The EU Pay Transparency Directive (2023/970): a complete guide

What the directive is and why it exists

The principle of equal pay for equal work is enshrined in EU law, but for decades it has been hard to enforce because pay information was largely opaque. Workers rarely knew how their pay compared with colleagues doing the same work, and the burden of proving discrimination fell almost entirely on them. Directive (EU) 2023/970 was adopted to change that by strengthening the application of equal pay through transparency and enforcement mechanisms.

In practice the directive does three things: it gives job applicants and workers new rights to pay information; it imposes recurring gender pay-gap reporting obligations on employers above certain sizes; and it introduces a joint pay assessment that is triggered when reporting reveals a significant, unexplained gap. Together these shift the balance: employers, not workers, increasingly carry the burden of measuring, explaining and — where necessary — remedying pay differences.

Who must comply

The directive applies to all employers in the EU, in both the public and private sectors, and to all workers who have an employment contract or relationship as defined by national law. The transparency rights — such as the right to information on pay levels and the ban on asking candidates about their pay history — apply broadly, regardless of employer size.

The recurring reporting obligation, however, is phased by headcount. Larger employers report first and most frequently; smaller employers below the threshold are not required to report (though many will choose to, and individual transparency rights still apply).

Reporting thresholds and timeline

Reporting frequency depends on the number of workers an employer has:

Member states had to transpose the directive into national law by 7 June 2026. The dates above are the directive's indicative deadlines; the precise schedule, definitions and any earlier national requirements are set by each country's implementing legislation. If your organisation operates in several member states, you may face slightly different rules and timing in each.

The 5% rule and the joint pay assessment

The directive's defining mechanism is the 5% threshold. Where reporting reveals an average gender pay gap of at least 5% in any category of workers performing the same work or work of equal value, and the employer cannot justify that gap on the basis of objective, gender-neutral criteria, the employer must carry out a joint pay assessment together with workers' representatives.

A joint pay assessment is a structured exercise that:

• identifies the categories of workers where the gap appears;
• analyses the reasons for the differences, including any objective, gender-neutral factors;
• establishes the measures needed to address differences that cannot be justified; and
• is carried out in cooperation with workers' representatives and made available to them.

Crucially, the 5% trigger is about unjustified gaps. A gap of 5% or more does not automatically mean an employer has broken the law — but it does mean the employer must be able to explain it with legitimate, gender-neutral reasons (such as seniority, performance or location), or take action. This is why an adjusted analysis, which controls for those factors, matters so much in practice.

What data must be reported

For each reporting cycle, employers within scope must report a defined set of figures. These typically include:

• The mean (average) gender pay gap across the organisation.
• The median gender pay gap.
• The mean and median gap in complementary or variable pay — bonuses, incentives and other variable components.
• The proportion of women and men receiving variable pay.
• The proportion of women and men in each pay quartile (the workforce split into four equal pay bands, Q1 lowest to Q4 highest).
• The gender pay gap within each category of workers doing the same work or work of equal value — the figures used to apply the 5% rule.

The overall pay-gap figures are typically published or shared with the relevant national monitoring body and made available to workers; the category-level breakdown supports the 5% assessment. Employers must also be able to explain their methodology — how categories were defined and how each figure was produced — because regulators and workers' representatives can ask.

Same work and work of "equal value"

Equal pay under the directive covers not only identical roles but also work of equal value. Member states must ensure objective, gender-neutral criteria are used to compare jobs — typically based on factors such as skills, effort, responsibility and working conditions. This means an employer cannot avoid scrutiny simply because two roles have different titles: if they are of equal value, their pay can be compared. Defining categories of workers carefully and consistently is therefore one of the most important — and most error-prone — parts of preparing to report.

New rights for workers and applicants

Alongside reporting, the directive grants individuals concrete transparency rights, including:

• Pay information before employment: applicants have the right to information about the initial pay level or range for a position, and employers may not ask candidates about their pay history.
• Pay information during employment: workers can request information on their individual pay level and the average pay levels, broken down by sex, for categories of workers doing the same work or work of equal value.
• A shift in the burden of proof: in equal-pay disputes, where transparency obligations have not been met, the burden can shift to the employer to show there was no discrimination.
• Remedies and penalties: member states must provide for compensation and effective, proportionate and dissuasive penalties for breaches.

How to prepare — and how Cleira helps

Preparing for the directive comes down to a repeatable workflow: assemble clean workforce data, define categories of workers consistently, compute the required metrics, identify and explain any gaps at or above 5%, and produce defensible documentation. Most mid-market employers have done some of this in a spreadsheet — but spreadsheets are hard to audit, easy to get wrong, and painful to repeat each cycle.

Cleira automates the analysis. You can run a complete, decision-grade gender pay gap analysis free in your browser right now — mean and median gaps on base and variable pay, quartile distribution, bonus participation and automatic per-category 5% flagging — with no login and no data leaving your device. When you are ready to file, Professional adds the deeper adjusted regression analysis (controlling for role, seniority, age and location) and turns the result into an official, branded, filing-ready PDF and Excel report, with multi-year tracking for future cycles.

Cleira automates the analysis. From 1 July 2026 you will be able to run a complete, decision-grade gender pay gap analysis free in your browser — mean and median gaps on base and variable pay, quartile distribution, bonus participation and automatic per-category 5% flagging — with no login and no data leaving your device. When you are ready to file, Professional adds the deeper adjusted regression analysis (controlling for role, seniority, age and location) and turns the result into an official, branded, filing-ready PDF and Excel report, with multi-year tracking for future cycles.

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