The right to know salaries when applying for a job. Transparency around what colleagues earn. And new reporting requirements for companies with 100+ employees. Here's what employers need to know about the new EU pay transparency directive.
Despite decades of progress, men and women still don’t receive equal pay for equal work. To tackle this persistent pay gap, the EU has introduced a new directive designed to increase transparency around pay practices – the Pay Transparency Directive.
By summer 2026, the directive must be implemented in Swedish law. While we don’t yet know exactly how the national legislation will be worded, one thing is clear: change is coming. And it’s coming soon.
That’s why it’s smart to start preparing now. To help you get ahead, we’ve compiled ten key questions and answers about the directive – and what it means for you as an employer.
Psst! Want a bit more context before diving into the details? Start with these articles:
Pay Transparency Soon to Be Swedish Law – Here’s What You Need to Know
Pay Surveys – Eight Questions and Answers
1. When Does the Pay Transparency Directive Come Into Force in Sweden?
All EU member states must implement the Pay Transparency Directive by 7 June 2026. However, each country sets its own start date. In Sweden, the directive will begin to apply on 1 June 2026.
This means companies with 150 or more employees will be required to start reporting pay data no earlier than 2027 – the year after the directive comes into force. Companies with 100 to 149 employees have more time; their first reporting will take place in 2031.
2. Which Employers Are Covered by the Directive?
All employers – regardless of size – are subject to the core principles of the directive. That includes, for example, providing salary information during recruitment and giving employees access to specific pay-related data.
When it comes to reporting obligations, these depend on the size of the organisation:
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Companies with 250+ employees → pay reporting annually
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Companies with 100–249 employees → pay reporting every three years
Smaller employers (fewer than 100 employees) are not required to submit formal reports but must still comply with the rest of the directive.
3. What Needs to Be Assessed – and How?
Much of what the directive outlines resembles Sweden’s existing pay equity audit rules. But in some areas, the directive goes further – especially regarding the depth of analysis and how pay gaps must be evaluated and addressed.
Key elements of a pay assessment under the directive include:
- Evaluate work of equal value.
Jobs must be compared using gender-neutral criteria – such as skills, effort, responsibility, and working conditions. These are the same principles already used under Swedish discrimination law. - Take action on gaps of 5% or more.
If your audit shows a pay gap of 5% or more between women and men doing equal work, you must either justify the difference or take action to close the gap – and be ready to show this to the Equality Ombudsman (DO). - Deeper analysis than today.
Unlike current Swedish rules, you must also consider factors like parental leave and care leave. The goal is to uncover whether such absences (more common among women) are linked to systematically lower pay.
4. How Will the New Rules Affect Recruitment?
From the recruitment stage, you must provide candidates with clear information about the starting salary or salary range for the position. There’s no strict definition of how wide the range may be – but it must be reasonable and meaningful enough to support informed decision-making during salary negotiations.
Another important shift: employers may no longer ask candidates about their previous salary. This is to prevent historical pay discrimination from following the candidate into a new role.
5. Do We Have to Include the Salary in the Job Ad?
No, the directive does not require you to publish salary or salary ranges in job postings. But candidates must receive clear salary information before the first interview where pay and conditions are discussed.
That said, research suggests that including pay information in job ads can be a smart move – even if not legally required. It may streamline your selection process and attract the right applicants.
6. What Information Must We Share With Employees?
Employees have the right to clear and easily accessible information about:
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Their own salary
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The average salary for the same or equivalent work, broken down by gender
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The criteria used for setting salaries, bonuses, and career progression
7. What Does “Collaboration With Trade Unions” Mean – and Does It Apply Without a Collective Agreement?
The directive introduces stricter requirements for cooperation with trade unions.
If your company is bound by a collective agreement, the union must be involved in:
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Defining pay criteria
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Deciding which factors are used for job evaluation
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Producing the pay reporting
If your company doesn’t have a collective agreement but union organisations are active at the workplace, you must still share relevant information with them if they request to collaborate.
8. What Is Required in a Pay Transparency Report Under the Directive?
A pay equity report is a clear and consolidated report showing how salaries are distributed in the organisation – broken down by gender and occupational group.
It includes, among other things:
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Pay differences between women and men. Both in base salary and in various types of variable pay (such as bonuses).
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Differences in median pay. Median pay shows what the “middle person” earns and gives an indication of how salaries are distributed.
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How many receive bonuses or supplements. The proportion of women and men who receive variable compensation.
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Distribution across pay quartiles. How women and men are positioned across salary levels – from the lowest to the highest.
The report is submitted to the Equality Ombudsman (DO), who will then publish it on a designated website.
9. What happens if we break the rules?
Employers who fail to comply with the rules risk several penalties. These may include:
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injunctions from the supervisory authority (such as Sweden’s Equality Ombudsman; "DO")
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damages to employees in cases of discrimination
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fines for failing to report
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negative impact on your employer brand
Read more: Meet the Requirements for Pay Transparency – Ensure a Smooth Pay Survey!
10. How Can We Prepare?
To comply with the Pay Transparency Directive, you’ll need both smart strategies and practical tools that work day to day. Above all, it’s crucial to get full control of your pay and employment data. (Sure, you could keep juggling Excel files, email threads, and spreadsheets from different sources. But that quickly becomes time-consuming and unreliable.)
With the right tools, you and your team can collect, structure, analyse, and report – all in one smooth process.
Here are a few important steps to take already now:
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Conduct annual pay equity audits: Identify and address any unjustified pay gaps between genders. (A good digital tool makes the job both faster and more secure.)
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Review your pay criteria and job architecture: Make sure that pay setting is based on objective, gender-neutral grounds tied to defined roles and competence levels.
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Collaborate with the union: Build a foundation for transparent dialogue and a constructive way forward.
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Get ready for reporting: Set up smart (digital) routines for reporting pay gaps and documenting pay-setting principles – especially important for companies with more than 100 employees.
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Communicate internally: Inform employees about their right to insight and train managers and HR staff on the new rules and structures.
Stay Compliant and Work Smarter with Flex HRM!
Tired of juggling Excel files and scattered data? Here’s how Flex HRM can help streamline and strengthen your pay equity process:
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Automated and efficient process – saves time and reduces the risk of errors.
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All data in one place – say goodbye to Excel chaos and manual transfers between systems.
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Smooth job evaluation and analysis – intuitive support for assessing equal and equivalent work and identifying unjustified pay gaps.
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Easy to repeat – once job evaluation and preparation are done, you can easily carry them over to the next year’s audit.
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Headache-free reporting – smart features for generating reports and action plans in just a few clicks.
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Continuously improving – we update the tool regularly so you can stay compliant with minimal hassle.
Want to know more? Don’t hesitate to get in touch – we’d love to hear from you!
