Salary transparency

It is based on something you already know

Denmark already has an equal pay law requiring equal pay for men and women for equal work or work of equal value. The new thing is that you must now be able to show it with a salary structure that you can compare across employees, and a salary statement that documents that the criteria are objective and gender neutral.

These 3 requirements already apply: if you overlook them, you are responsible

In short: the EU wants transparency about pay, so that the gender pay gap becomes visible and can be justified objectively. The background is not abstract: there is still a noticeable gender pay gap in Denmark today, and this is the difference the directive is built to close.

It changes three things for you:

• You must give employees easy access to your salary criteria. The criteria you use to determine salary, salary level and salary development must be objective and gender neutral and visible to employees, not hidden in a head or an old Excel tab. Many companies already have a building block lying around, without knowing it: the DISCO codes, the public classification system for job types, which some pay systems already use to group positions objectively.
• Employees are given the right to access. They can ask for their own salary level and the average salary, broken down by gender, for employees in the same category, i.e. those who perform the same work or work of the same value. You must respond within two months.
• Salary in recruitment will be open. The salary range must appear on the job advertisement or at the first interview, and you must not ask about the applicant's previous salary.

If you miss one of the dates, the wage transparency directive will catch up with you immediately

The rules come into force on 1 January 2027. If you have over 150 employees, the rule of thumb is that you must prepare your first salary statement: a report that shows salary differences broken down by gender and job category by 1 September 2028 at the latest. If there are fewer of you, it depends on your exact size:

How often you have to report also depends on your size: companies with 250+ employees report every year, the rest every three years. If you are under 50 employees, you are not covered by the reporting obligation, but the other requirements for salary criteria and employee insight still apply.

That's how it goes when no one has checked the numbers in time

The example below is made up for illustration and not an expression of a real case:

Imagine a service company with 180 employees. Today, some “are called senior consultant”, others “account manager”, but do basically the same work with the same responsibility. When the directive's criteria are laid down over the positions – skills, responsibility, effort, working conditions –, they land in the same category.

The wage analysis shows a difference of 7% between the sexes in the category. It is above the 5% limit and the company must now call for a joint pay assessment with employee representatives, document the reason, and if the difference cannot be objectively justified, it must be rectified.

Had the company not had control over categorization and data in advance, it would be left without documentation on the day an employee asks. Or the day a lawyer does it on the employee's behalf.

4 things it costs you right away if you wait

It's not just paperwork that you risk falling behind with:

• The burden of proof reverses. In cases of equal pay, it is now up to you to prove that a pay gap is objectively justified and not the employee to prove otherwise. Without documentation in place, you are in a weak position.
• Sanctions are part of the directive. The EU requires member states to introduce sanctions that are “effective, proportional and preventive” for violations. The specific Danish rules are determined in the implementation, but the uncertainty in itself is a risk to plan based on.
• Recruitment will be more difficult, not easier, if you are not prepared. When the salary range is to be in the job posting, it is not something you can improvise on the day. It requires a salary structure that already makes sense.
• Trust is hard to rebuild. If it emerges that you have not had control over the figures, when the employees first ask, it is a bigger trust problem than the pay gap itself.

The preparation is not free, but it is not a big investment either, but is primarily time from HR, payroll and management. If you plan it well in advance, it will be significantly cheaper in time and resources than if you have to collect it under time pressure in 2027.

But it is not just an exercise in avoiding the worst. The companies that get this under control early on also get a pay system that the employees themselves can be behind, and a recruitment where pay is not a taboo negotiation, but a clear starting point. It is the difference that determines whether your employees experience the directive as control from outside or as proof that you already have it under control.

7 steps that determine whether the pay transparency directive becomes a fine or a formality

2027 sounds far in the future, but it is not. Especially not when data needs to be cleaned, criteria need to be established and managers need to be dressed for difficult conversations about pay. The order matters: each step builds on the previous one. Seven places to start, in the right order:

1. Map your position and salary structure
   Uncover how you are organized today and assess whether the structure can be used as it is – or needs to be adjusted to meet the directive's criteria.
2. Establish objective, gender-neutral criteria
   Decide what will actually determine salary, salary level and salary development for you, and make sure that the criteria are objective and gender-neutral – not just a continuation of “, that's how we've always done”.
3. Map your salary data and find the salary gap
   Get an overview of what data you have and whether it is complete and available. Identify where there are pay differences and how big they are. If you already run 365-Salary in continuation of Business Central, you often have a large part of the structure in place in advance.
4. Write down your salary policy
   Document the criteria for salary, salary level and salary development in an actual policy, and determine a fixed process for how salary is decided in the future.
5. Build a procedure for employees' right to salary information
   Decide how and when employees get answers when they ask about their own salary or the average salary in their category – and whether it should be supported by a system.
6. Dress up your managers
   They must be able to handle the new requirements and answer salary questions professionally before employees start asking. Practice concrete answers in advance – e.g. how a manager explains a pay difference with reference to job category and objective criteria, instead of being caught on the wrong foot in the middle of an employee interview.
7. Prepare your salary statement if you are covered
   Build the process well in advance: Templates, responsible and a fixed annual plan save you stress when the deadline approaches.