Why some organisations don't like salary transparency - and what it means for you

Ok, so you may have read my Linkedin post about the new EU ’Pay Transparency Directive’?

…and now you are curious why some companies complain about this new transparency? You really should know about this, so I hope you like to read.

Background

This is a binding EU directive that compels employers to be transparent about pay — towards job applicants, towards employees, and in public reporting — in order to make pay differences between the sexes visible and to address them.

The EU directive establishes individual job applicants’ and employees’ right to information about starting salary, pay criteria, pay levels, and pay progression. It also includes requirements for workplace-based pay analyses.

Sweden plans to have turned the EU’s ’Pay Transparency Directive’ into Swedish law by July 1st, 2026. Since the directive was decided back in 2023, countries and companies have had plenty of time to prepare, but as that date is around the corner now, some companies are complaining and the media is picking that up.

The directive establishes individual job applicants’ and employees’ right to information about starting salary, pay criteria, pay levels, and pay progression.

It also includes requirements for workplace-based pay analyses, requirements for employers to report key figures on pay differences to a national supervisory body, and requirements that parts of this data be compiled and published.

Employers shall be obliged to inform job applicants about the starting salary or salary range for the position to be filled. A so-called question ban is proposed, meaning that the employer may not ask job applicants about their current remuneration or pay history.

The details

Reporting requirements and the 5% rule

The directive stipulates that a joint pay assessment must be carried out if there is a difference of five percent or more in the average pay level between women and men in any category of employees — if this cannot be objectively explained or remedied within six months of the pay report being submitted.

Reversal of the burden of proof

The directive entails a reversal of the burden of proof regarding pay.
Previously, it was the employee who had to prove that the employer had violated the rules. Once the directive has been implemented, it is the employer who bears the burden of proof. Sanctions in the form of administrative fines, proportionate to payroll costs, may be imposed for violations.

Key requirements for all employers, regardless of size

Job applicants must be informed of the starting salary or salary range before or at the first interview.
Employers are banned from asking candidates about their current salary or pay history.
Employees cannot be prevented from discussing their own pay with colleagues.

Reporting requirements for larger employers

250+ employees — annually, first report due June 2027 (based on 2026 data)

150–249 employees — every three years, also starting June 2027

100–149 employees — every three years, but not until June 2031 (based on 2030 data)

Burden of proof and sanctions

The burden of proof is reversed — it is the employer, not the employee, who must demonstrate that no discrimination has occurred.
Penalties including fines will apply to employers who violate the rules.
Diskrimineringsombudsmannen (DO) is proposed as the supervisory authority in Sweden.

So why are some people so unhappy about this?

There are actually critics on both sides — those who think the directive goes too far, and those who think Sweden’s implementation doesn’t go far enough.

Those who think it goes too far (or creates problems)

The Swedish Agency for Government Employers argues that the Swedish inquiry proposes ”over-implementation” by not making use of the exemptions the directive permits. They also see a risk to the Swedish labour market model (*), where parties have agreed on pay principles based on objective wage-setting — and fear that further legislation in this area could undermine that model.

The Swedish Management Association (Ledarna) argues that the directive’s increased demands for transparency, stronger compliance mechanisms, and more detailed regulation increase the risk of a changed view of the Swedish wage formation model (*). They are particularly concerned that the right to pay transparency may affect managers’ ability to fully utilise individual and differentiated pay-setting based on individual performance and business development.

Broad concern about administrative burden

Many respondents in the consultation process, particularly employer organisations and municipalities, expressed concern that the proposal entails an increased administrative burden and cost, especially for small and medium-sized employers. Some also argued it could complicate local and individual pay-setting, which is part of the Swedish labour market model (*), and that it could lead to more conflicts and legal disputes.

Those who think the Swedish implementation doesn’t go far enough

The Swedish Women’s Lobby (Sveriges Kvinnoorganisationer) criticises the inquiry for striving to make as few changes as possible, and argues that the interests of the labour market parties appear to have been placed above the Discrimination Act and the right to equal pay. They call the inquiry’s interpretation of its mandate unreasonably narrow.

The Swedish Gender Equality Agency (Jämställdhetsmyndigheten) points out a fundamental limitation: only pay differences within the same employer can be addressed. There are still no tools to tackle the larger problem of the undervaluation of women-dominated work across the Swedish labour market as a whole.

In short: why they worry

Employers worry about bureaucracy, cost, and threats to individual pay-setting; equality advocates worry the implementation is too weak and that the real structural problem — the undervaluation of women-dominated occupations at sector level — remains untouched.

What this means for you

In the tech sector specifically, the two most relevant collective agreements are the IT-avtalet (between TechSverige, Sveriges Ingenjörer, Akavia and Unionen, covering companies like Tietoevry and CGI) and the Teknikavtalet (TAG) (between Teknikarbetsgivarna and Unionen, Sveriges Ingenjörer and Ledarna, covering around 300,000 employees in engineering and tech companies).

Both agreements are built on the principle that ”pay-setting shall be differentiated based on individual or other grounds, and pay differences shall be objectively and well-motivated”.
This is important context because it means that individual, differentiated pay is already a core principle in Swedish tech — and the directive now adds a transparency layer on top of it.

If you are applying for a job at a tech company (from 1 July 2026)

The employer must provide the starting salary or salary range for the position in advance of the salary negotiation — before the first interview or in the job listing itself. The purpose is to enable an informed salary negotiation.

The employer is also prohibited from asking you about your current or previous salary. You must also be informed of any applicable collective agreement provisions for the role.

In practice for a tech candidate: You will most likely know the salary band before you walk into the room, and your employer cannot use your salary history from a previous job to anchor the negotiation downward. If you are a member of a union, they should be able to assist if an employer fails to comply.

If you are already employed at a tech company (from 1 July 2026)

Upon written request, the employer must provide you with your own salary and the average salary — broken down by gender — for colleagues performing equal or equivalent work. This does not mean you can demand a list of your colleagues’ individual salaries; only aggregated average figures by category and gender. The information must be provided within two months of the request.

You also gain the right to information about the criteria used to determine pay levels and pay progression.

You cannot be prevented from disclosing your own salary to others.
This is something that a lot of companies will dislike and some have even (wrongly) told their employees that they can’t.

There is one restriction: the employer may require that you use the average pay information only for the purpose of exercising your right to equal pay — not for other purposes. This restriction does not apply to public sector employers or those covered by public transparency legislation.

If you suspect pay discrimination, the burden of proof is reversed: if you can show that your salary is lower than a colleague’s for the same or equivalent work, it is the employer who must demonstrate that the difference is justified.

The role of unions

Unions with collective agreements must be involved in pay surveys (lönekartläggning), pay reporting, the design of job evaluation criteria, and the remedying of unjustified pay gaps. Employers without a collective agreement must still collaborate with any union that has members at the workplace.

For tech workers, this means that Unionen, Sveriges Ingenjörer or Akavia will have a more formal and legally mandated role in pay processes than before.

The broader picture for tech specifically

Tech in Sweden has long relied on highly individualised pay, where market rates for scarce skills (cloud engineers, AI specialists, security experts) can legitimately drive large salary differences between people with the same job title. Sveriges Ingenjörer has noted that the directive will intensify the work to eliminate unjustified pay differences between women and men, and that they will support their members and elected union representatives at workplaces to ensure that agreements are followed so members get good pay development.

The tension is real: a senior backend engineer and a junior one may have the same job title but very different salaries justified by skill and market demand. Under the new rules, if that difference correlates with gender by more than 5%, the employer will need to document why — or fix it.

Best of luck & take care!

Björn

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Notes & disclaimers

* The “Swedish labour market model” and the “Swedish wage formation model” are very special things. Put simply, there is an old agreement between employer organisations and unions that many people would say is the foundation or the underlying rule book that makes the Swedish labour market and salary negotiations work as well as they do, allowing for predictable changes and peace in the labour market.
I have used reputable sources and cross/double-checked the information, but I may still have errors in this text. If so, that is all my fault.
Use this information wisely. Don’t bully your employer with demands. Asking questions should be fine, provided that the employer is a serious one.
You can read the full EU directive here.

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