Luxembourg prepares to disclose salaries under EU directive

Until recently, discussing salaries in the workplace in Luxembourg was seen almost as something indecent - a kind of corporate confession that no one dared to say out loud. However, the European Union disagrees. The new EU Pay Transparency Directive came into force in May 2023 and Luxembourg, like other member states, is obliged to bring national legislation into line by 7 June 2026.

In the opinion of experts and authorities, the directive is not just a bureaucratic measure, but an attempt at a profound transformation of the labour market. Its central goal is to end systemic gender discrimination by making companies' wage policies more transparent and accountable.

Employees will now be able to request in writing from their employers information about their salary and the average salary of employees in a similar position, broken down by gender. Moreover, "similar" means not only the same position title, but also similar value of the work performed - in terms of effort, competences and level of responsibility.

Recruitment rules will also change: companies will be required to provide candidates with a starting salary or salary range based on objective and gender-neutral criteria. It will be forbidden to ask candidates about their current or previous income level, a mechanism that has often been used to "squeeze" salary expectations, especially for women.

But the real worry among employers is not this, but the mandatory reporting system. From 2027, large companies (more than 250 employees) will be required to send annual salary reports, broken down by gender and method of calculation. Companies between 100 and 249 employees - every three years from 2031. If the pay gap between men and women exceeds 5 per cent and cannot be justified by objective reasons (such as qualifications, seniority or productivity), employers must eliminate it. Companies with up to 100 employees report at will - without an obligation to correct the inequality.

The directive pays particular attention to the evidence mechanism. Previously, the employee had to prove pay discrimination on his/her own. Now it is the other way round: if an employee lodges a complaint, it is the employer who has to prove that everything was in accordance with the law. This dramatically strengthens the position of employees in labour disputes.

However, the implementation of the directive will not be without problems. The Luxembourg Ministry of Labour admits that the delay in the draft law was caused by the need to coordinate the position of several ministries at once. The authorities fear that excessive administrative pressure, especially on small and medium-sized businesses, will lead to the opposite effect: reduced motivation, increased internal competition and difficulties in protecting personal data. Nevertheless, they promise to present the draft law by the end of 2025.

Meanwhile, the directive can be a powerful lever to combat "invisible barriers" in career development and pay. Luxembourg, where women earn on average 4.7 per cent less than men (according to Eurostat data for 2023), is not in the worst position, but not in an exemplary one either.