The Pay Transparency Directive – A New Era for Employers in Sweden

The directive, which must be implemented by June 2026, aims to reduce pay gaps between women and men and create a more transparent and fair labor market. What does this mean for Swedish employers – and how can you prepare?

The directive requires employers to:

• Implement objective, gender-neutral pay structures that enable comparisons between employees performing the same or equivalent work.
  
  
• Report pay differences between women and men, covering both fixed and variable pay components, and share these with authorities and employees.
  
  
• Conduct annual pay audits (for employers with 250+ employees) or every three years (for those with 100–249 employees). Employers with fewer than 100 employees are subject to certain voluntary measures.
  
  
• Act on pay differences of 5% or more between women and men in the same category – differences that cannot be objectively justified must be addressed within six months.
  
  
• Provide job applicants with transparent pay information – the initial salary or salary range must be communicated before salary negotiations, and it is prohibited to ask about previous salary.
  
  
• Restricted pay secrecy – employers may not prevent employees from sharing their pay information.

The Swedish government has proposed implementing the directive through a new chapter in the Discrimination Act (SOU 2024:40). This includes:

• Expanded reporting obligations to the Equality Ombudsman (DO).
  
  
• Deeper analysis of pay data, including the effects of, for example, parental leave.
  
  
• Open reports – pay reporting must be in percentages, not kronor, and be available to current employees.
  
  
• New sanction options – employers who do not comply risk fines or damages, and the burden of proof lies with the employer in disputes.

Preparing in good time offers several advantages:

• Ensure compliance before the deadline and avoid rushed actions.
  
  
• Strengthen your employer brand by demonstrating commitment to equality and transparency.
  
  
• Reduce risks of legal consequences and reputational damage.
  
  
• Attract and retain talent – transparency and fairness are key factors for today’s and tomorrow’s employees.

1. Review and update your pay structures – ensure they are objective and gender-neutral.
   
   
2. Conduct a thorough pay audit and identify any unjustified pay differences.
   
   
3. Develop a clear communication plan – inform both current and potential employees about your pay policy.
   
   
4. Train managers and HR in the new rules and how pay decisions should be justified and communicated.
   
   
5. Invest in technology and analytics tools – for example, KPMG’s Pay Transparency Tool, which enables in-depth analysis and visualization of pay data, identification of anomalies, and support for action plans.

The directive is not just about new administrative requirements, but also a cultural shift. Pay transparency demands openness, clear communication, and active efforts to build trust and understanding among employees. Leadership engagement and a robust governance process are crucial for success.

The EU Pay Transparency Directive is an opportunity for Swedish employers to take the lead in the pursuit of equal pay and a more inclusive labor market. By acting proactively, you can not only ensure compliance, but also strengthen your brand and contribute to a fairer workplace.

Would you like to know more about how KPMG can support your organization in the journey towards pay transparency? Contact us for a discussion on how we can help you prepare for future requirements.