Implementation of the EU's Pay Transparency Directive in Sweden

We’ve summarized below some of the key aspects of the recommendations set out in the investigation. 

Requirements for transparency in pay structures

The introduction of new rights and obligations regarding transparency in pay structures is an important change that will be implemented in Swedish legislation. It is proposed that transparency in pay structures takes the form of a new chapter in the Swedish Discrimination Act, where pay surveys become an important factor in creating transparency in pay structures. A thorough pay survey will play a central role in identifying and correcting any unfair pay gaps, while also providing employers with necessary information to meet the requirements for transparency for employees and promote an open and transparent workplace culture.

To prevent gender-based pay discrimination, both job seekers and employees will have the right to access pay information:

1. Employers will have an obligation to inform job seekers of their starting pay or pay range in good time before negotiating pay. The purpose is to provide job seekers with enough insight on the pay for the job they are applying for, to be able to negotiate effectively. The means of providing this information to job seekers can vary, and the investigation mentions as an example that it can be included in job advertisements or be provided before the interview. However, the investigation does not propose a requirement for job advertisements to include this type of information and leaves the question relatively open-ended.
   
   This is surprising because, although the Directive gives members states the option, we had anticipated that Sweden might mandate that information about pay bands should be specified in the job advertisement. It will be interesting to see what market practice develops in Sweden if the Directive is enacted in this way and whether other member states follow suit in enacting the legislation in this way.
   
2. Employees will also have the right to request information about their own pay as well as the average pay for similar job tasks, divided by gender, at the employer. Employers will not be able to prevent employees from disclosing their pay to others, which means that employers will not be allowed to implement confidentiality rules around an employee's individual pay.

Pay structures and pay survey

The investigation shows that the current regulations in the Swedish Discrimination Act already aim to ensure equal pay for equal work or work of equal value. Employers are also already required to conduct an annual pay survey to ensure that pay structures are fair and that equivalent work is compensated in a fair manner. Given this context, the investigation has determined that the existing legal framework meets the requirements of the Directive, which stipulates that employers should have established pay structures in place.

However, the investigation proposes certain adjustments to the current requirements. In addition to the previous requirements for the pay survey, the pay survey will also include information on the proportion of women and men in the organization who perform work that are equal or equivalent. Moreover, if the pay survey shows pay gaps, an in-depth analysis of the pay survey must be carried out to rule out that the pay gap is directly or indirectly related to gender. In this pay assessment, a comparison of the salary development between women and men in connection with, for example, parental leave must be included, which is new. The analysis aims to compare the salary development for employees who perform work that is considered equal or equivalent, but who have not taken similar leave. By identifying and analyzing any differences in salary development in these different situations, the employer can better understand and address any inequalities and pay discrimination. 

Employers with 10 or more employees will continue to be required to carry out annual pay surveys. The pay survey must be in writing.

Special requirements for employers with 100 or more employees

To ensure equal pay between genders in large workplaces, employers with at least 100 employees will be required to carry out pay reporting, which will take place at different frequencies depending on how many employees the employer has (see below). The pay report must include information about pay differences between men and women for all employees. 

The pay report shall be submitted to the Equality Ombudsman (Swe. Diskrimineringsombudsman, EO), which is the authority proposed to be appointed as a supervisory body. The pay report will be made public, with the exception of the data regarding differences in pay between genders for categories of workers performing the same work or work of equal value, which will not be publicly disclosed. 

For employers with 100-249 employees, pay reporting will need to be done every three years starting most likely in 2031. For employers with at least 250 employees, pay reporting will need to be done annually starting most likely in 2027. 

Employers with at least 100 employees must also provide information on pay differences between men and women who perform equal work or work of equal value. A detailed account must be included that explains pay differences of five percent or more. This means that if it turns out that there are pay differences of five percent or more, an in-depth pay assessment must be conducted to determine if the difference can be explained by objective and gender-neutral criteria. The account must be submitted to the EO, it must be factually accurate and proposals for action must be provided if unjustified pay gaps are uncovered.

Sanctions and damages

If the rules on pay transparency are violated, the employer may be required to pay damages. Similarly, the employer who fails to submit a pay report or otherwise provide the information required or requested by the EO may risk having to pay a sanction. 

Entry into force

According to the Directive, Sweden must have implemented the directive no later than June 7, 2026. The investigation shows that it is proposed that the amendments to, among other things, the Swedish Discrimination Act will enter into force on June 1, 2026.

Do you need help?

With the upcoming changes and requirements for pay transparency, it is important for employers to be in line with the new regulations. If you need help and advice to ensure that your organization meets the new requirements and creates a fair and transparent work environment, do not hesitate to contact us. Our team of experts helps many companies in various ways to be prepared when the new rules come into force. Don't hesitate to get in touch!