Directive (EU) 2023/970: The New Era of Pay Transparency

Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023, known as the Pay Transparency Directive, introduces comprehensive measures aimed at strengthening the principle of equal pay for women and men for equal work or work of equal value. The main objective of the Directive is to reduce the gender pay gap by facilitating the identification of pay discrimination and ensuring stronger enforcement mechanisms. EU Member States, including Bulgaria, shall transpose the Directive’s provisions into their national legislation until the 7th of June 2026.

Transparency in recruitment conditions

The Directive introduces clear transparency requirements during the recruitment process. Employers must provide candidates with information about the initial salary or its range for the relevant position. This information should be included in the job advertisement or provided before the interview. In addition, employers are prohibited from asking candidates about their salary history in current or previous jobs.

Employees’ right to information and pay-setting criteria

During the employment relationship, employees will have the right to request and receive information on average pay levels, broken down by gender, for categories of workers performing the same work or work of equal value. The employer must provide this information within a reasonable period not exceeding two months.

Pay criteria must be gender-neutral and based on factors such as skills, effort, responsibility, and working conditions. An important change is that the Directive prohibits any contractual or internal clauses that restrict workers from disclosing or discussing their remuneration, thereby removing salary confidentiality clauses.

Reporting obligations and joint pay assessment

The Directive introduces mandatory gender pay gap reporting for larger employers.

Employers with 250 or more employees must report annually.
Employers with 150 to 249 employees must report every three years, starting from 7 June 2027.

The reported information must cover both the overall gender pay gap and gaps in base salary, supplementary pay, bonuses, and other components.

If reporting reveals an unjustified gender pay gap exceeding 5% in any worker category, the employer is required to carry out a joint pay assessment. The aim is to identify, correct, and prevent such disparities based on objective and gender-neutral criteria.

Compensation and sanctions

The Directive significantly strengthens worker protection by introducing a shift in the burden of proof. It is the employer who must prove that there is no discrimination and that any pay differences are based on objective, gender-neutral factors.

Employees affected by discriminatory practices are entitled to full compensation for losses suffered, including full backpay of withheld remuneration, with no caps or limits on compensation allowed. It also provides for the imposition of financial penalties in cases of non-compliance with transparency obligations.

Recommendations for employer preparation

In light of the approaching transposition deadline of 7 June 2026, we are ready to provide comprehensive legal support in adapting to the new requirements, including through:

A full legal audit of the rules on pay structure and organisation, as well as all internal acts defining criteria for salary and bonus formation.
An internal analysis of job positions in the staffing structure compared to job descriptions and actual duties, to identify roles considered “work of equal value.” This is key to avoiding hidden pay discrimination.
Training of key teams (HR, payroll, accounting, etc.) on the new recruitment rules and obligations to provide information to employees.
Review and amendment of employment contracts, confidentiality agreements, and internal labour regulations, including revision of pay confidentiality clauses.
Preparation for mandatory reporting for employers with 150+ employees, and conducting a pilot internal audit of data to identify potential unjustified pay gaps before the first mandatory public disclosure.

For more information, please contact us via our contact page.

This publication is for informational purposes only and does not constitute legal advice. For specific legal consultation, please contact our team.

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