EU Pay Transparency Directive

Overview

Directive (EU) 2023/970, adopted by the European Parliament and the Council on 10 May 2023, represents a pivotal legislative effort to reinforce the fundamental principle of equal pay for equal work or work of equal value between men and women across the European Union. Published in the Official Journal on 17 May 2023, this Directive aims to address the persistent gender pay gap, which stood at 12.7% across the EU in 2021, by introducing comprehensive pay transparency measures and strengthening enforcement mechanisms. Despite existing legal frameworks, such as Directive 2006/54/EC and the 2014 Commission Recommendation on pay transparency, the effective implementation and enforcement of equal pay principles have remained a significant challenge within the EU, often due to a lack of clear rules and insufficient tools for victims of discrimination.

The impetus for this Directive stems from the recognition that a lack of pay transparency often conceals gender-based pay discrimination, making it difficult for employees to identify and challenge disparities. The European Commission first proposed the draft law on 4 March 2021, following strong calls from co-legislators and in alignment with key political priorities, notably the Gender Equality Strategy 2020-2025. The legislative journey involved extensive negotiations: the Council of the European Union adopted a general approach on 6 December 2021, and the European Parliament endorsed its negotiating position on 5 April 2022. An informal agreement was subsequently reached between the co-legislators on 15 December 2022, leading to formal endorsement by the Parliament on 30 March 2023 and by the Council on 24 April 2023, culminating in its final adoption.

For Austria, as an EU Member State, the Directive mandates transposition into national law by 7 June 2026. While Austria already has pay transparency rules under its Equal Treatment Act (Gleichbehandlungsgesetz), the Directive will introduce significantly more granular reporting and transparency requirements. These new rules are expected to expand existing obligations, such as lowering reporting thresholds for companies and introducing new rights for employees, including the right to information on pay levels and a ban on salary history inquiries. As of early 2026, Austria has not yet published draft legislation to transpose the Directive, but employers are strongly advised to prepare for the upcoming changes, which signal a paradigm shift in how pay transparency and equality are managed and enforced within the Austrian labour market.

Definitions

Directive (EU) 2023/970 establishes several crucial definitions to ensure a consistent understanding and application of its provisions across all Member States. Central to the Directive is the concept of "equal pay for equal work or work of equal value." This fundamental principle, enshrined in Article 157 of the Treaty on the Functioning of the European Union (TFEU), means that remuneration rates must be set without discrimination based on sex. The Directive aims to strengthen the practical application of this principle by clarifying that "work of equal value" requires a comprehensive, objective, and gender-neutral assessment of various factors, including skills, effort, responsibility, and working conditions. This assessment must consider the nature of the tasks performed, the complexity of the duties, the level of decision-making autonomy, and the physical or mental demands of the job, ensuring that subjective biases are eliminated from job evaluation processes.

"Remuneration" is broadly defined to encompass the ordinary basic or minimum wage or salary, along with any additional emoluments payable directly or indirectly, whether in cash or in kind, by the employer to the worker arising out of the worker's employment. This comprehensive definition includes a wide array of components such as allowances, overtime pay, bonuses, commissions, benefits in kind (e.g., company cars, housing, health insurance, stock options), and contributions to supplementary pension schemes. By including all elements contributing to an employee's total compensation, the Directive ensures that employers cannot circumvent the principle of equal pay by differentiating non-basic pay elements, thereby providing a holistic view for assessing pay equality.

The Directive also implicitly addresses "direct discrimination" and "indirect discrimination" in pay. Direct discrimination occurs when one person is treated less favourably on grounds of sex than another is, has been or would be treated in a comparable situation. For example, paying a woman less than a man for the exact same job without objective justification. Indirect discrimination arises where an apparently neutral provision, criterion or practice would put persons of one sex at a particular disadvantage compared with persons of the other sex, unless that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary. An example could be a bonus scheme that disproportionately rewards full-time workers, disadvantaging women who are more likely to work part-time due to care responsibilities. The Directive's focus on objective, gender-neutral criteria for pay setting and job evaluation is designed to identify and eliminate both forms of discrimination. The concept of "pay gap" refers to the difference in average gross hourly earnings between men and women, which the Directive seeks to reduce through increased transparency and robust enforcement.

Covered Employers

Directive (EU) 2023/970 applies broadly to all employers within the European Union, encompassing both the public and private sectors. This universal application extends to any entity that has an employment contract or employment relationship as defined by national law, collective agreements, and/or practice in each Member State. This wide scope ensures that the principle of equal pay and the new transparency obligations cover a diverse range of workers, including part-time workers, workers on fixed-term contracts, agency workers, and individuals in management positions, thereby preventing loopholes that could exclude certain categories of employees from protection. The Directive sets minimum requirements, allowing Member States like Austria to introduce or maintain provisions that are more favourable to workers, reflecting the principle of upward harmonization.

The Directive introduces specific thresholds for certain obligations, particularly concerning pay gap reporting, which are designed to be phased in based on company size to allow smaller entities more time to adapt. While Austria currently requires private-sector employers with more than 150 employees to prepare a gender pay gap report every two years, the EU Directive will significantly expand these obligations. Under the new rules, companies with 100 or more employees will eventually be subject to reporting requirements. Specifically, companies with 150 or more employees will need to submit their first report using 2026 payroll data by 7 June 2027. Subsequently, companies with 250 or more employees will report annually, while those with 150-249 employees will report every three years. By 7 June 2031, companies with 100-149 employees must submit their first report using 2030 data, with subsequent reports every three years.

These staggered thresholds represent a significant expansion compared to Austria's current framework, which primarily focuses on internal reporting for companies with 150+ employees. The Directive's approach aims to provide smaller entities with more time to adapt to the new requirements, recognizing the potential administrative burden. It is crucial for employers to note that the employee threshold applies to the total number of employees in the company across all its establishments within a Member State, not per individual establishment. There are no explicit exemptions for specific sectors; the Directive's application is universal across all economic activities where an employment relationship exists. Employers should begin assessing their workforce size and preparing for the upcoming reporting and transparency obligations well in advance of the transposition deadline.

Employee Rights

The Directive (EU) 2023/970 significantly strengthens employee rights regarding pay transparency and equal pay, empowering workers to identify and challenge potential discrimination. A core provision is the individual right for employees to request and receive information about their individual pay level and the average pay levels, broken down by gender, for categories of workers performing the same work or work of equal value. This information must be provided by the employer within two months of the request, and employers are obliged to annually inform all employees of this right. This empowers workers with the necessary data to assess whether their remuneration aligns with that of their colleagues in comparable roles, fostering a more informed and proactive workforce in addressing pay disparities.

Furthermore, the Directive introduces a crucial ban on asking job applicants about their current or past salaries during the recruitment process. This measure aims to prevent the perpetuation of historical pay discrimination, ensuring that new hires are offered remuneration based on the objective value of the work, the skills required, and the responsibilities of the position, rather than being anchored to potentially discriminatory previous pay. This helps break cycles of underpayment. In addition, job applicants gain the right to receive information about the initial pay level or range for the position they are applying for. This information must be provided either in the job advertisement itself or, at the latest, before the job interview, promoting transparency from the very beginning of the employment relationship and enabling applicants to negotiate more effectively.

In cases of alleged pay discrimination, the Directive introduces a significant shift in the burden of proof from the employee to the employer. This means that if an employee establishes facts from which discrimination on grounds of sex may be presumed, it will then be for the employer to prove that there has been no direct or indirect discrimination in pay. This reversal is a powerful enforcement mechanism, making it considerably easier for victims of discrimination to pursue claims, as employers typically possess all relevant pay data. Employees who have suffered gender-based pay discrimination will also have the right to full compensation, which must include full recovery of remuneration (including back pay and related bonuses), as well as compensation for lost opportunities and non-material damage. Crucially, employees must not be prevented from disclosing their remuneration for the purpose of enforcing the principle of equal pay, and any contractual clauses to that effect will be considered null and void.

Pay Transparency Requirements

The Directive (EU) 2023/970 introduces robust pay transparency requirements designed to shed light on remuneration structures and facilitate the identification and elimination of gender-based pay disparities throughout the employment lifecycle. A key aspect is the obligation for employers to provide information about the initial pay level or its range in job advertisements or, at the latest, before the job interview. This requirement ensures that applicants are aware of the expected remuneration from the outset, promoting fair negotiation and reducing the likelihood of discriminatory pay offers based on previous salary. Additionally, job advertisements must be gender-neutral, and the criteria used to determine pay, pay levels, and career progression must be objective and gender-neutral, ensuring that biases are removed from the hiring and advancement processes.

Beyond the recruitment phase, the Directive mandates that employees have the right to request and receive information about their individual pay level and the average pay levels, broken down by gender, for categories of workers performing the same work or work of equal value. Employers must provide this information within two months of the request and annually inform employees of this right. This empowers employees with the necessary data to compare their remuneration with that of their colleagues, fostering a more informed workforce capable of identifying and challenging potential pay discrimination. Employers are also explicitly required to disclose the objective and gender-neutral criteria used to determine pay, pay levels, and career progression, ensuring that these criteria are transparent and justifiable.

Furthermore, the Directive prohibits contractual clauses that prevent employees from disclosing information about their pay. This measure aims to foster open discussion about remuneration, which is crucial for identifying and addressing pay gaps, and ensures that employees are not penalized for discussing their wages. Employers must also establish and maintain pay structures that ensure there are no gender-based pay differences for work of equal value that are not justified by objective, gender-neutral criteria. This involves a proactive review and, if necessary, adjustment of job classification and evaluation systems to ensure they are free from bias and accurately reflect the value of different roles. The Directive's emphasis on transparency extends to the entire employment relationship, from hiring to career progression, aiming to embed equal pay principles throughout an organization's remuneration practices and culture.

Reporting & Audit Obligations

The Directive (EU) 2023/970 introduces comprehensive pay gap reporting obligations that will significantly expand upon Austria's existing requirements, moving beyond internal reporting to greater public accountability. Under the Directive, employers will be required to report on their gender pay gap, with the frequency and detail of reporting varying based on company size. Companies with 250 or more employees will be required to report annually, while those with 150 to 249 employees will report every three years. The reporting obligation will extend to companies with 100 to 149 employees by 7 June 2031, with subsequent reports every three years. Austria's current law mandates biennial income reports for companies with 150 or more employees, which are primarily shared internally or with works councils. The Directive will likely require public disclosure for larger companies, enhancing transparency and external scrutiny.

The content of these reports will be significantly more granular and detailed than what is currently required in Austria. Employers will need to provide data on the gender pay gap, including the mean and median pay gaps, the gender pay gap in complementary or variable components of pay (e.g., bonuses, benefits), the proportion of women and men receiving such components, and the proportion of women and men in each quartile band of the pay structure. This data must be broken down by categories of workers performing the same work or work of equal value, allowing for more precise identification of disparities. The reports must also include information on the objective and gender-neutral criteria used to determine pay and career progression, demonstrating the employer's commitment to fair remuneration practices.

A critical obligation arises if the report reveals an unexplained gender pay gap of more than 5% that is not justified by objective, gender-neutral criteria. In such cases, employers will be obliged to conduct a joint pay assessment in cooperation with workers' representatives (e.g., works councils or trade unions). This assessment aims to identify the root causes of the pay gap and implement concrete corrective measures within a reasonable timeframe. The Directive also emphasizes the importance of robust methodologies for job evaluation and classification to ensure that work of equal value is objectively assessed, free from gender bias. The reports will be made accessible to employees and, for larger companies, potentially to the public, increasing accountability and driving proactive efforts towards pay equity. Member States must ensure that employers regularly update the information provided and that the reporting is accurate and complete.

Governance & Enforcement Bodies

The Directive (EU) 2023/970 requires Member States to designate specific bodies responsible for the promotion, monitoring, and enforcement of equal pay, ensuring effective oversight and redress mechanisms. In Austria, the existing framework includes several key institutions that will likely play an enhanced and expanded role in the transposition and enforcement of the Directive. The Federal Equal Treatment Act (Gleichbehandlungsgesetz - GlBG) for the private sector, along with the Federal Act on the Equal Treatment Commission and the Equal Treatment Ombudsperson (GBK/GAW Act), already establish mechanisms for addressing discrimination. The Equal Treatment Ombudsperson provides independent advice and support to those affected by discrimination, including mediation efforts, while the Equal Treatment Commission deals with issues related to discrimination, drawing up expertises and examining individual cases.

Under the Directive, these bodies, or newly designated ones, will be tasked with ensuring comprehensive compliance with the new pay transparency and enforcement mechanisms. Their roles will include receiving and investigating complaints of pay discrimination, providing assistance to victims (including legal aid and information on remedies), and actively monitoring employers' adherence to reporting and transparency obligations. The Directive also mandates that Member States ensure that workers' representatives (e.g., works councils, trade unions) are actively involved in the implementation and monitoring of pay transparency measures, particularly in the context of joint pay assessments when significant unexplained pay gaps are identified. This collaborative approach aims to leverage internal expertise and promote collective action.

While the Equal Treatment Commission and Ombudsperson handle advisory and investigative functions, the ultimate assertion of compensation entitlements in Austria typically requires judicial proceedings. The Directive reinforces the role of national courts by shifting the burden of proof in pay discrimination cases, making it easier for individuals to seek judicial remedies and obtain full compensation. The Austrian Federal Ministry of Labour and Economy, along with other relevant ministries, also provides guidance on income reports and equal treatment. Their role will be crucial in developing and disseminating comprehensive information regarding the transposed national legislation, offering practical tools and resources for both employers and employees. The Directive allows Member States to designate more than one body, provided that the monitoring and analysis functions are ensured by a central coordinating body to maintain consistency and effectiveness.

Monitoring & Evaluation

The monitoring and evaluation framework under Directive (EU) 2023/970 is meticulously designed to ensure the effective application of equal pay principles and to track tangible progress in closing the gender pay gap across the EU. Member States are required to establish or designate bodies responsible for continuously monitoring compliance with the Directive's provisions. These bodies will oversee the implementation of pay transparency measures, including verifying the accuracy, completeness, and timeliness of pay gap reports submitted by employers. They will also be responsible for systematically collecting and analyzing data on pay equality, which is essential for assessing developments at both national and Union levels and identifying persistent areas of inequality.

Complaint investigation procedures will be significantly strengthened, with the designated enforcement bodies, such as Austria's Equal Treatment Ombudsperson and Equal Treatment Commission, playing a crucial role. These bodies will investigate alleged instances of pay discrimination, provide robust support to complainants, and facilitate their access to justice. The Directive's shift in the burden of proof will profoundly impact how complaints are investigated, requiring employers to demonstrate that any pay differences are based on objective, gender-neutral criteria once a prima facie case of discrimination is established by the employee. This procedural change aims to streamline the investigation process, reduce the evidentiary burden on victims, and improve outcomes for those who have experienced discrimination.

The Directive also places strong emphasis on the importance of regular evaluation of its impact and effectiveness. Member States will be required to compile comprehensive wage statistics broken down by sex, age, occupation, and sector, and to provide accurate and complete statistics to the European Commission (Eurostat) for monitoring changes in the gender pay gap. This detailed data collection, potentially building on existing structural earnings statistics, will enable the Commission to assess the Directive's effectiveness, identify best practices, and pinpoint areas requiring further legislative or policy action. The frequency of audits and evaluations will be determined by national legislation, but the Directive's overall objective is to foster a continuous cycle of monitoring, reporting, and corrective action to achieve genuine and sustainable pay equity across the Union.

Enforcement & Penalties

Directive (EU) 2023/970 significantly strengthens enforcement mechanisms and introduces more robust penalties for non-compliance with equal pay and pay transparency requirements, aiming to make discrimination costly and difficult to conceal. A pivotal change is the reversal of the burden of proof in pay discrimination cases. If an employee presents facts from which pay discrimination on grounds of sex may be presumed (e.g., showing a significant pay disparity for comparable work), it will then be for the employer to prove that there has been no direct or indirect discrimination. This shift aims to alleviate the evidentiary burden on employees, who often lack access to comprehensive pay data, and to hold employers more directly accountable for their pay practices.

Victims of pay discrimination will have the explicit right to full compensation or reparation, which must be comprehensive and cover all damages incurred. This includes full recovery of remuneration, encompassing back pay and related bonuses, as well as compensation for lost opportunities (e.g., missed promotions or career progression) and non-material damage (e.g., emotional distress, reputational harm). The compensation must also include interest on arrears. This comprehensive approach to remedies aims to ensure that victims are fully restored to the position they would have been in had the discrimination not occurred, providing a meaningful deterrent against discriminatory practices. Member States are required to ensure that these remedies are effective, proportionate, and genuinely dissuasive.

The Directive also mandates that Member States lay down rules on penalties applicable to infringements of national provisions adopted pursuant to the Directive. These penalties must be effective, proportionate, and dissuasive. While specific fine amounts and penalty ranges will be determined by Austria during its transposition process, the Directive indicates that such penalties could include significant administrative fines, public naming and shaming, or even the withdrawal of public benefits or contracts for non-compliant employers. For instance, if a pay gap of more than 5% is identified in a company's report and is not justified by objective, gender-neutral criteria or corrected within six months, the employer may be obliged to take specific corrective measures, potentially including a joint pay assessment. The Directive also ensures that employees and their representatives can initiate legal proceedings to enforce rights and obligations related to equal pay, including collective actions, further strengthening the enforcement landscape.

Relationship to Other Laws

Directive (EU) 2023/970 builds upon and significantly interacts with existing EU and national legislation concerning equal treatment and pay, acting as a crucial reinforcement rather than a replacement. At the EU level, it complements and strengthens the provisions of Directive 2006/54/EC on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation. While Directive 2006/54/EC established the broad principle, the new Directive provides more specific and detailed rules on pay transparency and enforcement mechanisms, which were identified as areas needing substantial improvement for the effective application of the equal pay principle. It also aligns with Article 21 of the Charter of Fundamental Rights of the European Union, which prohibits discrimination, including on grounds of sex, and Article 157 of the Treaty on the Functioning of the European Union (TFEU) which enshrines the equal pay principle.

In Austria, the Directive will necessitate significant amendments to the existing Federal Equal Treatment Act (Gleichbehandlungsgesetz - GlBG), which is the primary legal basis for equal treatment in the private sector. The GlBG already includes provisions against discrimination based on gender in employment, including remuneration, and mandates income reporting for certain employers. However, the Directive's requirements for pay transparency in job advertisements (e.g., salary range disclosure), the ban on salary history inquiries, expanded reporting thresholds (lowering from 150 to 100 employees), and the crucial shift in the burden of proof are more stringent and detailed than current Austrian law. Therefore, Austria will need to adapt its existing framework to meet these new EU standards, ensuring full compliance and enhancing worker protections.

The Directive sets minimum requirements, meaning Member States are free to introduce or maintain provisions that are more favourable to workers. This allows Austria to retain any existing stronger protections while incorporating the new EU standards. The principle of equal pay for equal work or work of equal value is also enshrined in the Austrian Federal Constitution and is applicable to collective agreements, which play a significant role in setting minimum wages and working conditions in Austria. The Directive's emphasis on objective, gender-neutral job evaluation criteria will further influence how collective agreements and company-internal salary schemes are structured and negotiated to ensure compliance, requiring a review of existing pay scales and job classification systems to eliminate any potential gender bias. This ensures a holistic approach to pay equity across all levels of legal and contractual frameworks.

International Context

Directive (EU) 2023/970 is a direct manifestation of the European Union's unwavering commitment to international labour standards and human rights, particularly those promoting gender equality and non-discrimination in employment. The principle of equal pay for equal work or work of equal value is a cornerstone of international labour law, notably enshrined in the International Labour Organization (ILO) Equal Remuneration Convention, 1951 (No. 100). Austria ratified ILO Convention No. 100 on 29 October 1953, undertaking a binding commitment to ensure the application of the principle of equal remuneration for men and women workers for work of equal value through national laws, wage determination regulations, or collective agreements. The EU Directive provides concrete legislative tools to help Member States like Austria fulfill these long-standing international obligations more effectively.

Furthermore, the Directive aligns with the broader principles of non-discrimination in employment and occupation as outlined in ILO Discrimination (Employment and Occupation) Convention, 1958 (No. 111). This fundamental ILO convention, ratified by 175 countries, including Austria, requires states to pursue a national policy designed to promote equality of opportunity and treatment in employment and occupation, with a view to eliminating any discrimination based on grounds such as sex, race, religion, or social origin. The EU Directive's comprehensive approach to pay transparency and strengthened enforcement mechanisms directly contributes to fulfilling the obligations under these international instruments by providing concrete, actionable tools to identify, prevent, and address gender-based pay discrimination in a systematic manner.

The Directive's introduction of advanced pay transparency measures, such as salary range disclosure in job advertisements and the right to information on average pay levels, reflects a growing global trend towards greater transparency as a means to combat persistent pay inequality. Many countries and jurisdictions worldwide are exploring or implementing similar measures, recognizing that opacity in pay systems often perpetuates discriminatory practices and makes it difficult for individuals to challenge them. By setting robust minimum requirements for pay transparency and strengthening enforcement, the EU Directive positions the Union as a global leader in promoting pay equity, encouraging other jurisdictions to adopt similar progressive policies and contributing to the global agenda for gender equality in the workplace. The Directive's emphasis on objective, gender-neutral criteria for pay setting and job evaluation also resonates with international best practices for fair work valuation and non-discriminatory remuneration systems.

Implementation Timeline

Date	Milestone	Status
2023-05-10	Directive (EU) 2023/970 adopted by European Parliament and Council	Adopted
2023-05-17	Directive (EU) 2023/970 published in the Official Journal of the European Union	In Force (EU Level)
2023-06-07	Directive (EU) 2023/970 entered into force	In Force (EU Level)
2026-06-07	Deadline for EU Member States, including Austria, to transpose the Directive into national law	Awaiting Entry (National)
2027-06-07	First reporting deadline for companies with 150 or more employees (using 2026 payroll data)	Awaiting Entry (National)
2031-06-07	First reporting deadline for companies with 100-149 employees (using 2030 payroll data)	Awaiting Entry (National)

Compliance Checklist

Requirement	Action Required	Deadline
Review and update pay structures	Ensure pay structures are based on objective, gender-neutral criteria for equal work or work of equal value, and eliminate any discriminatory elements.	By 7 June 2026
Job advertisement transparency	Disclose initial pay level or range in all job advertisements or before interviews; ensure all job advertisements use gender-neutral language.	By 7 June 2026
Ban on salary history inquiries	Prohibit asking job applicants about their current or past salaries during any stage of the recruitment process.	By 7 June 2026
Employee right to information	Establish a clear and accessible procedure for employees to request and receive information on their individual pay and average pay levels (by gender) for comparable roles. Inform employees annually of this right.	By 7 June 2026
Pay gap reporting (150+ employees)	Prepare and submit detailed gender pay gap reports (including mean/median pay gaps, variable pay, quartile bands) using 2026 payroll data.	By 7 June 2027
Pay gap reporting (250+ employees)	Report annually on all required gender pay gap metrics, ensuring public accessibility where mandated.	Annually, starting after 7 June 2027
Pay gap reporting (150-249 employees)	Report every three years on all required gender pay gap metrics.	Every three years, starting after 7 June 2027
Pay gap reporting (100-149 employees)	Prepare and submit detailed gender pay gap reports using 2030 payroll data.	By 7 June 2031, then every three years
Joint pay assessment	If an unexplained gender pay gap > 5% is identified in reports, conduct a joint pay assessment in cooperation with workers' representatives to identify and correct disparities.	Within 6 months of identifying the gap
Non-disclosure clauses	Review and amend employment contracts to ensure they do not contain clauses preventing employees from disclosing their remuneration.	By 7 June 2026
Burden of proof shift preparedness	Be prepared to prove the absence of discrimination with objective, gender-neutral justifications if an employee establishes facts from which discrimination may be presumed.	By 7 June 2026
Compensation for discrimination	Ensure internal mechanisms and policies are in place to provide full compensation for victims of pay discrimination, including back pay, bonuses, and damages.	By 7 June 2026

Sources and References

Source	Type
Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023	official
ILO Convention No. 100: Equal Remuneration Convention, 1951	official
ILO Convention No. 111: Discrimination (Employment and Occupation) Convention, 1958	official
Bundes-Gleichbehandlungsgesetz (B-GlBG) - Federal Equal Treatment Act (Austria)	official
Austrian Federal Ministry of Social Affairs, Health, Care and Consumer Protection - Equal Treatment	official
Oesterreich.gv.at - General information on equal treatment in the private sector	official
Austrian Federal Ministry of Labour and Economy - Pay Transparency	official