Preparing Business for Directive (EU) 2023/970: The New Standard for Transparency and Equal Pay
Jan 27, 2026 | News & Analysis
The adaptation window is closing. What do employers need to know before June 2026?
In the legal world, few regulations fundamentally reshape Human Resources management. Directive (EU) 2023/970 on strengthening the application of the principle of equal pay is exactly such an act. It does not merely introduce new administrative duties; it revolutionizes the philosophy of remuneration—shifting from secrecy negotiated "behind closed doors" to a transparent process based on objective criteria.
With the transposition deadline into Bulgarian legislation approaching—June 7, 2026—the team at Benov & Vasilev Law Firm presents a detailed analysis of the new obligations and risks for businesses.
I. "The Context": Why is the EU Mandating This Change?
Although the principle of "equal pay" has been enshrined in EU Treaties since 1957, statistics show a persistent problem.
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The Pay Gap: The average gender pay gap in the EU remains around 13%. This means that for every €1 a man earns, a woman earns €0.87.
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Information Asymmetry: The root cause is not always direct discrimination, but a lack of transparency. Employees often do not know how salaries are formed, preventing them from assessing whether they are being treated fairly.
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The Goal: To shine a light on the "black box" of corporate remuneration through mandatory transparency and to create effective enforcement mechanisms.
II. "When" and "Who": Scope and Deadlines
The Directive has a broad personal scope—it applies to all employers in both the public and private sectors. However, the most stringent administrative reporting duties are tiered according to the size of the enterprise.
Key Dates and Reporting Thresholds: By June 7, 2026, Bulgaria must transpose these requirements into the Labor Code and the Protection Against Discrimination Act. Immediately thereafter, reporting timelines begin:
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Employers with 250+ employees: Must report on the pay gap annually.
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Employers with 150 to 249 employees: Must report every 3 years.
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Employers with 100 to 149 employees: Must report every 3 years (with potential grace periods depending on national transposition).
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Under 100 employees: While reporting may not be mandatory (subject to national law), all other transparency obligations regarding pay structures apply to them as well.
III. "What": Key Obligations and Legal Concepts
At the heart of the Directive is the concept of "Work of Equal Value." This is the most complex aspect to implement. Employers must establish job evaluation systems that are "gender-neutral."
How do you compare seemingly incomparable positions? Four objective criteria must be used:
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Skills (education, experience, qualification).
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Effort (physical and mental).
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Responsibility (material, managerial, human resources).
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Working Conditions.
New Transparency Obligations:
1. Pre-employment Transparency: Candidates must receive information about the initial pay or its range before the job interview.
Crucial: Employers are explicitly banned from asking candidates about their current or previous salary (closing the "history gap").
2. During Employment: Employees have the right to request written information on their individual pay level and the average pay levels, broken down by gender, for categories of employees performing work of equal value.
3. Joint Pay Assessment: If reporting reveals a gender pay gap of over 5% that cannot be justified by objective, gender-neutral criteria and is not remedied within 6 months, the employer is obliged to conduct a thorough audit (Joint Pay Assessment) in cooperation with workers' representatives.
IV. "Sanctions" and Risks: The Cost of Non-Compliance
The Directive changes the rules of the game in the courtroom.
1. Reversal of the Burden of Proof: This is the most critical shift for employers. In a legal dispute, if an employee presents facts presuming a lack of transparency, the burden falls entirely on the employer. You must prove to the court that discrimination did not occur. Without impeccable documentation and a transparent methodology, defending such cases will be extremely difficult.
2. Full Compensation: The Directive requires compensation that places the employee in the position they would have been in without the discrimination. This includes:
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Full back pay of salary differences and bonuses.
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Compensation for lost opportunities.
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Interest on arrears.
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No cap on the compensation amount.
3. Penalties: Member States must introduce effective, proportionate, and dissuasive penalties applicable to infringements, regardless of whether an individual claim is filed.
V. "How": Practical Steps and Risk Management
The time for "wait and see" is over. Businesses must take the following actions:
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Gap Analysis: Calculate your pay gap now, before it becomes mandatory public data. Identify at-risk departments.
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Job Descriptions Review: Update them to reflect actual responsibilities and skills, ensuring they serve as a solid basis for "work of equal value" comparisons.
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Objectify Bonuses: Remove subjective bonuses based solely on "managerial discretion" and replace them with measurable KPIs.
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Train HR Teams: Overhaul the recruitment process—eliminate salary history questions and prepare clear salary ranges for every position.
VI. Assistance from Benov & Vasilev Attorneys at law
At Benov & Vasilev, we understand that Directive 2023/970 is not just an HR challenge but a significant legal risk. We offer specialized assistance in the following areas:
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Legal Pay Audit: Reviewing Internal Salary Rules and employment contracts for compliance with new transparency requirements.
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Methodology Development: Assisting in the creation of gender-neutral job evaluation systems that can withstand judicial scrutiny.
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Litigation Defense: Representation in discrimination claims and equal pay disputes, focusing on successfully managing the burden of proof.
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Corporate Training: Preparing management and HR staff for the new restrictions during interviews and performance appraisals.
Do not leave your business vulnerable. Contact us for an initial consultation and an action plan before the legislation enters into force.
This article is for information purposes only and does not constitute legal advice. For specific cases, please contact the specialists at Benov & Vasilev Attorneys at law.