Flash Alert: Pay Transparency: what does the draft bill transposing the European Directive provide for?

On 5 August 2026, in the Labour and Employment Bulletin, the draft bill aimed at partially transposing Directive (EU) 2023/970 into Portuguese law, concerning the strengthening of the application of the principle of equal pay for work of equal value between men and women.

The draft is currently subject to a 20-day public consultation period, meaning that its content may still be subject to change during the legislative process.

The bill provides for amendments to Law No. 60/2018 of 21 August, which adopts measures to promote equal pay between men and women for work of equal value or of equal worth, and to Decree-Law No. 78/2026 of 16 March on the organisation of the Commission for Equality in Work and Employment (hereinafter ‘CITE’), and the Code of Labour Procedure, introducing new obligations for employers and strengthening the mechanisms for reporting, monitoring and rectifying pay differences between men and women.

What are the main changes?

1. Greater transparency in the setting of pay

One of the main changes envisaged is the strengthening of the obligation to adopt a transparent pay policy.

According to the draft, the employer must ensure the existence of a transparent remuneration policy, agreed with workers’ representatives where they exist, and based on an assessment of the components of the roles according to objective criteria, common to both men and women and non-discriminatory on the grounds of sex.

When determining pay, factors such as skills, responsibility and working conditions must be taken into account, in order to ensure equal pay for equal work or work of equal value.

In line with this increased transparency, the draft also stipulates that any contractual clauses or provisions in collective bargaining agreements intended to prevent a worker from disclosing information relating to their remuneration shall be null and void.

2. New rules on recruitment

The draft bill also introduces new obligations at the recruitment stage.

Candidates must receive, prior to the conclusion of the employment contract, information on the starting pay or the relevant pay range, determined on the basis of objective criteria common to both men and women.

Furthermore, employers will be prohibited from asking candidates about their current or previous pay history.

3. Employees now have a strengthened right to information

The draft legislation stipulates that, each year, employers must inform workers that they may request information regarding:

• their individual pay level; and
• the average pay levels, broken down by gender, of groups of workers performing work that is the same or of equal value to their own.

The employer must provide this information within two months of receiving a written request.

The request may be made directly by the employee, through their representatives or via CITE.

The draft bill also stipulates that the criteria used to determine pay, pay levels and pay progression must be displayed or published on the company’s intranet. Companies with fewer than 50 employees are, however, exempt from disclosing information relating to pay progression.

4. Companies with 50 or more employees will face new reporting obligations

One of the changes with the greatest impact on employers relates to the introduction of new obligations to report information on pay gaps.

Companies with 50 or more employees will have to provide information, broken down by gender, which enables the calculation of, amongst other things, the following indicators:

• pay gap;
• pay gap in supplementary or variable pay components;
• median pay gap;
• median pay gap in supplementary or variable pay components;
• the proportion of employees of each sex who receive supplementary or variable pay components;
• proportion of workers of each sex in each quartile of the pay range; and
• pay gap between employees by employee group, broken down into basic pay and supplementary or variable pay components.

For this purpose, temporary workers employed by the company shall also be taken into account.

Access to information regarding pay gaps by employee group must be provided to employees and their representatives, who may request further clarification from the employer regarding the pay gaps; such requests must be answered within 30 days.

Companies with 250 or more employees must provide this information annually (with the first report due by 7 June 2027), whilst companies with between 50 and 249 employees will be required to report every three years; for companies with between 150 and 249 employees, the first report must be submitted by 7 June 2027, and, for companies with 50 to 149 employees, by 7 June 2031.

5. Pay gaps and joint assessment of pay

The draft legislation provides for a specific mechanism for situations where pay gaps between men and women are identified.

Where differences in average pay levels based on sex are detected, the competent inspection authority may notify the employer to, within 90 days, justify the differences or propose measures to rectify them, with any differences that are not justified being presumed to be discriminatory.

If no justification or corrective measures are provided and an unjustified difference of at least 5 per cent remains, the employer may be required to submit, within 45 days, a joint pay assessment, with the participation of workers’ representatives, where such representatives exist.

This assessment must analyse, amongst other factors, the composition of the groups of employees, average pay levels, supplementary or variable components, the reasons for the differences identified and the measures necessary to rectify them.

Following the assessment, the employer must implement the measures set out within 90 days and submit a report on their implementation to the inspection service.

The draft also provides for the repeal of the current Pay Gap Assessment Plan.

6. Strengthening the protection of workers

The draft bill also strengthens the protection of workers who exercise rights relating to equal pay.

In particular, it is provided that dismissal or any other disciplinary sanction imposed, allegedly to punish a breach of labour law, shall be presumed to be unfair where it occurs within three years of the lodging of a complaint regarding a breach of rights relating to the principle of equal pay.

Furthermore, the draft bill also provides for the possibility of the court ordering the employer to pay full compensation for pecuniary and non-pecuniary damages, together with interest, resulting from the breach of rights or obligations relating to the principle of equal pay, even if no specific claim to that effect has been made.

7. Strengthening of enforcement and the consequences of non-compliance

The draft bill also strengthens enforcement mechanisms and establishes a new framework for administrative offences.

In the event of a repeat offence or repeated breach of the rights and obligations relating to equal pay, additional sanctions may be imposed, including the revocation of tax and financial incentives or public benefits, disqualification from receiving financial incentives, disqualification from participating in auctions, concessions or public tenders for a period of up to two years, and compulsory training on pay transparency.

What should companies start preparing for?

Although this is still a proposal, its content already allows us to anticipate some areas that are likely to require particular attention from employers.

In particular, it will be important to start:

• review remuneration policies, identifying the criteria used in setting and adjusting salaries;
• assess job classification and appraisal systems, ensuring that objective and non-discriminatory criteria are in place;
• analyse the remuneration structure, including basic pay, allowances, bonuses and other variable components;
• review recruitment procedures, particularly regarding the disclosure of remuneration and the collection of information on candidates’ salary history; and
• put in place internal mechanisms to enable the organisation to respond to requests for information from employees.

Conclusion:

The draft bill is still under public consultation and may be subject to changes.

It is expected, however, that the future law will come into force on the first day of the month following its publication, immediately imposing new obligations on companies, particularly regarding the provision of information to employees.

Companies should therefore begin reviewing their remuneration practices and structures now, to ensure they are prepared for the new regime.