Equal Pay: The New EU Rules for Employers
Recently, growing attention among employers (primarily) and employees has been drawn to Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023 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 (the Pay Transparency Directive, the Directive). Its objective is to reinforce gender pay equality through transparency and accountability.
In this context, the present article outlines key aspects of the new EU rules applicable to employers. Bulgaria is still required to transpose the Directive (i.e. to adopt national legislation ensuring compliance) by 7 June 2026, with certain provisions becoming applicable from the same date. Therefore, it is important for private-sector employers to prepare in due time and to take initial practical steps – for example, by reviewing their internal documents such as internal salary rules, work regulations, standard employment contract clauses, etc.
Below are outlined, in summary form, main elements of the Directive itself. In essence, its objective is to ensure equal pay for equal work or work of equal value and to eliminate gender-based discrimination in pay. The new rules apply to employers in both the public and private sectors, as well as to all workers who have an employment contract or employment relationship as defined by law, collective agreements and/or practice.
Some key employer obligations under the Directive (non-exhaustive):
- Transparency in recruitment:
In job advertisements or prior to the conduct of an interview, employers shall indicate the initial pay level or the corresponding pay range applicable to the position, determined on the basis of objective, gender-neutral criteria established for the respective post. This enables candidates to make an informed assessment before the interview process. Furthermore, employers shall not request candidates to disclose information concerning their current or previous remuneration, with the aim of preventing pay levels from being anchored to an individual’s pay history. Job advertisements and job titles shall be gender-neutral, and recruitment and interview procedures shall be conducted in a non-discriminatory manner. - Access to pay information:
Workers shall have the right to obtain information regarding their individual pay level and the average pay levels, broken down by sex, for categories of workers performing the same work as them or work of equal value. Employers shall inform workers, on an annual basis, of their right to request and receive this information in writing. Furthermore, no restrictions shall be imposed on workers preventing them from disclosing their own pay for the purpose of enforcing the principle of equal pay for equal work or work of equal value. - Reporting and accountability:
The Directive provides for a phased implementation of the rules on the provision of information regarding the gender pay gap, depending on the number of employees. The accuracy of the information provided shall be confirmed by the employer’s management after consultation with workers’ representatives, who shall have access to the methodologies applied by the employer.
Employers shall provide information on the pay gap between female and male workers, by categories of workers, broken down by basic pay and complementary or variable components, to all their workers and their representatives. Competence in this area shall also be vested in the so-called equality body.
In general, where the reported data reveal a difference of five percent or more (≥5%) in average pay levels which cannot be justified on the basis of objective, gender-neutral criteria, and the employer fails to remedy this unjustified difference within six months, the employer shall conduct a joint pay assessment in cooperation with workers’ representatives.
Although not expressly required by the Directive, Member States may adopt national legislation setting out that employers with fewer than 100 workers shall also be required to report pay information. - Technical assistance for smaller employers:
Member States shall actively support employers with fewer than 250 workers by providing guidance, training and tools to assist them in complying with the new requirements.
In brief: consequences of non-compliance
Failure to comply with the rules may give rise to liability. The Directive expressly provides that infringements shall be subject to sanctions and compensation obligations, and that the burden of proof lies with the employer, who must demonstrate the absence of discrimination in pay, rather than with the worker to prove its existence.
Workers shall be entitled to full compensation, including back pay, bonuses and non-material damages, etc., and the limitation period for bringing claims relating to equal pay shall not be shorter than three years.
The new framework is expected to bring a cultural shift in pay negotiations towards greater transparency. Employers who are unprepared may face financial and reputational risks. Introducing transparent criteria and systematically documenting pay structures may, in fact, be easier for smaller employers and help strengthen employee trust, rather than perpetuate conscious or unintentional inequalities.
Disclaimer: The analysis and information provided in this article are for general informational purposes only and should not be considered legal advice. If you require legal assistance in relation to a specific case, we recommend consulting a competent attorney. The author assumes no liability for actions taken based on the content of this publication.