International Newsletter : Employment Law
Florence Coussau, Diane-Valérie Bilala
Pay Transparency: Key Challenges for Multinational Groups with French and EU-Based Employees.
A/ Overview
The Directive (EU) 2023/970 issued by the European Parliament, which entered into force on May 10, 2023, is commonly referred to as the “Pay Transparency Directive”. It is undoubtedly one of the European texts currently generating the most debate across the EU as it aims to put an end to direct and indirect pay discrimination between women and men by harmonizing practices at both national and European level.
The Pay Transparency Directive sets a shared objective of reducing unjustified pay gaps and thus establishes minimum requirements on pay transparency to comply with the principle of equal pay. Yet it does not provide a uniform, standardized rulebook. Instead, implementation will vary across EU Member States, requiring compliance to be assessed on a country-by-country basis.
To date, based on publicly available information, only 6 of the 27 EU Member States have met the deadline set by the European Union for transposing the Pay Transparency Directive, namely Estonia, Greece, Italy, Lithuania, Malta and Slovakia. France, like several other Member States, is experiencing a significant delay in the transposition process.
More than three years after the adoption of the Pay Transparency Directive, the second draft law is due to be presented to the French Council of Ministers on September 10, 2026.
Its entry into force is targeted for January 1, 2028, an objective repeatedly announced by the Minister of Labor, although this date is not yet legally fixed and remains subject to the parliamentary process and implementing decrees.
As it stands, the draft law comprises twenty-two articles and applies to employers in both the private and public sectors. It is structured around three main pillars: (i) transparency on remuneration granted to employees, both at the recruitment stage and through an annual right to information; (ii) transparency on pay gap indicators to promote greater equality between women and men; and (iii) reversal of the burden of proof and sanctions applicable in case of non-compliance.
What Will Change in Practice: Core Obligations
- No more questions about previous salary. Employers will no longer be allowed to ask candidates about their previous remuneration.
- A salary range from the job offer stage. Employers will have to communicate a salary range and the applicable collective bargaining provisions in the job vacancy notice or, failing that, prior to the job interview.
- An annual right to information. Employees will be able to request their own level of remuneration and that of colleagues holding comparable positions, unless this would allow an individual employee to be identified.
- Pay gaps under scrutiny. Any unjustified pay gap between women and men, not based on objective criteria, will trigger an obligation to implement corrective measures such as negotiations on professional equality, action plans, etc.
- Reversal of the burden of proof. In the event of a dispute, it will no longer be up to the employee to prove discrimination; instead, the employer will have to demonstrate that its decision was based on objective criteria unrelated to any discriminatory ground.
- Sanctions. In case of non-compliance, criminal sanctions may apply, such as up to two years’ imprisonment and a €7,500 fine, where an offence is committed by the same employer against several individuals.
B/ Impact of the Directive on Multinational Organizations with French and EU-Based Employees
For foreign groups already established in France, or considering doing so, this issue deserves particular attention.
The implementation of pay transparency and its transposition into French law introduce new HR compliance obligations, which will replace the current professional equality index (index de l’égalité professionnelle).
These companies are already subject to a substantial number of other non-financial reporting requirements, including the Corporate Sustainability Reporting Directive (CSRD) and the duty of vigilance.
The cumulative effect of these obligations contributes to a perception of regulatory complexity, which may be a concern for foreign investors.
Two points deserve particular attention from international groups establishing operations in France:
- Compliance with the new requirements laid down by the EU Directive may entail significant costs, as multinational companies will be required to redesign their pay structures, conduct pay-gap audits, adapt their HR information systems and monitoring processes, and train recruitment teams on the new rules governing salary transparency.
- The tension between global remuneration policies and local requirements. Many international groups apply remuneration policies and classification grids defined at global or regional level. The need to objectively justify pay gaps by category of work of equal value, using criteria compliant with French law, will require a local adaptation of these policies that some HR departments have not yet anticipated.
For multinational employers, the Pay Transparency Directive is a challenge, as they will have to navigate a regulatory patchwork should they operate in multiple EU markets.
They cannot simply wait for local implementation, bearing in mind that, at least in France, the timetable is uncertain.
Building a coordinated, group-wide compliance framework now will ensure these organizations are fully prepared when each national transposition takes effect.
Florence Coussau, Partner
Diane-Valérie Bilala, Associate