According to Eurostat, the unadjusted gender pay gap is defined as the difference between the average gross hourly earnings of men and women expressed as a percentage of the average gross hourly earnings of men, and it is calculated for companies with more than 10 employees.
In 2021 the unadjusted Gender Pay Gap was 12,7% across Europe. It varies by sector, and for most member states the public sector has a significantly lower gender pay gap.
The main driver behind the Pay Transparency Directive is to lower this number and ensure pay equity across the European Union.
Many companies will need time to prepare and adapt to the new EU Pay Transparency legislation in order to be compliant. It will require new ways of communicating about pay structures, and it may also necessitate targeted raises to close existing gender pay gaps.
Often pay gaps arise over time and there can be many contributing factors that may not necessarily be gender-based but end up affecting men and women differently. This could be lack of pay adjustments during periods of (parental) leave, part time vs. full time employment and the impact of this on promotion possibilities, shifts in market prices of new-hires, and so forth.
By June 7, 2026, all member states will have transposed the Pay Transparency Directive into local law - likely some countries will even be ready before. This gives you up to three years to prepare before the legal requirements and possible ramifications of existing gender pay gaps.
There can be significant advantages to early adaptation, as it could give your company a competitive edge in the recruitment market and beyond. By actively working to close the gender pay gap now, you can brand yourself as fair and advancing diversity, thus be a more attractive employer and business partner.