Pay transparency: how can employers prepare?
Pay transparency: how can employers prepare?
More than three years after the adoption of European Directive 2023/970 of 10 May 2023 on pay transparency, a bill to transpose the reform into French law was presented to the Council of Ministers on 10 September 2026.
Beyond introducing new reporting obligations, this wide-ranging reform is based on a more ambitious approach: enabling employees and their representatives to better identify pay gaps and requiring employers to justify them where they are not based on objective criteria.
What are the main changes to expect? And, above all, how can companies start preparing now?
1. What will the reform actually require from employers?
Greater pay transparency
The main change will be the replacement of the professional equality index with new indicators, including a new indicator measuring pay gaps among groups of employees performing “equal work or work of equal value”.
Under the bill, this indicator would have to be reported every three years by companies with between 50 and 249 employees, and annually by those with at least 250 employees. However, a collective agreement could exempt companies with between 50 and 99 employees from this reporting requirement.
Companies will also have to provide greater transparency regarding their pay practices.
Internally, employees will be entitled to request information on average pay levels, broken down by gender, within their category, i.e. among employees performing “equal work or work of equal value”. Employers will have to provide this information unless doing so could disclose the pay of another identifiable employee.
The Social and Economic Committee (CSE) will, for its part, have access to more detailed and usable data.
Finally, from the recruitment stage onwards, employers will be required to provide a salary range in their job advertisements.
A stronger obligation to justify pay gaps
The reform will not merely require pay gaps to be measured; it will also require employers to address them.
Where a significant pay gap is identified within a category of employees performing “equal work or work of equal value” and cannot be justified by objective, gender-neutral criteria, the employer will have to take corrective measures and, where appropriate, enter into negotiations on equal pay.
The threshold triggering these obligations will be set by decree. According to the documents accompanying the bill, it is expected to be 5%.
Depending on the size of the company and the circumstances identified, this could notably involve:
- a process for justifying pay gaps;
- the implementation of corrective measures;
- the opening of negotiations with employee representatives;
- a joint assessment of pay;
- the adoption of a specific action plan.
The underlying principle is clear: employers will have to be able to demonstrate that differences in pay are based on objective, gender-neutral and documented criteria.
A new approach to “equal work or work of equal value”
The reform also provides for a revised approach to the concept of “equal work or work of equal value”, reflecting the European approach.
The bill proposes to expand the French Labour Code to take into account a broader range of objective criteria, including working conditions and both technical and non-technical skills.
These criteria will be used to establish categories of employees performing equal work or work of equal value, which will form the basis for future pay indicators and comparisons.
These categories will have to be established by a company-level collective agreement or, if negotiations fail, by a unilateral decision of the employer following consultation with the CSE.
Tougher penalties
In the event of breaches relating in particular to reporting obligations or the implementation of corrective measures, employers could face a financial penalty of up to 1% of their total payroll (2% in the event of a repeat offence). Other breaches, including those relating to employees’ and candidates’ information rights, could be subject to a penalty of up to €450 per breach (€900 in the event of a repeat offence).
The bill also provides for the possibility of excluding a company sanctioned for certain breaches from public procurement contracts for a period of one year.
At the same time, the bill strengthens the rules governing the burden of proof in pay discrimination cases in order to facilitate employees’ claims.
2. A bill still under development: what is the timetable?
Presented on 10 September, the bill will first be considered by the Senate and then by the National Assembly. The Government is aiming for adoption by the end of February 2027, although this timetable remains uncertain.
More importantly, several key provisions will require implementing decrees, which will notably need to specify how the new indicators are to be calculated, how headcount is to be determined, the pay-gap threshold triggering corrective measures and the minimum headcount required to ensure data confidentiality.
The reporting obligations and administrative penalties would enter into force no later than one year after the law is enacted. However, the reporting of the seventh indicator could be deferred for up to three years for companies with between 100 and 149 employees and six years for those with between 50 and 99 employees.
Some measures should nevertheless apply as soon as the law enters into force, including:
- the obligation to provide a salary range at the recruitment stage;
- a prohibition on requesting a candidate’s salary history;
- a prohibition on clauses preventing employees from discussing their pay.
3. How can companies prepare now?
Without waiting for the bill to be finally adopted, companies would be well advised to start preparing now.
Identifying comparable categories of employees
The future regulatory framework will rely heavily on companies’ ability to identify employees performing “equal work or work of equal value”.
Employers should therefore consider:
- updating job descriptions;
- identifying the skills required for each role;
- identifying the responsibilities involved;
- analysing the working conditions associated with different roles;
- considering the criteria that could be used to assess so-called non-technical skills.
This preparatory work will help companies establish consistent categories that are legally robust.
Reviewing and securing HR and management practices
The reform will also have a direct impact on day-to-day HR management practices.
An internal audit may be useful to identify any adjustments required in relation to:
- job advertisements;
- recruitment procedures;
- interview templates;
- employment contracts;
- remuneration policies;
- career progression processes.
The objective is twofold: to anticipate the new legal requirements and to formalise consistent, well-documented practices across the company.
The forthcoming transparency requirements will inevitably lead to more requests from employees for explanations and increase the risk of litigation.
This is also reflected in the revised rules on the burden of proof set out in the new bill, allowing a candidate or employee to rely on any factual evidence suggesting pay discrimination in order to bring a claim.
Rigorous documentation of pay decisions is therefore, already today, the best protection for employers.
Our Labour law team is available to assist you with these steps.