EU Pay Transparency Directive 2023/970 — What Every Employer Must Know (2026)

What Is Directive 2023/970 and Why It Matters

Directive (EU) 2023/970 of the European Parliament and of the Council was adopted on 10 May 2023 and published in the Official Journal L 132/21 of 17.05.2023. Its objective is clear: to close the gender pay gap across the EU through transparency mechanisms and effective enforcement.

Why is this critical right now? Because 7 June 2026 is the deadline for all Member States to transpose the Directive into national law. After that date, employers must fulfil specific obligations — regardless of whether national legislation has been adopted (certain provisions of the Directive have direct effect).

The Directive affects all employers — from hiring transparency to mandatory reporting for companies with 100+ employees. It introduces unprecedented sanctions: full compensation with no cap, reversed burden of proof, and collective actions.

Structure of the Directive — 4 Chapters, 37 Articles

The Directive is organized into four main chapters, each covering a different aspect of pay transparency:

The most immediate obligations for employers are in Chapter II (transparency) and Chapter III (sanctions). These are the provisions that create real legal and financial risk.

Transparency Before and During Hiring (Art. 5)

Article 5 of the Directive introduces four new obligations that fundamentally change the hiring process:

1. Salary range in job postings — every job advertisement must include the initial pay level or range, based on objective and gender-neutral criteria. The information must be provided before the job interview.
2. Ban on asking about previous salary — employers cannot ask candidates about their current or prior pay levels. A violation of this prohibition alone constitutes grounds for a sanction.
3. Gender-neutral job titles — job descriptions and advertisements must use language that does not discriminate on the basis of gender.
4. Non-discriminatory recruitment — the entire recruitment and selection process must be conducted without discrimination, ensuring equal pay for equal work from the outset.

In practice: if you post a job ad without a salary range after 7 June 2026 — you are in breach of the Directive. If during an interview you ask “how much did you earn at your previous job?” — you are in breach of the Directive.

Employee Rights (Art. 6–7)

The Directive creates new rights for every employee that the employer is required to guarantee:

• Documented pay criteria (Art. 6) — the employer must provide easy access to the criteria used for determining pay levels, pay progression, and career advancement. These criteria must be objective and gender-neutral.
• Right to information (Art. 7) — any employee may request written information on their individual pay level and the average pay levels, broken down by gender, for the category of workers performing equal work or work of equal value.
• Response deadline: 2 months — the employer must provide the requested information within two months of receiving the request.
• Pay secrecy clauses banned (Art. 7(5)) — contractual clauses that prevent employees from disclosing their pay are explicitly prohibited. Employers cannot restrict workers’ right to discuss their pay.
• Annual notification — the employer must inform employees every year of their right to request this information (under the Bulgarian draft — by 31 January).

Who Reports, When and What (Art. 9)

Article 9 introduces mandatory pay gap reporting — but not equally for all employers. The obligations depend on company size:

7 Mandatory Indicators

The report must contain the following seven indicators:

1. Mean gender pay gap
2. Mean gap in supplementary or variable pay components
3. Median gender pay gap
4. Median gap in supplementary components
5. Proportion of women and men receiving supplementary components
6. Proportion of women and men in each pay quartile
7. Pay gap by category of workers (basic pay + supplements)

The 5% Threshold — What Happens (Art. 10)

Article 10 creates a three-step escalation mechanism triggered when reporting reveals a pay gap of 5% or more in any worker category:

1. Step 1: Justification — the employer must justify the gap with objective, gender-neutral criteria. If it can prove that the gap is due to legitimate factors (experience, qualifications, specific conditions) — the procedure stops here.
2. Step 2: Correction within 6 months — if the employer cannot justify the gap, it must correct it within 6 months.
3. Step 3: Joint pay assessment — if the gap remains unjustified after the deadline, the employer must carry out a joint pay assessment together with worker representatives. This assessment includes analysis, identification of causes, remedial measures, and monitoring.

Important: the 5% threshold applies to each individual category of workers, not the company as a whole. Even if your overall average gap is 2%, if one specific category shows a 5.1% gap — the mechanism is triggered.

Sanctions and Legal Risks — CRITICAL

Chapter III of the Directive (Art. 14–26) creates an unprecedented sanctions regime in the field of employment law. Here is what every non-compliant employer risks:

Full Compensation With NO Cap (Art. 16)

A worker who has suffered pay discrimination is entitled to full compensation, including: back pay, associated bonuses and in-kind benefits, compensation for non-material damages, and interest. Member States cannot set a cap on compensation.

Reversed Burden of Proof (Art. 18)

If the employer has failed to comply with its transparency obligations, the burden of proof shifts. In court proceedings, it is the employer who must prove that there was no discrimination. The worker does not prove they were discriminated against — the employer proves they were not.

Collective Actions (Art. 20)

The Directive allows worker representatives and organizations to bring collective claims on behalf of affected employees. A single claim can cover dozens or hundreds of employees simultaneously.

Victimization Protection (Art. 25)

Employers cannot retaliate against employees who have exercised their rights under the Directive — whether by filing a request, complaint, or participating in proceedings.

National Sanctions

The Directive requires sanctions to be “effective, proportionate and dissuasive” (Art. 23). The draft amendment to the Bulgarian Anti-Discrimination Act provides for fines on the following scale:

• Individuals: EUR 128–1,278 (BGN 250–2,500)
• Legal entities: EUR 128–2,556 (BGN 250–5,000)
• Plus: potential compensation claims from affected workers — with no cap

Transposition Status in Bulgaria

As of April 2026, Bulgaria is in the process of transposing the Directive through a draft amendment to the Anti-Discrimination Act (Zakon za zashtita ot diskriminatsia). A working group at the Ministry of Labour and Social Policy (MLSP) has been formed and a draft exists, but it has not yet been adopted by the National Assembly.

What Does This Mean for Employers?

• The deadline does not wait — 7 June 2026 is fixed by the EU, regardless of the pace of Bulgarian legislative process
• Direct effect — certain provisions of the Directive (particularly those that are sufficiently clear and unconditional) can be directly applied by national courts even without a national transposing law. This applies especially to the prohibition of discrimination and the right to information.
• CJEU precedent — the Court of Justice of the EU has repeatedly held that individuals can rely directly on sufficiently clear provisions of directives if the Member State has failed to transpose them on time

The takeaway: employers must prepare NOW, without waiting for the adoption of the draft law. The risks of non-compliance are real and immediate.

5 Steps to Prepare

1. Audit your current pay system — analyze how salaries are determined in your company, whether there are documented criteria, and whether those criteria are objective and gender-neutral.
2. Review job postings — every posting must include a salary range. Also check for gender-neutral job titles.
3. Document pay criteria and progression rules — if you do not have a formalized pay policy, create one. The criteria must be accessible to all employees.
4. Classify positions (job grading) — define the categories of workers performing equal work or work of equal value. This is the foundation for accurate reporting.
5. Run a trial gender pay gap calculation — calculate the 7 indicators on a test basis to know where you stand and whether any category exceeds the 5% threshold.

Frequently Asked Questions