Wage Transparency Legislation: Implementation Across Europe And The United States

Wage transparency laws are becoming increasingly common in the United States and Europe. Such laws require companies to disclose certain employee compensation information to both job applicants and existing employees, as a means of addressing pay disparity concerns, particularly along gender and racial lines.

For job applicants, wage transparency typically means companies must include salary ranges in job postings or during the hiring process, so that employees with parallel skills and experience will be offered comparable salaries. For existing employees, wage transparency includes the right to access (i) certain information about an employee's own pay, such as the criteria used to determine compensation rates and promotions, and (ii) the average pay of colleagues in similar roles, including broken down by gender.

European Union

The EU has taken an aggressive legislative approach to wage transparency, adopting the EU Pay Transparency Directive on May 10, 2023 (the Directive), and requiring all EU member states to implement such Directive by June 7, 2026.

Under the Directive, EU companies will be required to:

• Organize and implement internal policies and payroll systems, including promotions and salary increases, based on clear, objective and gender-neutral criteria;
• Post salary range on job postings, or provide such information to job applicants at some point in the hiring process;
• Refrain from asking job applicants about their current or previous remuneration;
• Upon employee request, make available information regarding average pay levels for employees performing the same or equivalent work, broken down by gender and role; and upon employee representatives' or labour inspectorates' request, provide information regarding individual salaries (with such institutions then reporting back to employees as to whether the employee may have a potential claim for violation of the Directive);
• Inform all employees annually about their right to access pay information (any contractual clauses restricting employees from disclosing their pay will be considered unlawful);
• Work with employee representatives to conduct pay assessments if a government institution pay report reveals a gender gap in pay of 5% or more, which cannot be justified on the basis of objective and gender-neutral criteria, and implement measures to address unjustified pay discrepancies;
• Appoint company representatives to ensure the Directive's effective implementation; and
• Regularly report internal pay gap statistics to the applicable monitoring government authority, with reporting obligations to vary depending on company size as follows:

Companies with under 100 employees may voluntarily report internal pay gap statistics, or may be required to do so under a specific EU Member State national law.

Employers will be prohibited from retaliating against employees who assert their rights under the Directive, including those who request pay transparency information and/or participate in government agency investigations.

Failure to comply with the Directive may result in penalties, fines, and/or other corrective measures for noncompliance.

Employer Considerations

To ensure readiness for implementation of the Directive, EU companies may consider taking the following steps:

1. Review and update job descriptions, pay structures, and internal compensation policies to help ensure gender-neutral and objective criteria, including the identification and grouping of different job positions falling into the notion of "work of equal value" and any objective and gender-neutral criteria justifying a pay gap of 5% or more;
2. Audit recruitment practices and job postings for transparency and neutrality;
3. Remove confidentiality clauses that prevent employees from discussing pay or disclosing their remuneration;
4. Prepare work plan (road map) and preliminary recommendations for company boards of directors;
5. Instruct HR and management teams regarding new requirements, including guidance for how to respond to pay transparency requests and avoid discriminatory practices;
6. Monitor pay gap indicators for purposes of detecting and addressing potential disparities prior to regulatory audits;
7. Prepare pay policy, including the development of guidelines for pay progression; and
8. Prepare applicable corporate documents (board resolutions, policies, bylaws).

Implementation of the Directive has already begun in some EU Member States, and certain EU Member States have issued their own specific wage transparency requirements irrespective of the Directive, as set forth below.

Germany

Germany has required wage reporting in the finance sector since 2013, pursuant to the Banking Act (Kreditwesengesetz), enacted pursuant to EU Directive 2013/36/EU.

In addition, since 2017, the Pay Transparency Act (Entgelttransparenzgesetz) has implemented certain wage reporting requirements, based on the notion that transparency in pay matters will result in equal pay for work of equal value in all industries. Currently, under Germany's Pay Transparency Act, employees working for companies that have more than 200 employees have the right to obtain information regarding the salary structure of comparable positions. For other positions, employees have the right to obtain the median salary (rather than the specific salary for each position). In addition, corporations and partnerships with more than 500 employees obligated to file a management report (Lagebericht) must regularly review their pay structures and issue a report regarding equality measures every five years. The report must outline steps to take for purposes of promoting equality and the achievement of equal pay, and must be published in the Federal Gazette (Bundesanzeiger) to ensure transparency.

The Pay Transparency Act may be amended to reflect the additional rights and obligations required by the Directive- for example, the current law does not impose sanctions on German companies that fail to comply with reporting requirements or delay information requests, and the Directive obliges the EU member states to introduce binding and dissuasive sanctions. In April 2025, the German government proposed the formation of a committee to develop implementation proposals by the end of 2025, followed immediately by the legislative approval process. An initial draft bill is expected in early 2026.

Italy

In recent years, Italy introduced laws addressing gender pay gaps and career path transparency. Under Legislative Decree no. 104/2022, companies must provide certain information to employees regarding the sum of remuneration and its components (e.g., minimum wage and super minimum). In addition, Law no. 162/2021 has extended to companies with more than 50 employees the obligation to file a biennial report with the Ministry of Labor regarding employee contract and salary terms, broken down into male and female groups. The report is subject to the analysis of the Italian authority on gender equality, which is authorized to file a complaint for a perceived breach of the required legal provisions related to gender equality (Legislative Decree no. 198/2006). An employer found to have violated such requirements will be subject to fines and/or the elimination of a social security tax reduction to which the employer had previously been entitled.

Although the Directive requirements have not yet been adopted in Italy, a Legislative Decree may be issued prior to the Directive's June 7, 2026 deadline.

The Netherlands

The implementation of the Directive into Dutch law has been postponed until Jan. 1, 2027. However, in March 2025, a draft bill was introduced to put the Directive in effect, with the terms of the bill confirming there would be no broader national application of the Directive beyond its current scope. The bill will first be reviewed by the Council of State before moving on to parliamentary deliberations. Adoption of the Directive would occur primarily through the Equal Treatment (Men and Women) Act, which currently governs equal treatment in employment and applies to all workers. In light of the Directive, companies may see greater involvement from works councils in matters of equal pay, as co-determination rights are expected to be expanded.

In addition to permitting employees— and their representatives, such as trade unions— to submit individual wage claims, the draft bill introduces external administrative enforcement, and the Dutch Labour Inspectorate to oversee compliance with the applicable obligations. In the event of a violation, the Labour Inspectorate may impose a fine of up to EUR 10,300 (subject to indexation) per employee per infraction, and must publicly disclose any warnings or fines issued.

Poland

Under the amendment to the Polish Labour Code of May 9, 2025, which takes effect on Dec. 24, 2025, all Polish companies are obligated to include salary information in job vacancy announcements, or prior to an applicant's interview, but in any event, prior to the final stage of the applicant's recruitment process. Further, the law requires job vacancy announcements to be gender neutral, and the recruitment process to be non-discriminatory. The above amendment implements the Directive only to a limited extent, and so more expansive legislation may be introduced by the June 7, 2026, Directive implementation deadline.

United Kingdom

On account of the UK's departure from the European Union, the UK will not be subject to the Directive. However, the UK already has more limited established reporting obligations under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which requires companies with 250 or more employees to publish annual gender pay gap reports, including the following information:

• Mean and median hourly gender pay gaps;
• Bonus pay gaps and proportions of men and women receiving bonuses; and
• The distribution of men and women across four pay quartiles.

These reports must be published on the company's website and must be filed with the Government Equalities Office.

Listed UK companies must also disclose the CEO-to-median, CEO-to-lower quartile, and CEO-to-upper quartile pay ratios under the Companies (Miscellaneous Reporting) Regulations 2018.

The current UK government has also signaled possible reforms aimed at strengthening pay transparency and equity, such as:

• Requiring companies to include salary bands in job adverts;
• Banning questions about an applicant's salary history;
• Publishing or providing employees with information on pay, pay structures, and criteria for progression;
• Providing employees with information on their pay level and how their pay compares to those doing the same role or work of equal value; and
• Identifying actions needed to avoid equal pay breaches occurring or continuing;
• Extending reporting obligations to cover ethnicity and disability pay gaps; and
• Requiring companies with significant pay gaps to publish action plans setting out how such gaps would be addressed.

The UK government is currently exploring the above initiatives, although it is possible some or all of the initiative may appear in the draft Equality (Race and Disability) Bill, which may be published later this year.

The UK Equality and Human Rights Commission has the right to take enforcement action, including seeking a court order requiring a company to issue necessary publications, and uncapped fines may be imposed in the case of a breach of any such court order.

The Commission will also "name and shame" companies in breach of the Regulations by publishing an online list of such companies.

Finally, employees may use a failure to comply as evidence in support of a claim for equal pay – potentially allowing an employment tribunal to make adverse inferences against the company.

United States

Unlike the EU, the United States has not enacted a uniform federal law addressing wage transparency. Instead, U.S. wage transparency laws are jurisdiction-specific, with a number of U.S. states and cities having passed such laws (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey (and Jersey City), New York (and New York City), Ohio (multiple cities), Rhode Island, Vermont, Washington, D.C., and Washington). Additional jurisdictions have laws pending.

U.S. wage transparency laws generally require the posting of salary range for job applicants and ban companies from asking candidates about their past and/or current pay rate. Some jurisdictions require disclosure of more than pay range to job applicants; for example, bonus, commission, stock options, and additional employee benefits.

In addition, although the impetus for wage transparency laws originated in gender-based pay gaps, certain U.S. wage transparency laws relate to gaps based on race, as well, and require U.S. companies to provide company-wide employee salary information to existing employees, upon request, as well as to notify current employees of promotional opportunities.

Although the majority of U.S. states have not (yet) implemented wage transparency legislation, the increase in remote work in the United States has made such laws relevant to any U.S. company prepared to hire remotely from a jurisdiction where such laws are in effect.

Employer Considerations

As demonstrated by the above survey of various jurisdictions internationally, the general direction globally is toward greater regulation of wage transparency, creating increased obligations on companies worldwide.

In light of this trend, companies may consider the following steps:

1. Determine whether the company has employees located in jurisdictions with wage transparency laws and assess the potential applicability of those laws.
2. Determine whether the company is recruiting from jurisdictions with wage transparency laws and assess the potential applicability of such laws to the company's recruiting practices.
3. Review current employee compensation for purposes of evaluating whether there appears to be an objective pay disparity based on employee gender; and if so, work with counsel to align compensation rates.
4. Train HR and recruitment teams to set appropriate pay ranges when recruiting, and to communicate compensation information to candidates, as well as company employees as required.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.