New rules on pay transparency: Is your business ready?

The EU Pay Transparency Directive is set to become part of Danish legislation and may affect many businesses in the coming years. Its purpose is to strengthen the principle of equal pay for equal work or work of equal value, while also increasing transparency regarding pay practices in the workplace.

Although the rules have not yet been finally adopted, the proposed legislation suggests that they will enter into force on 1 March 2027. Employers may therefore benefit from already considering whether their pay structures and internal processes are sufficiently documented.

 

Focus on Documentation of Pay Differences

The Danish labour market has long been governed by equal pay rules, but the upcoming requirements go one step further. In the future, it will not be sufficient merely to justify pay differences on legitimate grounds. Companies will also need to be able to document why employees are paid differently.

The new rules do not change an employer’s right to determine pay levels. However, they do require any pay differences to be based on objective and gender-neutral criteria. Such criteria may include differences in employees’ qualifications, responsibilities, experience, or working conditions.

 

Requirements for Pay Reporting

The proposed legislation also introduces new pay reporting obligations for companies of a certain size. As a general rule, businesses with at least 100 employees will be subject to the reporting requirements, while certain companies with between 50 and 99 employees may also be covered under specific circumstances.

The reports must include information on pay differences between men and women, as well as the gender distribution across the company’s pay levels. The aim is to provide a better basis for identifying potential pay inequalities.

For the largest companies, the first reports will need to be prepared as early as 2028, while smaller companies will have additional time to prepare.

 

A Well-Defined Pay Structure Will Become More Important

For many businesses, the greatest challenge may not necessarily be the reporting itself, but the preparatory work behind it.

According to the proposed legislation, companies must be able to identify employees performing the same work or work of equal value. This typically requires a thorough review of job duties, role content, and the criteria used when determining salaries.

A clearly defined pay structure can therefore become an important tool. The better a company can document the relationship between job responsibilities, accountability, and pay, the easier it will be to comply with the upcoming requirements and respond to questions from employees or authorities.

 

What Happens If Unexplained Pay Gaps Are Identified?

If a company identifies pay differences between men and women that cannot be explained by objective and gender-neutral factors, the proposed legislation will require follow-up action. The employer must assess the cause of the difference, document that assessment, and, where necessary, implement appropriate measures to address the issue.

In certain situations, there may also be a requirement to carry out a more comprehensive pay assessment in cooperation with employee representatives.

 

Conclusion

The upcoming pay transparency rules are not only about new reporting obligations. For many businesses, they will also result in a greater focus on documentation, pay structures, and the criteria underlying salary decisions. Companies will increasingly need to demonstrate why employees are paid differently and ensure that any pay differences are based on objective and gender-neutral criteria.

Although the rules are not expected to take effect until 2027, it may be beneficial to start reviewing your pay structure, job categories, and internal procedures already now. Early preparation can make it easier to comply with the new requirements and reduce the risk of future challenges once the rules take effect.

At Raadgiver.dk, we are available to assist businesses that wish to review their pay structures or seek advice on how the upcoming pay transparency requirements may affect their organisation.

Disclaimer: This article is based on the proposed legislation implementing the EU Pay Transparency Directive. The proposal has not yet been finally adopted, and the final rules may therefore change during the legislative process.

 

Read more about employment law here.

 

This article does not constitute and cannot replace legal advice. Raadgiver.dk ApS accepts no liability for any damage or loss directly or indirectly attributable to the use of the information contained in the article.

Published November 2026