30 April 2025

What will be the penalty for violating pay transparency regulations?

The directive obliges employers to put their pay structures in order, as well as to make more information about the salaries paid to employees available to employees, job applicants or relevant state authorities. There are various consequences for failing to comply with these pay transparency obligations.

The Directive describes them in a general manner, leaving it up to member states to clarify the rules pursuant to which employers will be liable in accordance with their national law.

Sanctions are generally to include:

  • Compensation for the employee. Employees who are discriminated against in terms of pay will be entitled to compensation, which is to include recovery of back pay and related bonuses or benefits in kind, compensation for lost opportunities, or compensation for intangible losses. Employers who have failed to comply with pay transparency laws will have to prove in proceedings that an employee pursuing their rights in court has not been discriminated against.
  • Financial penalties and orders. Employers who violate the pay transparency regulations are to be subject to "effective, proportionate and dissuasive" penalties. The magnitude of penalties may depend on the employer's gross annual turnover or total wage costs. The directive stresses that employers who are notorious violators are to be punished particularly harshly. Relevant state authorities will also be able to issue binding orders against non-compliant employers to stop violations, and take certain actions, failure to comply with which is also to result in fines.
  • Sanctions in the sphere of public procurement law and concession agreements. The Directive also allows member states to hold persons responsible on the grounds of public procurement law and concession agreements. For example, this may entail excluding commercial entities non-compliant with wage transparency regulations, or with a pay gap in excess of 5% unjustified for objective reasons, from the public procurement process.