Directive (EU) 2023/970: How to Prepare Your Business for Pay Transparency

Directive (EU) 2023/970 places pay transparency and equal pay at the center of people policies. This main article explains what is next for employers in Bulgaria, who the new rules affect, and how to begin preparing in a structured way.

What Directive (EU) 2023/970 Is

The EU Pay Transparency Directive (EU 2023/970) requires employers in Bulgaria to disclose pay levels, forbids questions about previous salary, and requires measures against the gender pay gap (>5%). Transposition into Bulgarian legislation must be completed by 7 June 2026.

Directive (EU) 2023/970 is the European legal act aimed at strengthening the principle of equal pay for women and men for equal work or work of equal value through greater pay transparency and more effective enforcement mechanisms. In practice, it requires employers to have clearer rules, better internal pay logic, and greater readiness to explain how salaries, bonuses, and career development are determined.

The topic is not only legal. For many organizations, it is a matter of trust, competitiveness, and risk management. When the pay structure is unclear, questions arise about fairness, comparability, and consistency. When it is well organized, it supports both HR processes and team engagement.

Why This Directive Matters

The reason the directive is so significant is that it shifts the focus: from reacting to disputes to building transparency in advance. Instead of the employer explaining salaries only when there is a conflict, clear and objective criteria are expected to exist from the very moment pay is determined. This is a major change in the way compensation policy is managed.

For businesses in Bulgaria, this means that topics such as job evaluation, pay ranges, bonus schemes, comparability between roles, and internal compensation rules will need to be examined systematically. Even when the specific national rules are further developed, the direction is clear: more justification, more consistency, and more verifiability.

Who It Affects

The directive is relevant for a wide range of employers, but the practical burden will be felt most strongly by organizations with a larger number of employees, diverse roles, different pay levels, and more complex bonus or variable pay models. HR teams, payroll specialists, labor law lawyers, and compensation managers will be on the front line of preparation.

In smaller structures, the approach is also important, because pay transparency is not only a matter of scale. Even a company with a limited team must be able to answer basic questions: why two employees in similar positions are paid differently, how the starting salary is determined, what the criteria for increases are, and how unjustified differences are avoided.

The Core Ideas Behind Pay Transparency

At the heart of the directive are several practical principles. First, candidates and employees should receive clearer information about remuneration and the criteria by which it is determined. Second, the employer must be able to show logic when comparing roles that represent work of equal value. Third, when unexplained pay differences are identified, there must be a mechanism to identify and correct them.

These principles apply not only to base salary. They also concern bonuses, allowances, additional remuneration, benefits, promotion conditions, and access to development. If a system is transparent only on paper but not in practice, the risk of non-compliance remains.

What Employers in Bulgaria Should Expect

For employers here, preparation will most likely include several practical areas. First is a review of the current pay structure. It is necessary to see how jobs are organized, whether there are clear levels, what the salary ranges are, and whether differences between employees can be justified by objective criteria such as experience, qualifications, performance, and responsibilities.

Second, internal policies need to be analyzed. This includes rules for selection, offers, promotions, bonuses, overtime, additional agreements, and career development. Pay transparency cannot be separated from the way the organization makes staffing decisions.

Third, it is useful to prepare communication for managers. In many companies, line managers are the ones who answer questions about salaries, and they do not always have a shared and consistent framework. This creates a risk of different explanations across different teams.

Equal Pay and Work of Equal Value

One of the most commonly overlooked topics is the difference between „equal work“ and „work of equal value“. The directive is not limited to identical roles. It requires the employer to look more broadly: whether different roles that have similar complexity, responsibility, effort, and impact are assessed in a fair and consistent way.

This means that internal job evaluation becomes very important. If an organization has, for example, sales, marketing, and customer service specialists with different titles but similar levels of responsibility and comparable requirements, it must be able to show why the pay is different or why it is close.

How to Start Preparing

The most practical approach is to start with a data review. Usually, the first step is to gather up-to-date data on salaries, bonuses, levels, roles, departments, and employees. Then you look for groups of positions that can be compared by content, not just by name. This often reveals differences that were not visible in day-to-day work.

The next step is to analyze the reasons for the differences. Some of them will be fully justified: different experience, specialized skills, managerial responsibility, market shortages of talent. Others may have been inherited from past decisions and may not have sufficient justification. This is where the need for corrective action arises.

The third step is to introduce clear rules. This means fixed criteria for starting pay, movement within pay ranges, awarding bonuses, and changes upon promotion. The clearer these rules are, the easier it is to maintain compliance with pay transparency requirements.

Which Processes Should Be Reviewed

job descriptions and their current relevance;
job evaluation and internal levels;
the structure of base and variable pay;
the way starting offers are determined for candidates;
the rules for promotion and annual salary review;
access to bonuses, benefits, and additional payments;
recruitment, hiring, and candidate communication processes.

What This Means for HR, Payroll, and Lawyers

HR teams will need to connect people policies with measurable criteria. Payroll specialists will have a key role in data, reporting, and maintaining accurate pay information. Labor law lawyers will be needed when reviewing internal documents, contractual clauses, and communication about rights and obligations.

The best results are achieved when these functions work together. If the data, rules, and legal framework are organized separately, the risk of gaps is higher. If they are combined in a single working framework, the organization can respond more confidently to future requirements.

Frequently Asked Questions from Employers

A common question is whether the directive requires all salaries to become public. The answer is that the direction is toward greater transparency, but that does not mean arbitrary disclosure of everything to everyone. In practice, a balance will be sought between the information needed for fair pay and equal treatment, and the protection of personal data and business-sensitive information.

Another question is whether all salaries need to be rearranged at once. In most cases, preparation will be phased: analysis, diagnosis, prioritization, corrections, and implementation of new processes. This is the more sustainable model, because it allows for justified decisions rather than hasty changes.

A third question is whether small companies can postpone the topic. The practical answer is that postponement increases risk. Even when obligations are applied gradually depending on the size of the organization, basic readiness is useful for everyone.

What to Do Right Now

Start with an internal review of roles, pay, and the criteria for increases. Gather the data in one place, identify comparison groups, and look for differences that cannot be explained by objective factors. Review and update your recruitment, bonus, and promotion policies. If you need a more detailed plan, it is useful to also review related materials on pay transparency in practice, pay gap analysis, and internal compensation rules.

Frequently Asked Questions

Who does Directive (EU) 2023/970 apply to?

It applies to employers and workers in the context of the principle of equal pay and pay transparency. The practical obligations will depend on national implementation and on the size and structure of the organization.

Are only salaries affected?

No. Bonuses, additional remuneration, promotion rules, starting offer packages, and the internal criteria for determining pay are also affected.

What does work of equal value mean?

It is work that may be different in title, but is comparable in complexity, responsibility, effort, skills, and impact on the organization.

Do we need to change everything immediately?

It is not reasonable to make hasty changes. It is better to first conduct an analysis and then make corrections, prioritize, and prepare the policies.

Who in the company should lead the process?

Most often, this is a joint effort between HR, payroll, the legal team, and management, with clear support from leadership.

Conclusion

Directive (EU) 2023/970 is not just another legal act. It is a signal that compensation must be managed more clearly, more consistently, and with better justification. For employers in Bulgaria, this is an opportunity to organize one of their most sensitive systems — pay — so that it meets legal requirements, employee expectations, and business goals at the same time.

The earlier preparation begins, the easier it will be to adapt to the new rules. If the approach is structured and data-driven, pay transparency can become not a burden, but a competitive advantage.

Practical webinar on the topic

If you want to move from the general framework to concrete actions for your organization, NIT is organizing a practical live webinar „How to Prepare Your Business for Directive (EU) 2023/970“ with attorney-at-law Dr. Ilyana Sabinova. The event will take place on 20 May 2026 at 10:00 and will last 3 hours live. The training is suitable for employers, HR specialists, lawyers, payroll specialists, accountants, compliance experts, and managers who need to prepare their internal rules and processes in time.

During the webinar, participants receive practical training, the opportunity for real-time Q&A, the lecturer's presentation, and a certificate of participation. The focus is not just on paraphrasing the legal text, but on what questions you should ask in your organization, which processes to review first, and how to begin your preparation more confidently.

If the topic is already relevant for your business, see the webinar details and participation conditions: How to Prepare Your Business for Directive (EU) 2023/970. On the page you will find the program, the lecturer, and up-to-date registration information.