What Employers Need to Know Before June 2026

The European Union has taken a major step toward reducing the gender pay gap with the adoption of the EU Pay Transparency Directive (Directive (EU) 2023/970). The directive introduces new obligations for employers regarding salary transparency, reporting, and equal pay.

Member states must transpose the directive into national legislation by 7 June 2026, which means companies across the EU—including those operating in Bulgaria—will soon need to adapt their HR policies, compensation systems, and reporting practices.

Below is an overview of the key requirements and what employers should start preparing for.

What Is the EU Pay Transparency Directive?

Directive (EU) 2023/970 aims to strengthen the principle of equal pay for equal work or work of equal value between women and men.

The directive seeks to improve transparency around pay structures and ensure that employees and job applicants have access to clear information about how salaries are determined.

Key objectives include:

• Increasing transparency in compensation systems

• Helping employees identify and challenge pay discrimination

• Strengthening enforcement mechanisms across EU member states

• Introducing mandatory gender pay gap reporting

Although the principle of equal pay has existed in EU legislation for decades, the gender pay gap across the EU remains around 11–13%. A major reason for this disparity is the lack of transparency in how salaries are set and compared within organisations.

Key Deadlines: When Will the Directive Apply?

• 7 June 2026
  EU countries must transpose the directive into national legislation.
• 2026
  Companies should begin collecting data on gender pay differences.
• 7 June 2027
  The first official gender pay gap reports will be required.

Even though the formal deadline is June 2026, companies should begin preparing well in advance. Implementation may require adjustments to HR policies, salary structures, internal reporting processes, and data systems.

Pay Transparency in Job Advertisements

The directive introduces new rules during the recruitment process.

Employers will be required to:

• Provide the starting salary or salary range in the job advertisement or before the interview process

• Use gender-neutral language in job postings

• Avoid asking candidates about their salary history

These measures aim to prevent existing pay inequalities from being carried over from one employer to another.

Employee Rights After Hiring

The directive strengthens employees’ rights to access information about pay structures.

Employees will have the right to request information about:

• Their individual salary level

• The average salary by gender for comparable positions

• The criteria used to determine pay and career progression

Employers must ensure that these criteria are objective, transparent, and gender-neutral.

What Does “Work of Equal Value” Mean?

The directive introduces a structured methodology for comparing roles that may differ in function but provide comparable value to an organization.

The evaluation is based on four key criteria:

• Skills – education, qualifications, and experience

• Effort – physical or intellectual demands of the job

• Responsibility – level of managerial or financial responsibility

• Working conditions – working environment and potential risks

This means that different job positions may still be compared if the overall value of the work is considered similar.

Gender Pay Gap Reporting Obligations

Reporting obligations depend on the size of the company.

Reporting requirements

• Companies with 250+ employees
  Must report every year.
• Companies with 150–249 employees
  Must report every three years.
• Companies with 100–149 employees
  Must report every three years starting later.
• Companies with fewer than 100 employees
  Reporting may be voluntary depending on national legislation.

These reports must analyse gender pay differences across comparable job categories within the organisation.

What Happens If the Pay Gap Exceeds 5%?

If the analysis reveals a gender pay gap of 5% or more that cannot be justified by objective factors, employers must take corrective action.

This may include:

• Conducting a joint pay assessment

• Involving employee representatives

• Analyzing the causes of the pay gap

• Implementing corrective measures

Legal Risks and Potential Sanctions

The directive introduces stronger enforcement mechanisms and penalties.

Possible consequences for non-compliance include:

• Financial penalties and fines

• Payment of unpaid wage differences retroactively

• Compensation for affected employees

• Interest and additional financial damages

• Restrictions on participation in public procurement procedures

A significant change is the shift in the burden of proof. In cases of suspected pay discrimination, the employer must demonstrate that no violation has occurred.

How Companies Can Prepare

Preparation should begin before the directive becomes legally binding.

Recommended steps include:

• Conducting a gender pay gap analysis

• Reviewing job descriptions and job classifications

• Establishing objective compensation criteria

• Standardizing bonuses and promotion practices

• Training HR teams and managers

• Implementing systems for data collection and reporting

Early preparation will help organisations reduce legal risks and create more transparent and equitable compensation structures.

Key Takeaways

The EU Pay Transparency Directive represents one of the most significant developments in European labor legislation in recent years.

It pushes companies toward more transparent, structured, and data-driven compensation systems.

Organisations that begin preparing early will not only minimise compliance risks but also strengthen their reputation as fair, responsible, and transparent employers.