March 29, 2026
If countries delay implementing the Pay Transparency Directive, enforcement shifts to EU-level procedures and state liability, while courts may begin aligning national law with the directive’s objectives.
Category:
Pay Equity LegislationAuthor:
Adam Seoudi
/
Head of CX
PTD is the EU’s pay transparency directive. It is designed to strengthen the principle of equal pay for equal work or work of equal value through pre-hiring transparency, employee information rights, pay-gap reporting, joint pay assessments, and stronger enforcement. Under Article 34, Member States must bring the necessary national measures into force by 7 June 2026 and notify them to the Commission.
Several Member States have already signalled implementation slippage. In Czechia, the Ministry of Labour has published a draft under which the basic provisions would enter into force on 1 January 2027, even though the Directive must be transposed by 7 June 2026.
There are now concrete signs that implementation will not be uniform across the EU. Several Member States have already signalled implementation slippage. In Czechia, the Ministry of Labour has published a draft under which the basic provisions would enter into force on 1 January 2027. Denmark’s consultation draft provides for an entry into force on 1 January 2027. In the Netherlands, official parliamentary materials state a target entry into force of 1 January 2027. In Sweden, the government has publicly said that it intends to postpone the entry into force of the new rules and, more recently, that it does not currently intend to submit a proposition on the directive to Parliament. France also appears to be at serious risk of delay: in March 2026, the Ministry of Labour was only beginning consultation on draft transposition legislation, and specialist advisers were already warning that the law would likely not be enacted until the end of 2026.
For Poland, a detailed draft law has been published, including pay transparency mechanisms and calculation rules. However, informal signals point to a possible delay due to legislative and institutional challenges - indicating progress, but also a credible risk of missing the deadline.
Key takeaway: For Directive 2023/970, the legal switch flips on 7 June 2026. Before that date, the issue is implementation risk; after that date, any Member State that has not properly adopted and notified the necessary measures moves into infringement territory.
The starting point is Article 258 TFEU. If the Commission considers that a Member State has failed to fulfil an obligation under the Treaties, it gives the State the opportunity to submit observations, then issues a reasoned opinion. If the State still does not comply within the period laid down by the Commission, the Commission may bring the matter before the Court of Justice of the European Union. In practice, the Commission’s formal process begins with a letter of formal notice, then moves to the reasoned opinion, and only then to referral to the Court.
The Commission’s own guidance is explicit on the stages. First, it sends a letter of formal notice and usually gives the Member State around two months to respond. Second, if the Commission remains unconvinced, it issues a reasoned opinion, again usually with a two-month compliance window. Third, if non-compliance continues, it may refer the case to the CJEU. The Commission also notes that most cases are settled before referral.
Financial sanctions are governed by Article 260 TFEU, and this is where late transposition becomes more serious. Under Article 260(2), if a Member State does not comply with a prior CJEU judgment, the Commission can return to the Court and seek a lump sum and/or a daily penalty payment. But Article 260(3) is especially important for directives: where the infringement is a failure to notify transposition measures for a directive adopted under a legislative procedure, the Commission may ask for sanctions already in the first court referral.
The Commission explains that financial penalties are calculated by reference to three core factors: the importance of the breached rules and the impact on general and private interests, the duration of the infringement, and the Member State’s ability to pay so that the sanction remains deterrent. The Court, not the Commission, sets the final amount.
Key takeaway: Missing a directive deadline is not a procedural footnote. For non-notification of transposition measures, Article 260(3) TFEU allows the Commission to seek lump-sum and daily penalties without waiting for a second round of litigation.
The classic damages case is Francovich. Italy failed to implement Directive 80/987 on employee protection in employer insolvency. The CJEU held that the directive’s result clearly granted rights to individuals and that, where a Member State fails to implement a directive, EU law requires a right to reparation if three conditions are met:
- the directive must confer rights on individuals,
- the content of those rights must be identifiable, and
- there must be a causal link between the State’s breach and the loss suffered.
At the same time, the Court found that the workers could not directly enforce the guarantee mechanism in that case because the directive did not identify who was liable to provide it.
That line was strengthened in Dillenkofer. The Court stated that failure to take any measure to transpose a directive within the prescribed period constitutes, in itself, a sufficiently serious breach of EU law, provided the directive confers identifiable rights and there is a causal link to the loss. That matters because it lowers the practical barrier for damages claims when a Member State simply misses the deadline altogether.
On financial penalties, Commission v Belgium (C-543/17) was the Court’s first interpretation and application of Article 260(3) TFEU. Belgium had not fully transposed the high-speed networks directive. The Court found that the infringement persisted and ordered Belgium to pay EUR 5,000 per day until compliance.
In Commission v Ireland (C-550/18), concerning the Anti-Money Laundering Directive, the Court ordered Ireland to pay a lump sum of EUR 2 million. That case is important because it shows that even where transposition progresses during the proceedings, a long delay can still justify a substantial lump-sum sanction.
A more recent example is Commission v Poland (C-147/23) on the Whistleblowers Directive. The Commission sent a formal notice on 27 January 2022, a reasoned opinion on 15 July 2022, and the Court’s judgment followed on 25 April 2024. The Court imposed a EUR 7 million lump sum and, if the infringement still persisted at delivery of judgment, a EUR 40,000 daily penalty payment until compliance. The Court also rejected Poland’s reliance on legislative complexity, COVID-19 disruption and refugee-related pressures as justifications for missing the transposition deadline.
These cases matter for pay transparency because they show three distinct consequences of late implementation: infringement proceedings brought by the Commission, court-imposed financial sanctions on the State, and damages claims by individuals against the State where the failure causes loss.
The answer depends first on timing. Before 7 June 2026, the transposition period for Directive 2023/970 is still running. As a rule, workers cannot treat the directive as if national law were already missing. During the transposition period, however, Member States must refrain from adopting measures that would seriously compromise the directive’s result.
After 7 June 2026, the analysis changes. A directive may have vertical direct effect where the relevant provision is sufficiently precise and unconditional, and the claim is brought against the State or an “emanation of the State”. The case law from Marshall and Foster confirms that sufficiently precise directive provisions may be relied on against the State, including bodies under State control or entrusted with public services and special powers.
But directives do not have horizontal direct effect. A worker cannot simply sue a private employer and say: “the State failed to transpose the directive, so the directive applies directly between us.” That is the point made in Marshall and reaffirmed in Faccini Dori: a directive cannot of itself impose obligations on an individual and therefore cannot be relied upon as such against an individual.
That is not the end of the story. National courts must, so far as possible, interpret domestic law in line with the wording and purpose of the directive. Von Colson and Marleasing are the leading authorities for that principle of indirect effect or consistent interpretation. In practice, that can matter in disputes against both public and private employers where there is already national legislation that can be read compatibly with the directive.
Finally, there is state liability. If a Member State misses the deadline and that failure causes loss, workers may claim damages against the State under the Francovich principle, as refined by later case law. A simple example: if a public-sector employee loses a realistic chance to challenge pay discrimination because the State failed to create the procedural machinery that the directive required, a damages claim against the State may become arguable. By contrast, in a dispute against a private manufacturer, the worker cannot rely on the directive alone as if it were national law; the stronger routes are existing equal-pay law, consistent interpretation of national law, or a Francovich-style claim against the State.
Key takeaway: After the deadline, employees may be able to rely on the directive against the State, may benefit from directive-consistent interpretation of national law, and may claim damages against the State. They generally cannot rely on the directive as such in a purely private dispute against a private employer.
For employers, the central mistake is to assume that “no national law yet” means “no legal exposure yet”. That is too simplistic.
First, before transposition, the directive itself is already setting the compliance direction. It requires Member States to create rights such as pre-employment pay transparency, worker information rights, gender pay-gap reporting, joint pay assessments and stronger remedies. Once transposed, those rights will not be marginal. Workers must have access to compensation, including back pay and interest, without any prior upper limit; if an employer has not complied with the pay-transparency obligations in Articles 5, 6, 7, 9 and 10, the burden of proof shifts to the employer in pay-discrimination proceedings.
Second, some risks are commercial as well as legal. Under Article 24, Member States must include equal-pay compliance in public procurement performance conditions, and contracting authorities may exclude operators from procurement procedures where they can demonstrate non-compliance with pay-transparency obligations or an unjustified pay gap above 5% in a worker category. For employers selling to the public sector, waiting for the final national text is particularly risky.
The practical response is straightforward. Companies should already be doing five things:
1. Map their workforce into defensible categories of “same work” and “work of equal value”.
2. Test pay structures, allowances, bonuses and variable pay for unexplained sex-based differentials.
3. Build recruitment controls now, especially for salary-history questions and pre-offer pay communication.
4. Prepare evidence trails for objective, gender-neutral justifications.
5. Align HR, legal, finance and internal audit so that any eventual reporting can be produced consistently across jurisdictions.
Those steps are not marketing hygiene; they are the preparation needed to deal with Articles 5 to 10, 16 to 24 and 29 of the directive.
From an EU-law perspective, “waiting for implementation” is risky for two reasons. At Member State level, once the deadline passes, late transposition can trigger formal infringement action under Article 258 TFEU and financial sanctions under Article 260 TFEU. At company level, delayed national implementation does not eliminate exposure; it postpones and concentrates it, while courts, equality bodies, workers’ representatives move into position.
For multinational and local employers alike, the safer strategy is proactive compliance. Directive 2023/970 is not a narrow reporting rule. It is a structural enforcement instrument built around transparency, evidential pressure, compensation, and public accountability. By the time national laws are finalised, employers that have not already cleaned up job architecture, pay governance and data quality will be doing legal remediation under time pressure.
Cross-border employers should assume staggered implementation, but converging substance. National details will differ on procedure, enforcement architecture and reporting channels, yet the core EU model is already fixed: pre-hiring transparency, employee information rights, reportable pay-gap metrics, joint pay assessments, stronger remedies and stronger proof burdens.
The practical implication is that the most efficient approach is usually an EU baseline model with local overlays, not 27 separate redesigns. Employers should set group-wide principles now for job evaluation, pay ranges, documentation of objective justifications, salary-setting approvals and data ownership, then adapt those principles to local transposition once national texts are final. That reduces the risk of inconsistent pay logic, fragmented reporting and avoidable employee challenges across jurisdictions.
