Draft law to transpose the EU Pay Transparency Directive in Portugal

The Portuguese government has published draft legislation to partially transpose the EU Pay Transparency Directive (2023/970) for public consultation. The proposal would build on the existing equal pay and pay transparency framework under Law No. 60/2018, introducing new employee information rights, pay transparency requirements during recruitment and formal remediation mechanisms for addressing unjustified gender pay gaps.

Key provisions

New requirements for pay transparency would include:

• Pay range disclosure during recruitment: Employers would be required to provide information on the starting pay level or pay range before employment begins (the draft law does not require it to be provided in job advertisements or before any interviews) and would be prohibited from asking candidates about their current salary or salary history
• Transparent pay policy: All employers would be required to establish a transparent pay policy, in cooperation with employee representatives (where they exist), based on objective and gender-neutral criteria, including skills, responsibilities, working conditions and other factors relevant to assessing whether workers perform equal work or work of equal value. Pay structures and progression would need to align with these criteria. Employers with 50 or more employees would be required to display or publish the pay progression criteria, while smaller employers would be exempt from the publishing requirement
• Right to information: Employees would be entitled to request information on their individual pay level and on average pay levels, for categories of workers performing similar comparable work or work of equal value, broken down by gender, which employers would be required to provide within two months. Employees may request this information directly or through their employee representatives. In addition, employers must annually inform employees of this right and the formal procedure for requesting such information
• Pay reporting: Companies with 50 or more employees (rather than those with 100 or more employees, as established in the directive) would be subject to mandatory pay gap reporting. Reported data would need to include the overall and median gender-based pay gaps, broken down by total compensation, base pay and variable pay; the proportion of men and women receiving variable pay; the proportion of men and women in each quartile pay band; and gender-based pay gaps by worker category, for total compensation, base pay and variable pay. Employers with 250 or more employees would be required to start reporting, in relation to the prior calendar year, by June 7, 2027, and annually thereafter. Employers with 150 to 249 employees would be required to start reporting by the same date, but every three years. Employers with 50 to 149 workers would be required to start reporting by June 7, 2031, and then every three years. While the Labor Inspectorate would be responsible for overseeing compliance with pay transparency-related requirements, the draft bill does not specify the entity to which employers would be required to submit pay gap information
• Remediation of unjustified pay gaps and joint pay assessments: The Labor Inspectorate would be entitled to request clarification from employers regarding pay gaps between men and women performing work of equal value. Employers would have 90 calendar days from the Inspectorate’s notification to respond and justify any differences on objective, gender-neutral criteria or propose remediation measures. Where gender pay gaps of 5% or more in any categories of workers cannot be objectively justified or corrected, employers would have 45 calendar days (from the Labor Inspectorate’s notification) to conduct a joint pay assessment and develop an action plan to address the gap in cooperation with employee representatives (where they exist). Employers would then have 90 calendar days to implement such measures and submit an implementation report to the Labor Inspectorate. It should be noted that the 5% threshold does not establish an acceptable level of pay disparity. Any pay difference must be objectively justified by gender-neutral factors. The 5% threshold merely triggers the obligation to carry out a joint pay assessment where the gap cannot be justified or remedied

The draft legislation remains subject to the legislative process and may be amended before adoption. While the draft law addresses several of the core obligations under the EU Pay Transparency Directive, the proposed transposition remains partial; further legislative measures may be required to address provisions not fully covered by the current proposal. As of 2024, Portugal had an unadjusted gender pay gap of 7.0%, well below the EU average of 11.1% (Eurostat data). However, this aggregate indicator should not be interpreted as evidence of compliance with the equal pay requirements applicable to workers performing equal work or work of equal value. Employers should monitor legislative developments and begin assessing their readiness across areas such as job architecture, pay criteria, worker categories, recruitment practices, employee information procedures, data quality and reporting capabilities.