FAQ on the Pay Transparency Directive

The EU Pay Transparency Directive is intended to help reduce pay disparities and contribute to achieving genuine equal pay between men and women for the same work or work of equal value.

The Directive formalises and expands the existing equal pay provisions set out in the Danish Equal Pay Act. Its purpose is to make pay practices and pay-setting processes more transparent, thereby helping to prevent discrimination based on gender.

The Directive will apply to all employers, regardless of size, and introduces a range of new requirements concerning pay management, recruitment processes, and transparency. However, certain obligations will only apply to employers above a specified size threshold.

The current legislative proposal provides for an effective date of 1 January 2027. This means that employers in Denmark are expected to have a longer implementation period than the deadline of 7 June 2026 set out in the Directive.

Transparency in the recruitment process

• All employers will be required to ensure that pay negotiations during recruitment are informed and transparent. This means that employers must disclose either the starting salary or the relevant salary range at an appropriate stage of the recruitment process. Employers should therefore be prepared to address questions about pay as early as possible.
• Employers will no longer be permitted to ask candidates about their current or previous salary levels.
  

Right of access to pay information

• All employees will have the right to request information about:
  • Their individual pay level.
  • Average pay levels, broken down by gender, for colleagues performing the same work or work of equal value. Employers will therefore need to classify employees into appropriate comparison groups.
  • The criteria used to determine pay and career progression.
    

Gender pay gap reporting – for larger employers

• Larger employers will be subject to reporting obligations regarding gender pay gaps within their organisation. The scope and frequency of reporting will depend on the size of the employer:
  • Fewer than 50 employees: No reporting obligation, although reporting may be carried out voluntarily. However, individual Member States may choose to introduce reporting requirements when implementing the Directive.
  • 50–99 employees, provided there are at least eight employees of each gender within the same employee group, as defined by the six-digit DISCO classification code or an equivalent classification system: reporting every three years, with the first report due on 1 September 2031.
  • 100–149 employees: reporting every three years, with the first report due on 1 September 2031.
  • 150–249 employees: reporting every three years, with the first report due on 1 September 2028.
  • 250 or more employees: annual reporting, with the first report due on 1 September 2028.

Joint pay assessment: Where a report reveals a difference in average pay levels between men and women of more than 5%, and that difference cannot be justified by objective, gender-neutral criteria, the employer must take corrective action.

If the pay gap has not been remedied within six months of submitting the pay report, the employer will be required to carry out a joint pay assessment in cooperation with employee representatives. This assessment is intended to identify, analyse and address unjustified pay disparities.

Danish equal pay legislation already requires employers to provide equal pay to men and women performing the same work or work of equal value.

However, this obligation does not mean that all employees must receive identical pay. Differences in pay are permissible, provided that they can be justified by objective and gender-neutral criteria and do not constitute either direct or indirect discrimination.

Whether work is considered comparable is determined through an overall assessment of the content of the position itself, rather than the individual employee performing it.

The assessment is based on four established criteria:

• Effort
• Working conditions
• Responsibility
• Skills

If, based on these criteria, the work is deemed to be the same or of equal value, the employees concerned are considered comparable for the purposes of the Danish Equal Pay Act.

Pay is understood broadly and covers both the fixed basic salary and all other benefits that the employee receives as part of the employment relationship – regardless of whether they are provided in cash or in kind – for example, but not limited to, pension, flexible benefits/special savings schemes, additional leave days, working-time-related allowances (e.g. shift work allowances), qualification and function-related supplements, bonus schemes, as well as employee benefits such as a company car and mobile phone.

The employer must have clear frameworks in place for how pay is determined and adjusted, enabling employees to assess which employees they can compare themselves with for pay purposes and to gain insight into the criteria that form the basis of pay determination.

The structure must therefore be based on objective and gender-neutral criteria – typically skills, effort, responsibility and working conditions – as well as any other factors relevant to the specific position. The criteria must not be based, either directly or indirectly, on gender and must be applied consistently.

Where an employee representative exists, the criteria must be established in consultation with that representative.

Employers should therefore create a transparent job classification system in which positions are divided into categories of comparable work. The categorisation must be objectively justified and ensure that the work within each category is the same or of equal value.

There are no rules governing how small or large a category may be. The key requirement is that the employer must, at all times, be able to explain and justify the categorisation based on objective criteria. For example, if an employee has a particular area of responsibility and duties requiring specific skills, that employee may constitute a category of their own.

The most obvious place to begin preparing for the new rules is to categorise the different employee groups within the organisation, so that objective criteria for pay determination can be established within each category.

The pay structure must be accessible to employees, for example via an intranet, employee handbook or internal shared drive.

Employers must establish and describe the criteria used for determining pay, and those criteria must be objective and gender-neutral, meaning that they must have no direct or indirect connection to gender.

Typically, the assessment is based on effort, working conditions, responsibility and skills.

• A criterion is directly discriminatory if it explicitly refers to gender.
• A criterion is indirectly discriminatory if it appears neutral but, in practice, places one gender at a disadvantage compared to the other.

However, an apparently neutral criterion may be maintained if it is objectively justified and proportionate. In such cases, there is no unlawful indirect discrimination.

If an employee requests it, they are entitled to receive, in writing, information on the average pay levels broken down by gender – but only for the employee category to which they themselves belong.

The purpose is to provide employees with a basis for assessing whether there is a gender-based pay gap within their employee category.

If a category consists of only one gender, this will generally not give rise to a right to receive such information. However, where a category includes both men and women – regardless of the number of employees – the employer must provide information on the average pay levels broken down by gender.

Information that could identify an individual employee’s pay must not be disclosed directly to employees. Such information may only be provided to an employee representative or to the Equal Pay Institute of the Labour Market, which may then provide advice without revealing individual salaries.

The employer must respond to the request within a reasonable period and no later than two months after receiving the request.

It may furthermore be stipulated that the information may only be used for the purpose of enforcing the right to equal pay.

50–99 employees

Employers of this size must prepare pay statistics every three years, with the first report due on 1 September 2031.

However, this obligation only applies where there are at least eight employees of each gender within the same employee category (classified according to the six-digit DISCO code or an equivalent classification system).

As a minimum, the pay statistics must cover:

• gender pay gaps;
• gender differences in variable/supplementary pay components;
• median pay differences between genders (both overall and for variable pay components);
• the proportion of men and women receiving variable pay components; and
• the gender distribution across pay quartiles.

100–149 employees

Employers of this size must prepare pay statistics every three years, with the first report due on 1 September 2031.

As a minimum, the pay statistics must cover:

• gender pay gaps;
• gender differences in supplementary/variable pay components;
• median pay differences (overall and for variable pay components);
• the proportion of men and women receiving variable pay components;
• the gender distribution across pay quartiles; and
• gender pay gaps within each employee category, broken down into basic pay and variable pay components.

150-249 employees

Employers of this size must prepare pay statistics every three years, with the first report due on 1 September 2028.

As a minimum, the statistics must include:

• the gender pay gap;
• the gender pay gap in supplementary/variable pay components;
• the median gender pay gap (overall and for variable pay components);
• the proportion of men and women receiving variable pay components;
• the gender distribution across pay quartiles; and
• gender pay gaps within each employee category, broken down into basic pay and variable pay components.

250 or more employees

Employers with 250 or more employees must prepare pay statistics annually, with the first report due on 1 September 2028.

As a minimum, the statistics must include:

• gender pay gaps;
• gender differences in supplementary/variable pay components;
• median pay differences between genders (overall and for variable pay components);
• the proportion of men and women receiving variable pay components;
• the gender distribution across pay quartiles; and
• gender pay gaps within each employee category, broken down into basic pay and variable pay components.

To identify and address any pay disparities revealed by the pay statistics that cannot be objectively justified, all employers with at least 100 employees must carry out a joint pay assessment where all of the following conditions are met:

• the pay statistics show a difference of at least 5% within an employee category;
• the difference cannot be explained by objective, gender-neutral criteria; and
• the difference has not been eliminated within six months.

As a minimum, the joint pay assessment must contain:

• an analysis of the gender composition within each employee category;
• average pay levels for men and women, including variable pay components;
• identified pay differences within the individual categories;
• explanations for any differences based on objective criteria;
• the proportion of employees who have obtained a pay increase following a period of leave (e.g. maternity, paternity or parental leave);
• specific measures to remedy unjustified pay differences; and
• an evaluation of the effectiveness of previously implemented measures.

Pay transparency requirements apply even before employment begins. This means that applicants must have access to relevant pay information before their remuneration is determined.

Specifically, the employer must provide information on:

• the expected starting salary or a salary range; and
• any relevant collective agreement terms affecting remuneration (e.g. pension contributions, flexible benefits schemes and additional leave days).

The information must be provided early in the recruitment process – typically in the job advertisement or, at the latest, before salary negotiations take place.

There is no requirement to state an exact salary. A salary range is sufficient, provided that it gives the applicant a genuine basis for negotiating pay.

The employer is not bound by the stated range and may offer a salary outside that range where objectively justified, for example by the candidate’s experience or qualifications.

At the same time, employers will be prohibited from asking applicants about their current or previous salary. However, it will remain lawful to ask applicants about their salary expectations.

Under the current bill proposing amendments to the Danish Equal Pay Act, non-compliance with the pay transparency rules is not, in itself, intended to be subject to fines or separate compensation.

Instead, a failure to comply with the rules will constitute an aggravating factor in equal pay claims. For example, where a gender-based pay disparity is established, the employer’s failure to comply with the transparency requirements may lead to a higher level of compensation being awarded under section 2 of the Danish Equal Pay Act.