What it is
The EU Pay Transparency Directive (Directive 2023/970/EU) entered into force on 6 June 2023. It requires employers across all EU member states to measure, report, and, where gaps exceed defined thresholds, remediate gender pay gaps. It applies to both public and private sector employers.
The Directive builds on the principle of equal pay for equal work or work of equal value, which has been EU law since the Treaty of Rome. What is new is the mandatory reporting framework, the individual right to pay information, the reversed burden of proof in discrimination proceedings, and the joint assessment obligation.
Who it applies to
| Company size | Obligation | First reporting deadline |
|---|---|---|
| 250 or more employees | Full reporting obligation: all 7 Article 9 metrics | 7 June 2027 |
| 150–249 employees | Full reporting obligation: all 7 Article 9 metrics | 7 June 2027 |
| 100–149 employees | Full reporting obligation: all 7 Article 9 metrics | 7 June 2031 |
| Fewer than 100 employees | No mandatory reporting. Individual pay information rights apply to all employees regardless of company size. | Not applicable |
Key dates
| Date | Event |
|---|---|
| 6 June 2023 | Directive enters into force |
| 7 June 2026 | Member state transposition deadline: national law must be in place |
| 7 June 2027 | First pay gap report due: companies with 150 or more employees |
| 7 June 2031 | First pay gap report due: companies with 100–149 employees |
| Annual thereafter | 250+ employee companies report every year. 100–249 employee companies report every three years. |
The 7 required reporting metrics (Article 9)
Every company within scope must calculate and publish the following metrics, broken down by category of comparable work where indicated.
| # | Metric | Pay basis |
|---|---|---|
| 1 | Mean gender pay gap | Basic pay |
| 2 | Median gender pay gap | Basic pay |
| 3 | Mean gender pay gap in supplementary and variable pay | Variable pay (bonuses, commissions, overtime) |
| 4 | Median gender pay gap in supplementary and variable pay | Variable pay |
| 5 | Share of female and male workers receiving supplementary or variable pay | Headcount |
| 6 | Share of female and male workers in each pay quartile | Total pay, split into Q1–Q4 |
| 7 | Gender pay gap per category of comparable work | Basic pay and variable, reported per comparable work group |
What triggers additional obligations
| Trigger | Obligation | Timeline |
|---|---|---|
| Gap of 5% or more in any comparable work category that cannot be justified by objective, gender-neutral criteria | Joint pay assessment (Article 10), conducted in cooperation with the Works Council | Must be initiated if gap is not remedied within 6 months of report submission |
| Employee submits individual pay information request (Article 7) | Employer must provide the employee's own pay level and the average pay level of colleagues doing the same work or work of equal value, broken down by gender | Within 2 months of request |
| Employer fails to meet pay transparency obligations | Burden of proof reverses in any pay discrimination proceeding: the employer must disprove discrimination, not the employee prove it | Immediate upon breach |
What counts as pay
The Directive's definition of pay is broad. It covers everything a worker receives in exchange for work, whether in cash or in kind:
- Base salary
- Bonuses and commissions
- Overtime pay
- Allowances (shift, travel, representation)
- Benefits in kind (company car, meal vouchers, equipment)
- Employer contributions to occupational pension schemes (scope under German law pending)
- Paid training
Not included: reimbursement of actual expenses incurred (travel costs, client entertainment).
What counts as comparable work
Workers are in the same comparable work category if they perform work of equal value, assessed on four objective criteria:
- Competencies: skills, knowledge, qualifications required
- Effort: mental and physical demands of the role
- Responsibility: scope of decision-making and accountability
- Working conditions: physical environment, risks, schedule demands
Job titles and grades alone are not sufficient. The assessment must be gender-neutral and documented. Workers in different departments or locations can belong to the same comparable work category if their work meets these criteria.
The consequences of non-compliance
| Violation | Consequence |
|---|---|
| Failure to report | Financial penalty (amount set by national law); burden of proof reversal in all pay discrimination claims |
| Unjustified gap above 5%, no joint assessment | Compelled assessment; aggravated breach; active discrimination exposure |
| Pay discrimination substantiated | Full back pay, all missed bonuses and benefits, non-material damages: no cap |
| Repeated non-compliance | Exclusion from public procurement; revocation of public grants and subsidies |
The German context
Germany has not yet passed its national transposition law. The transposition deadline is 7 June 2026. An independent expert commission submitted recommendations to the Federal Ministry (BMFSFJ) in October 2025. The Referentenentwurf had not been published as of March 2026.
If Germany misses the transposition deadline, the Directive becomes directly applicable from 7 June 2026. The first reporting deadline of 7 June 2027 is fixed regardless of when the national law is passed.
Germany's existing pay transparency law, the Entgelttransparenzgesetz (EntgTranspG), in force since 2018, already requires companies with 200 or more employees to respond to individual pay disclosure requests. The EU Directive extends and strengthens these obligations.
Axios Analytics automates all seven Article 9 metrics and calculates the adjusted pay gap per comparable work category: the number that determines whether Article 10 is triggered. Built for the German mid-market.
See how it worksSources
- EU Pay Transparency Directive 2023/970, Official Journal of the European Union, May 2023
- KPMG Law: Implementation of the Pay Transparency Directive: what the expert commission recommends, December 2025
- Freshfields: Final report of the expert commission, December 2025
- Axios Analytics internal regulatory analysis, March 2026