Italy's Pay Transparency Decree: A Turning Point for Equal Pay

On February 5, 2026, Italy’s Council of Ministers approved a draft Legislative Decree implementing Directive (EU) 2023/970 on pay transparency. Following its preliminary approval, the measure now enters a review and consultation phase—an important step in ensuring that Italy meets the June 7, 2026 deadline to transpose the Directive into national law.

The draft decree reshapes corporate practices in compensation management. Pay equality will no longer be left to the discretion of voluntary corporate best practices but must be grounded in a comprehensive system of rules based on transparency and information. The core objective of the Directive, and by extension, Italy’s draft decree, is to reduce the gender pay gap by tackling pay discrimination between men and women through the application of the principle of equal pay for "equal work" and for "work of equal value."

Below are the key features of the draft decree: 

Work of Equal Value

As a cornerstone provision, the Italian draft decree clarifies the criteria for identifying "equal work" or "work of equal value"—the common thread running through the Directive.

In the Italian legal system, employee wages and other economic benefits are primarily determined by the national collective bargaining agreement (NCBA) applied by the employer. Accordingly, the draft decree anchors the assessment of pay levels for "equal work" or "work of equal value" to the classification and grading systems established by NCBAs.

Specifically, "equal work" is defined as work performed in the exercise of identical duties or duties falling within the same pay grade and legal classification provided for by the NCBA applied by the employer.

"Work of equal value" refers to work involving different but comparable duties based on the classification criteria established by the NCBA applied by the employer.

In cases where an employer has not adopted an NCBA, the draft decree uses a fallback: the applicable reference becomes the NCBA negotiated by the comparatively most representative trade union organizations at the national level for that industry or relevant sector.

It is therefore clear that NCBAs play a central and strategic role in defining pay classification systems, which must be based on objective and gender-neutral criteria in order to prevent stereotypes or entrenched practices from indirectly influencing pay determination. 

The central role assigned to NCBAs may create interpretive challenges for multinational employers that operate their own internal job architecture. The draft decree does not explicitly address how internal job frameworks should interact with NCBA-based systems, since, in the Italian system, only NCBA classifications have a regulatory function. Employers should therefore ensure that their internal classification criteria are applied consistently with the NCBA classifications. 

Pay Transparency in the Pre-Employment Phase

Another key provision in the draft decree concerns the right to pay-related information at the recruitment stage, through the introduction of specific disclosure obligations designed to ensure equal treatment.

Employers will be required to provide job applicants with clear and transparent information about the compensation for the position. Job postings and recruitment announcements must disclose either the initial compensation level or the applicable compensation band.

Should the final text of the decree maintain this formulation, this would represent a more stringent obligation than the minimum requirements set out in the EU Directive.

In addition, under the draft decree, job applicants may not be asked for information about compensation received in current or previous employment relationships. Nor may such information be obtained by the prospective employer through other means, including via third parties involved in the recruitment process.

Pay Transparency During Employment 

Pay information rights under the Directive do not end with the job access phase but extend throughout the entire employment relationship.

During employment, employers must make available to employees information concerning the criteria used to determine compensation, as well as pay levels and the mechanisms for pay progression. According to the draft decree, this disclosure obligation may be fulfilled by reference to the provisions of the NCBA applied by the employer.

A further central element is the recognition of an actual right for workers to request information on average pay levels, broken down by gender, for categories of workers performing equal work or work of equal value. The request may be made directly by workers or through union representatives. The employer will be required to respond within two months of the request.

In this regard, the draft decree also introduces the option for employers to publish pay data proactively. Employers may fulfill their disclosure obligation up front by publishing on their intranet or in a restricted area of the company website information on average pay levels, broken down by gender, for categories of employees performing equal work or work of equal value. 

Published information must be presented in aggregate and anonymous form, with reference to average pay levels by category and gender, so as to allow comparison without making individual workers identifiable.

Finally, a prohibition is introduced against imposing confidentiality clauses on individual compensation. The draft decree provides that: “Workers cannot be prevented from disclosing their own remuneration. Contractual clauses that limit the right of workers to disclose information on their own remuneration are prohibited.” 

Reporting Obligations

In addition to disclosure obligations towards workers, employers will be subject to reporting obligations when they exceed the threshold of 100 workers. 

The reporting obligation centers on preparing and periodically transmitting detailed information on pay differentials between men and women, with reference to different categories of workers.

Where the pay gap in any category exceeds 5%, and such difference is not justified by objective and gender-neutral criteria, an enhanced intervention mechanism is triggered. If the employer fails to identify corrective measures within a certain timeframe, an obligation arises to conduct a joint assessment with worker representatives.

Next Steps for Employers

While the draft decree is currently at the preliminary stage and may undergo revisions during the consultation period, employers should begin evaluating their current pay practices and classification systems in light of these new requirements.