This year, November 15th marks European Equal Pay Day, symbolising the day that women in the EU effectively “work for free” until the year’s end. Currently, EU women make 13% less than their male counterparts for equal work, with the global gap almost double that at 23%. At the current rate, estimates predict that it will take over 250 years to close the global gender pay gap.
Earlier this year, the EU introduced the EU Pay Transparency Directive to ensure pay transparency and remedy pay inequalities based on gender. While countries have until 2026 to implement national laws enforcing the Directive, there are steps companies can take now to prepare.
We spoke with, Magnus Drogell, CEO of Pihr, to understand more about the EU Directive, who it affects, and what companies–whether directly affected by the Directive or not–should be doing to remedy pay discrepancies within their organisation.
EU Pay Transparency Directive
Q: What is the new Directive and what are the main aspects?
MD: The Directive comes into force on 7 June 2026 and aims to strengthen the individual’s right to information. It forces companies with more than 100 employees to publish salary ranges for positions, disclose gender pay gaps within the company, and position-specific gender pay gaps. The new Directive will be enforced through a variety of potential penalties and fines for non-compliance.
Q: Who will be affected by the Directive? Is it only big companies?
MD: All employers will be forced to comply with certain parts of the Directive, such as being transparent with pay to employees. All employers with more than 100 employees will be forced to publish information internally and externally about their gender pay gaps and potential analysis of gaps that are wider than 5%.
Q: Should companies prepare for the new Directive before it comes into effect? And if so, what do they need to do?
MD: Companies should certainly prepare for the new Directive and ensure that they have a good understanding of all parts and what it will mean to their business. We strongly encourage companies to get ahead of the coming legislation, ensuring that they have an optimal job architecture in place and clear salary ranges. Also, all businesses should make sure that they can explain all types of salary differences between genders before the commencement of the Directive.
Q: Do you think this will change how companies work with salaries?
MD: It will have a profound effect on how all businesses set and communicate around pay. For the first time, employees will be allowed to ask about their pay compared with their peers, and employers will be forced to justify any salary differences using gender-neutral factors.
Q: Do you think the new Directive will have the desired effect and create a market where equal work means equal pay, regardless of gender?
MD: The short answer is – Yes! The directive is a true game changer and will force employers to focus on the issue and close any unjust pay gaps sooner rather than later.
Pihr is a regulatory, SaaS impact company with a mission to help close the global gender pay gap. Their pay equity solution can help companies prepare and become compliant before the Directive comes into effect, ensuring that more and more employers in Europe offer equal pay for equal work.