Please be aware that this article primarily pertains to Swedish rules and regulations, which may not necessarily apply or be valid in jurisdictions outside of Sweden.
Say goodbye to secret salaries and hello to stricter reporting requirements on gender pay disparities. The government has now released its investigation on how to implement the EU Pay Transparency Directive into Swedish law. As an employer, here’s the essential information you need to know.
The new Pay Transparency Directive, adopted by the EU in May 2023, aims to address the gender pay gap. Specifically, it requires employers to map and report pay differences while being more transparent with information to both employees and job applicants.
To figure out how to apply the directive within the current legislative framework and the Swedish labor market model, the government launched an investigation. This investigation is now complete and was made public on May 29 this year.
What Does This Mean for Me as an Employer?
In Sweden, all employers are already required by the Discrimination Act to conduct an annual pay equity analysis to identify and analyze any unjustifiable pay differences between men and women. This gives Sweden a bit of an advantage, as we already have a key element of the Pay Transparency Directive in place, unlike several other EU countries.
However, the directive introduces a slew of new rules that Swedish companies haven’t had to comply with before. While not all details are finalized (more on that below), here’s a brief summary of what we know so far. Want to dive deeper? You can read the full government investigation here (article in Swedish).
1. The pay equity analysis become more crucial than ever
Employers must continue conducting annual pay equity analyses to detect and address pay differences between men and women, with written documentation required for those with ten or more employees. While this is not new, the government’s investigation proposes a couple of adjustments to the current regulations:
- The survey should include an analysis of how parental leave and other absences affect salary progression.
- Written pay equity analyses must now include documentation of the proportion of women and men performing equal or equivalent work.
2. Reporting to the Equality Ombudsman (DO)
A completely new requirement is that employers with 100 or more employees must submit a report detailing pay differences between men and women. Depending on the company’s size, this reporting should occur annually or every three years. These reports must be submitted to the Equality Ombudsman (DO), who will publish the data and report to the EU Commission.
If the pay differences exceed five percent without a reasonable explanation, the company must develop an action plan.
3. Salary information in job listings…
…or at least during the interview process. Job applicants will now have the right to know the starting salary or salary range for the position they are applying for well before employment. Asking applicants about their previous salaries will be prohibited. This obligation to provide information also applies to current employees, who have the right to request and receive details on pay practices, their own salary, and average salaries for equal or equivalent work, broken down by gender.
4. Closer collaboration between employers and unions
According to the directive, employers must collaborate with trade unions on the pay equity mapping process. Although such practices already exist in Sweden, tougher requirements are on the horizon. For example, unions and employers will need to work together to establish criteria for the job evaluation that every employer is required to perform.
5. Penalties, reversed burden of proof, and new limitation period
Employers who violate the rules will face severe and costly consequences. If an employee believes they have been subjected to pay discrimination, the burden of proof shifts to the employer, who must prove that discrimination did not occur. Employers may also be liable to pay both fines and damages.
Lastly, the limitation period for employees to have their cases tried in court is extended to three years from when they became aware that pay discrimination occurred. This means employers must keep pay records for extended periods as evidence.
What Happens Next?
The next step is to refer the investigation for comments so that relevant authorities and organizations can provide their input. The government will then draft a legislative proposal for the Swedish parliament to vote on. The deadline for the full implementation of the Pay Transparency Directive in all member states, including Sweden, is June 7, 2026, although each country may choose to implement it earlier.
