4 minute read 26 May 2023
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How to best prepare for the recently adopted EU Directive on Pay Transparency?

By Radmilla Del Pozzo

Partner, People Advisory Services | EY Switzerland

I began my career at EY as an intern during my studies which sparked my interest in equity. Originally from Russia, I am now based in Geneva where I enjoy exploring new destinations with my family.

4 minute read 26 May 2023
Related topics Workforce Law

The recent adoption of the Pay Transparency Directive by the European Parliament represents an important step towards reducing the gender pay gap through increased transparency in pay. This development also reflects the broader global conversation on transparency, extending beyond the boundaries of the EU. In response, companies will need to adapt and prepare to embrace this transformative change.

In brief
  • The new EU Pay Transparency Directive was adopted by the European Parliament on 30 March 2023 and is expected to be translated into national law of the EU member states within three years
  • The directive includes a set of binding measures to increase pay transparency
  • Not only EU domiciled companies but also Swiss companies should now make sure they find the best possible action plan for their situation 


A new EU Directive around pay transparency was recently approved by the European Parliament and by the Council on April 24th. The goal of this directive is to strengthen the application of the principle of equal pay for equal work between women and men and to enhance equality in the workplace in general.

Despite some progress, women still receive significantly lower pay than men on average. In the European Union, women earn 13% less than men on average, while in Switzerland, the gender pay gap widens to 18%. The enforcement of the principle of equal pay for equal work remains a challenge in the EU as well as other European markets and pay transparency has been identified as a key obstacle to closing the gender pay gap. The adopted Directive aspires to tackle the gender pay gap and promote fair pay practices by increasing transparency and accountability. In addition to the EU regulation, Switzerland is witnessing an increasing emphasis on pay transparency, encompassing enhanced clarity regarding the salary process and criteria. It is crucial for not only EU-based companies but also Swiss companies to proactively prepare for greater transparency.

The Directive's key measures to promote pay transparency and equal pay

The Directive aims to establish binding measures to promote pay transparency and access to remedies for those experiencing pay discrimination in the broad sense, it encompasses intersectional discrimination for the first time and contains clauses that guarantee the consideration of employees with disabilities.

These measures include requirements prior to employment; employers will have to disclose salary ranges and will be prohibited from inquiring about a candidate's pay history. The Directive also includes a reporting obligation; employers with at least 100 employees will be required to disclose information on gender pay gaps, and those with a gender pay gap of at least 5% will be required to conduct a pay assessment in collaboration with workers' representatives.

Additionally, the proposal strengthens the existing minimum standards on sanctions in cases of infringement. Employers will bear the burden of proof, and member states will have to establish specific penalties and fines.

The Directive will come into force upon publication on the EU Official Journal. The member states will have a three-year window to translate the Directive into national laws.

Taking action - how organizations can start preparing for the new law

The directive sets out strong standards and will have significant implications for employers and employees in the EU and is expected to serve as a model for similar legislations in other parts of the world such as Switzerland.

While no immediate change in law is expected, promoting gender equality and pay transparency in the workplace is a multifaceted challenge that cannot be easily or quickly resolved. Nevertheless, there are actions that organizations can take now to proactively tackle the issue and stay ahead of the curve.

Analyze your pay gap and take corrective actions. Carry out a thorough equal pay review to identify any potential gender pay gap and take corrective action where necessary.

Review your job architecture and pay structure. Having an up-to-date and accurate job architecture lays the foundation for a fair and transparent pay system in which roles and responsibilities are reflected correctly and based on objective criteria.

Assess and review your policies regarding Diversity, Equity, and Inclusion (DEI). Examining policies and procedures in recruitment, performance management, promotion, and compensation is key to ensure they are unbiased and equitable. The improvement of these policies can foster a culture of fairness and equality, which will help attracting and retaining top talents.

Raise awareness by training managers and HR staff. Providing training on DEI policies in place and unconscious bias helps raising awareness and ensuring managers and HR staff apply the standards and foster a culture which promotes equal opportunities for all.

By implementing proactive measures to promote fairness and address potential gender pay gaps, organizations can not only prepare for the new EU regulations but also reap the numerous benefits that arise from fostering diversity and inclusion in the workplace, positioning themselves as employers of choice.


The European parliament recently approved the pay transparency directive aiming to narrow the gender pay gap in the EU. The Directive goes beyond the monitoring of equal pay and includes a series of binding measures. It is expected to be transposed into national law within three years and may serve as a model for other countries in the world such as Switzerland. Initiating plans to ensure a seamless transition is key, and those who proactively demonstrate commitment and tackle the issue will be best positioned. 


We would like to thank Corinna Ast and Lucile Cotte for their valuable contributions to this article.

About this article

By Radmilla Del Pozzo

Partner, People Advisory Services | EY Switzerland

I began my career at EY as an intern during my studies which sparked my interest in equity. Originally from Russia, I am now based in Geneva where I enjoy exploring new destinations with my family.

Related topics Workforce Law