A delay in transposition does not exempt employers
Directive (EU) 2023/970 of 10 May 2023 on pay transparency was to be transposed by Member States by 7 June 2026 at the latest. However, in Luxembourg, no bill has been introduced to date[1]. This delay should not, however, encourage employers to remain passive. Although, in principle, a directive that has not been transposed by the deadline does not impose obligations on private individuals, it can nonetheless influence the interpretation of national law[2]. Moreover, the principle of equal pay for women and men is already enshrined in the Labor Code, which provides for sanctions against employers who fail to guarantee equal pay for the same work or work of equal value[3]. The Directive will strengthen the effectiveness of this right through obligations of transparency, reporting, and deterrent sanctions.
Unprecedented Obligations for Businesses
The Directive imposes salary transparency at all stages of the employment relationship. From the recruitment stage, candidates must be informed of the initial salary or the expected salary range, and employers will no longer be able to request candidates’ salary history. Every employee will have the right to information on average pay, broken down by gender, for identical work or work of equal value. Companies with more than 100 employees will be required to regularly publish pay gaps between women and men. If a gap exceeds 5% and is not justified by objective and non-sexist criteria, a joint assessment with employee representatives will be mandatory, with a requirement to address the gap.
The Directive also requires jobs to be classified according to objective criteria, some of which are mandatory, including skills, effort, duties, and working conditions, agreed upon with employee representatives. Discretionary bonus clauses, which are widespread in Luxembourg, could become more vulnerable to challenge in light of these requirements for objectivity and justification. Finally, where an employee establishes facts giving rise to a presumption of discrimination, or where the employer fails to comply with its transparency obligations, the burden of proof will fall on the employer to provde that no discrimination has occurred.
Preparing now: a strategic imperative
Despite the absence of implementing legislation, we have been advising the employers we support since last year to begin preparing now. There is sufficient certainty regarding the substance of the forthcoming legislation to justify a proactive compliance strategy: mapping jobs and classification criteria, identifying pay gaps within job categories, documenting the objective criteria justifying these gaps, developing transparent salary structures, reviewing bonus schemes, and implementing monitoring tools.
The involvement of employee representatives is strongly recommended, as the Directive envisages an enhanced role for workers’ representatives in defining job-classification criteria and jointly evaluating compensation. Employers that take a proactive approach and voluntarily disclose their salary data are likely to strengthen both their attractiveness as employers and their reputation for social responsibility.
Such preparation will enable employers to approach the entry into force of the implemeting legislation with confidence, and to turn a regulatory obligation into a competitive advantage.
Other HR challenges on the horizon
Beyond salary transparency, Luxembourg employers are facing a number of other HR challenges, including the right to disconnect, which must be effectively implemented by 1 July 2026. The challenge lies in striking the right balance between a policy that is too general to provide meaningful protection to employees, and one that is so rigid that it proves unworkable in practice. Employers must therefore develop practical, tailored arrangements that reconcile employee protection with the operational needs of the business.
The use of AI is also of major concern, as is the prevention of workplace harassment, which remains more relevant than ever given the number of cases (proven or not) that employers continue to face.
They must ensure that their internal reporting and complaint-handling procedures are effective and comply with legal requirements.
Conclusion: preparing to stand out
The Directive marks a paradigm shift. The traditional approach, based on contractual freedom and salary confidentiality is giving way to a requirement for justification and transparency. Employers that anticipate these changes will be well positioned to attract and retain talent, while also limiting their legal risks. Compliance with pay equality requirements is therefore also becoming a driver of attractiveness.
[1] NB: Article finalised on 15 June 2026
[2] No horizontal direct effect of directives
[3] Articles L. 225-1 to L. 225-5 of the Labour Code, introduced by the law of 15 December 2016