This article was first published in Italian on the TreviSearch / AltoPartners Italy website. To read the original blog post, click here

What really changes with EU Directive 2023/970? (and why many companies aren’t ready)

1. A change that goes beyond compliance

With the adoption of EU Directive 2023/970, the European Union introduces a principle destined to profoundly impact the organization of companies: pay transparency as a concrete tool to ensure equal treatment.

The formal focus is on the gender pay gap. The real impact, however, concerns the entire people management system.

It’s not just about:

– publish salary ranges

– produce reports

– respond to employee requests

It is about demonstrating that the pay system is consistent, objective and defensible

And this is where the difficulties begin, and most companies will fail not because of a lack of data, but because of a lack of processes and structure.

2. The real critical point: “work of equal value”

The Directive doesn’t simply require comparing salaries. It requires demonstrating that different roles are evaluated according to comparable and transparent criteria.

In practice:

• responsibility

– complexity

– impact on business

– required skills

They must be measurable, documented and shared.

In the reality of many companies (not just SMEs):

– job descriptions are outdated or inconsistent

– the levels are historical, not designed

– pay differentials are the result of individual negotiations/mere seniority

– the memory of “why Tizio earns more than Caio” is often informal

– the responsibilities do not correspond to the role

This makes the system fragile, not just non-compliant.

3. Pay transparency = organizational exposure

The Directive introduces new rights for workers:

– access to average salary information

– possibility of contesting unjustified differentials

– reversal of the burden of proof in the event of litigation

In other words: if you can’t explain your pay system, someone else will do it for you (unions, lawyers, courts, the media).

The risk is not only legal:

– internal tensions

– loss of confidence in management

– reputational damage

– difficulty attracting talent

4. A mistake to avoid: reducing everything to a numerical exercise

Many companies are approaching the issue as a simple:

“Let’s do an analysis of the gender pay gap and see what we come up with.”

It’s a short-sighted approach. Without:

– a clear job architecture

– role evaluation criteria

– a pay equity framework

any number is contestable.

Transparency doesn’t come from data. It comes from system design.

5. From obligation to opportunity: what forward-thinking companies can do

Forward-thinking organizations that address the Directive in a structured way today can achieve concrete benefits:

– more solid and manageable remuneration systems

– greater coherence between roles, performance and pay

– reduction of legal and union risk

– strengthening the employer value proposition

– greater management credibility

– Employer Branding (Positioning yourself as a transparent and fair company attracts the best talent, particularly among the younger generations who value corporate ethics)

– Trust and Engagement (Transparency increases employee satisfaction, reducing turnover and improving overall productivity.)

In short: a competitive advantage that is difficult to recover for those who move late.

In many cases, it is an opportunity to put things in order where things have been built up for years.

6. The Trevisearch / AltoPartners Italy point of view

At Trevisearch / AltoPartners Italy, we believe that pay transparency is not an ideological issue, but a governance issue that speaks volumes about leadership, accountability, values, and the sustainability of decisions.

Who selects, evaluates and develops leaders:

– must understand the real value of roles

– must be able to read organizational inconsistencies

– must help companies make their choices sustainable over time

For this reason, we approach EU Directive 2023/970 not as a requirement, but as an organizational strengthening project , which unites:

– job architecture

– pay equity

– leadership

– sustainability of managerial decisions

7. An open question for management

The Directive will enter into full force in June 2026. But the question is already current:

“Are we able to explain – simply, objectively, and convincingly – why people in the company are paid the way they are paid?”

If the answer is uncertain, the issue isn’t the Directive. It’s the system… and it’s best to manage it (methodically) before it becomes a problem!

Across our European partner firms, we are ready to help you transform what may seem like a problem into an opportunity.