Bill on implementation of the Pay Transparency Directive sent for public consultation

After a long wait, the Ministry of Employment has sent a bill for consultation on the implementation of the Pay Transparency Directive. The deadline for submitting consultation responses is March 27, 2026. 

The consultation coincides with the parliamentary election, which was called on the same day. However, the current reports are that the process will continue as planned.

The bill contains several interesting points which will be reviewed in this article. 

Entry into force and reporting of pay information delayed

According to the proposed bill, the law shall enter into force on January 1, 2027, which is after the directive's implementation deadline. 

In addition, companies will be required to report salary information for the first time September 1, 2028, for the 2027 calendar year. This is a one-year delay compared to the deadline set out in the directive. 

Pay structures for assessing equal work and work of equal value

The bill contains rules requiring employers to establish pay structures that ensure equal pay. The pay structures should not determine the pay but enable an assessment of whether employees are in a comparable situation in terms of the value of their work, based on objective, gender-neutral criteria.

Criteria must include at least skills, effort, responsibility, and working conditions and, where relevant, any other factors relevant to the specific job or position. In addition, it is explicitly stated that relevant soft skills must not be underestimated, including collaboration skills, communication, social and emotional competencies, informal responsibilities, and knowledge sharing.

The legislative notes indicate that it is ultimately up to employers themselves to determine which employees perform the same work or work of equal value, taking into account the obligations regarding gender-neutral criteria set out in the law and the directive.

Where relevant, the criteria are determined together with an employee representative, who is defined as an elected shop steward. However, there is no requirement for a company to elect an employee representative. 

Although DISCO codes still have their place in the regulation, it has been established in the preparatory work that categorization based on DISCO codes will often not be sufficient.

Obligation to provide information about salary and right of access to salary information

The bill proposes that employers must inform job applicants of the starting salary or salary range and the relevant provisions of the collective agreement, and that employers may not ask applicants about their salary in their current or previous employment.

In addition, employers must give their employees access to the objective and gender-neutral criteria used to determine employees' salaries, salary levels, and salary development, e.g., in a personnel policy. 

Furthermore, an employee has the right to request information about their own salary level and the average salary levels, broken down by gender, for employees who perform the same work or work of the same value as the employee. 

 Statistics Denmark prepares wage reports 

The current rules on gender-segregated wage statistics will be replaced by rules on wage reports. The new rules entail that companies with at least 100 employees are required to report on the wage gap between men and women who perform the same work or work of the same value.

However, as is currently the case, companies will be able to report wage information to either Statistics Denmark or an employer organization, which will then prepare a wage report for the company at no charge. However, it will be the employer's responsibility to ensure that the wage report is accurate, and they may be required to prepare it themselves, depending on the circumstances.

Companies with 50-99 employees may be partially covered by the rules if they have employed 8 of each gender in the same employee group calculated according to the 6-digit DISCO code or an equivalent classification system. This part of the implementation goes beyond the minimum requirements of the Directive, which only requires companies with 100 or more employees to report salary information.  

The reporting dates are as follows:

• Companies with more than 250 employees must report salary information for the first time on September 1, 2028, and every year thereafter. 

• Companies with 150-249 employees must report salary information for the first time on September 1, 2028, and every three years thereafter. 

• Companies with 100-149 employees and companies with 50-99 employees covered by the rules must report salary information for the first time on September 1, 2031, and every three years thereafter. 

Salary assessment

If the pay statement shows an unjustified pay gap between men and women, companies must rectify the situation. If the company has not rectified the situation within six months of the date of receipt or preparation of the pay statement, and the pay gap is at least 5% in a given category of employees, the company must prepare a pay assessment together with the employee representative. 

The pay assessment must be shared with the employees, and measures must be taken to remedy differences in pay if they are not justified on the basis of objective, gender-neutral criteria.

Burden of proof and limitation period

If an employee brings a claim for equal pay before the courts and the employer has not complied with the above obligations, it is up to the employer to prove that the employer has paid equal pay to men and women in accordance with the law. However, this does not apply if the employer can prove that the failure to comply was clearly unintentional and of minor importance. This is thus a clarification of the current rule on shared burden of proof in the current Danish Equal Pay Act. 

Claims for equal pay expire five years after the employee is or should have been aware of the claim. The bill proposes that the limitation period be temporarily suspended for six months from the date on which the employee informs the employer of the claim. Regardless of the five-year limitation period, the limitation period will not expire until one year after the limitation period is temporarily suspended.

Implementation through collective agreements

As has become traditional in Danish implementation laws, the bill proposes that the law should not apply if corresponding rights and obligations are laid down in a collective agreement.

Littler’s comments

The bill for the transposition of the Pay Transparency Directive into Danish law contains interesting aspects. It provides for minimum implementation, which, among other things, gives individual companies a certain degree of discretion. 

The directive is being implemented later than the specified implementation deadline. This seems appropriate in view of the need for preparation on the part of companies that have to adapt to the new obligations. 

Littler recommends that companies start drafting or adjusting their pay policies in accordance with the terms of the law now. In addition, companies with more than 149 employees would be well advised to consider whether their pay structures give rise to measures being implemented to ensure that pay differences in 2027 do not exceed 5% without valid reason. 

Littler are closely following the consultation and legislative process.