Sweden will not implement the EU Pay Transparency Directive

Instead, Sweden intends to push EU policymakers to postpone the deadline EU countries have for transposing the directive into national laws, which falls in June. It also wants to reopen talks on the text of the legislation with a view to achieving targeted changes.

A Stockholm-based legal expert said the decision reflects concerns that both employers and trade unions in Sweden have expressed about implementation of the EU directive in the country.

“The background to this is extensive criticism from parties to the Swedish labour market that have in many ways sought to influence the government in this direction,” said Åsa Erlandsson of Setterwalls, a law firm that Pinsent Masons partners with.

“I was at an employment law conference with people from the labour market when the news broke, and I do not think I am exaggerating when I say that all of them were very surprised, but pleased. It is a significant step to decide – at this stage, after the fact, when there are only a few months left to implement the directive – to attempt to bring about an amendment to the directive,” she said.

The EU Pay Transparency Directive is aimed at ensuring that the right to equal pay for equal work or work of equal value between men and women is upheld across all EU member states. It entered into force in May 2023 but the deadline for member states to implement it into national frameworks is 7 June 2026.

The directive introduces significant new disclosure and reporting obligations for employers, dependent on the size of the company, along with requirements to identify and correct inequalities through a joint pay evaluation exercise where a gender pay gap of more than 5% is found.

Under the directive, employers and job applicants will have new rights to obtain pay-related information from employers, while the burden of proof in cases involving suspected pay discrimination where the employer has not met its transparency or reporting obligations will be reversed so that the onus will be on the employer to prove the absence of direct or indirect discrimination.

In a statement, Nina Larsson, Sweden’s minister for gender equality, said: “The aim of the directive is a good one. Unjustified pay disparities must be tackled, and more tools are needed. At the same time, it has become increasingly clear how great the challenges are in transposing the directive into a national context, both for ourselves in Sweden and in other EU member states. That is why a fresh start at EU level is needed, and we are now taking the initiative on that front.”

Erlandsson said that, in addition to stakeholder criticism of the EU legislation, forthcoming parliamentary elections in Sweden scheduled for this September may have influenced how the Swedish government has ranked implementation of the directive within its legislative priorities. She thinks it is unlikely that Sweden will obtain sufficient support from other EU countries for amendment of the directive.

Munich-based employment law expert Lara-Christina Willems of Pinsent Masons said the process for implementing the EU Pay Transparency Directive in Germany has been initiated but is now up against a tight timescale.

“The EU directive must be transposed into national law by 7 June 2026, therefore in less than two months,” said Willems. “In Germany, this will be achieved by amending the so called Entgeldtransparenz Gesetz. The commission appointed by the federal government submitted its report containing recommendations for implementation of the directive at the end of 2025. The legislative process is now set to begin immediately. However, we are still waiting for an update.

It is very interesting to see the developments in Sweden.”

“It remains to be seen with some anticipation what will happen next in Germany, but in any case, employers should start looking into updating their pay systems now to be compliant in the future,” she said.