Pay Transparency in Europe and the UK: What Employers Need to Know

Miriam Bruce

Welcome to our series, Employment & Benefits Unpacked, where we dive into the many employment benefits and mobility issues facing organisations across jurisdictions. Each episode will be hosted by a different Mayer Brown lawyer from our Global Employment and Benefits Group. We’ll be offering a fresh perspective and insights for employers, HR professionals, and in-house counsel. You can subscribe to this series on all major platforms.

I’ll be your host for this episode. I’m Miriam Bruce, a partner in Mayer Brown’s London office. I’m delighted to be joined by Julien Haure, partner and head of our global employment and benefits team in France, and Hagen Köckeritz, partner and head of our global employment and benefits team in Germany. Today we’re going to be unpacking the topic of pay transparency legislation in Europe and the UK.

This is one of the hottest topics in employment law right now, with the EU Pay Transparency Directive requiring implementation by the 7th of June this year. Now, as we’ll hear, most member states missed that deadline, but employers across Europe are preparing for significant new obligations in this area, and we’ll also see how the UK is reacting too. So without further ado, let’s get going.

So, as I’ve said, today we’re tackling pay transparency, a subject that’s moved from a compliance checkbox to a strategic issue for employers across Europe and also the UK. The EU Pay Transparency Directive came into force in June 2023 and was due to be implemented by Member States by the 7th of June, a deadline we’ve just passed. Now, most Member States missed it, but the directive is still driving a fundamental shift in how organisations manage pay transparency. So let’s start with the big picture, the EU Pay Transparency Directive itself. Now, Julien, Hagen, can you walk us through the key elements? Julien, perhaps you could start with the background and purpose of the directive.

Julien Haure

Yeah, with pleasure, Miriam. The EU Transparency Pay Directive was adopted in May 2023 and came into force on 6 June of the same year. Its core aim is to reinforce the principle of equal pay for equal work or work of equal value between men and women through enhanced transparency and enforcement mechanisms. The directive responds to persistent gender pay gaps across the EU and is currently averaging around 12 to 13 percent and unadjusted. The view is that transparency is critical to identifying and addressing pay discrimination that may otherwise remain hidden.

Hagen Köckeritz 

Thank you, Julien. Let me outline some of the key obligations. So first there’s pay transparency for job applicants. Employers will be required to provide information on starting salary or salary range before the interview and typically already in the job advertisement there is going to be a prohibition on asking candidates about their salary history. Second, employees gain new rights to request information about individual pay level and average pay levels for employees performing equal work or work of equal value broken down by gender. Employers have to make available criteria used to determine pay, pay levels, and pay progression, and such criteria must be objective and gender neutral.

Julien Haure 

There are also again the reporting requirements. Companies with 100 or more employees must report on their gender pay gaps. The frequency depends on the company size. Annual reporting for companies with 250 plus employees, and every three years for those with 100 to 249 employees. The first reports for employers with 150 plus employees are due by June 2027.

Hagen Köckeritz

That’s right, that’s right. And I think one crucial element in the directive is the 5% threshold. If pay gap reporting reveals an unjustified gender pay gap of at least 5% in any category of workers that isn’t corrected within six months, employers must conduct a joint pay assessment together with their employee representatives. Also on the enforcement side, the directive provides for effective sanctions, including fines. A reversal of the burden of proof, which essentially means if an employee establishes facts that suggest there is discrimination, it’s for the employer to prove there was no breach. And finally, employees will have a right to claim full compensation for discrimination, including back pay, with no predetermined cap.

Julien Haure 

Yes, this is very interesting. And regarding the implement status, may I recall that the transposition deadline was on 7 June 2026. And frankly, most member states are still in the process, as mentioned by Miriam in the introduction of this podcast. A few have moved early. Slovakia and Italy, for instance, have finalized the transposition of the directive in their legislation before the deadline. But major EU economies like France, Germany, Spain, or Ireland are still working on their transposition legislation. This means that employers need to prepare now, based on the directive requirements, while watching for national variations.

Miriam Bruce

Thank you both for that helpful summary on the key parts of the directive. Now let’s unpack your individual countries and see how they’re approaching things. Julien, France already has quite a developed pay equity framework, doesn’t it? Can you tell us about that?

Julien Haure

Indeed. In France we are often late in a lot of things, but it is true that this time France has been a leader in this area. Since 2008, the Labour Code states that every employer should ensure that women and men receive equal pay for equal work or work of equal value. France has also determined for a while now how should be assessed a work of equal value. Basically, it is a work which requires to be performed by employees who have a similar professional knowledge that can be evidenced by a title, diploma, or professional practice, who have similar skills, which result from acquired experience, similar level of responsibilities, and comparable physical and nervous burdens.

For instance, case law in France has already considered that an HR director and a financial director could perform a work of equal value and, as such, need to be paid equally. But the current centerpiece of our existing legal arsenal to assess pay equality is what we called “Index égalité professionnelle”, which translation is “professional equality index”. This legal obligation has been introduced in 2018. It requires that companies with at least 50 employees calculate and publish an annual gender equality index score. The index measures five indicators: the gender pay gap, the differences in individual salary increases, the differences in promotions, the salary increases for women returning from maternity leave, and the gender parity amongst the highest paid employees. Companies are scored out of 100 points and must publish their score annually. Those who score below 75 must implement corrective actions within three years, failure to face financial penalties of up to 1% of their payroll. The most recent statistics show that the average national score has improved over time, and it’s reached now nearly a score of 88%. But there is still work to do, particularly on the higher paid positions indicator, where many companies score poorly, as women remain residual, unfortunately.

Miriam Bruce

So Julien, it’s very helpful to understand France’s current position. How is France approaching implementation of the EU directive?

Julien Haure

The French Parliament has already drafted a law, which has not been formally adopted by the French Labour Ministry, which has announced that it should be the case soon. According to the most recent announcement, the law should enter in force early 2027. The current bill focuses on topics that are not addressed by our professional equality index. For instance, I may say it adds an important criteria to the current equal pay index, which is the gender pay gap for each category of workers performing equal work of equal value. It also extends the employees’ information rights and recruitment transparency. Indeed, workers will have the right to obtain pay gap data concerning their colleague, with whom they consider they perform unequal work, which is not an easy assessment to do. Employers should disclose the contemplated salary range when advertising jobs, or at the latest, before the first interview with the candidate. This bill also provides a reverse burden of proof in equal pay disputes as mentioned by Hagen in the preliminary talks. That being said, most of the provisions of the bill will require enactment of decrees in France in order to specify how to apply the law. And such decrees unfortunately may take some time to be drafted. So the announcement of 2027 should not be the right one.

Miriam Bruce

Thank you very much. So let’s move to Germany. We’ve already revealed at the beginning, Hagen, that Germany has not implemented the directive yet. But you have already, like France, a framework in place through the Pay Transparency Act. I’ll leave the German pronunciation to you. But there are some limitations to that, I understand.

Hagen Köckeritz

Absolutely correct. Yeah. So we have the German Entgelttransparenzgesetz, the German Pay Transparency Act already since 2017. It introduced an individual right to information for employees in establishments with more than 200 employees. So we need a certain minimum size for employees to have that right. If the threshold is reached, then employees can request information about the median pay of colleagues of the opposite gender performing comparable work. But in fact, take up has been relatively low. There are studies that suggest that only a very small percentage of employees actually make use of that right. Talking about limitations that you mentioned, yes, there are limitations. One obviously is the 200 employee threshold requirement. So smaller establishments are out of scope already. And then the employer, and that is essentially based on data privacy law reasons, can refuse disclosure of information if the comparison group has fewer than six employees of the other gender. There’s also no obligation for employers to proactively inform employees that they have the right, which means many employees are not even aware of their right to ask for information. Companies with more than 500 employees that are required to report on a regular basis and create a management report. They also have to report on their efforts in the equal pay area, but this reporting is relatively limited and only follows a five-year cycle so for companies that are bound by collective agreements. There’s also no mandatory pay gap reporting requirement that’s comparable with what the directive actually introduces. For Germany that means the law that we have is not sufficient, does not meet the requirements of the directive. So there will have to be changes.

Miriam Bruce 

Understood. And if your Transparency Act has been around for almost ten years, has there been any case law about it? Are the courts shaping the landscape in pay transparency in Germany?

Hagen Köckeritz 

Yes, great question. The Federal Labour Court has been quite active, especially in recent years. There are two landmark decisions. One goes back to 2023, where the Federal Labour Court confirmed the scope of the information right under the Pay Transparency Act and also clarified details around the burden of proof for the employer. And all of that was based on Article 157 of the Treaty on the Functioning of the EU, which requires member states to interpret local law in accordance with EU law requirements. And then importantly, the court adopted a quite broad interpretation of who qualifies as an employee under the Act, which also follows a trend that we see in EU law. The more recent decision from October 2025 is quite interesting as well because the court determined that even if there’s only a one-to one-comparison, so one person claims that she has been paid less favorably than a male colleague of the same establishment. Yeah, this already creates the assumption that there is discrimination. The burden then shifts entirely to the employer, so the employer has to prove that the differentiation in pay was based on objective and gender neutral factors.

Miriam Bruce 

Very interesting. And so where is Germany with implementing the directive? It sounds like things will need to change, but how quickly?

Hagen Köckeritz 

Yeah, still a work in progress. So there has been no draft law published. There was an expert committee in fall 2025 that provided a report, but there is still no draft law that we can look into. What we have to expect obviously is that there will be an amendment to the Entgelttransparenzgesetz or even an entirely new implementation act. And the expectation is that the German legislation will have to lower the threshold from currently 200 employees in establishments to 100. It will have to introduce mandatory pay transparency in job advertisements. It will have to implement a structured pay gap reporting for companies with more than 100 employees and create rules around the joint pay assessment obligation if there is an unjustified gender pay gap of more than five percent. In addition to that, enforcement mechanisms in the law will need strengthening and potentially we will see administrative fines implemented in the law. For employers, this essentially means that they cannot wait for the new legislation to come, especially based on the requirement to interpret local law in accordance with EU law now that the directive is in force. Employers will have to start reviewing their workforce headcount against the headcounts determined in the directive. They will have to map their current pay structures against the directive’s indicators and ultimately strengthen their documentation to meet the evidentiary standards already set by the Federal Labour Court.

Miriam Bruce 

Very helpful practical input. And we’ll come back, I think, to practical takeaways, because certainly one of the questions I get asked a lot is one, what’s the position of the UK, which I’ll come to in a moment, but also what should employers do where member states haven’t implemented? It sounds as though the advice is going to be don’t wait, take action. So we’ll come back to some practical takeaways from you both before we end our session today.

But I just wanted to touch on the UK and what the position is here, particularly post-Brexit. So post-Brexit, the EU directive does not apply. But the UK does have a well-developed framework, particularly for gender pay reporting. And that pay gap reporting framework applies to employers with 250 or more employees on a particular snapshot date.

So private and voluntary sector employees and certain public authority employers report under the legislation we have in place, the Equality Act, gender pay gap information regulations, which have been around for almost ten years now, using the 5th of April as a snapshot date. And employers have to report annually on six metrics. It was interesting to hear from you both, and particularly from France, about what reporting looks like there.

But in the UK, the six metrics that are reported on are mean and median hourly pay gaps, mean and median bonus gaps, the proportion of men and women receiving bonus pay, and the distribution of men and women across pay quartiles. And that data has to be submitted through the government’s gender pay gap service as well as published on the employer’s own website. So large UK employers have been reporting on their gender pay gap for some time now. But as many of those tuning in today will know, the UK employment law landscape is changing significantly with the Employment Rights Act, and that legislation is touching most things, including this area. So I think the one important development to flag is the equality action plan. So, current government guidance provides that employers with 250 or more employees, that number again, may publish voluntary gender pay gap and menopause action plans from April this year, with mandatory action plans expected from spring next year, obviously subject to legislation. And these plans are intended to really dive into gender pay gap and help support employees experiencing the menopause.

Further down the line, the UK government has confirmed that mandatory ethnicity and disability pay gap reporting will be introduced for large employers again. No specific date, but the government most recently said that the regime should be operational and in place by 2029. So we’ll have to wait and see but unlike the directive, the UK current regime doesn’t impose general statutory requirement to include salary ranges in job adverts, although you do see that in the market. And what I think that means really for organisations operating in both the EU and the UK, there’ll be a need to operate two different regimes, particularly given the UK’s 250 employee reporting threshold and the different approach to transparency and reporting requirements in the EU. So more compliance issues for employers to manage, but I think what this legislation, the legislation we have, and the legislation that you are both going to be grappling with really puts the focus on a broader shift, not just from compliance, but really grappling with pay transparency and pay gaps in particular.

So I promised to come back to practical takeaways and we’ve heard a little bit of that from you already, Hagen. Julien, what should employers operating in France prioritize, do you think?

Julien Haure 

My key takeaways for France, notably for foreign employers, would be the four following ones. First of all, don’t think that you are compliant just because you have the professional equality index in place, and that you had a good score so far. This could be a mistake, because as you know, the directive introduced new indicators.

So, and it is my second takeaway, identify any gaps you may have against the directive requirements, which are not addressed by the index legislation so far. 

My third one, it is I think maybe the most important, you need to start right now to classify your job position based on the equal value criteria so that you may adequately face the employee’s request to be provided with their colleagues’ remuneration. It is not because an employee does not perform the same or a similar job than his colleague that it could not be considered as an equal value work. This is very important. Sometimes you have some collective bargaining agreement that already have implemented some classification that may help you to classify internally your job category. And finally, stay tuned, watch for the implementation legislation. It should come faster than expected.

Miriam Bruce 

Okay, so some things to be doing in France. How about Germany, Hagen?

Hagen Köckeritz 

Yeah, very much the same. So I think the most important takeaway is to not wait but start now. The law already has to be interpreted in accordance with the EU directive. What does it mean? I think employers need to start assessing their existing headcounts against the thresholds under the directive and determine which thresholds are applicable. Second, they should analyse their pay data and identify any potential gaps before they’re required to report. And then in my view, most critically, they should strengthen their documentation. Courts already are applying EU aligned evidentiary standards, so employers need to be ready to justify pay decisions with objective gender neutral criteria.

Miriam Bruce 

Very clear. And I think for the UK, the message is don’t assume just because we’re outside the EU directive that we can ignore pay transparency or pay issues. The UK is clearly on its own trajectory towards greater transparency, albeit via a different route. So there will be an increased focus on this in the coming years with the equality action plans coming in and potentially different types of pay gap reporting and if you’re operating both in the UK and the EU you’ll need to coordinate your approach so that it is a seamless experience both for you complying with your legal obligations but also for your workforce. 

So to summarise, I think it’s clear that across all of the jurisdictions we’ve talked about today, pay transparency is no longer optional or aspirational. Whilst the implementation of the directive has been slower than the EU would have liked for member states, employers can be taking steps to prepare now. So audit those pay structures, prepare for salary transparency and recruitment, and build the infrastructure to respond to individual information requests and to meet those reporting obligations when they come in. 

So that brings us to the end of this episode. Julien and Hagen, thank you so much for joining me today to unpack pay transparency across Europe and the UK. It’s clear this is an area where employers need to be proactive, whether they’re in the EU navigating the directive or in the UK watching developments closely. 

For our viewers and listeners, there are more episodes to come. Please check out our Employment & Benefits Unpacked page on the Mayer Brown website or your preferred streaming platform. And if you’d like to discuss any of the issues we’ve covered today, please do get in touch.

If you have any suggestions for topics for future episodes, please send them to unpacked@mayerbrown.com. Until next time, thanks for joining us.