Companies operating in the EU will soon be legally required to publish information about wage inequality among their staff, the European Parliament has ruled. The law will prohibit pay secrecy and aims to make the gender pay gap more transparent.

New EU Parliament rules for wage transparency

From 2027 onwards companies in EU states will have to adhere to stricter rules surrounding wage transparency. Thanks to the recent ruling, passed through the parliament last week by 427 votes to 79, companies with more than 250 employees will be required to submit an annual report detailing wages and wage discrepancies between their employees.

Smaller companies that employ between 250 and 100 workers will also be required to file such a report, though will only have to start doing so from 2031 onwards. In the case of companies with 100 employees or fewer, employers will only be required to file a report if it is requested by a member of staff.

If these reports reveal a gender pay gap of more than 5 percent, employers are obliged to carry out a joint pay assessment in tandem with their workers’ representatives (trade union or workers’ council representatives for example), though it will remain up to EU member states to decide on and enforce the penalties for infringement.

Crucially, this ruling should shift the burden of proof from the worker to the employer. If an employee concludes that their employer has discriminatory pay practices and a conflict arises, the EU ruling means that national legislation of member states should require the employer to prove otherwise.

EU ruling aims to prohibit pay secrecy and gender pay gaps

Though the ruling is designed to tackle the 13 percent gender pay gap between men and women working in the EU, the law will also prohibit pay secrecy more generally. The law outlines that workers and their representatives have the right to clear and complete information about individual and average pay levels, which can also be broken down by gender.

As part of prohibiting pay secrecy, contractual terms which ban employees from discussing their wages or requesting information about their colleagues' wages will also be made illegal.

A landmark ruling, the law will be the first to include non-binary people in EU gender pay discrimination legislation. In a statement on the European Parliament website, Dutch MEP Samira Rafaela said, “Not only do we finally have binding measures to tackle the gender pay gap, but also all citizens of the EU are empowered, recognised and protected against pay discrimination. Non-binary people have the same right to information as men and women.”

Danish MEP Kira Marie Peter-Hansen added, “Historically, women’s work has been undervalued and underpaid, and with this directive, we take an important step to secure equal pay for work of equal value.”

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