Pay transparency – draft bill submitted for consultation

The EU Pay Transparency Directive entered into force on 6 June 2023. With an implementation deadline of 7 June 2026, updates on national implementation have been eagerly awaited. 

The purpose of the Directive is to strengthen the application of the principle of equal pay for men and women for the same work or work of equal value through pay transparency and strengthened enforcement methods. The Directive and its national implementation are not intended to influence wage formation in the Danish labour market. 

According to the draft bill, the implementation of the Directive has been discussed in detail with the social partners who have drawn up a joint memorandum of understanding that will be published prior to the presentation of the bill. The draft bill proposes that the new obligations on pay transparency, pay reporting and joint pay assessments may be implemented through collective agreements. This reflects the existing principle in the Danish Equal Pay Act that the Act does not apply where equivalent obligations follow from a collective agreement.

• The Labour Market Institute for Equal Pay
  The social partners have recommended that a special body focusing on equal pay be established, called the Labour Market Institute for Equal Pay. The Institute will be responsible for strengthening the monitoring and enforcement of equal pay in the Danish labour market.
   
• Pay structures
  All employers must use pay structures ensuring equal pay for men and women for the same work or work of equal value. The pay structures must be based on objective, gender-neutral criteria agreed with the employee representative at the company, if there is such a representative. The criteria must include skills, effort, responsibility and working conditions and, where relevant, any other factors relevant to the specific job or position. 
   
• Pay transparency prior to recruitment
  Applicants for positions must be given information on the initial pay or the pay range and the relevant provisions of the collective agreement applicable to the position in question. This information may, for example, be provided in a public job advertisement, prior to the job interview or in any other way, provided that the information is given prior to the conclusion of the employment contract. 
  
  Also, it is proposed that employers should not ask applicants about their pay history in their current or previous employment – or proactively attempt to collect information about their pay history. However, an employer may ask an applicant what they expect to earn, provided that the employer has previously disclosed the initial pay or pay range for the position applied for. 
   

• Pay transparency during employment (right of access)
  All employers must make it easy for employees to access the objective and gender-neutral criteria used to determine pay, pay levels and pay progression. This could be done, for example, in a staff policy or by providing information about the collective agreement applicable to the work and the criteria for determining pay etc. specified therein. 

  In addition, employees will have the right (potentially via an employee representative or the Danish Labour Market Institute for Equal Pay) to request information from the employer about their individual pay level and the average pay levels, broken down by gender, for the category of employees who perform the same work or work of the same value as themselves. Such information must be given in writing no later than two months after the request is made. 

  Employers may require employees who receive such information to use the information solely for the purpose of exercising their own right to equal pay. However, employers may not restrict employees’ use of information about their own pay or pay level. 

  Once a year, employers must inform employees of their right to request information about pay levels and how they can access the information. 

• Pay reporting and joint pay assessment
  The draft bill proposes that the existing obligation to compile gender-disaggregated pay statistics be replaced by an obligation to report on pay gaps. 
  
  Employers with at least 100 employees will have to prepare a pay report for the previous year showing the pay gap between male and female employees in each “category of employees” at the company, broken down by basic pay and supplementary or variable elements.
  
  A “category of employees” is defined in the draft bill as employees who perform the same work or work of the same value, divided into groups in a non-arbitrary manner on the basis of non-discriminatory and objective gender-neutral criteria and, where relevant, in consultation with employee representatives. 
  
  Employers will still be able to report pay information to Statistics Denmark or the relevant employer’s association, which will then automatically generate a pay report based on the DISCO code categorisation system. However, it will be the employer’s responsibility to ensure that the pay report generated by Statistics Denmark or the employer’s association complies with the requirements. 
  
  It is worth noting that it is stated in the comments to the draft bill that the categorisation of employees must be specific to the individual company and that categorisation based on DISCO codes will therefore often be insufficient. In many cases, it will thus be necessary for employers to supplement the pay report received from Statistics Denmark or an employer’s association. 

  The pay report must be made available to employees and employee representatives, and employers will be obligated to clarify/elaborate on the information within a period of two months, if so requested.

  As regards one point, it is proposed to over-implement the Directive, as companies with 50-99 employees, where there are at least eight employees of each gender in the same employee group divided according to DISCO codes or a similar classification system, will also be subject to the obligation to prepare pay reports. However, this extended obligation does not apply to companies in the agricultural, hunting, forestry and fishing sectors.

  The deadline for preparing pay reports will depend on the number of employees.

  Employers with at least 250 employees will receive the automatically generated pay report from Statistics Denmark or the relevant employer’s association by 1 September 2028 at the latest and must subsequently prepare pay reports annually.

  Employers with 150–249 employees will also receive their first pay report by 1 September 2028 at the latest but are only required to prepare pay reports every three years after that. For both groups of employers, the report must be submitted to the Labour Market Institute for Equal Pay within one month of receiving the automatically generated pay report.   

  Companies with 100-149 employees (and qualifying companies with 50-99 employees) will receive their first pay report from Statistics Denmark or the relevant employer’s association by 1 September 2031 at the latest and must submit it to the Labour Market Institute for Equal Pay within one month of receipt and subsequently every three years.

  If an employer chooses to prepare its own pay report, the same deadlines will apply. 

  If a pay report shows an unjustified difference in the average pay between female and male employees of at least 5% for a category of employees, and the employer has not corrected this within six months of the date of submitting the pay report to the Labour Market Institute for Equal Pay, the employer must prepare a joint pay assessment in collaboration with the employee representatives. The joint pay assessment must be made available to the employees and employee representatives – and to the Labour Market Institute for Equal Pay as well, if requested by the Institute. 

• Enhanced burden of proof
  If an employer fails to meet its obligations regarding pay transparency, there will be evidence of facts giving rise to a presumption of direct or indirect discrimination, unless the employer can prove that the failure to comply was clearly unintentional or of minor importance. It will then be for the employer to prove that there has been no gender discrimination.  
   
• Time limitation
  The draft bill proposes introducing easier access to interrupting the five-year limitation period that usually applies to wage claims. The limitation period will thus be temporarily interrupted for six months from the date on which an employee has notified the employer of the claim, meaning that the limitation period cannot expire until at least one year after the employer has been notified of the claim. 
   
• Sanctions
  It is proposed that, when calculating compensation for employees whose rights have been violated as a result of pay discrimination, the employer’s failure to comply with its obligations regarding pay transparency be taken into account. 
  
  As a new feature, it is also proposed that the Equal Pay Act explicitly states that employees who have been subjected to unfavourable treatment other than dismissal may be awarded compensation. It is further proposed that an employee may be awarded compensation if the employer has not provided the employee with information about the initial pay or pay ranges prior to recruitment, individual pay level information on request, or the objective criteria used to determine pay, even where there is no underlying violation of the right to equal pay, meaning the compensation obligation arises as a stand-alone consequence of failure to provide information. Finally, it is proposed that employers violating some of the new obligations may be fined.
  
  It should be noted that beyond the formal legal sanctions, pay report data submitted to the Labour Market Institute for Equal Pay will be published by the Institute in a manner that enables direct comparison between employers across sectors and regions.

In the draft bill, the Danish Ministry of Employment has proposed that the bill enter into force on 1 January 2027. This means Denmark will not meet the 7 June 2026 transposition deadline, a deliberate decision to allow employers sufficient time to adapt to the new framework.

For pay data relating to the calendar year 2026, the existing rules on gender-segregated pay statistics will continue to apply. The new pay reporting requirements will apply from 2027 onwards.

As the draft bill has currently only been submitted for consultation, amendments to the bill – which is expected to be tabled after the general election taking place on 24 March 2026 – cannot be ruled out. However, Danish employers should start preparing for the new requirements.

Schjødt will, of course, follow the legislative process closely. The Center for Leadership (CfL) is hosting a half-day conference on the new rules in collaboration with Schjødt on 5 May 2026. More information on the conference can be found here: https://www.cfl.dk/arrangementer/halvdagskonference-om-ligelon-og-longennemsigtighed