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The European Union Pay Transparency Directive comes into Force on 7 June 2026. As recruiters prepare to adapt to the new requirements introduced by the legislation, what changes can jobseekers and employees expect?
Upcoming changes
With the introduction of European Union Directive (EU) 2023/970, the European Union aims to place greater emphasis on pay transparency. This legal reform is intended to bring about several changes designed to ensure fairer remuneration and prevent discrimination, particularly on the grounds of gender. The primary objective is to guarantee equal pay for equal work, or for work of equal value.
In Luxembourg, the directive will take effect on 7 June 2026, from which date companies will be required to comply with its provisions. However, this does not mean that salaries will automatically be displayed on every job advertisement, nor that salary negotiations will disappear from the recruitment process.
The main purpose of this development is to formalise salary structures and reduce subjectivity and inconsistencies in pay decisions. Employers will be expected to explain their remuneration decisions and justify any potential pay disparities.
What benefits will this bring to jobseekers?
This new directive could make your job search considerably easier. The most significant and visible change is that the salary, or at least a salary range, must be communicated to you before the first interview. This information may be included directly in the job advertisement or provided either in writing or verbally before the first formal discussion.
Another major change is that recruiters will no longer be allowed to ask about your current or previous salary. Salary negotiations will need to focus solely on the value of the role, the skills required, and your own expectations, rather than your salary history. This change is designed to prevent situations where individuals remain underpaid throughout their careers because they were underpaid in a previous role.
Did you know? Already, 27% of job advertisements on Moovijob.com include the proposed salary.
What benefits will this bring to employees?
While the changes affecting the recruitment process are the most visible, further developments will also affect existing employees. In addition to promoting transparency during hiring, the directive aims to clarify internal pay policies.
Your salary must be based on objective criteria, which your employer must be able to explain. These criteria may include job families, entry-level salary bands, clearly defined progression requirements, or formalised performance assessment processes. Such systems are already common in large organisations, so the greatest changes are likely to affect employees working for small and medium-sized enterprises (SMEs).
Under the directive, you will also have the right to request information about your own level of remuneration as well as average pay levels within the company. Individual salaries will not be made public, but you will be able to gain an understanding of the average salary for roles equivalent to your own. This measure is intended to help ensure that employees are not underpaid in relation to their position within the organisation. Average pay data broken down by gender will also be available upon request in order to help prevent pay gaps between women and men.
Did you know? In Luxembourg, women earn, on average, higher salaries than men, making it one of the most advanced countries in the world in terms of pay equality.
Finally, employers will no longer be permitted to prevent employees from discussing their salaries with colleagues. Confidentiality clauses that prohibit such discussions will therefore no longer be enforceable.
Overall, this new directive will provide employees with a clearer understanding of salary decisions, as these decisions will need to be better explained and justified. It will help eliminate subjective explanations such as "that’s the way we’ve always done it" and establish a clear, formalised framework within every organisation.
The directive’s ultimate goal is to achieve fairer pay based on the genuine value of each individual’s role within an organisation.
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