Italy’s Draft Pay Transparency Law – What HR Needs to Know

At a glance:

• Job comparisons: Same and equal-value work are assessed mainly by national collective agreement (CCNL) classifications; employer frameworks are allowed as a complementary, gender-neutral tool.
• Further guidance pending: The Ministry of Labour may issue guidance by 31 December 2026 on how work of equal value should be assessed in practice.
• Hiring transparency: Pay (or pay range) must be disclosed to candidates; salary history questions are prohibited.
• Employee pay rights: Employees may request average pay by gender (response within 2 months); employers with 100+ employees may publish this information proactively (e.g. via an internal intranet accessible to all employees)
• Pay gap reporting (100+): Detailed gender pay gap reporting applies from 100 employees, with phased first deadlines (150+ by 7 June 2027; 100-149 by 7 June 2031).
• Group reporting option: Where a uniform group pay policy applies, pay gap data may be aggregated at national level.
• 5% trigger: An unjustified ≥5% pay gap in any worker category requires a joint pay assessment with worker representatives.

Introduction
Italy is gearing up to implement the EU Pay Transparency Directive (Directive (EU) 2023/970) with a new draft legislative decree that promises to shake up traditional pay practices. HR and compensation professionals can expect clearer rules on salary disclosures, a ban on questions about past pay, and robust rights for employees to access pay information. In this article, we outline Italy's legislative approach to the directive, the key employer obligations (from job ads to annual reports), and how the Italian draft aligns with (or diverges from) the EU requirements. We'll also note where details remain tentative pending the final law, so you know what to watch for.

Italy's Legislative Approach to Implementation

Italy is transposing the EU directive via a dedicated legislative decree (currently in draft form), rather than simply amending existing laws. This standalone decree consists of 16 articles and explicitly implements Directive 2023/970. The decree will apply across both the public and private sectors.

National "Gold-Plating"? Interestingly, the Italian draft does not significantly exceed the EU directive's requirements - in some ways it hews closely to the minimum standards. Notably, it sets the employer size threshold for certain obligations at 100 employees, matching the directive's floor and not extending mandatory pay reporting to smaller firms. (However, bear in mind Italy already has a national reporting requirement from a 2021 reform: companies with over 50 employees must file a biennial gender equality report under Article 46 of the Equal Opportunities Code. This existing national rule remains in force, effectively capturing medium-sized firms even though the new EU-based obligations will formally kick in only at 100+ employees.) The draft also largely mirrors the directive's timelines and standards - for example, using the directive's 5% pay-gap trigger for action and the same phase-in dates for reporting. One area of slight leniency is that very small employers (<50 staff) are excused from documenting their pay raise criteria (more on that below), a concession aimed at reducing burden on micro-businesses. Overall, Italy's implementation approach is a near-literal transposition of the EU rules, supplemented by domestic practices.

Pay Transparency Before Hiring

The Italian draft law will transform how companies advertise jobs and handle candidate inquiries about pay. Salary range disclosure will be mandatory in recruitment. Employers must provide information on the initial wage or its range to job seekers before hiring, this means job postings and vacancy notices will need to clearly state the offered compensation.

At the same time, Italy will impose a ban on salary history questions. Employers (and any recruiters acting for them) cannot ask applicants about their current or past remuneration, nor can they try to dig up such information indirectly. This blanket prohibition aims to stop the perpetuation of pay gaps from one job to the next. In other words, a candidate's previous low salary can't be used against them in salary negotiations for a new role - leveling the playing field for those (often women) who historically earned less.

Another requirement is that job advertisements and hiring processes be gender-neutral and non-discriminatory. The draft specifies that selection and recruitment procedures must be conducted in a non-biased manner, and job announcements should be written using gender-neutral criteria (including any description of job titles or qualifications). This echoes existing equality principles but puts a spotlight on wording and practices in early hiring stages. HR teams should review their templates for job ads and interview scripts to ensure nothing in them could be seen as favoring a particular gender or otherwise discriminatory.

These pre-hire transparency obligations represent a cultural shift. Italian HR professionals will need to coordinate with recruiting and talent acquisition teams to ensure every vacancy notice includes the pay information required and that interviewers are trained not to broach forbidden topics like a candidate's salary history. While these changes will require some adjustments, the goal is to make the hiring stage fairer and more transparent from the outset.

Pay Transparency During Employment

Once employment begins, the draft law continues to shine light on pay structures and levels inside the organization. Several new duties will fall on employers to provide transparency to existing staff:

• Transparent pay setting and progression criteria: Companies will need to divulge the criteria used to determine pay and career progression. The draft requires employers to make easily accessible to employees the criteria on which remuneration and pay levels are based (these should be objective, gender-neutral criteria as defined in the law's equal pay framework). In addition, employers must share the criteria for salary increases or advancement ("progressione economica"), such as how bonuses are decided or what criterias lead to raises or promotions. This transparency aims to let employees understand how their pay is set and how they can progress, rather than these processes being a black box. However, recognizing the burden on very small businesses, the law exempts employers with fewer than 50 employees from having to provide the criteria for pay progression (they still must disclose the criteria for setting pay levels). Larger employers must ensure these policies or guidelines are documented and available (for instance, published on an intranet or included in employee handbooks).
• Right for employees to request pay information: Perhaps the most empowering change is that workers will have a statutory right to information about pay levels. An employee who suspects a pay gap or simply wants to check can request written data on the average pay levels for colleagues of the same and opposite sex who do the same or equivalent work. Upon such request, the employer must provide the information in writing within two months. The data should show the average remuneration broken down by gender for the category of employees performing the same job or work of equal value as the inquiring worker. Employers cannot fob off or ignore these inquiries - a substantive, written answer is obligatory. If the response is incomplete or seems off, the worker can ask for clarifications, to which the employer must respond with reasoning.
• Annual notification of rights: To ensure employees actually know about this new right, companies will be required to inform their staff every year that they can request pay information and explain how to do so. This might be done via an internal memo, email, or posting on a staff portal. The key is that no one should be left in the dark that they are entitled to comparative pay data.
• Proactive disclosure option: The law gives larger employers a way to streamline the process: organizations with at least 100 employees may opt to publish the gender pay information proactively (e.g. on the company intranet or a secure employee portal). By voluntarily making average pay by gender for each role category accessible to all staff, a company can potentially reduce individual requests - employees can see the figures on their own. This is permitted under the draft, though not mandated. It's a practical way for HR to demonstrate transparency and perhaps preempt concerns.
• No pay secrecy clauses: Importantly, the Italian draft explicitly forbids pay secrecy policies. Employers cannot prevent employees from disclosing their own pay, and any contract clause that seeks to gag workers about their salary is void and prohibited. In other words, an employee is free to tell colleagues what they earn if they choose - an employer can't sanction them for it. This aligns with the directive's intent to remove taboos around discussing pay.
• Respecting confidentiality of others' data: On the flip side, while employees can discuss their own pay, if they obtain information about coworkers' pay through the formal request process, they must use it responsibly. The draft specifies that information obtained about others (e.g. the average pay of a category of colleagues) is to be used only for the purpose of pursuing equal pay and not for unrelated reasons. This is a reminder to maintain professionalism and privacy - HR may want to communicate guidelines on handling any salary data that gets shared.

In sum, HR departments will need to set up channels for employees to inquire about pay (and a process to gather the required comparative data quickly). Documentation of pay determination criteria should be updated and published internally. And all managers should be coached that employees discussing or asking about pay is a protected activity under the new regime - not grounds for reprisal. Transparency inside the workplace is about to become the norm, shifting the culture from "never ask your coworker about their salary" to an environment where such inquiries are legitimate and supported by law.

Mandatory Pay Gap Reporting and Joint Assessments

Beyond individual rights, the Italian draft law mandates organizational transparency through reporting. Medium and large employers will have to periodically crunch the numbers and share data on their gender pay gaps. The decree outlines a comprehensive set of metrics that must be collected and communicated to authorities:

• Companies will need to compile data on their overall gender pay gap, both in terms of average gross pay and for any complementary or variable pay components (like bonuses). They must report the median pay gap as well - comparing the median female pay to median male pay - again including a breakout for variable pay.
• Employers must report the percentage of male and female employees receiving bonus pay or other variable components. They also have to break down their workforce into pay quartiles by gender - essentially showing the distribution of men and women in each pay quartile (from lowest paid 25% up to highest 25%).
• Another required metric is the gender pay gap by employee category, segmented by base salary and by extras. This means firms should calculate pay gaps within each group of employees performing the same or equal-value work, to pinpoint disparities in comparable roles.

This packet of information is quite detailed, reflecting the EU directive's standards. The format and procedures for submitting these pay data will be defined by the Ministry of Labour via implementing decrees. The Ministry's decrees will specify exactly how employers must calculate and transmit the figures (likely through an online platform), which data points they need to communicate, and so on. The ministry is also tasked with providing technical support and training initiatives to help employers fulfill these obligations. In other words, guidance and possibly templates or tools will be developed to ease the reporting process.

Who must report and when? The draft sets graduated deadlines depending on company size, mirroring the directive's timetable. All employers with at least 100 employees will eventually be obliged to collect and communicate the pay gap data, but smaller ones get more time. Specifically, companies with 150 or more workers must be ready to report using data as of no later than 7 June 2027, whereas those in the 100-149 range have until 7 June 2031 to come into the system. (Firms below 100 employees are not required to do this reporting at all under the draft, unless Italy later decides to extend it.) Furthermore, the frequency of reporting will differ by size: larger employers will likely report more often. The draft sets staggered entry dates for pay gap reporting (150+ employers from 2027; 100–149 from 2031), but does not expressly distinguish reporting frequency by employer size. A literal reading could therefore suggest annual reporting for all covered employers, rather than the Directive’s split between annual and three-year cycles. This point will require close monitoring as the legislative process continues and implementing measures are adopted. In practice, many employers are likely to spend 2026 preparing internal systems to ensure reporting readiness ahead of the first deadlines.

Joint pay assessments (the 5% trigger): Transparency is not an end in itself - it's meant to drive action on unjustified pay gaps. The Italian draft therefore includes a mechanism for joint pay evaluations when significant disparities are revealed. If the reported data show a gender pay difference of 5% or more in any category of workers, and the employer cannot justify this gap by objective gender-neutral factors, the company must undertake a joint pay assessment together with worker representatives. In essence, a 5% unexplained pay gap is a red flag that triggers a mandatory investigation and action plan.

Here's how it works: Once the pay transparency data are compiled, employers should try to rectify any glaring gaps within six months of having the information. If a gap ≥5% persists without an objective justification (and hasn't been remedied in that time frame), the employer is then required to team up with employee representatives (such as the company's works council or trade union reps) to analyze the situation and find solutions. This joint pay assessment will delve into the distribution of men and women across job categories, compare male and female pay levels and bonus components in each category, and identify the factors behind any differences. The aim is to agree on measures to correct unjustified disparities and prevent them going forward. In some cases, the labor inspectorate or equality body may also be involved to support the process. The draft effectively puts the onus on employers to not only be transparent but to act on the transparency: a consistent gap cannot simply be reported and ignored.

If your organisation applies a unified group pay policy ("politica salariale unitaria di gruppo"), the draft allows you to provide the Article 9 reporting information by aggregating data at national level - but only where that delivers a more reliable representation. This is an option, not a mandatory approach.

For HR, this means that the annual or periodic pay-gap number isn't just for the sustainability report or a checkbox; if it's high and unexplainable, it becomes an internal project with potential legal implications. Employers would be well advised to start evaluating their pay structures now, before formal reporting kicks in, to address any looming 5%+ gaps. It's preferable to handle discrepancies proactively than to be compelled into a formal joint assessment under the scrutiny of employee reps.

Support Measures and Compliance Timeline

The Italian government recognizes that these changes are substantial, so the draft law includes provisions to support employers (and employees) in the transition:

• Guidance on "work of equal value": A critical concept underpinning equal pay is the notion of equal value - ensuring different jobs that are of equal value to the employer are paid equitably. The draft leans heavily on collectively agreed job classifications to determine when work is of equal value, and it establishes general criteria (qualifications, effort, responsibility, working conditions, etc.) for evaluating job value in a gender-neutral way. To help operationalize this, the Ministry of Labour is empowered to issue one or more decrees by 31 December 2026 providing guidance on applying the equal value criteria in practice. These could take the form of guidelines or an official methodology for job evaluation. For HR professionals, that means more clarity is on the horizon about how to compare dissimilar roles and ensure your internal grading/remuneration systems meet the new standards. The involvement of Italy's collective bargaining partners is also key - many details might be fleshed out through dialogue with unions, given the draft explicitly calls on collective agreements to ensure gender-neutral pay classification systems. There may be an industry-specific dimension to this guidance as sectors adapt the principles to their job profiles. The draft clarifies that the statutory and national collective agreement classification systems are the reference tool for job comparison, because they are presumed aligned with the objective, gender-neutral evaluation criteria. At the same time, it expressly allows employers to use their own professional classification systems to support pay determination as a complement to the CCNL, provided those employer systems are also based on objective, gender-neutral criteria.
• Technical assistance and tools: The decree instructs the Ministry of Labour to provide technical assistance and even training initiatives to support employers in complying with the new obligations. We can expect the Ministry to develop tools (perhaps software templates for pay reporting, FAQs, or helplines) to make it easier, especially for smaller companies, to gather and submit the required information. The text specifically mentions the Ministry will define and offer support measures to facilitate employers' fulfillment of these duties.
• Monitoring and public transparency: To oversee the implementation, an independent monitoring body is being established within the Ministry of Labour. This body will have several tasks that actually benefit employers and employees alike. It will promote awareness of the equal pay and transparency principles and tackle intersectional discrimination issues in pay. It's also charged with analyzing the causes of gender pay gaps and developing instruments to assess pay disparities - drawing on expertise such as the EU's Institute for Gender Equality (EIGE). Crucially, the monitoring body will handle all the data submitted by employers: it will collect the pay gap reports and then publish aggregate data on gender pay differences in a user-friendly way. The idea is to allow easy comparison across employers, sectors, and regions. For instance, once reporting is underway, one might see national statistics or even rankings showing which industries or companies have higher gaps. Additionally, the body will compile information on the number and type of pay discrimination complaints and lawsuits happening in Italy, to gauge how the new rules are working in practice. Starting in 2028, the Ministry must also send yearly statistics to Eurostat on the national gender pay gap, broken down by sector, employment type, and other factors. All this means transparency at the societal level: not only will employees within a company see information, but there will be public visibility of the issue, creating reputational incentives for employers to improve. HR professionals should be prepared for a world in which pay-gap metrics could be scrutinized by external stakeholders (investors, the media, future recruits) once published.
• Timeline recap: By EU law, Italy must have the pay transparency measures in place by 7 June 2026. The draft is currently making its way through the legislative process (the Council of Ministers began examining it in February 2026). Assuming it is finalized and enacted in 2026, many provisions - like the ban on asking salary history or requirement to include pay in job ads - could take effect quite soon after. The reporting obligations, as noted, phase in by 2027 for large employers and 2031 for mid-sized ones. There is also a grace period until end of 2026 for the government to issue guidance on equal value. Employers should use this runway to update policies, implement any needed HRIS changes to capture data, and train staff on the new requirements. Mark your calendars for the key milestones: the likely effective date of the decree in 2026 (to start compliance on hiring transparency and internal requests), the first reporting deadline in 2027 for large firms, and the joint assessment trigger review every reporting cycle.

Alignment with the EU Directive (Stricter or More Lenient?)

Overall, Italy's draft legislation hews closely to the EU Pay Transparency Directive's mandates, with only a few national particularities:

• Stricter elements: The Italian draft does not appear to add extra obligations beyond the directive's scope - it largely avoids gold-plating. In fact, Italy opted to stick with the directive's minimum threshold of 100 employees for reporting duties, whereas some countries could have chosen to include smaller firms. Italy also mirrored the directive's 5% gap threshold and the extended timelines for medium-sized employers (2031 for 100-149 staff), rather than accelerating them. It's worth noting that prior Italian law (still in force) is stricter on one front: companies with over 50 employees already must produce a gender personnel report biennially. However, that is an older national requirement and not a creation of this draft. The new decree itself didn't impose any new below-100 obligations that the directive didn't require. In practice, though, Italy's existing 50+ reporting duty means Italian companies in the 50-99 band are already doing something akin to pay transparency (albeit with less granular indicators) - so one could say Italy is already gold-plated from before, but not because of this implementation act.
• Lenient or unique interpretations: The draft law did introduce a small concession by exempting micro-employers from publishing pay progression criteria. The EU directive didn't explicitly carve that out, so Italy is being considerate of very small businesses in this aspect. Another notable point is that the Italian law leans on collective labor contracts to define job classifications for equal value. This fits Italy's industrial relations context, where national union contracts set pay scales.
• Enforcement mechanisms: The directive emphasizes effective enforcement, including shifting the burden of proof to employers in discrimination cases and protecting workers from retaliation. Italy is already aligned here, as its legal system for equality cases already requires employers to prove that pay differences are not discriminatory once a prima facie case is shown (per Article 40 of Legislative Decree 198/2006), and the new decree explicitly invokes anti-retaliation protections. One potential gap is that the draft does not spell out new administrative fines for failing transparency obligations (for example, not posting a salary range in a job ad or not answering an info request). It relies on existing discrimination law to address violations. This may be an area to watch: it's possible that in the legislative review, penalties will be clarified to ensure there is a deterrent for non-compliance even if no individual comes forward with a discrimination claim. In short, the Italian approach is slightly more employer-friendly in not piling on extra requirements or punishments beyond what the EU directive strictly said - but companies should not be complacent. The combination of public reporting and existing anti-discrimination remedies will create significant legal and reputational pressure to comply fully.
• No extension to gig workers or others: The directive left some ambiguity about its application to non-traditional workers. Italy's draft applies to workers with an employment contract (including part-time, fixed-term, etc.). It doesn't explicitly mention genuinely self-employed professionals or gig workers without a contract of employment. This is consistent with the directive, which focused on "workers" in the EU-law sense, but it means the law isn't broadened beyond the directive's personal scope.

In summary, the Italian draft law aligns with the directive almost article by article. There are no nasty surprises or extra hoops for employers beyond what the EU envisioned - aside from Italy continuing its own parallel efforts on gender equality (like the 50+ employee report and a recent gender equality certification scheme under Article 46-bis of the Code, which savvy HR teams might use to their advantage for compliance and branding). The main differences lie in implementation details shaped by Italy's context rather than in higher demands.

Pending Clarifications and Next Steps

As of now, the law is still a draft, so some details could change before final approval. Key points that HR and reward professionals should keep an eye on as the legislative process concludes:

• Final text and guidance: The legislative decree may undergo tweaks - for example, Parliament or the government might adjust the sanction regime or thresholds slightly. We will only know the definitive obligations once the decree is published in the Official Gazette. Additionally, many practical aspects are deferred to ministerial decrees (secondary regulations). For instance, the methodology for reporting and the standard forms employers will use are to be defined by the Ministry of Labour. Similarly, the promised guidelines on evaluating equal-value work must be issued by end of 2026. These will be crucial for implementation. Companies should be prepared to adapt once those details are released.
• Definition of "equal value": While the draft provides a general definition and leaves much to collective agreements, the operational definition of "work of equal value" is a crucial factor that is still pending clarification. How do you compare two very different jobs to see if they should be paid the same? The upcoming ministerial decrees or guidelines should shed light on this, potentially with examples or evaluation factors. HR will need to integrate that definition into job grading and compensation systems.
• Interaction with existing reporting duties: Many are wondering how the new EU-level reporting will mesh with the biennial report on personnel (Article 46 D.Lgs.198/2006) that Italian companies ≥50 employees already submit. As of the draft, they appear to be parallel obligations. It's possible the government will streamline them - perhaps by allowing the EU metrics to satisfy the national report, or vice versa. Clarification on this point would be welcome, so companies aren't duplicating efforts. Until we see further guidance, prudent planning would be to anticipate doing both, or at least ensuring that data collected can feed into both requirements.
• Enforcement and penalties: The draft references existing sanctions for proven discrimination, but it does not explicitly lay out fines for failing, say, to include salary info in a job post or for missing a reporting deadline. In the EU directive, Member States must set "effective, proportionate and dissuasive" penalties for breaches. We expect that the final version or subsequent regulations will clarify the consequences of non-compliance (e.g. administrative fines by labor inspectors for omissions). HR compliance officers should watch for this, as it will inform the urgency and internal escalation of these tasks. In any case, ignoring the obligations is not advisable - aside from legal fines, non-compliance could be used as evidence against an employer in discrimination litigation (and the burden of proof would shift to an employer who hasn't met transparency duties).
• Collective bargaining role: The draft heavily involves collective bargaining in implementing pay transparency (for defining job classifications, addressing pay criteria, and conducting joint assessments). This means that some specifics may be worked out through social dialogue. For companies, especially those with unionized workplaces or works councils, it will be important to engage with employee representatives proactively. The "discussion formalmente attesa" (formal discussion expected) on these matters suggests that the rollout will include negotiations or consultations at various levels. Stay tuned to whether any sector-wide agreements or guidelines are issued by unions and employers' associations to complement the law.

In conclusion, Italy's draft pay transparency law is poised to bring significant changes in how employers manage and communicate pay. While much of the framework is now evident - salary range in job ads, no asking prior pay, the right for employees to know what others earn on average, and periodic gender pay gap reports - the final fine print and practical guidance will solidify in the coming months. HR and compensation professionals should begin laying the groundwork: audit your current pay structures for fairness, update recruiting policies, brief your leadership on the upcoming duties, and perhaps pilot internal pay transparency initiatives to get comfortable with the concept. The spirit of the directive and the Italian law is clear: the era of pay secrecy is ending, and those organizations that embrace transparency early can turn it into a strategic advantage in talent attraction and retention. As always, we will provide updates once the law is finalized and as further guidelines emerge, so you can confidently steer your company into compliance with Italy's new pay transparency regime.

Sources:

• Schema di decreto legislativo attuativo della Direttiva (UE) 2023/970 (Italian draft law on pay transparency), Articles 1-16
• Codice delle Pari Opportunità (D.Lgs. 11 aprile 2006 n.198), Article 46 (as modified by Law 162/2021) - Biennial report obligation for companies >50 employees

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