EU Pay Transparency Directive Now in Force — First Reports Due 2027, 5% Gap Threshold Triggers Mandatory Audit

The EU Pay Transparency Directive (EU 2023/970) entered into force on June 6, 2026, with transposition required by all Member States by June 7, 2026, and first gender pay gap reports due in 2027 covering calendar year 2026. Companies with more than 250 employees must report annually; companies with 100–250 employees must report every three years. Employers must disclose salary ranges in all job advertisements, cannot ask candidates about salary history, and must provide employees with information on average pay levels by sex upon request. Where a reported gender pay gap exceeds 5% and cannot be explained by objective, gender-neutral criteria, companies must conduct a joint pay assessment with workers' representatives. Non-compliance consequences are structurally significant: a reversed burden of proof, employee entitlement to full compensation, and financial penalties. For law firm employment counsel and in-house HR legal teams, the June 6 entry-into-force date means that 2026 pay data is now being collected under the Directive's framework — the companies whose first report is due in 2027 are in their reporting year now. The salary transparency requirement in job advertisements is immediately operative, and firms that have not yet updated their EU recruitment processes are already out of compliance.