Why the Pay Transparency Directive matters to Swedish employers
The EU Pay Transparency Directive (Directive 2023/970) is one of the most significant employment-law reforms in years. Its aim is to reinforce the principle of equal pay for equal work, or work of equal value, through greater transparency in how pay is set. Member states were required to transpose the rules into national law by 7 June 2026.
The situation is particularly interesting for Swedish employers. Sweden has not yet implemented the directive in national law, and the government has signalled that it wants to postpone transposition and push for a renegotiation at EU level. At the same time, the directive is in force as EU law, and many companies – especially those operating in several EU countries – should prepare regardless. This article explains what the directive requires, how it relates to Sweden’s existing pay-mapping rules, and what you should be doing now.
What is the Pay Transparency Directive?
The directive introduces binding pay-transparency measures and mechanisms to detect and address unjustified pay gaps between women and men. On top of the existing equal-pay principle, it adds concrete obligations around information, reporting and the burden of proof. The rules apply in principle to all employers, but the reporting duties are phased in according to headcount.
The most important requirements
Transparency before employment
Job applicants must receive information about the starting salary or pay range for a role, either in the job advertisement or ahead of the interview. The criteria must be objective and gender-neutral. Employers may not ask candidates about their pay history.
The right to pay information
Employees gain the right to request information about their own pay level and about average pay levels, broken down by sex, for workers doing equal work or work of equal value. Employers must inform staff of this right annually.
Objective, gender-neutral pay criteria
Pay and pay progression must be based on objective, gender-neutral criteria – such as skills, responsibility, effort and working conditions. Companies need pay structures that make it possible to assess whether two roles are comparable.
Gender pay gap reporting
Employers must report the pay gap between women and men, with the duty phased in by size. Employers with at least 250 employees report for the first time by 7 June 2027 and annually thereafter. Employers with 150–249 employees report for the first time in 2027 and then every three years, while employers with 100–149 employees begin reporting in 2031 and every three years thereafter. The first reports draw on pay data from 2026.
Joint pay assessment where the gap is 5 per cent or more
If reporting reveals a pay gap of at least 5 per cent within a category of workers that cannot be justified on objective, gender-neutral grounds – and is not remedied within six months – the employer must carry out a joint pay assessment together with worker representatives and take corrective measures.
Reversed burden of proof
Where an employer has failed to meet its pay-transparency obligations, the burden of proof in a dispute shifts to the employer, who must then show that no pay discrimination occurred. The directive also provides for compensation and penalties.
Where things stand in Sweden right now
The inquiry “Implementation of the Pay Transparency Directive” (SOU 2024:40) was circulated for consultation during 2025, and on 15 January 2026 the government adopted a legislative referral (lagrådsremiss) proposing amendments to the Discrimination Act (2008:567). The direction then shifted: in March 2026 the government first announced that transposition should be moved to 1 January 2027, and shortly afterwards that it wants to postpone implementation further, initiate a renegotiation of the directive, and refrain for now from submitting a bill to parliament.
The government’s assessment is that the directive is too administratively burdensome and risks undermining its own purpose. It therefore intends to seek more time and rule simplification at EU level. For employers this creates legal uncertainty: the directive formally applies as EU law from 7 June 2026, but there is as yet no new Swedish legislation implementing it.
It is worth remembering that Sweden already has rules close to the directive’s purpose. Under the Discrimination Act, employers must carry out an annual pay survey (lönekartläggning) to detect and remedy unjustified pay differences between women and men, and employers with at least ten employees must document this work in writing. Companies that already do thorough pay-survey work therefore have a solid foundation for the stricter transparency requirements once they are implemented.
Practical example
Imagine a Swedish technology company with 300 employees and subsidiaries in Germany and the Netherlands. Even though Sweden is holding back on its legislation, Germany and the Netherlands have introduced the directive into their systems. The group’s German and Dutch entities must already state pay ranges in job ads and prepare gender-based reporting. To avoid running two different approaches within the group, many companies choose to raise the level of transparency everywhere – including in Sweden. This illustrates why the directive becomes practically relevant in Sweden well before a Swedish law is in place.
Common mistakes companies make
The first mistake is to wait entirely until a Swedish law exists. Because the requirements rest on pay data from 2026, companies that wait may struggle to reconstruct the underlying data afterwards. A second mistake is to treat this purely as an HR issue; in practice it touches pay structures, recruitment, finance and legal. A third mistake is lacking a systematic job-evaluation method, which makes it hard to show that pay differences are objectively justified if they are challenged.
Recommended actions
Start by making sure your annual pay survey under the Discrimination Act is thorough and documented. Review your pay criteria so they are objective and gender-neutral, and establish a job-evaluation model that makes roles comparable. Map which reporting thresholds apply to you based on headcount, and preserve pay data from 2026. Groups operating in other EU countries should already be tracking implementation in those markets. Document your decisions so you can demonstrate objective reasons if pay differences are questioned.
Frequently asked questions
Does the Pay Transparency Directive already apply in Sweden?
The directive applies as EU law from 7 June 2026, but Sweden has not yet transposed it into national law. The government has announced that it wants to postpone implementation and push for a renegotiation. Sweden’s existing pay-survey rules under the Discrimination Act apply regardless.
Do we have to state salaries in job advertisements?
Under the directive, applicants must receive information about the starting salary or pay range before employment. Exactly how this will work in Sweden will be settled only when the directive is transposed, but companies operating in other EU countries may already be covered through those countries’ rules.
Which companies are covered by the reporting requirements?
Reporting is phased in by size. Employers with at least 250 employees report annually from 2027, those with 150–249 employees every three years from 2027, and those with 100–149 employees every three years from 2031.
Conclusion
The Pay Transparency Directive marks a clear shift towards greater openness in how pay is set. Even though Swedish implementation is currently postponed and uncertain, the directive applies as EU law and many companies are already affected through operations in other member states. The employers who review pay structures, job evaluation and documentation now are the best prepared – both for the coming rules and for building trust internally.
Lawgent helps companies navigate employment law and compliance using law and AI. Want to understand how the Pay Transparency Directive affects your specific business and how to prepare in practice? Get in touch with Lawgent and we will help you get started.
