Denmark: Transposing the EU Pay Transparency Directive

Employer Action Code: Monitor

The Ministry of Employment has released draft legislation to transpose the EU Pay Transparency Directive (2023/970) for consultation. The draft closely follows the text of the directive and would introduce new employer requirements and pay reporting obligations. Denmark had an unadjusted gender pay gap of 14.0% as of 2024, above the EU average of 11.1% (Eurostat data), despite the Equal Pay Act (Ligelønsloven) requiring equal pay for men and women doing work of equal value in the same enterprise.

Key details

• Pay transparency during recruitment: Employers would need to provide information to applicants/candidates on the initial pay and benefits levels (or range) along with the relevant collective bargaining agreement (CBA) provisions for the job before interviewing candidates. Employers would also be prohibited from inquiring into job applicants' current salary or salary history
• Transparency on pay setting: Employers would be required to develop processes by which employees would be able to obtain information on objective and gender-neutral criteria used to determine pay, salary/pay levels and pay progression in general
• Employee right to request: Employees would have the right to information on their individual pay level and average pay levels for workers performing the same work or work of equal value, broken down by gender
• Pay gap reporting: Employers with 100 or more employees would be required to prepare a wage statement themselves for category of worker pay gaps for the prior calendar year, while they would receive from Statistics Denmark a draft wage statement for entity-level pay gaps (based on pay data submitted by the company, similar to the current process in Denmark). For employers with 150 or more workers, the first statements covering entity and category worker gaps would need to be provided to employees and their representatives by September 1, 2028. In addition, the employer would have a month to review the draft entity-level statement provided by Statistics Denmark and submit to a new agency, the Labor Market Institute for Equal Pay (Arbejdsmarkedets Institut for Ligeløn). In the event of pay gaps of 5% or more by worker category that could not be justified or corrected within six months, the employer would need to carry out a joint pay assessment in cooperation with employee representatives and develop an action plan to close the gap
• Pay structures: Employers would be required to have formal pay structures using worker categories determined by gender-neutral job factors (such as responsibility, skills, effort and working conditions). Pay structures and pay increases would need to be aligned to these criteria and categories

Consistent with long-standing practice in Denmark, if CBAs have equal or better provisions on the rights and obligations established by the law on pay transparency, the CBA would dictate pay transparency terms for covered staff.

Employer implications

The proposed effective date for the amendments to the Equal Pay Act is January 1, 2027 (six months after the EU’s deadline for transposing the directive). Pay gap reporting would commence from September 2028 for employers with 150 or more employees and September 2031 for employers with 100 or more employees (50 or more employees under certain conditions). Employers should monitor the progress of the draft legislation and prepare for its likely implementation, including the development of any databases and reporting systems to support compliance.