Important: This article applies to Employer of Record (EOR) engagements only. If you engage workers in the EU as independent contractors through Thera, this directive does not apply to your contractor relationship. For EOR engagements, Thera acts as the legal Employer of Record, but companies hiring EU employees through Thera’s EOR service need to abide by the directive’s requirements through that arrangement.

The EU Pay Transparency Directive (Directive (EU) 2023/970) will close the EU’s 12.7% gender pay gap. EU Member States have until June 7, 2026 to transpose it into binding national law.

The four obligations every employer must meet:

If you hire EU employees through Thera’s EOR service, Thera is the legal employer of record, but you still need to meet these obligations through your EOR arrangement with Thera. This article walks you through what each requires, where each country stands, and what to do now.

In this article:

Note: This article is for informational purposes only and does not constitute legal advice.

Directive (EU) 2023/970 passed in May 2023. Its goal: close the EU’s 12.7% gender pay gap by requiring employers to publish and justify how they set pay.

Source: Eurostat. European Commission reports on the unadjusted gender pay gap in the EU (around 12 to 13% in recent years).

The directive does not just protect equal pay for identical roles. It requires equal pay for work of equal value, even across different job titles.

A Spanish employee cannot challenge a German colleague’s salary. Local market rates and cost of living are legitimate justifications for cross-country pay differences.

A sole female employee in Germany (Regional Channel Marketing Manager, $8,162/mo) could argue equal value against a Sales Operations Manager (M, $11,799/mo). Both are senior, non-quota-carrying roles. The 30.8% gap is defensible, but only with a documented job architecture.

3 x Software Dev Engineer III in Spain (2M, 1F), all paid exactly $12,925.62/month. Same title, same country, same pay regardless of gender or tenure. This is the benchmark.

Until a country passes its national law, the directive itself does not create direct legal obligations on employers. But this is not breathing room.

Sources: Syndio tracker (March 2026), Littler, Deloitte, Ravio, Trusaic.

Treat June 7, 2026 as your internal compliance date across all EU countries, regardless of national law readiness. The cost of being ahead is documentation effort. The cost of being behind is unlimited back-pay liability.

Note: the practices below apply to EU employees hired through Thera’s EOR service. They do not apply to independent contractors, who are governed by separate commercial agreements.

1. Publish a salary range before the role is filled, not after. Every EU job posting must include a pay range based on objective criteria. Malta and Poland require this today. All other countries will by June 2026 at latest. Apply this to all EU postings now.

2. Remove salary history questions from all EU hiring processes. Hard prohibition in the directive, already in force in Malta and Poland. Brief all hiring managers and any third-party recruitment agencies. An offer must be anchored to the role’s band, not what the candidate earned previously.

3. Hire into a documented band, not a negotiated number. Every EU hire should land within a pre-existing, documented pay grade with written criteria. If the band does not exist, create it before opening the role. Bands should be by country. Local market rates justify different bands per country.

4. Document the criteria used to place each offer within the band. Having a band is necessary but not sufficient. If male candidates consistently receive offers at the top of the band and females at mid-point, that pattern itself becomes evidence of a gap. Record the objective criteria for every offer.

5. Make pay criteria available to employees from day one. Article 7 requires employees have easy access to the criteria used to determine their pay from day one of employment. The criteria must exist in retrievable form before the person starts. A clear pay band sheet per country is sufficient.

Run regular pay equity reviews. Review pay by gender within each job category, per country, at least annually. Identify any gap above 5% and document whether it is justifiable. Proactive remediation costs far less than a joint pay assessment triggered by a complaint.

Build a job architecture before you need it. A job architecture is a formal framework of roles, grades, and levels with documented criteria for each grade. It is the foundational document that makes every other compliance obligation possible. Start with your largest EU markets.

Remove pay secrecy clauses from contracts. The directive prohibits contractual terms that restrict workers from disclosing their pay. The Czech Republic has already made this a fineable offence. Review all EU employment contracts and remove any clause that prevents employees from discussing salaries with colleagues.

Prepare a response process for pay information requests. Employees will have the right to request average pay for comparable colleagues, broken down by gender. You need a process to handle these: a named owner, a 60-day response window, and a methodology for calculating the comparison. Set it up now, not under pressure.

Track all pay components, not just base salary. The directive’s definition of ‘pay’ is broad. Base salary, bonuses, overtime, paid leave, benefits in kind, and any other element a worker receives. Gender pay gap reporting must cover the full picture. Start tracking all components per employee now.

Watch for national ‘gold-plating’. Some countries will impose requirements stricter than the directive’s minimum. Poland is already requiring annual notification of employees’ right to request pay information. Ireland may shorten the 60-day response window. We will flag any country-specific requirements as legislation is finalised.