Introduction
The European directive on wage transparency, adopted in 2023, marks a decisive turning point in the fight against wage discrimination in the European Union. With an application planned for 2026 in France, companies must already prepare for this major transformation that will have a profound impact on their HR processes and remuneration policies.
In France, the numbers speak for themselves: in 2023, the average wage income of women in the private sector remains 22.2% lower to that of men. This persistent reality, despite successive legislative advances, raises fundamental questions:
- How can we explain that, with equal skills, the pay gap persists in 2025?
- Are French companies really ready to reveal their salary grids?
- What HR processes will need to be redesigned to ensure fairness and transparency?
[...] The current emergence of the debate on wage transparency needs to be analyzed in the light of these disparities that are increasingly poorly tolerated.” Luc Bretones, specialist in new governance (HR Lab)
In this article, we'll explore the current state of wage differentials in France, the concrete implications of the European directive, the HR processes impacted, as well as the challenges and solutions for successful compliance. We will also look at how this directive could speed up the transition to competency-based organizations (SBO), an organizational model that is gaining ground in France and internationally.
Overview of wage differentials in France
This new directive does more than impose greater transparency on remuneration. It requires businesses a redesign of their approach to skills as an essential factor, the heart of wage policies. Indeed, wage policies will have to rely more and more on tangible elements: skills assessments and the measurement of the achievement of objectives.
Gender gaps: an insufficient reduction
Key figures on current disparities
What is the current state of the wage difference between men and women in France?
In 2023, the average wage income of women in the private sector was 22.2% lower than that of men. For equivalent working hours, the difference is 14.2%, and it falls to 3.8% for the same position in the same establishment.
Persistent explanatory factors:
- Parenting: The differences increase in proportion to the number of children
- Glass ceiling: Women represent only 24% of the 1% of the best paid positions
- Insufficient progress: At the current rate, perfect equality would only be achieved in 2050
Hierarchical differences: the French model in question
Pyramid wage structure
The French model traditionally values managerial advancement as the main way to increase wages. The pay gap between women and men increases with the hierarchical level: they are 4% among employees, 15% among managers, and reach 40% to 60% for management positions.
Questioning the model
While 38% of managers say they no longer want to access managerial functions (Ipsos, 2024), salary policies continue to favor this path. This discrepancy questions the recognition of expert individual contributors., especially in the technological and creative sectors.
According to Neobrain, the pay transparency directive will have 2 main benefits:
- Catalyze a reflection on the valuation of the different types of contributions within the organization, beyond the simple hierarchical criterion.
- Valuing horizontal mobilities more equitably
The European directive on pay transparency: framework and implications
The European directive on pay transparency is part of a legislative continuum aimed at reducing persistent wage differentials. It represents a major advance thanks to its systemic approach and its concrete requirements.
Current French legislation and developments
Reminder of existing devices
France already has a substantial legislative arsenal in terms of equal pay. From the 1972 law enshrining the principle of “equal pay for equal work” to the professional equality index established by The 2018 Professional Future Act, the regulatory framework has continued to strengthen: so why is the situation not changing?
The professional equality index, mandatory for companies with more than 250 employees, is now the main tool for measuring and managing wage differentials. This system, which requires annual publication, assesses five criteria:
- The gender pay gap
- The difference in the rate of individual increases
- The promotion rate gap
- The number of employees who are paid more when they return from maternity leave
- Parity among the 10 highest earners
At the same time, the agreements of GPEC/GEPP are gradually integrating components dedicated to professional equality, testifying to a more comprehensive approach combining skills management and pay equity.
Main new features brought about by the directive
The European Directive 2023/970 introduces several major innovations that go beyond current French mechanisms:
- Pay transparency prior to hiring: Employers will need to communicate the level or range of pay in job advertisements and prior to the job interview.
- Prohibition of questions about salary history: Recruiters will no longer be able to ask candidates about their previous salaries; this does not prevent them from asking their expectations.
- Right to information for employees: Each employee will be able to request information on their level of remuneration and on the average levels, broken down by gender, for categories of workers doing the same work.
- Mandatory salary reporting: Businesses will have to publish information on pay gaps between female and male workers.
- Mandatory salary audits: In the event of a discrepancy greater than 5% that is not justified by objective factors, companies will have to conduct a joint assessment with staff representatives and put in place a corrective action plan.
Affected companies and timetable
Application criteria by size
Which companies are affected by the Pay Transparency Directive?
The directive mainly targets businesses with 100 employees or more. However, France could choose to lower this threshold to 50 employees to align it with the existing professional equality index.
Obligations vary according to the workforce:
- Businesses with 100 to 249 employees : Annual salary reporting
- Businesses with 250 employees and more : Half-year reporting and mandatory audits in case of significant discrepancies
- VSEs and SMEs with less than 100 employees are not directly affected by reporting obligations, but remain subject to the general principles of non-discrimination and the rules of transparency prior to hiring.
Compliance deadlines
The implementation schedule is structured around several key deadlines:
- June 2026 : Deadline for transposition of the Directive into French law
- 2026-2027 : Progressive implementation of reporting obligations according to the size of companies
- 2028 : First application review and impact assessment
Larger businesses are likely to have a shorter period of time to comply, while mid-sized structures may benefit from a longer adjustment period.
Expected benefits of the directive
For employees
Pay transparency offers employees tangible benefits:
- Strengthened bargaining power thanks to a better understanding of salary practices
- Reduction of unconscious biases in the assessment of their professional value
- Increased protection against discrimination with facilitated redress mechanisms
- Better visibility on development opportunities and their financial impacts
For businesses
Contrary to popular belief, this directive also presents opportunities for organizations:
- Increased employer attractiveness and commitment, with transparency being particularly valued by younger generations
- Increased loyalty thanks to a perception of internal equity
- Reduction of disputes related to wage discrimination
- Optimization of remuneration policies through a more objective and structured approach
- Reduction of HR costs related to recruitment as candidates only select offers in line with their salary expectations.
“Now, remuneration is based on the responsibility of the position and the ability to assume the missions, more than on career or past remuneration.” - Aude Boudaud, director at Robert Walters
HR processes impacted and adaptation required
The pay transparency directive involves a redesign of several strategic HR processes, requiring an proactive approach to ensure compliance by 2026.
What are the main obligations imposed by the Directive?
Key obligations include the disclosure of wage ranges in job advertisements, the prohibition of questions about salary history, the right of employees to request information about their pay level, and the regular publication of pay gap reports.
Recruiting and salary negotiations
Recruiting will experience a significant transformation with the obligation to display pay ranges as soon as job offers are published. This prior transparency will change the dynamic of interviews and negotiations.
Recruiters will be forced to abandon questions about the salary history of candidates. Businesses will also have to formalize the objective criteria for setting the initial salary, thus creating essential traceability.
Assessment and promotion
Performance evaluation systems and promotion processes will require revision to ensure objectivity and traceability. The criteria for growth and professional development will benefit from being formalized and communicated clearly.
Managers will focus on justify differences in progress between employees with factual and measurable elements. This requirement requires the establishment of indicators that make it possible to quickly identify and correct potential disparities.
Internal communication and reporting
Compliance will require the creation of dashboards to monitor compensation by gender and function. These tools will facilitate gap analysis while maintaining the confidentiality of individual data.
Businesses will need to develop structured processes to respond to requests for information from employees concerning their salary positioning. The preparation of regulatory reports will also be a new task for HR teams.
How do you objectively justify pay differentials?
Pay differences can be legitimate if they are based on objective criteria such as differences in skills, performance, responsibilities, or working conditions. A well-structured competency framework is an essential tool for documenting these differences.
Faced with these transformations, the skills framework is the cornerstone of a transparent and equitable remuneration policy.
The competency framework as the basis of the transparency approach
Faced with the requirements of the European directive, the competency framework is the cornerstone of a transparent and equitable remuneration policy. Indeed, Competence is the most neutral and objective element in determining pay levels and justifying legitimate wage differentials.
To respond effectively to the challenges of transparency, a robust job-skills framework must integrate four essential dimensions:
An accessible compendium of professions
The first fundamental building block consists in establishing a clear and comprehensive map of the company's jobs. This repository must be organized around precise golden rules to ensure its relevance and acceptance by all:
- Understandable and coherent job families
- Standardized and explicit job titles
- Harmonized classifications that are understood by all
- A simple and navigable structure
This readability of jobs and their positioning is the essential prerequisite for objectively explaining remuneration differentials. In particular, it allows Distinguish what falls under a gap related to the nature of the position (level of responsibility, complexity) of what could be considered discriminatory.
A relevant inventory of skills
The second pillar is based on the precise definition of the skills expected for each job. To be truly actionable in the context of pay transparency, this inventory must respect several principles:
- Limit the number of skills to the essentials (15-20 maximum per job)
- Prioritize high-impact jobs
- Formulate competencies concisely and measurably
- Avoid over-specialization that rigidifies the system
- Adopt a simple and consistent structure
- Update the repository regularly
By clearly establishing the link between required skills and level of remuneration, the company has a solid and objective argument to justify wage differences, in particular during requests for information from employees provided for by the directive.
A multi-source evaluation system
The third critical element is the establishment of a transparent and fair skills assessment process. This system benefits from integrating several sources of assessment:
- Employee self-assessment to actively involve the main concerned
- Evaluation by the direct manager to provide a hierarchical perspective
- Feedback from peers or internal customers for a 360° vision
- Explicit evaluation criteria illustrated by concrete examples
- A regular evaluation frequency, ideally every six months
This multi-source approach reduces appreciation biases and reinforces the legitimacy of the resulting salary decisions. It is an effective bulwark against potential pay equity challenges.
An aligned performance measure
The fourth pillar is to establish a clear correlation between skill level and performance management. This connection is essential for:
- Justify the variable components of remuneration
- Explain differentiated wage increases
- Objectify increase or promotion decisions
An integrated system where skills and performance interact in the same tool offers valuable traceability to demonstrate the equity of salary practices and improve individual performance on an ongoing basis.
An accessible transformation tool
Despite the critical importance of these systems, it is clear that the maturity of skills frameworks in many companies remains insufficient to meet the requirements of the European directive. However, experience shows that it is possible, in the space of 4 to 8 weeks, to take over an existing one and to design a new job-skills matrix that is perfectly adapted to the new legal provisions.
This transformation is not only a necessary compliance, but also an opportunity to evolve towards a competency-based organization.
Want to know more about SBO? Read our article on The state of the SBO in France.
Challenges and barriers to implementation
The transposition of the European directive on pay transparency in France faces several significant obstacles that need to be anticipated by companies.
Cultural barriers and differences of interests
A French culture of wage discretion
France has traditionally maintained strong reservations about remuneration issues. Unlike Scandinavian or Anglo-Saxon countries, France maintains a deeply rooted culture of wage secrecy. This opacity is often perceived as protective of the social climate, avoiding comparisons and potential tensions between collaborators.
“Transparency should focus on processes and criteria rather than individual amounts, to maintain confidentiality while ensuring fairness.” - Manon Poirier, Executive Director of the Ordre des Conseillers en Ressources Humaines Agréés du Québec
According to a study Figures cited by Les Échos, only 11.6% of French companies publish the individual salaries of their employees. Most are limited to providing wage grids or ranges, or publishing pay differentials by category and gender, in accordance with current regulations.
Contrasting positions of the social partners
The debate on the transposition of the directive reveals diametrically opposed positions between employers' and trade union organizations:
Patronal side : Medef and CPME advocate for a minimalist application, limited to large companies (threshold of 250 employees), arguing the disproportionate administrative burden for SMEs and increased risks of litigation.
On the union side : Employee organizations call for extended application from 50 employees, aligned with the professional equality index, and accompanied by dissuasive sanctions. Their aim is to cover as many workers as possible, especially women who are highly represented in SMEs.
These profound differences point to tense negotiations on the transposition law, with a minimum risk of compromise that could weaken the scope of the directive.
Technical challenges and evolution of HRIS
Compliance with the directive raises significant technical challenges for French companies, especially for intermediate-sized structures including HR information systems were not designed for this level of transparency.
Key technical challenges include:
- The collection and analysis of salary data disaggregated by gender, function and level
- The creation of interfaces to respond to employee information requests
- Establishing internal audit mechanisms to identify unwarranted discrepancies
- The development of reports that comply with regulatory requirements
A study conducted by PageGroup, quoted by ITG, indicates that nearly one company out of two is unaware or unfamiliar with the requirements of the Directive, which highlights the lack of operational and technical preparation to produce the required analyses.
Limits and risks of circumvention
Potential avoidance strategies
Despite its ambitions, the directive has several flaws that can be exploited to limit its impact:
Artificial differentiation of job titles : Some businesses may be tempted to use multiple titles for similar functions, making comparisons more difficult.
Excessively wide pay ranges : The publication of very wide ranges (for example +/- 30%) would void the transparency of its substance while formally complying with the obligation.
Transfer to compensation items not covered : The directive focuses mainly on the base salary, leaving the possibility of moving differences to less visible components.
Uncertainties about the effective application
The methods of sanctions have yet to be specified in the French transposition, which may limit the incentive effect of the directive. Moreover, the directive only partially addresses the root causes of inequalities, such as sectoral segregation or career breaks linked to parenting.
Faced with these challenges, proactive companies nevertheless have the opportunity to stand out by adopting a proactive transparency approach, thus transforming a regulatory constraint into a competitive advantage.
Action plan for pay transparency
Compliance with the European directive represents a major challenge, but also an opportunity to rethink your HR practices. Here are the five essential steps to effectively prepare yourself by 2026.
1. Structuring your job-skills framework
A solid job-skills framework is the basis of any transparent remuneration policy. It makes it possible to objectively justify wage differences and to answer employee questions calmly.
Ask yourself: Does your current job classification clearly explain why two people in similar positions may be paid differently? Are the skills required for each function explicitly defined and linked to pay levels?
2. Develop your transparent remuneration policy
Transparency does not mean uniformity, but rather the ability to explain and justify differences. A clear remuneration policy establishes the rules of the game and secures both employees and managers.
Ask yourself: Do you have formalized pay ranges for each function? Are the salary development criteria explicit enough to be communicated to candidates and employees?
3. Analyzing and correcting your pay differences
It is better to identify and proactively correct unjustified deviations before the directive enters into force. This preventive approach demonstrates your commitment and reduces future legal risks.
Ask yourself: Have you identified potentially underpaid populations in your organization? Do you have a dedicated budget to gradually correct unjustified variances?
4. Adapt your HR information systems and processes
Salary transparency involves a technical evolution of your HR tools to collect, analyze and communicate remuneration data in accordance with new requirements.
Ask yourself: Does your current HRIS make it easy to produce the reports that will be required by the directive? Do you have a process in place to respond to requests for information from employees about their salary positioning?
5. Train and communicate with stakeholders
The human dimension is often the determining factor in the success of such a transformation. Managers and employees must be prepared for this new culture of transparency.
Ask yourself: Are your managers equipped to have constructive conversations about compensation? Is your internal communication gradually preparing people for this evolution?
Do you want a detailed roadmap for implementing these five steps? Download our complete checklist to guide you step by step in your preparation for the European directive on pay transparency.
Conclusion
The European directive on wage transparency marks a turning point in remuneration management in France. As ANDRH points out, this evolution should be seen as an opportunity to modernize HR practices and strengthen organizational equity.
Proactive companies that will structure their skills framework and objectify their salary policies will gain in the attractiveness and retention of talent. HR professionals now have a strategic role in transforming this legal obligation into a competitive advantage, by building an organization that is more equitable and adapted to the expectations of new generations.
The success of this approach is based on collaboration between HR, financial and legal departments, operational managers and HRIS teams. This transversal approach will incorporate all the dimensions necessary for effective implementation.
The time for action is now: 2026 may seem far away, but businesses that commit now will reap the benefits well before the regulatory deadline.
