Implementation of the Pay Transparency Directive

Job Applicants’ Rights

In addition to the requirement for gender-neutral job advertisements, job applicants will be entitled to receive information on the starting salary for the position as well as the relevant provisions of the applicable collective bargaining agreement. Employers will no longer be permitted to ask candidates about the development of their remuneration in current or previous employment relationships.

Employees will also gain the right to obtain information on the average remuneration of employees performing comparable work, broken down by gender.

Equal Pay for Equal or Equivalent Work

Employees should be able to assess whether they are in a comparable position in terms of the value of their work based on objective and gender-neutral criteria, and, where applicable, criteria agreed with employee representatives.

To achieve this, employers will be required to introduce gender-neutral job evaluation and classification systems or define categories of employees performing the same or equivalent work. The aim is to create a transparent and fair remuneration framework within organisations.

Defining Relevant Remuneration

For the purposes of pay transparency and comparability, remuneration must be clearly defined and quantified. Austrian employment law does not provide for a single uniform definition of remuneration; rather, it encompasses any benefit granted by an employer in exchange for the employee’s services.

While annual base salaries, allowances, variable cash compensation and benefits in kind can generally be quantified without difficulty, the valuation of stock options, pension commitments, company cars, health insurance, private medical benefits and life insurance arrangements may present practical challenges.

Consequences of Non-Compliance

As Austria has not yet implemented the Directive into national law, the precise domestic enforcement mechanisms remain uncertain. However, the Directive itself provides for a range of remedies in the event of non-compliance, including:

• compensation claims with retrospective effect of up to three years;
• effective, proportionate and dissuasive sanctions; and
• administrative fines and other enforcement measures.

The final details will depend on the Austrian implementing legislation once enacted.

Reporting Obligations for Employers

Depending on workforce size, employers will be required to prepare and publish regular reports on the gender pay gap within their organisation.

Under the Directive, reporting obligations will begin in 2027 for companies with at least 250 employees. Smaller employers will become subject to the reporting requirements at later stages.

Although the Directive does not impose reporting obligations on businesses with fewer than 100 employees, it remains to be seen whether Austria will extend reporting requirements to smaller employers when implementing the Directive at national level.

Key Takeaway

The EU Pay Transparency Directive will significantly increase transparency around remuneration and place new obligations on employers regarding recruitment, internal pay structures, reporting and equal pay compliance. Businesses should begin reviewing their remuneration systems, job evaluation processes and reporting capabilities now to ensure readiness once the Austrian implementation legislation enters into force.