Yes. Article 2 of Directive (EU) 2023/970 applies the Directive to employers in both the public and private sectors. It applies to workers who have an employment contract or employment relationship as defined by the law, collective agreements or practice in force in the relevant Member State, taking account of applicable Court of Justice case law. Article 5 also applies to applicants for employment. Employer-size thresholds affect particular duties, especially reporting, but they should not be treated as a general boundary between employers that are covered and employers that can ignore pay transparency.
Jurisdiction: European Union
Check applicable Member State law
Article 2 Covers Public and Private Sector Employers
The Directive does not limit pay transparency to private companies. Article 2 states that it applies to employers in the public and private sectors. That means the starting scope includes commercial businesses as well as public-sector organisations where the relevant employment relationships fall within the national implementation. The fact that public-sector compensation may already use grades, scales, collective arrangements or statutory frameworks does not make the Directive irrelevant. Those systems still need to support the principle of equal pay and the transparency rights established by the Directive.
Worker Coverage Depends on the Employment Relationship
The Directive applies to workers who have an employment contract or employment relationship as defined by the law, collective agreements or practice in force in each Member State, taking account of Court of Justice case law. Employers should therefore avoid creating a scope assessment based only on internal labels such as permanent employee, temporary employee or manager. The legal relationship and national rules matter. Part-time, fixed-term and other forms of work can require consideration where they satisfy the relevant employment criteria. A sound scope assessment starts with the actual workforce rather than a narrow payroll category.
Job Applicants Are Covered Before Employment Begins
The Directive also reaches beyond existing workers. Article 5 applies to applicants for employment and creates pre-employment transparency rights concerning the initial pay level or range, relevant collective agreement provisions where applicable and protection from questions about pay history. This means an employer can have pay transparency responsibilities toward a person who never becomes an employee. Public authorities and private employers therefore need to review recruitment materials, vacancy approvals, interview guidance and recruiter processes rather than treating the Directive only as an internal employee-relations or payroll issue.
Public Employers May Already Have Structure but Still Need Transparency
Public-sector employers often operate formal job classifications, salary scales or collective agreements, which can provide useful foundations for transparency. However, structure alone does not establish compliance. Employers still need to consider whether job evaluation criteria are objective and gender neutral, whether workers can access required information, whether comparable worker categories are appropriately defined and whether pay differences can be explained. Variable allowances, progression decisions, supplements, promotion practices or local arrangements can also affect actual compensation even where the basic salary scale is highly structured.
Private Employers May Need to Formalise Previously Discretionary Processes
Private employers can face a different operational challenge where salary setting has historically relied on individual negotiation, manager discretion or loosely defined market ranges. Pay transparency makes those informal practices harder to leave unexplained. Employers may need clearer salary bands, job levels, progression criteria, recruiter instructions and approval controls. The purpose is not to remove every form of discretion, but to ensure that compensation decisions can be linked to legitimate and gender-neutral factors rather than depending on undocumented bargaining outcomes that are difficult to compare or defend.
Employer Size Changes Some Duties but Not the Basic Scope Question
Workforce size matters because the Directive contains proportionate rules for particular obligations. Member States may exempt employers with fewer than 50 workers from the specific requirement concerning pay progression criteria. Article 9 reporting begins from 100 workers, with different starting dates and reporting frequencies for the 100-to-149, 150-to-249 and 250-plus groups. Those thresholds are important, but they do not convert the Directive into a law that applies only to employers above 100 workers. Recruitment transparency, worker information rights and equal-pay principles require separate analysis.
Employers Should Map Sector, Workforce and Jurisdiction Together
A useful scope assessment has three dimensions. First, identify the employing organisation and whether it operates in the public or private sector. Second, map the workers and recruitment activities connected with that employer. Third, identify the Member State law implementing the Directive. Multinational organisations may need several country-specific assessments because procedures, authorities and stronger national requirements can differ. This approach prevents employers from relying on one factor, such as sector or workforce size, when the real compliance position depends on the interaction between the organisation, its workers and applicable national law.
Frequently Asked Questions
Does the Pay Transparency Directive apply to public-sector employers?
Yes. Article 2 expressly applies the Directive to employers in both public and private sectors.
Does the Directive apply only to large private companies?
No. Employer size changes particular obligations, especially reporting, but the Directive should not be reduced to the Article 9 reporting thresholds.
Are job applicants covered even though they are not yet workers?
Yes. Article 5 specifically creates pay transparency rights for applicants for employment.
Can national law affect who is treated as a worker?
Yes. Article 2 connects worker coverage with employment contracts or employment relationships as defined by applicable national law, collective agreements or practice, taking account of Court of Justice case law.
Related Guides
Official Sources
Requirements and practices differ by jurisdiction and organisation. Check current local law, official guidance and professional advice for a specific situation.