Finland Pay Transparency Act

Overview

The Act amending the Act on Equality between Women and Men represents Finland's national implementation of the European Union's Pay Transparency Directive (Directive (EU) 2023/970). This legislative initiative is designed to bolster the principle of equal pay for equal work or work of equal value between men and women, a cornerstone of EU law and Finnish national policy. The original Act on Equality between Women and Men (609/1986), which came into force on January 1, 1987, already aimed to prevent gender-based discrimination and promote equality, particularly in working life. The new amendments significantly enhance these existing provisions by introducing more stringent requirements for pay transparency and enforcement mechanisms, aligning Finland's legal framework with the EU's broader efforts to close the gender pay gap across member states.

The impetus for this amendment stems directly from the EU Pay Transparency Directive, adopted on May 10, 2023, which mandates all member states to transpose its provisions into national law by June 7, 2026. Finland's Ministry of Social Affairs and Health (Sosiaali- ja terveysministeriö, STM) established a tripartite working group on May 14, 2024, to prepare the national implementation. This working group released a comprehensive draft proposal on May 16, 2025, which has since undergone political review and a public consultation period, with comments requested by February 9, 2026. The government plans for the changes to enter into force on May 18, 2026, slightly ahead of the EU deadline.

Key innovations introduced by this Act include a ban on salary history inquiries during recruitment, enhanced employee rights to request and receive pay information, and new reporting obligations for employers regarding gender pay gaps. Furthermore, the Act mandates joint pay assessments in situations where significant unexplained pay differences are identified. These measures are intended to foster a more transparent and equitable pay environment, enabling both employees and employers to identify and address unjustified pay disparities proactively. The legislation applies to both public and private sector employers, ensuring a broad scope of application across the Finnish labor market, impacting an estimated 2,799 companies with 100 or more employees.

Definitions

The Act introduces and clarifies several key terms central to its application and the broader goal of pay equity. Central among these is the concept of 'equal pay for equal work or work of equal value.' This principle, enshrined in Article 157 of the Treaty on the Functioning of the European Union (TFEU) and reinforced by Directive (EU) 2023/970, dictates that men and women performing the same job or jobs deemed to have equivalent value must receive equal remuneration. The assessment of 'work of equal value' is to be based on objective, gender-neutral criteria, which, according to the Finnish draft law, should include factors such as skills, effort, responsibility, and working conditions, as well as education, training, and experience, among other relevant elements specific to the job. This moves beyond a simple comparison of job titles to a more holistic evaluation of the demands and nature of the work performed, ensuring that historical biases in job valuation do not perpetuate pay disparities.

Another critical term is 'remuneration' or 'pay,' which encompasses not only basic salary but also any other consideration, whether in cash or in kind, that a worker receives directly or indirectly from their employer in respect of their employment. This broad definition ensures that all components of compensation, including bonuses, variable pay, benefits, and other allowances, are considered when assessing pay equity and calculating gender pay gaps. This comprehensive approach prevents employers from circumventing equal pay principles by differentiating non-basic pay elements. The Act aims to make these components transparent, allowing for a clearer understanding of total compensation packages and ensuring that all forms of compensation are subject to scrutiny for gender-based disparities.

The concept of 'pay transparency' itself is fundamental to the Act. It refers to the obligation for employers to provide clear, comprehensive, and accessible information about pay structures, criteria for pay progression, and actual pay levels. This transparency is intended to empower employees to identify potential discrimination and to facilitate informed pay negotiations. It also includes the requirement for employers to disclose salary ranges in job advertisements or at least before interviews, and to provide employees with information on average pay levels for comparable roles. Furthermore, the Act addresses the 'gender pay gap,' which is defined as the difference in average gross hourly earnings between men and women, often expressed as a percentage of men's earnings. This gap can result from various factors, including direct discrimination, occupational segregation, differences in working hours, and career interruptions due to care responsibilities. The reporting obligations introduced by the Act are specifically designed to measure and highlight this gap within organizations and drive its reduction.

Covered Employers

The Act amending the Act on Equality between Women and Men, in line with the EU Pay Transparency Directive, applies broadly to both public and private sector employers in Finland. This comprehensive scope ensures that the principles of pay transparency and equal pay are upheld across the entire labor market, from government agencies and municipalities to private companies of varying sizes. The existing Act on Equality between Women and Men (609/1986) already mandates that public and private employers with 30 or more employees prepare gender equality plans every two years. These plans must include a comprehensive pay survey, assessing the employer's gender equality situation, including the employment of women and men in different jobs, their pay, any differences in pay, and planned corrective measures. The new amendments build upon this existing foundation, adding more specific and robust requirements.

The new amendments introduce differentiated obligations based on employer size, primarily concerning pay gap reporting and joint pay assessments. While all Finnish employers, regardless of size, must adhere to the legal requirements for employees' right to information and pre-employment transparency, additional reporting duties are phased in for larger organizations. Specifically, employers with 100 or more employees will face new reporting requirements. This threshold is consistent with the EU Directive's minimum requirements and is estimated to impact approximately 2,799 Finnish companies. These larger employers will be required to provide detailed reports on various aspects of their gender pay gap, as outlined in the Reporting & Audit Obligations section, ensuring a systematic approach to identifying and addressing disparities.

For the most extensive reporting, employers with at least 250 employees will be required to submit annual reports on gender pay differences by employee group to the Incomes Register. Employers with 100 to 249 employees will have this reporting obligation every three years. Furthermore, employers with 50 or more employees will be required to provide employees with information about the criteria used for salary development in an easily accessible form, promoting internal transparency. There are no explicit exemptions for specific sectors mentioned in the available information, indicating a universal application across industries. The phased implementation and differentiated thresholds aim to balance the administrative burden on smaller entities with the directive's goal of comprehensive pay transparency across the Finnish economy.

Employee Rights

The Act significantly strengthens employee rights concerning pay transparency, empowering individuals to better understand and challenge potential pay discrimination. A core right introduced is the ability for employees to request information annually on pay levels and average pay by gender for roles of equal or comparable value. Employers are obligated to provide this data within two months of a request, ensuring timely access to crucial information. This right is designed to enable employees to assess whether their remuneration aligns with that of colleagues performing similar work, without necessarily disclosing individual colleagues' specific salaries. The aim is to provide sufficient context for employees to identify potential disparities and to engage in informed discussions about their pay, fostering a more equitable dialogue.

In addition to individual information requests, the Act reinforces the right to discuss pay without fear of retaliation. While the existing Finnish legislation already provides some protections against discrimination, the new provisions explicitly aim to prevent any adverse treatment of employees who exercise their rights under the pay transparency framework. This includes the right to disclose one's own pay, seek information about others' pay (within the legal framework), or participate in collective actions related to pay equity. The Directive emphasizes that workers and their representatives should not be penalized for seeking or disclosing information to enforce the principle of equal pay, thereby creating a safer environment for employees to advocate for fair compensation.

Furthermore, the Act introduces a ban on salary history inquiries during the recruitment process. This crucial provision prevents employers from basing new hires' salaries on previous earnings, which can perpetuate historical pay discrimination and systemic undervaluation of certain groups. Instead, employers must focus on the value of the work and objective, gender-neutral criteria when setting remuneration for new employees. While the job posting itself may not always include a salary range, transparency during recruitment is required, meaning applicants should receive information about the starting salary or salary range in a timely manner, typically before the interview stage or at least before a job offer is made. These combined rights aim to create a more equitable and transparent environment throughout the employment lifecycle, from hiring to ongoing employment.

Pay Transparency Requirements

The Act introduces several critical pay transparency requirements designed to foster a more equitable and informed labor market. A significant change pertains to job advertisements and the recruitment process. Employers will be prohibited from asking job applicants about their pay history, ensuring that past inequities do not influence future compensation. This ban aims to break the cycle of gender-based pay discrimination that can be perpetuated when new salaries are anchored to potentially discriminatory prior earnings. Instead, remuneration decisions must be based on objective, gender-neutral criteria related to the job itself, such as skills, experience, and responsibilities, rather than an applicant's previous earnings.

Regarding salary range disclosure, the Finnish draft legislation indicates that while job postings themselves don't necessarily need to include this information, transparency during recruitment is required. This means employers must provide applicants with the starting salary or salary range for the position in a timely manner, typically before the interview stage or at least before a job offer is made. This ensures that candidates are aware of the potential compensation for the role, allowing for more informed decision-making and reducing information asymmetry between employers and job seekers. The EU Directive itself encourages the inclusion of salary ranges in job advertisements to promote transparency from the outset, and Finland's approach aims to achieve a similar level of clarity for applicants.

Beyond recruitment, the Act mandates greater transparency in internal pay structures. Employers with 50 or more employees will be required to provide employees with easily accessible information about the criteria used for salary development. This includes details on how pay is determined, the factors influencing pay progression, and the evaluation systems in place. The goal is to ensure that employees understand the objective and gender-neutral criteria underpinning their remuneration, fostering trust and enabling them to assess the fairness of their own pay. This internal transparency, coupled with the right to request comparative pay data, empowers employees to engage in constructive dialogue with their employers about potential disparities and ensures that pay decisions are based on clear, justifiable metrics.

Reporting & Audit Obligations

The Act introduces new and enhanced reporting and audit obligations for employers, particularly those with a significant number of employees, to systematically identify and address gender pay gaps. For organizations with 100 or more employees, Finland's draft legislation mandates a comprehensive reporting framework. This reporting must include specific elements such as the average gender pay gap, the median gender pay gap, and the average and median gaps in variable compensation. Furthermore, employers must report on the distribution of men and women across pay quartiles, illustrating the proportion of each gender in different earning bands, and the proportion of male and female employees receiving variable pay. A breakdown of average pay gaps by job category is also required, allowing for more granular analysis of pay disparities and pinpointing specific areas for intervention.

The frequency of these reports varies by employer size. Employers with at least 250 employees will be required to submit these detailed reports annually to the Incomes Register. For employers with 100 to 249 employees, the reporting obligation will be every three years. This staggered approach aims to balance the administrative burden with the need for regular monitoring of pay equity, ensuring that smaller organizations are not unduly burdened while larger ones provide consistent data. Finland has also chosen to leverage existing data infrastructure, such as Statistics Finland and the Incomes Register, to enable employers to report a majority of the required Key Performance Indicators (KPIs) directly to the Ombudsman for Equality, streamlining the process and enhancing data accuracy.

Beyond regular reporting, the Act introduces the obligation for 'joint pay assessments' under specific conditions. If an employer's pay reporting reveals an unexplained difference in the average pay level between female and male workers of at least 5% in a given category of workers, and this difference cannot be justified by objective, gender-neutral criteria, the employer must conduct a joint pay assessment with employee representatives. This assessment aims to jointly examine pay structures and practices to identify, correct, and prevent unjustified pay differences. The employer will analyze factors such as gender representation in roles, average pay levels (including bonuses), and differences in pay for the same work. This proactive audit mechanism is a crucial tool for addressing systemic pay inequalities and fostering collaborative solutions between management and employees, moving beyond mere reporting to active remediation.

Governance & Enforcement Bodies

The enforcement and oversight of the Act amending the Act on Equality between Women and Men will primarily involve several key Finnish governmental and independent bodies, building upon the existing framework for gender equality. The Ministry of Social Affairs and Health (Sosiaali- ja terveysministeriö, STM) plays a central role in the legislative process and overall policy guidance, having established the working group responsible for drafting the amendments. This Ministry is responsible for the broader legislative framework concerning social affairs and health, including gender equality, and will oversee the implementation and future reviews of the Act.

The Ombudsman for Equality (Tasa-arvovaltuutettu) is a crucial independent authority tasked with supervising compliance with the Act on Equality between Women and Men. The Ombudsman's powers are expected to be strengthened under the new legislation, particularly concerning access to information and the ability to facilitate the resolution of discrimination cases. Under the current law, the Ombudsman can already obtain necessary information for supervision and demand the presentation of documents. The new reporting requirements, where employers submit data via the Incomes Register/Statistics Finland directly to the Ombudsman, further enhance this body's capacity to monitor pay gaps, identify non-compliant employers, and initiate corrective actions. The Ombudsman acts as a key point of contact for individuals seeking to file complaints regarding gender-based pay discrimination.

Additionally, the legislative proposal suggests amendments to the Act on the Ombudsman for Equality, the Act on Statistics Finland, the Act on the Incomes Information System, and the Act on the Enforcement of Fines. This indicates a coordinated approach to enforcement, leveraging existing data collection and legal enforcement mechanisms across various government agencies. While specific contact information for complaint filing processes under the *new* amendments will be detailed upon the Act's entry into force, the general process for gender discrimination complaints typically involves contacting the Ombudsman for Equality, who can then mediate or refer cases to the Equality and Non-Discrimination Tribunal or district courts for resolution. The involvement of labor market organizations in the working group also highlights the significant role of collective bargaining and employee representatives in monitoring and enforcing pay equity at the workplace level.

Monitoring & Evaluation

The monitoring and evaluation framework for the Act is designed to ensure continuous oversight of pay equity and the effective implementation of transparency measures. The Ombudsman for Equality will serve as a primary monitoring body, receiving aggregated pay gap data directly from employers via the Incomes Register and Statistics Finland. This centralized data collection will enable the Ombudsman to identify trends, pinpoint sectors or companies with persistent pay disparities, and prioritize enforcement actions. The regular reporting obligations for employers, particularly the annual or triennial submissions for those with 100 or more employees, form the backbone of this monitoring system, providing a consistent stream of data for analysis and intervention.

Complaint investigation procedures will be reinforced, allowing employees who suspect pay discrimination to request information on average pay levels for comparable work. If an employer fails to provide this information or if the information reveals potential discrimination, the employee, potentially with the support of a shop steward or the Ombudsman for Equality, can initiate a formal complaint. The Act aims to streamline these processes and ensure that investigations are thorough and timely. The existing Act on Equality already allows the Ombudsman to obtain necessary information and documents for supervision, and these powers are expected to be strengthened to handle the new transparency requirements, ensuring that all relevant data can be accessed for a comprehensive investigation.

The 'joint pay assessment' mechanism serves as a crucial internal audit and evaluation tool. When a gender pay gap of at least 5% is identified and cannot be objectively justified, employers with 100 or more employees are required to conduct this assessment in cooperation with employee representatives. This process involves a detailed analysis of pay structures and practices to identify root causes of disparities and develop corrective measures. The evaluation criteria for these assessments will focus on objective, gender-neutral factors such as skills, effort, responsibility, and working conditions, ensuring that any identified differences are thoroughly scrutinized. This collaborative approach not only helps in rectifying existing inequalities but also promotes a culture of continuous self-assessment and improvement within organizations regarding pay equity. The overall effectiveness of the Act will likely be evaluated based on reductions in the national gender pay gap, the number of discrimination cases successfully resolved, and the overall increase in pay transparency across the Finnish labor market.

Enforcement & Penalties

The Act introduces robust enforcement mechanisms and penalties to ensure compliance with the new pay transparency and equal pay obligations. Member States are required by the EU Directive to establish effective, proportionate, and dissuasive penalties for breaches of equal pay rights and obligations. The Finnish legislation will align with this, ensuring that non-compliance carries meaningful consequences. While specific fine amounts and penalty ranges will be detailed in the final legislative text, the intent is to create a real deterrent effect against pay discrimination and lack of transparency. These penalties may include administrative fines under national law, and the severity of the penalty should consider aggravating or mitigating factors, including any instances of intersectional discrimination, ensuring a nuanced approach to enforcement.

For repeated infringements, the penalties are expected to be heightened to ensure practical enforcement and to discourage habitual non-compliance. This escalation mechanism is crucial for addressing employers who consistently fail to meet their obligations or rectify identified pay disparities, signaling that persistent disregard for pay equity will not be tolerated. The amendments to the Act on the Enforcement of Fines, as part of the broader legislative package, will underpin these penalty provisions, providing the legal framework for imposing and collecting such fines. In cases of proven pay discrimination, employees may also be entitled to compensation for damages suffered, in addition to any fines levied against the employer, ensuring that victims of discrimination receive appropriate redress.

The appeals process for enforcement decisions will follow established Finnish legal procedures, typically involving appeals to administrative courts for decisions made by supervisory bodies like the Ombudsman for Equality, and to district courts for civil claims of discrimination. The principle of divided burden of proof, already present in Finnish equality legislation, will likely continue to apply, easing the burden on the complainant in discrimination cases by shifting some evidentiary responsibility to the employer once a prima facie case is established. The overall goal of these enforcement and penalty provisions is not merely punitive but also preventative, encouraging employers to proactively review and adjust their pay practices to ensure fairness and transparency, thereby reducing the incidence of gender-based pay discrimination in the Finnish labor market and fostering a culture of compliance.

Relationship to Other Laws

The Act amending the Act on Equality between Women and Men operates within and significantly interacts with Finland's existing legal framework, particularly other employment and anti-discrimination laws. Its primary relationship is with the original Act on Equality between Women and Men (609/1986), which it directly amends. This foundational Act already prohibits gender-based discrimination and mandates employers to promote equality systematically, including in pay matters. The new amendments build upon these existing provisions, strengthening them with specific pay transparency requirements derived from the EU Directive, creating a more robust and detailed framework for achieving pay equity.

The Act also interacts closely with the Non-Discrimination Act (1325/2014), which prohibits discrimination based on various grounds beyond gender, such as age, origin, disability, and sexual orientation. While the Act on Equality specifically addresses gender-based discrimination, the broader principles of non-discrimination and equal treatment are complementary. The EU Pay Transparency Directive itself provides a legal definition of intersectional discrimination, which may influence how discrimination cases are handled under Finnish law, particularly when multiple grounds of discrimination are present. This ensures a comprehensive approach to combating all forms of discrimination in the workplace, recognizing that individuals may face discrimination on more than one ground simultaneously.

Furthermore, the implementation involves amendments to several other related laws, highlighting its integrated nature within the Finnish legal system. These include the Act on the Ombudsman for Equality, the Act on Statistics Finland, the Act on the Incomes Information System, and the Act on the Enforcement of Fines. These amendments are necessary to facilitate the new reporting obligations, strengthen the powers of enforcement bodies, and ensure that penalties for non-compliance can be effectively applied. The Employment Contracts Act also contains general requirements for equal treatment and prohibits improper treatment of employees, providing a broader context for the specific pay equity provisions of this Act. In essence, the new Act aims to complement and reinforce these existing legal instruments, ensuring a cohesive and robust framework for promoting equality and preventing discrimination in Finland, thereby creating a more just and equitable labor market for all.

International Context

The Act amending the Act on Equality between Women and Men is a direct response to the European Union's Pay Transparency Directive (Directive (EU) 2023/970), adopted on May 10, 2023. This Directive represents a significant step by the EU to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women across all Member States. The Directive sets minimum requirements for pay transparency and reinforced enforcement mechanisms, recognizing that despite existing legal frameworks, the effective implementation and enforcement of equal pay principles remained a challenge in practice. Finland, as an EU Member State, is obligated to transpose this Directive into its national law by June 7, 2026. The Finnish government has committed to implementing the Directive in line with its minimum requirements, without adding additional obligations beyond what the EU law prescribes, ensuring consistency across the Union while allowing for national specificities.

Globally, the principle of equal pay for equal work or work of equal value is a fundamental human right and a core labor standard, enshrined in international instruments such as the International Labour Organization (ILO) Convention No. 100 on Equal Remuneration (1951) and Convention No. 111 on Discrimination (Employment and Occupation) (1958). The EU Pay Transparency Directive, and consequently Finland's implementing Act, aligns with these global trends towards greater pay equity and transparency. Many countries, including Australia, Canada, Iceland, and New Zealand, have also been developing new proactive approaches to equal pay, moving beyond purely voluntary measures. The Directive's design, based on the realization that litigation alone has been insufficient to correct pay inequalities, reflects a broader international shift towards preventative and systemic approaches, such as mandatory reporting and joint pay assessments. This Finnish Act therefore places Finland firmly within the international movement to combat gender pay gaps through enhanced legal frameworks and enforcement, contributing to global efforts for economic justice and gender equality.

Implementation Timeline

Compliance Checklist

Sources and References