A woman looking at a fine notice and a man looking down

What Happens If You’re Not Compliant with the EU Pay Transparency Directive?

ByAnita Lettink

Your Questions on Sanctions and Fines Answered

You’ve heard about the EU Pay Transparency Directive, you know the deadline is approaching (June 7, 2026), and I hope you’re already working on communication plans. But here’s the question that you should not ignore: What happens if we don’t get this right?

I haven’t written about the consequences of non-compliance before. That was mainly due to lack of information. I did not know how countries would bring this topic into their legislation. Now that we’ve seen several national transpositions, let’s look at the sanctions, fines, and other penalties you need to know about.

What’s the overall penalty framework under the Directive?

The Directive requires member states to establish penalties that are “effective, proportionate, and dissuasive”, including fines. But while the EU Directive sets the framework, each member state determines the specific penalty amounts and structures when they transpose the law into national legislation.

What types of penalties can employers face?

Non-compliance can hit you in several ways:

  • Financial penalties: Fines can reach up to 4% of annual turnover, though specific amounts vary significantly by country (more on that below).
  • Employee compensation: Workers who experience pay discrimination are entitled to uncapped compensation, which may include full recovery of back pay, bonuses, and payments in kind. Member States are prohibited from setting an upper limit on the compensation that can be awarded.
  • Exclusion from public procurement: Penalties could include exclusion from public tender procedures for a certain period of time. Public contracts may also have penalty or termination clauses.
  • Reputational damage: Non-compliance will often be publicly disclosed, affecting brand image and trust among stakeholders. And that can impact everything from recruitment to customer relationships.

Are the penalties different depending on what you fail to do?

Yes, absolutely. We see that countries are making a distinction between procedural and substantive failures. Procedural failures include issues like missing or late gender pay gap reports, failing to provide pay range information to candidates, or not responding promptly to employees’ requests for equal pay information. These typically result in administrative fines, which are often set at lower levels in comparison to more serious violations. On the other hand, substantive failures involve more significant issues, such as not addressing unjustified pay gaps over 5%, continuing discriminatory pay practices, or consistently neglecting transparency requirements. These failures can lead to higher fines, including court-ordered corrective actions. Keep in mind that according to the Directive, Member States must establish specific penalties for repeated infringements to reflect the severity. So, if you’re a repeat offender, expect escalating consequences.

What are countries actually proposing for penalties?

Member states are still transposing the Directive, but in the documents that have been released, there’s a range of approaches. Let me show you:

At the low end:

  • Lithuania: Penalties ranging from €400 to €6,000
  • Belgium (Wallonia-Brussels Federation): Fines up to €3,900 per year or the equivalent of actual damages suffered
  • Slovakia: Administrative fines up to €4,000 for non-compliance with gender pay gap reporting obligations

In the middle:

  • Poland (principles): Fines for non-compliance will range from €470 to €14,180 for various failures to comply

At the high end:

  • Netherlands: Administrative fines up to €10,300 per violation and public disclosure by the Dutch Labor Inspectorate
  • Sweden: Maximum penalty of €50,000 for employers who fail to submit their report
  • General EU framework: Up to 4% of annual turnover

That’s a range from €400 to potentially millions of euros for large organizations. The variation is more than 100x between the lowest and highest fixed penalties.

What’s driving these differences?

The large fluctuation in penalties isn’t random and there are several forces at play:

Fixed amounts vs. percentage-based penalties: Most countries are using fixed euro amounts, but penalties can also be tied to company revenue. This creates massive differences in actual financial impact. As example, for a company with €500 million in revenue, a €4,000 fixed fine is essentially a rounding error, while a 4% turnover-based penalty would be €20 million. Fixed amounts weigh much more heavily on small companies than large companies.

Per violation vs. annual penalties: Belgium’s penalty is structured as “per year,” while the Netherlands specifies “per violation.” This distinction matters enormously. If you have multiple violations (e.g. failing to provide salary ranges in job postings, not responding to employee information requests, and missing reporting deadlines) those “per violation” penalties can stack up quickly.

National wealth and wage levels: The fixed amounts roughly correlate with economic differences between member states. A €6,000 fine in Lithuania may have a similar deterrent effect as a €50,000 fine in Sweden, given the differences in average wages and business costs.

Existing penalty structures: Countries are also fitting these penalties into their existing labor law enforcement frameworks, which vary significantly. Some countries traditionally use lower administrative fines with higher criminal penalties for serious violations, while others rely more heavily on civil penalties.

What this means for multi-country employers

Here’s where it gets interesting for organizations operating across multiple EU countries: If you’re operating in both Lithuania and Sweden, the same violation could cost you €400 in one country and €50,000 in another: a 125x difference. This creates perverse incentives and makes it tempting to prioritize compliance in high-penalty countries. But please don’t do this. Here’s why:

  • The floor, not the ceiling: Remember that employees can also claim uncapped compensation for discrimination. A €400 administrative fine might seem manageable, but if that non-compliance leads to successful discrimination claims from multiple employees, you’re looking at back pay, bonuses, and legal costs that dwarf the fine.
  • Reputational spillover: A compliance failure in your Lithuanian operations doesn’t stay in Lithuania. People talk, colleagues are highly connected, and it will affect your reputation EU-wide and possibly globally. If you fail to comply in one country, employees in other countries will surely scrutinize their own pay and compensation.
  • Different violations, different countries: Your compliance challenges won’t be identical across countries. In one market you might struggle with salary range disclosure, in another with data collection for reporting. This may lead to different fines, especially when existing labor laws come into play.

And finally, remember that early transpositions tend to be more prudent. As the Directive becomes business as usual and enforcement agencies see what works, I fully expect penalties to trend upward, particularly in countries that started with lower amounts.

What if my country hasn’t transposed the Directive yet?

Some member states are running behind on transposition, and the Netherlands has announced a delay with implementation shifting to January 1, 2027. However, don’t let a national delay lull you into complacency.

First, the EU Commission can take action against member states that miss the deadline, potentially leading to additional pressure for quick implementation. Second, even if your primary country is delayed, you may have operations in other countries that do meet the deadline. Third, starting preparation now gives you time to identify and address issues before reporting becomes mandatory.

The problem is uncertainty

I think what’s most striking about these monetary penalties is how much is still uncertain. Major economies like France, Germany, Italy and Spain haven’t published their legislation, including their penalty structures yet. When they do, they might set precedents that influence other countries or lead to upward harmonization.

Germany, for instance, historically takes compliance very seriously and tends toward stricter penalties with close oversight. France has an existing gender equality index system with its own penalty structure. How these countries reconcile existing frameworks with the new Directive could significantly impact the penalty landscape across Europe.

The huge gap between lowest and highest penalties suggests we’re in the early days of what will likely be a harmonization process. The monetary fluctuations tell me that EU member states are still figuring out how to make these penalties truly “effective, proportionate, and dissuasive” as the Directive requires.

What should HR leaders take away?

Let me give you some general advice to shape your approach:

  • Don’t plan around the lowest penalties: Just because Slovakia has a €4,000 maximum doesn’t mean that’s your real financial exposure. Factor in the possibility of percentage-based penalties, multiple violations, and employee compensation claims.
  • The percentage-based penalties are the real risk: For larger employers, 4% of annual turnover isn’t just a fine, it’s a potential catastrophe. Even 1-2% could be tens of millions of euros for a major corporation.
  • Think beyond the immediate fine: The monetary penalty is often the smallest part of your total cost. Add in legal defense costs, back pay and compensation, remediation costs, reputational damage, and recruitment and retention impacts.
  • The enforcement approach matters as much as the amount: A country with a €10,000 maximum penalty but aggressive enforcement and inspection programs may actually pose more financial risk than a country with a €50,000 penalty but passive enforcement.
  • Build for the strictest standard: For multi-country employers, the smartest move is to build a compliance program that would satisfy the strictest interpretation and highest penalties (Think back to the GDPR). Then you’re covered everywhere, regardless of how the penalty landscape evolves.

And the bottom line?

The penalties for non-compliance with the EU Pay Transparency Directive are real and potentially significant, ranging from hundreds to millions of euros depending on your size, location, and the nature of your violations.

But let me remind you that the financial penalties, while painful, aren’t actually your biggest risk. The real cost of non-compliance is the combination of uncapped employee compensation claims, reputational damage, talent implications, litigation exposure, and operational disruption that comes with it.

The penalty landscape is still taking shape, likely trending upward, and your real exposure goes far beyond whatever administrative fine gets published in the legislation. We won’t know for sure what fines will look like until sometime in 2027, and even then I expect warnings rather than financial penalties in a first round. In the end, the question isn’t whether to comply, it’s whether you’ll do so proactively, on your own terms, or reactively under regulatory pressure.