If you employ people in the EU, one change in the Pay Transparency Directive (2023/970) deserves your full attention: it flips who has to prove what in a pay discrimination case.

The old rule vs. the new rule

Before: If an employee believed they were being paid unfairly compared to a colleague doing equal work, the employee had to prove it. That's a hard bar to clear - employees rarely have access to their colleagues' salary data of the internal reasoning behind pay decision.

Now: Once an employee brings forward some initial evidence suggesting unequal pay for equal work (this is often called a prima facie case - think "facts that raise a reasonable suspicion", not a fully proven case), the burden shifts. It becomes the employer's responsibility to prove that the pay difference is not discriminatory.

When exactly does the shift happen?

This isn't automatic in every dispute. The shift is triggered specifically when:

• An employee (or job applicant, in some contexts) raises a pay discrimination claim, and
• The employee presents some initial facts pointing to a pay gap for equal work or work of equal value.

At that point, instead of the employee needing to dig up proof of discrimination, the employer must show objective, gender-neutral criteria that explain the pay difference - elements like experience, qualifications, performance, or job level, applied consistently.

If the employer can't produce that documentation, the employer loses the case by default - not because discrimination was proven, but because the employer couldn't disprove it.

Why this matters more than it might sound

A few employer guides also flag a related trigger: if your company hasn't met its own transparency or reporting obligations under the Directive (like publishing pay gap data or responding to employee pay information requests), that failure itself can help trigger the shift in the burden of proof during a dispute. In other words, non-compliance with the transparency rules makes the employer more exposed, not just non-compliance with equal pay itself.

What this means practically

The shift turns documentation from a "nice to have" into the employer's main line of defence. To be ready and prepared, the prudent employer should have on file:

 

• Written, consistent pay criteria - how job levels, salary bands, and progression are decided, applied the same way across comparable roles;
• A clean job architecture - comparable roles classified consistently (not "Senior Engineer" in one office and "Software Engineer III" doing the same job elsewhere, with no clear link between them);
• A paper trail for every pay decision - offers, raises, promotions, market adjustments - showing the objective reason behind every decision;
• Records of any corrections made after pay audits, and who approved them.

The Bottom Line

Under the old system, unequal pay was hard for employees to prove. Under the new system, it's now on employers to prove pay decisions were fair - and if the paperwork to back it up is not in place, the employer starts the dispute at a huge disadvantage.

The practical takeaway: start building (and keeping) documented, objective pay criteria now.

Phoenix Wise Solutions can guide employers through intricacies of building tailor made policies and procedures that will lead to solid documentary foundations, building more confidence within employees vis-a-vis their employer, and fostering more peace of mind for both sides of the same coin.

Dr. Stephan Gauci

Managing Director