The EU Pay Transparency Directive: How to Prepare HR for 2027
Last updated: 12 June 2026 · Expert input: Nilgün Aydin, attorney and HR law specialist
Across the EU, men and women are still paid 13% differently for the same work. In Denmark the figure is 12.5%. The EU Pay Transparency Directive is the answer to that pay gap — and from 1 January 2027 it becomes Danish law.
It means HR will have to work far more systematically with pay: salary ranges in job postings, job categories, employees’ right to information and — for the largest companies — pay reports and joint pay assessments.
This guide is built for you if you carry HR responsibility and need your company ready before 1 January 2027. You get a clear overview of the directive’s requirements, concrete answers from attorney Nilgün Aydin, a 10-point checklist and a free guide at the bottom of the page.
Download our guide to the EU Pay Transparency Directive here.
TL;DR
- When: Takes effect in Denmark on 1 January 2027.
- Who: All employers — pay reporting only from 100+ employees.
- Core requirements: Salary range in job postings, employees’ right to information, job categories with 4 objective criteria, joint pay assessment at a 5%+ gender pay gap.
- Core obligation: Documentation — the employer must be able to explain any pay difference using objective, gender-neutral criteria.
- Start here: Pay structure and job categories.
CONTENTS:
What is the Pay Transparency Directive — in brief
The concrete requirements in the Pay Transparency Directive
Job categories in the Pay Transparency Directive — how to split them
The Pay Transparency Directive requires 4 objective criteria
How to communicate about pay without creating distrust
Checklist: 10 things HR must start before 1 January 2027
Ask the lawyer — 8 questions about the Pay Transparency Directive
How HR-ON helps with the Pay Transparency Directive
What is the Pay Transparency Directive — in brief
The Pay Transparency Directive (Directive (EU) 2023/970) was adopted in 2023 as part of the EU’s work on gender equality. Its purpose is to ensure equal pay for the same work — or work of equal value — regardless of gender.
The directive strengthens the principle we already have in the EU equal pay framework but which has not closed the pay gap. It does so by shifting the focus from “do we have an equal pay principle?” to “can you document that your pay structure is objective and gender-neutral?”
The expert says
“The Pay Transparency Directive will mean that, as an employer, you have to work much more systematically with pay. There has to be greater openness about how pay is set and how it develops — and this will apply to all employers in Denmark.”
When does the Pay Transparency Directive take effect in Denmark?
The EU’s original implementation deadline was 7 June 2026. Denmark, however, has not implemented it on time, and the Danish bill is expected to take effect on 1 January 2027.
Timeline:
| April 2023 | The EU adopts the directive (2023/970) |
| 2025-2026 | Danish bill in consultation |
| 1 January 2027 | The law takes effect in Denmark |
| 7 June 2027 | First pay report for companies with 250+ employees |
| 7 June 2029 | First pay report for 150-249 employees |
| 7 June 2031 | First pay report for 100-149 employees |
Note: The pay reporting dates are based on the directive’s original rollout plan and may be adjusted in the final Danish law. We will update this page once the bill is adopted.
Who does the Pay Transparency Directive apply to?
Many believe the directive only affects large companies. That is not correct. Some requirements apply to all employers — others only above a certain size.
| Requirement | Applies to |
| Salary range in job postings or before the interview | All employers |
| Ban on asking applicants about previous pay | All employers |
| Employee’s right to information about pay | All employers |
| Objective, gender-neutral pay criteria | All employers |
| Pay reporting (gender-segmented) | 100+ employees (phased) |
| Joint pay assessment at an unexplained gap ≥ 5% | 100+ employees |
This means: small and medium-sized companies must also be ready on 1 January 2027.
The concrete requirements in the Pay Transparency Directive
Salary range in job postings — applies to everyone
Going forward, as an employer you must state either a starting salary or a salary range in the job posting itself — or at the latest before a job interview. You may no longer ask a candidate about their previous pay.
For HR this means the salary range must be explainable on the basis of objective criteria — and it must be traceable to a consistent pay structure. That is harder than it sounds if your current pay practice is built on individual negotiation without clear frameworks.
Read also: How to structure job postings that attract more candidates
The employee’s right to information
Employees gain the right to be informed of:
- Their own pay and pay development.
- The average pay for others in the same job category, broken down by gender.
- The criteria used to set and develop pay.
There are deadlines for when the information must be provided. HR therefore needs a system and a workflow for who receives requests for information — and how you respond in writing and with documentation.
Pay reporting for companies with 100+ employees
Companies with 100+ employees must report pay differences broken down by gender. The thresholds are phased — large companies first, smaller ones later — as shown in the timeline above.
Joint pay assessment at an unexplained gap ≥ 5%
If the pay report shows an unexplained gender pay gap of 5% or more, the company must carry out a joint pay assessment together with employee representatives — and remedy the difference.
The burden of proof shifts
One of the most overlooked elements: if an employee believes she is being discriminated against on pay, it is the employer who must prove that the difference is justified. That makes documentation a core obligation — not an optional practice.
Read also: Pay transparency with HR-ON — what HR needs to be able to document
Job categories in the Pay Transparency Directive — how to split them
A job category is a grouping of positions that are either the same — or have the same value to the company. It is the foundation of the entire directive, because an employee can only compare their pay with colleagues within the same job category.
The expert says
“You get an overview of the positions in your company. Then you simply take the positions that are the same role, or roles that have the same value to the company, and categorise them. That is what the rules call job categories. An employee can then come and ask: which job category am I placed in? Who can I compare myself with?”
Example: the field vs. the team
Nilgün gives a concrete example that makes the lawfulness of pay differences tangible:
Imagine two employees in the same job category. One works in a team and can get sparring, help and knowledge-sharing while solving tasks. The other works independently “out in the field” — makes their own decisions and cannot draw on colleagues.
That is a lawful reason for the two employees to receive different pay — because their working conditions are objectively different.
The point: pay differences are allowed to exist. They just must not be based on gender — and they must be explainable on the basis of sound, objective criteria.
Read also: How to get an overview of employee data across departments
The Pay Transparency Directive requires 4 objective criteria
The directive requires you, as a company, to use objective and gender-neutral criteria to set pay. As a minimum you must use four criteria — plus the “soft” criteria that are often forgotten.
The expert says
“It states explicitly that, as a company, you must take as your starting point four different objective criteria as a minimum. And those criteria are skills, effort, responsibility and working conditions.”
The 4 minimum criteria
| Criterion | Examples |
| Skills | Education, further training, certifications, languages, professional level |
| Effort | Physical/mental effort, complexity, problem-solving |
| Responsibility | People management, budget/financial responsibility, safety responsibility, client responsibility |
| Working conditions | Shift work, travel, autonomy, physical work environment |
Don’t forget the “soft” criteria
The bill states explicitly that “soft” criteria — those that have historically been assessed as having lower value — must be taken into account. This applies, for example, to care work, coordination, communication and culture-building responsibility — competencies that are often over-represented in typically female-dominated roles.
This is where many pay structures have a blind spot today — and it is why the unexplained pay gap has not disappeared, even though Denmark has had an Equal Pay Act since 1976.
How to communicate about pay without creating distrust
The biggest concern among HR leaders is that openness about pay will create unrest: “What happens when Anna sees that Lars earns DKK 4,000 more?”
The expert says
“Get to grips with what the rules are about, and prepare thoroughly. Build the pay structures — and equip your managers so they can communicate clearly about them. When you have a manager who understands the rules and can explain that differences are based on objective, sound criteria and not on gender, it creates trust rather than distrust.”
Three practical moves
- Start now. The structural work takes longer than expected. If you wait until Q4 2026, it is too late.
- Have the conversation before employees ask the question. Proactive communication about pay structure and criteria moves the conversation from “feeling” to “facts”.
- Train your managers. They are the ones who face the conversation — not HR. A manager who cannot answer “why do I get this?” undermines the entire structure.
Checklist: 10 things HR must start before 1 January 2027
Steps 1–5: Foundation and structure
1) Map your current pay structure
Who is placed where, and on what basis? Get an overview before you start adjusting.
2) Define job categories
Group positions that are the same, or that have the same value to the company. This is the foundation of the entire directive.
3) Set the 4 objective criteria
Skills, effort, responsibility, working conditions — and add relevant soft criteria for your company.
4) Review your pay history
Identify differences that cannot be explained by objective criteria — and make a plan to close them.
5) Adapt your job posting templates
Make sure all job postings always include a salary range or starting salary.
Steps 6–10: Implementation and communication
6) Stop asking candidates about previous pay
Update interview guides and your recruitment system so the question is no longer asked.
7) Build a workflow for requests for information
Who receives them? Who responds? What are the deadlines? What documentation? Get it in place in good time.
8) Equip your managers
Training in what the directive requires, and how they explain pay differences in conversations with employees.
9) Prepare pay reporting data (if you are 100+)
Make sure you can pull gender-segmented data from your HR/payroll system. See how to structure employee data in one place →
10) Make a communication plan
Internal and external — so employees know what you are doing, and when.
Ask the lawyer — 8 questions about the Pay Transparency Directive
What does the Pay Transparency Directive mean for companies in Denmark?
What does the Pay Transparency Directive mean for companies in Denmark?
The directive requires far more structured and open work with pay. All employers must be able to explain their pay structure on the basis of objective criteria, state a salary range in job postings and meet employees’ right to information.
Companies with 100+ employees must also report gender-segmented pay differences.
When does the Pay Transparency Directive take effect?
When does the Pay Transparency Directive take effect?
The Danish law is expected to take effect on 1 January 2027.
The EU’s original deadline was 7 June 2026, but Denmark is behind on implementation.
Does the directive apply to all companies?
Does the directive apply to all companies?
Yes. Some requirements — such as a salary range in job postings, the right to information and the ban on asking about previous pay — apply to all employers regardless of size.
Pay reporting and joint pay assessment apply only from 100+ employees and are phased in towards 2031.
What is 'work of equal value' in practice?
What is ‘work of equal value’ in practice?
It is assessed by grouping the company’s positions into job categories based on objective criteria — such as skills, effort, responsibility and working conditions.
Employees in the same job category perform either the same work or work of equal value to the company and can compare themselves on pay.
What is the employee's right to information?
What is the employee’s right to information?
Employees gain the right to see their own pay and pay development, the average pay for others in the same job category (broken down by gender) and the criteria the company uses to set pay.
The employer has a deadline to respond.
What happens if our pay gap is over 5%?
What happens if our pay gap is over 5%?
If the pay report shows an unexplained gender-based difference of 5% or more, the company must carry out a joint pay assessment with employee representatives and remedy the difference.
Which criteria can justify lawful pay differences?
Which criteria can justify lawful pay differences?
Different education, certifications, work experience, people management, financial responsibility and differences in working conditions (e.g. independent work without team sparring versus team work).
Differences must never be based on gender.
Where do we start as a company?
Where do we start as a company?
Begin with job categories and pay structure.
Once you have an overview of positions, criteria and pay levels, the rest — job postings, the right to information, manager training, reporting — falls into place.
How HR-ON helps with the Pay Transparency Directive
Preparing for the Pay Transparency Directive is first and foremost a piece of structural work — and it starts with having your employee and pay-related data in one place, so you can pull an overview across job categories, departments and working conditions.
In October 2026 we are launching HR-ON Pay Transparency — a dedicated tool built on top of HR-ON Staff for exactly this purpose, bringing together:
- Pay data on the employee profile — base pay, gross pay, pension, benefits in kind and bonuses in one place
- Job architecture — job families, career levels and positions structured according to the directive’s logic
- Pay ranges in recruitment — direct integration with HR-ON Recruit, so salary ranges in job postings build on your actual data
- Statistics and dashboards — boxplots, pay differences, gender distribution and job-category comparisons for pay reporting and joint pay assessment
Together with HR-ON Staff and HR-ON Recruit, you get the foundation that makes pay reporting, the right to information and documentation far less time-consuming when the directive takes effect.
Read also: HR-ON Pay Transparency tool · Find the right HR system for your size · How to structure employee data
Next steps
Download the guide: We have created a detailed guide to the EU Pay Transparency Directive that builds on this article.
→ Download the guide to the EU Pay Transparency Directive
Explore the tool: See how HR-ON supports pay structure, job categories and documentation in one place.
→ Discover HR-ON Pay Transparency
Or — talk to an HR advisor: If you want help translating the directive into concrete steps for your company, we are happy to set up a no-obligation meeting.
→ Book a conversation with an HR-ON advisor · Try the price calculator
Expert input for this article
