2023’s EU Directive 2023/970 to “strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms”, also known as the Pay Transparency Directive, must be implemented by European member states by no later than 7 June 2026.

With such a timescale you might be tempted to the view that this is an issue that can be pushed back until next year. We don’t recommend this.  The Directive – which it is worth remembering sets the minimum standards employers must be ready to meet by June 2026 – sets out very clearly the potential implications of not being ready (information requests from individual employees, a joint pay assessment, claims and sanctions from national authorities, to name a few) .  Employers would be well-advised to consider what it means for them sooner rather than later.  Whilst 15 months may well be a long time in politics, when it comes to the Pay Transparency Directive, it is anything but.

At the heart of the Directive is the requirement that member states take the necessary measures to ensure that employers have pay structures ensuring equal pay for equal work or work of equal value (art. 4, §1). It seeks to achieve this objective in part by compelling them to provide information to their employees about the way in which their pay and benefits are determined, from the point of recruitment through to severance, and (for employers with a headcount of 100+) by introducing pay reporting obligations which extend some way beyond what most member states already have in place.

Both the information provisions and the pay reporting provisions refer specifically to the concepts of “equal work or work of equal value”. As of June 2026, every employee will have the right to request and receive information on their individual pay level and the average pay levels, broken down by sex, for categories of workers performing the same work or work of equal value to theirs. Assuming their employer meets the minimum headcount threshold, it will also be required to prepare and publish various statistics in relation to the gender pay gap, including any gap between workers in the same ”category”, i.e. those performing the same work or work of equal value.

So, what does “work of equal value” actually mean?  According to the Equal Treatment Directive (recital #9), the question is to be determined on the basis of criteria such as the nature of the work, training and working conditions.  The Pay Transparency Directive, inspired by new case law of the European Court of Justice, takes this a step further in referring expressly to skills, effort, responsibility and working conditions. The criteria used and the way in which they are applied in the assessment of whether work is “of equal value” must be objective and gender-neutral.

Even though the European Court of Justice has considered the issue a number of times over the past 30 years, the concept of “work of equal value” will still be an entirely new one for many EU employers. Whilst many companies already have some form of job architecture in place, these tend to reflect a more traditional and hierarchical approach, arguably a reflection the “responsibility” criteria referred to in the Directive, but do not otherwise consider the demands of the work being done. And, as is clear from both those ECJ decisions and equal pay litigation in the UK, particularly in the public sector, this “demands-based” approach can lead to jobs which on their face appear completely different – refuse collectors and social care workers for example – being found to be “work of equal value”.  Apples and pears indeed, leaving the employer firmly in the salad.

Collective bargaining agreements, which are particularly common across continental Europe, potentially present a similar concern. Very often, these collective agreements – which determine wage scales or pay bands to be applied across an entire industry sector – are still largely determined according to a management hierarchy and so do not take account of any of the other criteria put forward by the ECJ. A pay policy which depends wholly or even partly on these collectively-bargained wage scales or bands could potentially be inadequate in terms of identifying “work of equal value” and so make it difficult for an employer to meet the requirements of the new Directive. Quite how far the worker representatives – being the same worker representatives who have spent years negotiating hard with employers and employer bodies to put these very collective agreements in place – will now seek to challenge the validity of those arrangements in light of the provisions of the Pay Transparency Directive remains to be seen.  However, this is just one of many issues all employers will need to grapple with sooner rather than later if they are to be properly prepared come June 2026.   

Whether it’s assessing and potentially revising your company job grading scheme, or holding the industry-level wage scales up to the light, it is clear that these exercises will take time, and, if we want to be slightly dramatic about it, the Pay Transparency Directive is really only two pay cycles away. So now’s the time to start, even if local legislators haven’t really started implementing the Directive yet.