Vill du läsa artikeln på svenska? Klicka här
In 2023, the EU adopted the Pay Transparency Directive, which aims to reduce gender pay gaps and increase fairness in the labor market by promoting greater transparency in wage setting. The directive has also been adopted in Sweden, and employers should already start preparing for its implementation in June 2026.
The Swedish review of the Pay Transparency Directive has proposed certain adjustments to the current national regulations, which will bring changes for employers. Among other things, this entails new obligations regarding salary information, pay audits, and recruitment processes.
Even though the directive will not take effect until June 2026, employers should begin preparations now to ensure compliance with the new regulations.
Core Requirements of the Directive
The Pay Transparency Directive applies to all organizations operating within the EU, regardless of industry. However, the specific requirements vary depending on company size, with larger companies subject to more extensive reporting obligations.
Employees’ Right to Information
According to the directive, employees have the right to request written information about their own salary and the average salary of employees performing equivalent work for the same employer. This information must be presented separately for men and women. Employers must also inform employees about current salary policies and wage-setting practices within the organization.
Reporting to the Swedish Equality Ombudsman (DO)
Employers with 100 or more employees must report gender pay gaps using key indicators to the Equality Ombudsman (DO). Many of these indicators will be publicly available, such as the proportion of men and women receiving salary supplements or variable pay.
If the wage report reveals an unexplained gender pay gap of more than 5% that is not addressed within six months, the company must also submit its pay audit to the DO.
Changes in Pay Audits
Sweden already requires all employers to conduct pay audits to identify and reduce gender pay disparities. Therefore, a strong foundation is in place when the directive comes into effect. However, the directive introduces an additional requirement: pay audits must now also analyze potential wage discrimination against employees who have taken parental leave, leave to care for a relative, or leave due to urgent family circumstances. Their salaries must be compared with employees who have not taken such leave.
Pay Transparency in Recruitment
Job applicants have the right to receive information about the starting salary or salary range and applicable collective agreement provisions before employment. This information must be provided in a way that ensures an informed and transparent salary negotiation process.
Employers will no longer be allowed to ask candidates about their current or previous salary. This measure aims to prevent unjustified wage disparities from carrying over to new workplaces.
How to Prepare for the Pay Transparency Directive
1. Assess Your Current Situation
Review and, if necessary, update your salary policy to ensure it includes clear criteria for wage setting and salary increases. The directive requires that all wage differences must be justified with objective and gender-neutral criteria. You need to demonstrate that salaries are determined based on fair and transparent factors such as experience, education, level of responsibility, and performance.
All decision-makers involved in salary setting should be aware of these requirements and trained in applying them correctly.
2. Establish a Process for Pay Audits
As mentioned earlier, all companies are required to conduct a pay audit. If you have more than 10 employees, the audit must be documented. If you have more than 100 employees, it must also be reported to the DO.
If you have not yet established a process for pay audits, now is the time to consider how it should be structured. Who will conduct the audit? What system will be used? Do you have the necessary internal expertise, or would it be more efficient to hire an external provider?
3. Prepare for Reporting to the DO
If you have 100 or more employees, you must report gender pay gaps to the DO. According to the transitional provisions, the first reporting deadline varies depending on company size.
- Employers with 150 or more employees must report for the first time in June 2027.
- Employers with 100–149 employees must report for the first time in 2031.
4. Review Your Collective Agreements
Collective and wage agreements may influence how your company implements the Pay Transparency Directive. Your collective agreement may already contain provisions addressing pay adjustments for equal or equivalent work. This should be considered when analyzing the measures your company needs to take.
5. Communicate with Employees
Employers will be required to inform their employees annually about their right to salary information. This includes the average salary levels for equivalent work, broken down by gender, as well as the criteria for pay and career development.
Employers should review which communication channels will be used to share this information and designate a responsible party within the organization.
6. Review Recruitment Processes
Adjust your recruitment processes to ensure that salary information is communicated clearly and accurately at an early stage.
How Azets Can Support You
If you have Azets as your payroll partner, we can assist you with:
✔ Ensuring your job descriptions and job evaluations are complete.
✔ Conducting pay audits and identifying potential pay gaps.
✔ Optimizing HR processes to enhance coordination and effectiveness.
✔ Interpreting collective agreements and adapting your procedures to meet new requirements.
✔ Implementing procedures for information disclosure and recruitment processes.
Feel free to contact us for further assistance.
Subscribe to our newsletter
Stay updated on everything in accounting, payroll and HR and gain unique insights and advice from our articles. Fill in the form below to subscribe to Azets newsletter.
