Companies will have to be clear about salary at recruitment and cannot ask about expected or previous salary, according to new directive. And they will also have to justify internal differences.
Pay transparency will no longer be a recommended practice but will become a legal obligation in the European Union.
The , known as the Pay Transparency Directive, aims to combat pay disparities between men and women and profoundly change the way companies define, communicate and justify salaries.
The deadline for Member States to transpose the directive ended on June 7. Portugal has not yet completed this process and is, therefore, in formal default, according to this Sunday. The government is preparing to adapt the new rules to national law, in a process that should have an impact on the Labor Code, the Single Report and the inspection mechanisms already used by the Working Conditions Authority.
Salary clear right away
The most visible change will be felt right at the recruitment. Companies will now have to inform candidates about the starting remuneration or the respective salary range in the job advertisement, before the first interview or through another clear and timely means. Salary opacity in the pre-contractual phase will no longer be acceptable.
Can’t ask about previous salary
The directive also prohibits employers from asking candidates how much they earned in their previous jobs. Brussels considers that this practice tends to perpetuate inequalities, especially when a person already comes from a situation of undervalued wages.
The salary offered must depend on the skills, responsibilities and requirements of the job, and not on the salary history of each candidate.
Goodbye, salary confidentiality
Another central change is the end of salary confidentiality clauses. Companies will no longer be able to prevent workers from talking about what they earn, whenever this sharing aims to apply the principle of equal pay.
An employee cannot be subject to disciplinary action, reprisal or dismissal for disclosing their salary to a colleague to try to find out if there is salary discrimination.
This does not mean that all individual salaries become public within companies. Each worker’s privacy remains protected. What the directive guarantees is the right of each employee to know their own level of remuneration and to request information about the average levels of remuneration of workers performing the same functions or of equal value, broken down by gender.
In other words, no one will have automatic access to their colleague’s nominal salary slip, but You will be able to know if you are below the average for your professional category.
With the new guideline, companies will have to explain the criteria used to define salaries, progressions, bonuses and benefits.
Reversal of the burden of proof
The guideline also strengthens workers’ judicial protection. One of the most relevant changes is the reversal of the burden of proof.
In the event of a lawsuit for alleged pay discrimination, if the company has not complied with transparency or reporting obligations, It will be up to the employer to prove that the pay difference does not result from gender discrimination. Until now, it was generally the worker who had to gather often inaccessible evidence about internal wages.
If the worker wins the case, he will be entitled to full repair. This compensation may include back wages, unpaid premiums, bonuses, lost advancement opportunities, and other losses associated with discrimination.
The directive also prevents Member States from imposing maximum ceilings that limit this compensation.
New reporting obligations
Companies will also have new reporting obligations. The European calendar foresees a phased application, according to the size of the organization.
Companies with 250 or more employees will have to submit the first pay gap report by June 7, 2027, with data for 2026, and repeat the process every year. Companies with 150 to 249 employees will have the same date for the first report, but the obligation will be renewed every three years.
Companies with 100 to 149 employees will have more time: the first report will only be required by June 7, 2031, based on data from 2030, and also repeated every three years. Companies with fewer than 100 employees are not covered by an automatic public reporting obligation under the European directive.
Still, member states can impose more demanding rules. In Portugal, existing legislation on pay equality requires the collection of statistical data in companies with more than 50 workers, which leaves open the possibility for the national legislator to adopt lower thresholds.
Joint assessment in pay gap cases
When reports reveal an average salary disparity of more than 5% between men and women in the same category of workers, and this difference cannot be justified by objective and neutral criteria, the company will have to move towards a joint salary assessment. This audit must be carried out in conjunction with worker representatives and will aim to identify and correct the causes of inequality.
It will be up to each Member State to define the specific regime of fines and penalties. The directive also admits reputational and commercial consequences for companies that default, including restrictions on access to public tenders, economic incentives or state subsidies.
Comparisons in different positions
The definition of “work of equal value” also gains greater importance. The guideline dispels the idea that only functions with the same title can be compared.
Assessment should be based on objective, gender-neutral criteria such as skills, effort, responsibility and working conditions. This allows you to compare different roles as long as they have equivalent value to the organization.
