Прозрачност в заплащането - какво трябва да знаят работодателите

On 10 May 2023, the European Union adopted Directive (EU) 2023/970, marking a significant step toward the effective implementation of the principle of equal pay between women and men. Although this principle has been enshrined for decades in primary EU law, including Article 157 of the Treaty on the Functioning of the European Union (TFEU), its practical enforcement has remained limited. The main reason for this is the lack of transparency — a factor that makes discrimination difficult to detect and even harder to prove.

This is precisely where the new Directive intervenes, introducing specific mechanisms aimed at shedding light on pay structures and facilitating access to justice. Member States, including Bulgaria, are required to transpose these rules by 7 June 2026, which brings the issue of timely employer preparation to the forefront.

What does the Directive change?

At the core of the new framework is the obligation for transparency at the earliest stage of the employment relationship. Employers will be required to provide information about the salary or its range before the employment contract is concluded, thereby reducing information asymmetry between the parties. At the same time, a ban is introduced on requesting information about a candidate’s previous remuneration — a practice that has often led to the perpetuation of existing inequalities.

However, the changes do not end at the recruitment phase. The Directive requires employers to establish internal pay systems that ensure comparability and are based on objective and gender-neutral criteria such as skills, effort, responsibility, and working conditions. In practice, this means structuring and formalizing policies that, in many organizations, have so far existed in an informal or only partially regulated manner.

Particularly important is the expansion of employee‘s right to information. Each employee will be able to request not only data about their own pay and the criteria used to determine it, but also aggregated information on pay levels by gender for the same or equivalent work. This right is supported by an obligation for the employer to inform employees annually of its existence and to respond to such requests within a specified timeframe.

For larger employers, the Directive also introduces an obligation for periodic reporting on pay gaps. These reports include both average and median values, as well as information on additional components of remuneration. The significance of this obligation is reinforced by the fact that the collected data will not remain purely internal but will be submitted to competent authorities and may potentially be made public.

Pay gaps above 5% – obligation to act

Special attention should be paid to the mechanism related to pay gaps exceeding 5%. In such cases, the employer is required to analyze the reasons and demonstrate that they are based on objective and gender-neutral criteria. If such justification cannot be provided, corrective measures must be taken within a relatively short period, including through joint assessment with employee representatives. This approach clearly shows that the Directive is not limited to formal obligations but aims at effectively addressing inequalities.

At the same time, the Directive recognizes the need to balance these requirements with data protection rules. The processing and publication of information must be carried out in a manner that does not allow the identification of specific/employees, while still ensuring effective access to relevant data.

Enforcement and sanctions

A key element is also the focus on enforcement. The Directive provides for enhanced supervision by national authorities, as well as effective, proportionate, and dissuasive sanctions. These may include financial penalties linked to turnover or payroll, as well as more severe consequences in cases of repeated violations. In the Bulgarian context, existing institutions such as the Commission for Protection against Discrimination, the Labour Inspectorate, and the courts are likely to play a central role.

Stronger protection for employees

Last but not least, the Directive significantly strengthens the procedural protection of employees. The burden of proof is eased by shifting it to the employer where indications of pay disparities exist; opportunities for collective redress are expanded; and, where discrimination is established, the right to full compensation is guaranteed, including for lost wages and other damages.

In Bulgarian law, the principle of equal pay is already enshrined in the Labour Code and the Protection against Discrimination Act, but its practical application has remained limited precisely due to the lack of transparency. In this sense, the Directive has the potential to bring about a qualitative change, transforming this principle from a declarative norm into an effectively enforceable requirement.

What does this mean for businesses?

From a practical perspective, this means that employers should begin preparations well before the transposition deadline. Reviewing existing policies, analyzing potential pay gaps, and building internal mechanisms for transparency and accountability are no longer matters of good practice, but of future legal obligation.

Recommended steps to take now:

review remuneration policies;
analyze existing pay gaps;
introduce objective criteria;
establish internal reporting systems;
prepare for transparency and oversight.

Ultimately, Directive (EU) 2023/970 does not merely supplement the existing framework, but transforms the way equal pay is conceived-from an abstract principle into a concrete compliance standard that will have a direct impact on employers’ day-to-day operations and on the development of labor law practice.