Intervention

How Italian companies can deal with the EU pay transparency directive

EU Directive brings opportunities for pay transparency in Italy, but requires balance and support for proper implementation

22 August 2025

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The EU Directive on wage transparency represents an important step towards greater fairness in the workplace, but its concrete implementation is far from a foregone conclusion in the Italian production fabric. The regulatory framework that Italy will have to transpose by June 2026 is ambitious and potentially high-impact, the timeframe is tight and many companies, especially SMEs, are not ready to tackle it in a structured way. Only a minority, often multinationals or large companies, are moving in time. While the majority tend to deal with changes at the last moment, with the risk of only formal compliance with the new regulations, without real conviction and effectiveness.

This would be a mistake. The Pay Transparency Directive represents a great opportunity to build a new organisational culture based on transparency, meritocracy and inclusion. It can strengthen the trust pact between companies and workers, improve the attractiveness of companies on the labour market and stimulate fairer and more sustainable growth. But for all this to happen, balance is needed in the transposition phase: it is important to introduce accompanying measures, simplified tools and targeted incentives to support companies in the process of adopting the new rules.

What the legislation provides for

The EU Directive 2023/970 comes in a context of renewed attention to gender pay equality, driven by new generations more concerned about equity, the increasing availability of pay data (such as Glassdoor or PayScale), investors' interest in social sustainability (CSRD) and a broader culture on diversity, equity and inclusion. The legislation aims to move beyond 'formal' equality to 'substantive' equality, guaranteed by transparency, reporting and corrective measures in case of imbalances.

It requires that at the pre-employment stage the company discloses information on salary or salary range at the start of the selection process, that job advertisements and selection processes are gender-neutral and that no information on previous salaries is required. During the employment relationship, it requires that employees be guaranteed accessibility to pay and progression criteria, the right to receive written information on their pay level and pay averages by gender and category, with full freedom to share pay information. In addition, the directive provides for a periodic survey of these activities with an annual report starting in 2027 for companies with more than 250 employees, every 3 years from 2027 for those between 150 and 249 employees, every 3 years from 2031 for those between 100 and 149 employees, and optional for those under 100 employees. In the case of non-compliance (with a gap of more than 5 per cent not justified and not corrected within 6 months), the regulation imposes a joint assessment with employee representation, with the obligation to analyse, define action plans and evaluate classification systems. And it provides for sanctions: compensation for damages, injunctions and the obligation to provide evidence of actions taken.

The complexity of adoption

The EU directive on pay transparency impacts practically every corporate function. First of all HR, which is called upon to review the work architecture, evaluation criteria, and reward systems. But also Legal, which has to produce documents, respond to requests and manage possible disputes; Internal Communication, which has to change the way in which pay is discussed; Trade Union Relations, for the structural involvement of representatives in corrective processes; and IT, for the collection, management, processing and publication of data. Adoption represents a very complex step, which, once completed, could bring considerable benefits: improving employer attractiveness, enhancing engagement and retention, reducing reputational and legal risks, but above all pushing to structure more meritocratic and more transparent systems. With the risk, however, of a high bureaucratic burden (even more burdensome for SMEs) and a 'state' application of the rules, which could result in a flattening of pay levels. And with the further risk of generating internal conflicts, in the difficulty of defining objective criteria that are universally accepted.

The risk of "defensive conformism"

For these reasons, it is important to focus on what we have in front of us and to define the transposition path step by step. The new legislation offers Italian companies an extraordinary opportunity to review all organisational and evaluation processes. And thus, to build a strategic management of all reward systems, improving attractiveness to talent (the real challenge for the organisation) and enhancing diversity, equity and inclusion leverage to support competitiveness and innovation. However, 'defensive conformism' must be avoided at all costs, where a company limits itself to formal compliance without real impact on processes, generating mistrust and discontent among people who do not see concrete action. One must be alert to possible legal risks for non-compliance or unjustified gaps and keep implementation and training costs under control in less structured companies.

Suggestions for effective transposition

Acknowledging that the timeframe for adoption is tight and the risk of merely formal adherence is concrete, for an effective transposition of the legislation, the government should introduce accompanying measures, with simplified tools, targeted incentives and a flanking strategy, especially for SMEs. The suggestion is to provide for a flexible and proportional transposition, avoiding a 'one size fits all' approach in favour of graduated models for different company sizes and integrating the new provisions with those of the existing system to avoid duplication.

It would be useful to provide companies with guidelines and operational tools, such as standard templates for data collection and reporting, together with a public digital platform for the transmission of reports. Certainly, tax or contribution incentives for companies that adopt structural rebalancing measures, or rewards in public tenders for those applying virtuous policies, would be helpful. And, at the same time, anti-avoidance mechanisms and qualitative, as well as quantitative, monitoring of reported data to concretely analyse the impacts. It will be important to introduce a tripartite table (state, companies, trade unions) to monitor implementation and to involve bilateral bodies in training and support for SMEs. And it will be crucial to create training and culture on the challenge we face, through public campaigns on a fair pay culture, together with training activities for HR, managers and trade union representatives on objective evaluation criteria.

As AIDP - the Italian Association for Personnel Management - and as the Lombardy group, we are willing to collaborate with the institutions in the transposition phase, so that a regulatory framework can be constructed that adequately balances the needs of social justice, organisational sustainability and economic competitiveness, enhancing the central role of people and social dialogue in the development of the country.

*Vice President of AIDP Lombardy