April 15, 2025
Sweden has published a 400-page proposal for transposing the Pay Transparency Directive. Here is what you need to know.
Category:
Pay Transparency
Does your organization have a presence in Sweden? If so, this update is for you. Sweden has now unveiled its draft approach to implementing the EU Pay Transparency Directive (Directive (EU)2023/970) - and it’s quite the read (the report spans almost 400pages!). Released as SOU 2024:40, the draft lays out how equal pay transparency will be woven into Swedish law. For all Swedish employers, big or small, this means new requirements are on the horizon - especially if you have100+ employees, as additional reporting duties will kick in on a phased timeline.
If you have any questions about the draft legislation, how to approach compliance, or need a hand preparing for these changes (perhaps even a platform to help automate the process across countries), don’t hesitate to reach out. I’m happy to share insights from our experience working with companies of all sizes as we gear up for pay transparency.
Enough preamble - let’s jump in and see what Sweden has in store, enjoy the read!:-)
To implement the Pay Transparency Directive, the Swedish government has chosen to amend its existing legal framework rather than create an entirely new law. The cornerstone of these changes will be the Discrimination Act (Diskrimineringslagen). The draft proposes adding a brand-new chapter - 3a - to the Discrimination Act dedicated to pay transparency and pay equity. This new chapter will sit alongside Sweden’s pre-existing requirements for active measures on equality (like the annual pay equity audits, lönekartläggning, that larger employers already must perform. In essence, Sweden is embedding the directive’s mandates into laws and practices employers are already familiar with, rather than “gold-plating” with entirely separate rules.
Many core principles of the EU directive were already reflected in Swedish law. For example, Sweden has long prohibited wage discrimination based on gender - the right to “equal pay for equal or equivalent work” between women and men is a fundamental tenet of the Discrimination Act. Employers with 10 or more employees have also been required to annually review and document their pay structures to identify any unjustified gender pay gaps, which is a practice that anticipated several elements of the EU directive. Because of this, the government’s transposition strategy has been largely about aligning new requirements with these established concepts. The draft avoids over-complicating things for employers: it sticks closely to the directive’s minimum requirements and integrates them into the Swedish context (for instance, by leveraging the existing role of the Equality Ombudsman for oversight, as we’ll discuss later).
From a scope perspective, the coverage is broad. All employers in Sweden, public and private, fall under these pay transparency rules (just as they do under discrimination law). Certain obligations, however, will vary by employer size - notably the pay gap reporting duties apply only to organizations with 100 or more employees, as permitted by the directive’s thresholds. Other rights (like an employee’s right to ask about pay) apply to all workplaces, no matter how small. In short, if you employ people in Sweden, you will be touched by this law in some way. The good news is that, because the approach builds on familiar foundations, complying should be more about adjusting current practices than inventing new ones from scratch. My two cents: don’t let the term “minimal changes” fool you - practical impact can be major. The increased transparency will put a spotlight on your pay practices, so even if the legal adjustments seem straightforward, be prepared to communicate and justify your pay decisions more than ever before. This is as much a change in mindset and communication as it is in legislation
Let’s have a look at the core obligations that you as an employer of Dutch employees will face. This is very much aligned with what we already knew, although they are being more direct in their interpretation of salary transparency prior to employment.
Employers must proactively disclose salary information to job candidates. Concretely, this means providing the starting salary or salary range for the position in question, as well as any relevant pay provisions in applicable collective agreements, before a job is offered. This info should be given early enough to allow an informed salary discussion - ideally in the job advertisement or at least prior to the interview/offer stage. At the same time, employers are barred from asking applicants about their salary history at previous jobs. The draft makes it illegal to probe a candidate’s current or past pay. Also worth noting: employers should ensure their job titles and descriptions are gender-neutral and that recruitment processes are free of bias, a requirement that largely aligns with existing Swedish norms.
One of the most empowering aspects of the directive, now mirrored in the Swedish draft, is that employees have the right to request information about pay levels. Upon an employee’s request, an employer must provide written information on two things:
This allows an employee to see, for instance, “I make X kronor, while the average for my role is Y for men and Z for women.” Such information can be critical in revealing hidden pay gaps. The employer must provide this info as soon as possible, and at the latest within 2 months of the request. If the employee finds the information incomplete or incorrect, they can ask for additional clarification, and the employer must then promptly correct or supplement the data. Furthermore, employees must be informed annually of their right to request this information and the procedure to do so - meaning at least once a year you’ll need to remind your staff that “you have the right to ask about your pay and how it compares to others of a different gender doing similar work, and here’s how to submit a request.” This annual reminder is intended to boost awareness so that employees exercise their rights. Importantly, no retaliation can come to an employee for asking (more on that in the next section). And if you’re wondering, these transparency rights also extend to former employees; someone who has left the company can still request data about their pay vs. others, which could help them assess if they were subjected to unfair pay disparities.
Employers with more than 100 employees must report extensive pay gap data. The reports must include the following components.
In short, this is a comprehensive snapshot of where men and women stand in your pay structure - not just base salary but also supplements like bonuses, and not just averages but medians and representation in high vs. low pay bands. These reports must be submitted to the Equality Ombudsman (DO) and, under the draft, the DO will publish the data publicly in an aggregated form, so there is a strong “naming and shaming” incentive for companies to have good numbers.
The pay gap reporting is phased in over time depending on employer size. The table below shows the reporting frequency depending on the size of the company.
Reporting the numbers is just step one - what if the numbers show a problem? The EU directive introduced the concept of a “joint pay assessment” (or joint pay audit) for situations where sizeable pay gaps are found. Sweden’s draft implements this as well, referring to it as a gemensam lönebedömning. If your pay gap report shows an unexplained gender pay difference of 5% or more within any category of employees doing equal or equivalent work, and you cannot justify that gap with objective, gender-neutral factors, you must take action. First, the employer is expected to try to explain or fix the gap - perhaps there is a valid explanation like differences in experience, which should be documented, or if not, salaries should be adjusted. The draft gives a grace period of six months from when the report was filed to address or explain the discrepancy. If after six months the gap remains unjustified and unremedied, then the employer must carry out a joint pay assessment in cooperation with employee representatives.
What does a joint pay assessment involve? It’s essentially a deep dive into your pay structure. According to the draft, this assessment must cover the entire workforce, not just the category where the 5% gap was found. The idea is to perform a thorough analysis of all jobs and pay practices, with the participation of worker representatives (e.g. union or other employee delegates). You’ll be examining whether men and women are paid equally for equal or equivalent roles, investigating all significant pay differences, and formulating measures to correct those that are not justified. The assessment should result in a report or action plan. Per the directive’s rules, the results of the joint pay assessment must be shared with employees and their representatives, and also submitted to a designated authority.
From an employee’s perspective, the draft law provides not only new rights to information, but also solid protections to ensure they can exercise those rights without fear. Here are the key safeguards for workers.
The EU directive included an optional provision (Article 12(3)) allowing countries to limit the disclosure of pay information in very small groups - for example, if only one or two people hold a certain role, an employer could be permitted to only give pay info to worker representatives or a labor inspectorate, rather than directly to the requesting employee, to avoid essentially revealing a single colleague’s pay. Sweden has decided not to take this option. The inquiry found that the existing personal data protection framework is sufficient to handle any privacy concerns. In fact, the draft explicitly notes that neither employers nor unions pushed for using the Article 12(3) limitation. So under the Swedish rules, if an employee asks for the average salary of their comparators and it turns out they are the only person in their category (or one of two), the employer will still have to provide the information (likely the average of that one person’s salary - which is essentially their salary). The reasoning is that transparency is crucial: without the data, workers can’t enforce their right to equal pay, and that takes precedence, as long as data is handled lawfully. This mirrors the approach taken in the Netherlands and some other countries - trusting GDPR’s principles to protect against misuse of data, rather than introducing new carve-outs that could weaken the directive’s effect. However, the draft does introduce a nuance. while employees can obtain information about pay, employers can require that employees use such information only for the intended purpose of verifying equal pay rights.
If a pay discrimination claim is successful, the employee is entitled to compensation for the discrimination. Swedish law will continue to provide for both economic compensation (back pay) and general damages for violation of the equal pay principle. One tweak the draft makes, to align with the directive, is setting a clear statute of limitations of 3 years for pay discrimination claims. Specifically, an employee’s claim regarding unequal pay must be brought within 3 years from the time the employee became aware (or should have become aware) of the situation that they allege is discriminatory (This 3-year clock is paused while any internal dispute resolution is ongoing, as per general rules.) Previously, Swedish law had various limitation rules, but this change ensures consistency with the directive’s mandate of at least a 3-year window. Three years is a decent period - for instance, if an employee only learns in 2025 that she’s been underpaid compared to male peers for many years prior, she could still file a claim for those past differences, as long as it’s within 3 years of discovering the issue. However, she couldn’t claim unlimited back pay beyond that period. Employers should note: back pay liability can add up. This potential liability far exceeds any administrative fine for non-compliance, underscoring that the real financial risk lies in not correcting pay disparities.
In addition to this, the directive stipulates a set of supervision, enforcement, and sanction provisions:
In transposing the EU Pay Transparency Directive into Swedish legislation, existing national definitions and structures have been kept as much as possible to ensure legal continuity and coherence. Several key concepts are central to the implementation of the new measures, particularly concerning remuneration, pay gaps, and the underlying factors that influence pay equity.
This phrase is core to both the existing Swedish law and the directive. It means that a comparison of pay is valid if two workers are doing the same work or work that is of equal value. Equal value is determined by looking at the content of the jobs - the tasks, responsibilities, effort, skill, and working conditions involved - rather than the job titles. The EU Pay Transparency Directive provides, for the first time, a clearer EU-wide definition of “work of equal value”, which the Swedish draft incorporates. Essentially, jobs can be considered of equal value if, after a gender-neutral evaluation of the above factors, they are comparable in their overall demands. For example, a warehouse supervisor and a store manager might be different roles, but if they require similar levels of skill, responsibility, effort, and working conditions, they could be deemed equal value work even if the titles and tasks differ. Swedish law has long acknowledged this concept, and in fact, Swedish employers are expected to assess job roles as part of their pay equity audits to identify work of equal value across different jobs (to catch situations like traditionally male roles being paid more than traditionally female roles despite equivalence). The directive specifically highlights four factors that must be considered at minimum:
These factors are explicitly referenced in the EU text and are mirrored implicitly in the Swedish draft’s emphasis on “sakliga och könsneutrala kriterier” (objective and gender-neutral criteria) for determining pay.
The draft reinforces that all pay differences must be based on objective, gender-neutral criteria, not on gender (directly or indirectly). It sounds obvious, but this principle has teeth: if a pay difference can’t be traced back to a legitimate factor, it’s not allowed. What counts as a legitimate factor? The law doesn’t provide an exhaustive list, but guidance from the EU and case law gives examples. In fact, the report cites European Court of Justice cases stating that education, experience (length of service), quality of performance, and flexibility are examples of valid reasons that can justify pay gaps if they are relevant to the job. It also notes that market conditions (like labor market shortages or regional cost of living differences) may justify differences in some cases. The key is that these factors must not be a proxy for gender. For instance, “experience” is gender-neutral on its face, but if women historically were denied opportunities to gain experience, one must be cautious in how that’s valued.
The draft warns against any preconceived notions or stereotypes influencing pay. A classic example given is that traditionally female-dominated roles (like nursing or teaching) should not be undervalued just because “women do them”. Soft skills often associated with women, like communication or teamwork, should be valued just as objectively as any “hard” skills. In practice, this means when setting up your pay structure or evaluating employees, you use consistent criteria (education level, years in role, performance ratings, etc.) and ensure they are applied fairly regardless of gender. If you find a pay gap, you should be able to point to one of these factors as the reason, and that reason has to hold water (e.g., “Person A has 5 more years of experience than Person B, hence the higher pay” is a defendable explanation; “Person A negotiated better” is not considered an objective justification in a world moving toward structured transparency).
While Sweden’s implementation of the Pay Transparency Directive might appear to slot neatly into the existing legal puzzle (indeed, many provisions feel like a continuation of what was already in place), its impact in practice will be significant. For employers, this isn’t just another box-ticking compliance exercise - it represents a cultural shift toward openness about pay. Even if the legal changes require only “minimal” adjustments on paper, the reality is that employees will have far greater insight into and expectations about pay fairness. As a result, the onus is on employers to ensure that their pay systems are not only lawful but perceived as fair and understandable.
There’s an opportunity here: companies that proactively embrace pay transparency can boost trust and employer branding. Imagine being able to tell your employees (and job candidates), “Go ahead, ask about pay. We have nothing to hide, and we are confident in our pay-setting practices.” That builds confidence and can be a selling point in talent acquisition. Many employees, especially the younger workforce, value transparency and fairness even above some monetary perks. So, compliance can indeed be turned into a competitive advantage.
As always, I and my team are here to help if you want to discuss what these changes mean in practice. We’ve been closely tracking the EU directive and various national implementations (the Netherlands, Spain, etc., and now Sweden) and helping companies prepare. Whether it’s understanding the fine print of SOU 2024:40 or figuring out how to roll out a multi-country pay transparency compliance program, we’re happy to share our experience. Feel free to reach out - I’d be glad to walk you through the Swedish draft, how it aligns with the EU directive, and what steps you can take to get ahead of the curve.
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