Italy: Draft legislation to transpose the EU Pay Transparency Directive

Employer Action Code: Monitor

The Council of Ministers approved, at preliminary review stage, a draft legislative decree to transpose the provisions of EU Directive 2023/970 on Pay Transparency into national law. The draft text emphasizes the role of national collective bargaining agreements (NCBAs) as the key reference for defining categories of workers and pay structures. In addition, the draft strengthens pay transparency obligations at the hiring stage, requiring employers to specify in job advertisements the initial pay level or the applicable pay range. Under the directive, EU member states have until June 7, 2026, to transpose its provisions into local law.

Key details

The draft decree includes the following provisions:

• Pay structures: NCBAs would be the main reference to classify workers and determine pay structures. For employers not subject to an NCBA, the reference would be the NCBA signed by the most representative trade unions at the national level for their industry or sector. Companies could also determine remuneration based on internal job classification systems, in addition to those provided by CBAs, provided the criteria used are gender-neutral and objective
• Pay transparency during recruitment: Employers would have to disclose either the initial compensation level or applicable pay range in job postings and recruiting advertisements. In addition, employers as well as any third party involved in the recruitment process would be prohibited from inquiring into or otherwise obtaining candidates’ pay history
• Transparency on pay setting: Companies with 50 or more employees would be required to make information on the criteria used to determine pay, pay levels and pay progression accessible to all employees. According to the draft decree, employers would meet this requirement by referring employees to the applicable NCBA
• Right to information: Employees would be entitled to request information on average pay levels, broken down by gender, for categories of workers performing equal work or work of equal value; employers would have two months to respond and may meet the obligation by proactively publishing average pay data by gender and category on their intranet or in restricted company areas
• Reporting obligation: Companies with 150 or more employees would be required to communicate detailed information on gender pay gaps, considering June 2027 as the reference period for the first reporting cycle, with reporting required every year for companies with 250 or more employees and every three years for companies with 150 to 249 employees; from 2031, companies with 100 to 149 employees would have to start reporting every three years. In the event of unjustified pay gaps exceeding 5% that the employer could not correct within six months, pay assessments would have to be carried out in cooperation with workers’ representatives
• Sanctions and enforcement: The draft explicitly refers to sanctions and enforcement mechanisms regulated within the existing Italian Equal Opportunities Code (Codice delle pari opportunità)

Employer implications

Average gross earnings for women in the private sector in Italy were 16.7% lower than those of men in 2023 (Eurostat data). The directive is expected to have a lasting impact on pay equity and transparency among EU member states. Employers should monitor the legislative process closely, as the decree has now been submitted to the parliamentary committees and may be subject to change before coming back to the Government for final approval.