Directive (EU) 2023/970: Strengthening Pay Equality and Transparency Obligations

The Directive (EU) 2023/970 of 10 May 2023 strengthens the principle of equal pay for equal work or work of equal value between men and women, introducing new requirements regarding pay transparency and mechanisms aimed at ensuring its effective enforcement. Although the Directive is already in force at European level, Portugal has until June 2026 to transpose it into national law, making timely preparation by companies particularly relevant.

Among the main developments is the obligation for employers to implement clear and objective pay structures that ensure equal remuneration. These structures must make it possible to assess whether workers are in a comparable situation, based on gender-neutral criteria, namely skills, effort, responsibility and working conditions.

During the recruitment process, job applicants will have the right to receive information regarding the initial salary or the respective salary range for the position in question, based on objective criteria. The aim is to ensure more informed and transparent negotiations, and employers are expressly prohibited from asking candidates about their salary history.

Within organisations, the Directive also imposes greater transparency regarding remuneration policies and salary progression. Employees must have access to the criteria used to determine remuneration and career progression, which must be clear, objective and gender-neutral.

In addition, workers will be entitled to request, in writing, information concerning their individual pay level and the average pay levels, broken down by sex, for categories of workers performing the same work or work of equal value. Employers will be required to inform employees annually of this right, as well as of the procedures for exercising it, and must respond within a reasonable timeframe.

Another relevant aspect concerns the prohibition of contractual clauses preventing the disclosure of salary information, thereby reinforcing transparency and combating discriminatory practices. It is also important to ensure that all information made available is accessible, including to persons with disabilities, taking into account their specific needs.

Finally, the Directive introduces reporting obligations and, in certain cases, joint pay assessments, generally applicable to employers with more than 100 employees, without prejudice to national legislation extending this scope.

Although the transposition has not yet taken place, the impact of these measures will be significant. Companies should therefore begin reviewing their remuneration policies and practices now in order to ensure future compliance and mitigate legal and reputational risks.

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