Equal Pay Day marks the symbolic day in the year when women effectively "stop earning", compared to men, due to the gender pay gap in Europe. In recent years, the EU has intensified its focus on addressing pay inequality with a series of legislative initiatives that enhance pay transparency and gender-related reporting obligations. The EU Pay Transparency Directive and the Corporate Sustainability Reporting Directive (CSRD) both set out the detailed information that companies must provide on the gender pay gap in their management reports. Equal Pay Day serves as a timely reminder of recent advancements in pay transparency legislation that impact compliance requirements, corporate governance and employee relations.

EU Directive on Pay Transparency: key provisions and transposition timeline

The EU Pay Transparency Directive, formally adopted in May 2023, is a landmark initiative in the effort to narrow the gender pay gap across the EU. It applies to employers in public and private sectors, and to all workers in an employment relationship. The directive mandates a series of measures to enhance pay transparency, which include the right for employees to access pay information and the obligation for employers to report on pay discrepancies. Notably, this directive applies to companies with at least 250 employees, requiring them to report on gender pay gaps yearly and to take corrective action if pay discrepancies exceed 5% without justification.

The deadline for transposing this directive into national law is set for 7 June 2026. By this date, EU member states are required to implement the directive’s provisions, harmonising pay transparency practices across the EU. Employers with 250 workers or more will have to provide information on the gender pay gap in their organisation by 7 June 2027, covering the previous calendar year (2026). Employers with 150 to 249 workers will have the same obligation to provide this information, but only every three years. For employers, this upcoming deadline highlights the need to review pay structures and ensure proactive compliance to avoid legal liabilities and reputational risks in the future.

CSRD and ESRS: reporting obligations on pay gap transparency

The Corporate Sustainability Reporting Directive (CSRD), published in December 2022, broadens the scope of reporting requirements by requiring corporate disclosures on various Environmental, Social and Governance (ESG) factors, including gender pay gaps. Under the CSRD, companies must report detailed data on their sustainability practices, as defined by the European Sustainability Reporting Standards (ESRS).

The CSRD expands the reporting scope to cover large companies and certain medium-sized listed companies, and other companies, depending on their size and presence in the EU.

• See this flowchart for implementation deadlines.

For pay transparency specifically, companies will need to report on their gender pay gap under the ESRS terms, which provide detailed indicators and metrics on wage disparities. These require companies to report data on median pay by gender and on gender representation at various levels within the organisation. Importantly, companies will need to implement mechanisms to track and disclose pay data, which will likely require legal counsel and compliance teams to work together to standardise these metrics.

Pay transparency in the Netherlands: legislative developments and status

The Netherlands has been a frontrunner in discussions on gender pay equality: as early as 2019, the Dutch government introduced a bill calling for equal pay of women and men (Wet gelijke beloning van vrouwen en mannen). This bill specifically requires employers to disclose salary ranges and provide clear justifications for pay differences between men and women. Moreover, the proposal includes sanctions for non-compliance, empowering the Dutch Labour Inspectorate to enforce fines.

The Dutch equal pay bill is currently under review, with further amendments expected to align the national bill closely with EU standards. It is anticipated that the bill will be published for internet consultation in the first quarter of 2025. These legislative developments underline the increasing scrutiny of pay practices, presenting new responsibilities for employers, especially those who operate across borders within the EU.

Key takeaways

Equal Pay Day serves as a reminder of the need for stronger, more transparent practices to combat gender pay disparities across the EU. The EU’s Pay Transparency Directive, CSRD/ESRS reporting and the Dutch legislative proposal signal a shift towards increased regulatory oversight of pay practices. Employers with a workforce in the EU need to start preparing for compliance by assessing gender pay disparities and establishing reporting mechanisms.