The Pay Transparency Directive – what applies today and how to prepare your organisation

As early as 2023, the EU adopted the Pay Transparency Directive, which is intended to reduce pay disparities between women and men and to strengthen the principle of equal pay for equal or equivalent work through increased transparency in pay-setting. The directive is to be implemented in all EU Member States, but each Member State is responsible for how it is incorporated into national legislation.

In Sweden, work on implementing the directive has begun. However, on 26 March 2026 the Government announced that the legislative process would be paused and that Sweden would instead seek to promote a renegotiation of the directive at EU level.

The Government considers the purpose of the Pay Transparency Directive to be important, but assesses that its current design entails significant challenges when implemented at national level. The directive is considered to offer insufficient flexibility for national solutions, is not sufficiently adapted to Swedish conditions, and risks creating a substantial administrative burden without a corresponding benefit in terms of gender equality.

In Sweden, there have long been established requirements for preventive work against unjustified pay disparities, including through pay surveys and active measures. The Government argues that any new rules must interact more effectively with this existing regulatory framework. Questions have also arisen regarding how pay should be reported. In the referral to the Council on Legislation, the Government assumed reporting based on annual pay and hourly pay, in line with the wording of the directive. This differs from the proposal in the previous inquiry, which suggested using the pay concept already applied in the organisation, such as monthly salary. Since monthly salary is often used in Swedish pay comparisons, this has been highlighted as an issue that could lead to additional work, difficulties in comparisons, and the influence of factors such as periods of absence during the year.

The announcement means that the bill planned for presentation on 17 March 2026 was never submitted, and the Government has also stated that it does not currently intend to submit a bill to Parliament. According to current information, the Swedish rules are instead planned to enter into force on 1 January 2027, which represents a delay compared with the EU’s original timetable. Until then, the current regulatory framework applies and the requirements relating to active measures and pay surveys remain in place. However, developments at EU level mean that employers still have reason to follow the issue closely and prepare for forthcoming changes.

Timeline for the Pay Transparency Directive in Sweden

Spring 2023 - The EU adopts the Pay Transparency Directive.

15 January 2026 - The Government decides to submit a referral to the Council on Legislation with proposals on how the directive should be implemented in Swedish law.

11 March 2026 - The Government announces that the proposed date of entry into force is to be postponed from 1 July 2026 to 1 January 2027.

17 March 2026 - A bill was planned to be presented, but was never submitted.

26 March 2026 - The Government announces that the legislative process is paused and that Sweden instead wishes to work towards a renegotiation of the directive at EU level.

1 January 2027 - The amendments to the Discrimination Act (the Swedish rules in accordance with the directive) are proposed to enter into force.

20 May 2028 - Pay reporting is to be submitted to the Equality Ombudsman (DO) for the first time.

What do we know at present?

Given that the Swedish implementation of the Pay Transparency Directive has been postponed and that no bill is currently forthcoming, the ongoing assessment is based on the content of the EU directive and the Swedish inquiry that has been produced. The inquiry contains proposals on how the directive could be adapted to Swedish conditions and highlights, among other things, changes and clarifications relating to:

• Employees’ right to pay information
• Expanded requirements for pay surveys
• Reporting of pay gaps
• Increased transparency in recruitment processes

The main principles of the directive

The Pay Transparency Directive applies to all organisations operating within the EU, regardless of sector. However, the scope of the requirements varies depending on the size of the organisation. Overall, the directive entails increased demands on structure, documentation and transparency in pay-related work.

Right to pay information for employees

Under the directive, employees are to have the right to request written information about their own pay and the average pay levels for equal or equivalent work, broken down by women and men. Employers must also be able to explain which pay criteria, pay-setting processes and practices are applied.

Changes to pay surveys

In Sweden, there is already a requirement for all employers to carry out an annual pay survey with the aim of identifying and reducing pay differences between women and men. As a result, there is already a strong foundation when the Pay Transparency Directive enters into force. However, the directive does mean that the survey may need to be supplemented with additional analyses, including to ensure that employees who have been on parental leave, leave to care for a relative, or absent due to urgent family reasons are not disadvantaged in terms of pay compared with other employees.

The introduction of the directive may also entail changes to documentation requirements, with the threshold for when the pay survey must be documented proposed to increase from 10 to 25 employees.

Reporting of pay gaps

The EU directive includes requirements for pay reporting for employers with 100 employees or more. The reporting is to include various key indicators highlighting pay differences between women and men. Based on the proposals in the inquiry, the Equality Ombudsman (DO) is intended to be the recipient of the reports, and certain information may be made public.

If the reporting reveals an unexplained pay gap of more than five per cent that cannot be justified or remedied within six months, the employer may also be required to submit its pay survey to the DO. As a consequence of the postponed implementation of the EU Pay Transparency Directive, the Government proposes that reporting to the DO should be carried out for the first time no later than 20 May 2028.

Pay transparency in recruitment

The directive also includes requirements for increased pay transparency in recruitment. Job applicants are to be provided with information about starting pay or a pay range, as well as applicable collective agreement provisions, at an early stage of the process. The purpose is to enable informed and open pay negotiations.

Furthermore, the directive contains a prohibition on asking candidates about their current or previous pay, in order to reduce the risk of unjustified pay disparities being carried forward.

How to prepare for the Pay Transparency Directive

Even though implementation has been postponed, the requirements for increased pay transparency are approaching. Today’s requirements relating, for example, to active measures and pay surveys continue to apply, and the following steps may be crucial in ensuring readiness when the new rules eventually enter into force.

1. Assess your current position

Review your pay policy to ensure that it includes clear criteria for pay-setting and pay progression. The directive requires that all pay differences must be justifiable based on objective and gender-neutral criteria. You need to be able to show that pay-setting is based on clear and fair criteria such as experience, education, level of responsibility and performance. All decision-makers involved in pay-setting should be aware of these requirements and trained to apply them correctly.

2. Pay survey process

All companies must carry out a pay survey. If you have more than 10 employees, the survey must be documented, and if you have more than 100 employees it must also be reported to the DO.

If you do not already have a process in place for conducting pay surveys, now is a good time to consider how that process should look in your organisation. Who will carry out the survey? Which system will be used? Do you have the right expertise internally, or is it more efficient to engage an external provider?

3. Prepare for reporting to the DO

If you have 100 employees or more, you must report pay gaps to the DO. According to the current proposal, the first report must be submitted no later than 20 May 2028.

4. What does your collective agreement say?

Collective agreements and pay agreements may have an impact on how the Pay Transparency Directive is implemented in your organisation. There may already be provisions in the collective agreement regarding measures to address pay differences for equal or equivalent work. These must be taken into account when analysing which actions should be taken in your company.

5. Communicate with employees

Employers will be required to inform their employees annually of their right to pay information. This includes, among other things, average pay levels for equivalent work, broken down by gender, as well as criteria for pay and career development. Employers need to review which communication channels should be used to share this information and who within the organisation should be responsible for providing it to employees.

6. Review recruitment processes

Adapt your recruitment processes to ensure that pay information is communicated clearly and correctly at an early stage.

How Azets can support you

As your payroll partner, Azets can support you with the following:

• Ensure that pay policies, role descriptions and job evaluations are up to date
• Carry out pay surveys and identify pay gaps
• Structure HR and payroll processes for efficiency and compliance
• Interpret collective agreements and adapt procedures
• Prepare the organisation for future requirements relating to transparency and reporting

If you would like to learn more, please do not hesitate to contact us.