Upcoming legal requirements make it essential for companies to review internal processes. The EU Pay Transparency Directive will introduce several changes that affect all employers, even those with only one employee.
Although the Finnish legislation with final practical provisions has not yet been confirmed, it is clear that these rules will impact business operations in the coming years. The directive aims to ensure the principle of equal pay and increase transparency around salaries. According to the EU directive, the requirements must be implemented by June 2026. The legislative proposal currently under consideration in Finland indicates that the national law is expected to come into effect in May of the same year.
The directive requires employers to justify pay decisions in an objective and gender-neutral manner. Employees will have the right to access information about their own salary as well as the average salary for equivalent work, broken down by gender. Even smaller companies will need to map job roles and explain how salaries are determined. Employers must also disclose the criteria used for salary progression.
Job advertisements and titles must be gender-neutral. Salary or salary ranges must be stated in the job posting or communicated to candidates before the interview, without requiring the candidate to ask. It will be prohibited to inquire about previous salary history.
If the gender pay gap within a group of employees exceeds five percent, the employer must demonstrate objective and gender-neutral reasons for the difference. If pay discrimination occurs, employees may be entitled to compensation, and the company risks fines. The employer is responsible for proving compliance with the principle of equal pay and the transparency requirements under the directive.
Reporting obligations vary by company size. Companies with at least 250 employees must report on pay gaps annually, while those with 100–249 employees report every three years. Smaller companies may report voluntarily.
If reporting reveals a gender pay gap of five percent or more that cannot be justified by objective and gender-neutral criteria and is not corrected within six months, employers with at least 100 employees must conduct a joint pay assessment with employee representatives. The exact thresholds for certain measures and reporting obligations will be determined once Finnish legislation is in force.
Currently, companies with at least 30 employees are already required to have an equality plan and conduct a pay survey under the Equality Act. With the new directive, these processes must be reviewed to ensure compliance with upcoming regulations.
It is advisable for all companies and employers to review recruitment processes, ensure gender-neutral job titles, and communicate salary or salary ranges at the appropriate stage. Evaluate how job requirements and equivalence are assessed and prepare a system if one is lacking. Verify that the pay policy is gender-neutral and that salary-setting criteria are clear and transparent. Investigate any unjustified gender pay gaps and develop a plan to address them if necessary.
