transparency on the wages as a measure against the pay gaps and unjustified pay discriminations. We shall not forget, however the right to protection of personal data and individual rights and freedoms, that in this field are particularly sensitive. The interaction of different legal acts creates a very interesting and sometimes challenging situation for companies and business operators, that have to carefully consider the implementation of the requirements considering the “cross-border” legislations applicable.
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