The employer must conduct a mandatory joint pay assessment with worker representatives if any category of workers shows a gender pay gap of 5% or more that cannot be justified by objective, gender-neutral criteria.
This is triggered under the EU Pay Transparency Directive (Directive 2023/970), which member states must transpose by June 7, 2026. The current EU-wide average gap is 11.1% (Eurostat 2024), so many employers will hit this threshold.
What triggers the joint pay assessment
- The 5% threshold applies per category of workers performing the same work or work of equal value, not to the company-wide average
- The employer has 6 months to either justify the gap using objective, gender-neutral factors (seniority, qualifications, market conditions) or remedy it
- When the gap is not justified or remedied within 6 months, the joint pay assessment is mandatory
- The assessment is conducted with worker representatives (works council, union reps, or elected employee delegates, depending on member state)
What a joint pay assessment involves
- Analysis of the proportion of female and male workers in each category
- Detailed information on average pay (base and variable) for female and male workers in each category
- Identification of pay differences and their causes
- Measures to address unjustified differences, with specific timelines
Results must be made available to workers and their representatives and submitted to the national monitoring body. Employers with 250+ employees report annually (first reports due June 7, 2027, on 2026 data). 150 to 249 employees report every 3 years, also due June 2027. 100 to 149 employees report every 3 years from June 2031.
Consequences of non-compliance
- Burden of proof reverses: once a worker shows facts suggesting pay discrimination, the employer must prove there was none
- Compensation is uncapped (back pay, bonuses, lost opportunities, non-material damages)
- Penalties must be "effective, proportionate, and dissuasive," set by each member state, and they include banning suppliers (public procurement exclusion)
Companies, including those wanting to reach pay equity, typically start a pay audit now rather than waiting for the June 2027 deadline, since remediation of a 5% gap takes 6 months before the joint assessment is triggered. Updates from the European Council track member state transposition.
Disclaimer:
This article informs. It does not advise on the law. EU member states transpose this rule differently. Some may set stricter thresholds.
TL;DR
- A 5%+ gender pay gap in any worker category triggers a mandatory joint pay assessment with worker representatives when the gap cannot be justified within 6 months.
- The assessment analyses causes, sets remediation timelines, and is submitted to the national monitoring body. Burden of proof reverses.
- Compensation is uncapped, and the first reports on 2026 data are due in June