Directive (EU) 2023/970 will be fully implemented by 7 June 2026, bringing about a tangible transformation in the management of corporate compensation policies.

Pay transparency is no longer solely a matter of equal pay; it now directly affects internal organization, corporate governance, and risk management.

The new rules will require companies to provide greater clarity regarding the criteria used to determine salaries, pay increases, bonuses, and career progression.

Indeed, pay transparency will make compensation systems more exposed to requests for verification, internal comparisons, and potential disputes.

For this reason, the key issue will no longer be merely “how much” is paid, but above all “how” compensation decisions are structured, applied, and documented over time.

Companies will need to demonstrate both the consistency of the criteria adopted and the traceability of individual organizational decisions.

Particular attention will need to be paid to individual salary increases, incentive schemes, career development paths, pay differences between comparable roles, and exceptions managed without adequate formalization.

The principle of equal pay for work of equal value will also become increasingly significant, making it necessary to strengthen job evaluation and responsibility assessment systems.

Monitoring pay gaps and ensuring the traceability of compensation criteria will play an increasingly central role in corporate management.

The Directive also strengthens protections in litigation proceedings: in the event of a dispute, the employer will bear the burden of demonstrating the consistency and fairness of its compensation system.

In this context, pay transparency confirms itself as a matter of strategic compliance, in addition to a regulatory obligation.

Adapting processes, compensation policies, and documentation structures today means reducing future exposure and reinforcing the organization’s long-term sustainability.

The Law Firm remains available for any further clarification.