Pay transparency becomes mandatory starting June 2026. What employers need to know about Directive 2023/970. An interview with lawyers Loredana Costina and Dragoș Brezeanu

“What is the salary for this position?”, “What are my colleagues earning in similar roles?” or “Why am I being paid less?” — these are the types of questions that you may be receiving more frequently from candidates and colleagues who are seeking salary transparency. However, the current answer is constrained by the Romanian Labour Code, which, in Article 163, stipulates that salaries are confidential. Still, the pressure for transparency is increasing and no longer comes solely from candidates and employees, but also from the European Union.

Directive (EU) 2023/970, which must be transposed into Romanian law by June 2026, brings major changes for employers. It mandates clear measures regarding equal pay for equal work between women and men, along with new obligations for communicating and documenting salary policies. Employers will be required to disclose salary information during the recruitment process, define clear pay criteria, and respond to employee requests regarding the salaries of colleagues in similar roles.

What exactly does this Directive entail? How does it align with Romanian labour legislation? What are the risks for employers who fail to comply with salary transparency obligations?

Lawyers Loredana Costina (Corobana Law Firm) and Dragoș Brezeanu (Brezeanu Dragoș Romeo Law Firm), speaking at the HR Power Breakfast event organized by BIA, explain what companies must do to remain compliant. Here are the questions they answer:

• I want to post a job ad — is it mandatory to include the salary?

• How can salary differences be justified without breaking the law?

• What does a joint pay assessment mean?

• What penalties do employers face if they don’t implement Directive 2023/970? What steps can they take now to avoid salary transparency-related litigation?

 

 

 

WHAT IS NEW IN DIRECTIVE 2023/970 GIVEN THAT ROMANIA’S ANTI-DISCRIMINATION LEGISLATION WAS RECENTLY UPDATED AND THAT ARTICLE 41(4) OF THE ROMANIAN CONSTITUTION REQUIRES EQUAL PAY FOR WOMEN AND MEN DOING EQUAL WORK? 

Loredana Costina: While our Constitution includes provisions regarding equal pay for women and men performing the same work, these are often very general. The mere existence of such provisions does not guarantee their application. We lack detailed regulations on how to implement them or what equality means in practice.

What’s interesting in Directive 2023/970 is evident even in its title: “Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023 on strengthening the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms.”

In effect, the Directive provides much more specific rules for implementing gender pay equality. Employers are now required to make salaries more transparent. While it’s still unclear whether we’ll see absolute transparency, such as being forced to disclose that “Alexandra Popescu earns X”—what is certain is that companies must disclose the salary range for her role and what a male colleague in the same role and with the same responsibilities is paid.

For the first time, there is an obligation to make salary levels transparent, despite Article 163 of the Labour Code still stating that salaries are confidential. To date, employees have been prohibited from disclosing their salaries, and employers have had no obligation to do so. As such, the concept of equality between men and women has been more of a “nice-to-have,” lacking effective enforcement mechanisms.

The Directive’s rationale notes that the gender pay gap in the EU currently stands at 13%, even when comparing identical jobs. This is not merely because women tend to work in lower-paid fields post-pandemic—there are also significant gaps in identical roles.

It’s important to remember that national governments must transpose the Directive into law by June 2026. How this will look in Romania remains unclear. Based on past experience, Romanian lawmakers often wait until the last moment and simply copy the Directive’s wording, without adapting it to national realities, which leads to issues. The Directive, in theory, is very useful for upholding the principles in our Constitution.

 

 

 

 

HOW CAN EMPLOYERS PREPARE TO COMPLY WITH DIRECTIVE 2023/970? HOW CAN SALARY DIFFERENCES BE JUSTIFIED?

Dragoș Brezeanu: The Directive, published in 2023, was not originally focused solely on the gender pay gap but was based on poorly paid occupations. Salary studies revealed significant differences between the pay of men and women, and those differences still exist today across the EU. In Romania, gender-based pay gaps persist, and employers can take action.

Over the past 20 years, collective bargaining legislation has undergone many changes. Law 62/2011 on social dialogue eliminated national collective agreements. Large employers should now consider implementing collective labour contracts and well-defined salary grids.

HR departments already conduct salary surveys at the market and regional levels, broken down by role. Employers have the tools they need.

Through a collective labour contract, companies can publicly define pay grades internally, making it clear where each worker (e.g., unskilled, skilled) fits in. Employers can use this to align salaries transparently and avoid major issues.

My advice is: don’t simulate collective bargaining — actually conclude collective agreements. This is not only beneficial for salary rights, but also serves as a safety valve to avoid conflict. Strikes are not permitted during the term of a collective agreement. Collective agreements protect employers when employees say: “I want to know my colleague’s salary because I earn less.” You can show them the pay grid and how their salary fits within it.

While Article 163 on salary confidentiality has not been repealed, and likely won’t be in the transposition law (for which we currently have no draft or public consultation), courts have interpreted transparency differently. In one case, a judge required an employer to disclose each salary. A lawsuit could thus compel full disclosure.

The Directive refers to average salaries, not individual ones, so Article 163 should not be repealed. Problems arise only if, for example, Alexandru Popescu learns Alexandra Popescu’s salary and shares it, though the Directive says he can, without facing confidentiality restrictions.

The Directive also refers to equal competencies and duties, which must be documented in job descriptions. Employers can demonstrate that two workers have different competencies, thereby justifying pay differences.

Equality is a birthright, but differences emerge in knowledge, experience, and performance. Therefore, we need performance evaluations and assessment tools.

 

WHAT ROLE WILL EMPLOYEE REPRESENTATIVES HAVE IN SETTING PAY LEVELS?

Attorney Loredana Costina: In theory, they will have a consultative role, but the current directive stipulates that these salary levels are to be developed together. This notion of “together” is very difficult to define. What happens in situations where there is a significant discrepancy between the conclusions reached by employee representatives and those reached by company representatives?

At present, there is no mediation procedure between the two positions, nor is there any information on what these reports will look like. Will there be a single report, or are we talking about a report prepared by the company and a separate report prepared by the employee representatives, with both being submitted to a supervisory and control body—whose identity remains unknown? Will it be the Labour Inspectorate (ITM)? We only know that there is a draft law on this matter, but it has not yet been made public.

The Directive states the following regarding the joint pay assessment: “Member States shall take appropriate measures to ensure that employers subject to pay reporting under Article 9 conduct, in cooperation with their workers’ representatives, a joint pay assessment where all of the following conditions are met:

a) the pay reporting reveals a difference of at least 5% in the average pay level between female and male workers within any category of workers;

b) the employer has not justified such a difference in average pay level using objective, gender-neutral criteria;

c) the employer has not rectified the unjustified difference in average pay level within six months of submitting the pay report.”

The text of the Directive is particularly interesting in terms of the criteria, as these must be objective and gender-neutral. If not objectively justified, we may encounter situations where certain salary-setting criteria are deemed by a court to be specific to a certain gender.

In practice, such criteria may favor higher remuneration levels for male employees over female ones. Of course, this depends heavily on the industry. There are sectors where we cannot argue that women are weaker negotiators, but if the criteria are formulated in a certain way, a court may conclude that the very criterion itself is discriminatory. For example, we might be tempted to “favor” women for their capacity to cooperate, attentiveness to others, better listening skills, or less aggressive tone. In this case, we are looking at positive discrimination, which may in itself lead to criteria that are discriminatory by nature.

These questions remain regarding the cooperation between employee representatives and company representatives in setting salary levels:
Is it necessary for measures to be taken in cooperation with workers’ representatives in every case, or only when the employer meets the three conditions discussed above?
If the employer is not in this situation, is the involvement of workers’ representatives still required in developing these criteria?
These are questions for which we do not yet have clear answers.

 

 

THE DIRECTIVE REFERS TO WORKERS. WHAT KIND OF WORKERS ARE WE TALKING ABOUT?

Lawyer Dragoș Brezeanu: It is clear that we are no longer referring to the traditional concept of an employee. We are talking, for example, about civil servants, about managers (who are employed under a mandate or director’s contract, representing the company in dealings with third parties), about collaborators (who are in a dependent relationship with a client), or about in-house lawyers.

There is also an interpretation by the European Court of Justice, which defines a “dependent worker” as being in a relationship of subordination between the service provider (the worker) and the employer (the beneficiary of the work).

We may end up discussing not only employees in the traditional sense, but also other dependent workers who could fall under this designation.

At least for the moment, three categories are clearly defined:

1. Employee (worker)

2. Civil servant (who is appointed and does not necessarily negotiate their rights through an employment contract)

3. Company manager (if appointed under a mandate)

AS AN EMPLOYER, I WANT TO POST A JOB AD. HOW DO I PROCEED? SHOULD I INCLUDE THE SALARY?

Attorney Dragoș Brezeanu: Directive 2023/970 begins with the job advertisement and then refers to ongoing employment relationships.

The recruitment ad must include a certain salary level. This doesn’t mean stating the exact salary that will be offered to the selected candidate, but rather a salary range or pay scale.

Candidates will want to know the exact salary they can expect, but this detail doesn’t need to appear in the job ad itself—it should be provided at the offer stage. I recommend that the salary offer include all relevant details, with the most important being the job responsibilities (the occupational code [COR] may be broad, but in practice, the employee’s actual duties can differ from those listed in the COR).

In the job advertisement, mention a salary range or a pay scale from the collective labor agreement. Then, in the salary offer, specify the exact amount. Keep in mind that the European directive refers not only to salary, but also to benefits—whether monetary or in kind.

 

WHAT SANCTIONS DO EMPLOYERS FACE IF THEY FAIL TO IMPLEMENT THE SALARY TRANSPARENCY PROVISIONS SET OUT IN DIRECTIVE 2023/970?

Lawyer Loredana Costina: The provisions of the Directive are currently vague in the sense that they leave it to the discretion of the Member States to determine what penalties, compensations, and likely fines will apply.

The Directive’s text does not specify amounts. EU Member States have the right to establish what sanctions employers will bear. What is interesting from the perspective of non-compliance with the Directive is that access to justice for employees is being liberalized.

This Directive grants Member States the right and even encourages them to adopt measures whereby the employee is exempted from bearing court costs even if they lose, provided it is assessed that the employee had a justified/reasonable cause to bring the case to court. What constitutes this reasonable cause is not yet known, but we may see changes in the Civil Procedure Code, meaning that an employee who brings such a claim will not have to pay the employer’s legal costs, even if they lose.

When the employee states: “We are not in an equal situation; my salary is X% less than my colleague’s (with the same role, skills, experience),” the employer must prove that there is a company-level regulation establishing that a salary range was respected.

We are talking about exposure to complex litigation and court costs for employers which they will never be able to recover from employees. Employees can bring claims to court at any time and keep the employer engaged in this judicial process. We will see if national legislation will impose fines or other sanctions on employers.

WHAT WILL HAPPEN IN COURT?

Attorney Dragoș Brezeanu: If the employee does not obtain what they seek (for example, their salary, like in the case of Mr. Popescu), they will sue the employer (under the umbrella of their right not to bear court costs). At this point, we do not yet know what constitutes a justification for their claim, but civil law is straightforward: you either have a valid claim or you do not.

Such litigation can take some time. Documents will be exchanged, the employer will present evidence (payroll records, collective agreements, internal regulations, salary procedures). There may also be additional legal costs, such as accounting expertise. The expenses will be quite significant for the employer, who will bear the court costs. For this reason, I find the transposition law of Directive 2023/970 very important, and its drafting should involve lawyers who understand how things work in courts. We want to avoid having a mere literal translation of the Directive.

The Directive allows a three-year transposition period precisely because it is quite complex and gives EU member states time to harmonize their legislation. In Romania, we are roughly in the final stretch, with one year left. For us lawyers, the resulting disputes will be interesting; for employers, challenging — but we hope the legislation will clarify many currently unclear aspects.

 

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