Prepar­ing for pay trans­parency and the con­cept of equal pay

Under the new Pay Transparency Directive, companies will be required to ensure a “principle of equal pay” that entails equal pay for equal work or work of equal value between men and women.

Most companies are slowly preparing for the new pay transparency obligations to some extent. However, to prepare, the definition of “pay” needs to be established clearly internally to comply with the new requirement to secure equal pay for equal work.

Pay is more than just salary

“Pay” is broadly defined under the new rules to include salary and any other elements that employees receive directly or indirectly because of their employment. It does not play a role whether the “pay” is in cash or kind. It also does not matter whether the “pay” is complementary or a variable component.

Accordingly, companies should prepare for a definition that includes but is not limited to:

• Bonus in various forms
• Severance pay (statutory or extraordinary)
• Overtime pay and other supplements
• Pension
• Travel, house, and meal allowance

Depending on the circumstances, several other elements can be added to the list. That means that companies must prepare detailed overviews taking all employment benefits into account, including negotiated exits. Especially negotiated exits may easily tip the equal balance among job functions, depending on the circumstances.

IUNO’s opinion

The Pay Transparency Directive will undoubtedly trigger a series of new rights and obligations. Even though the implementation deadline is 7 June 2026, most companies are already preparing their internal systems for compliance.

In the Nordics, Sweden has taken the lead with an initial implementation report confirming the understanding of a broad interpretation of what “pay” will entail. In Norway and Denmark, draft bills are still in the making.

We have previously written about the pay transparency directive here and a case from the European Court of Justice about equal pay here.

[The European Parliament and the Council's Directive on pay transparency of 24 April 2023 and the implementation of the Pay Transparency Directive, SOU 2024:40 of 29 May 2024]