Italy Publishes Draft Legislation Implementing The Pay Transparency Directive: What Employers Need To Know – Employee Rights/ Labour Relations

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Italy has published its draft legislation implementing
the EU Pay Transparency Directive, with a key national design
choice that could significantly affect how equal pay risk is
assessed in practice. We examine the key provisions and what they
mean for employers operating in Italy.

The draft makes national collective bargaining agreements the
primary reference point for determining “work of equal
value” – an approach that may broaden comparator pools,
increase equal pay exposure, and shift judicial focus away from
methodology towards the pay gaps themselves. The draft was first
published on 3 February and then updated on 5 February, with
several important changes. While further changes may still be made
before it is finalised, employers should be considering the
implications now.

Who does the draft apply to?

The draft applies to all employment contracts, whether
fixed-term or indefinite, including part-time and managerial
positions. Apprenticeship contracts, domestic work contracts, and
intermittent work contracts are excluded. Notably, temporary
employees, who were included in the original draft, were removed
from the amended version published on 5 February.

How is pay defined?

Pay is defined broadly as basic salary or wage and all sums and
values paid by the employer, directly or indirectly, including in
kind, as well as supplementary or variable components. Pay level
means gross annual pay and the corresponding gross hourly pay,
excluding non-structural individual remuneration elements, such as
pay components granted on a personal, discretionary or temporary
basis.

How is work of “equal value” defined?

The draft confirms that national collective bargaining
agreements and legislation require pay-setting systems to use
objective, gender-neutral criteria to ensure equal pay for the same
or equivalent work. Crucially, using a national collective labour
agreement agreed by the most representative trade unions creates an
assumption that pay equality and transparency rules are being met -
though this does not prevent individual claims of pay
discrimination.

“Same work” means roles with identical duties, or
roles falling within the same pay level and legal category under
the relevant national collective agreement. “Work of equal
value” means different roles with comparable duties, assessed
by reference to the pay classification levels in the applicable
national collective agreement, using common, objective and
gender-neutral criteria including skills, responsibility and
working conditions.

Job classification systems set by law or national collective
agreements will be the main reference point for comparing roles.
Employers may use their own job classification systems for pay purposes,
provided these are objective, gender-neutral and supplement the
collective agreement framework. Comparisons can be made across
different employers or group companies where pay is governed by the
same law, collective agreement or centrally applied group
framework. The Ministry of Labour may issue further implementation
guidance on this by 31 December 2026.

What are the pre-hire pay transparency requirements?

Candidates must be informed of the initial salary or applicable
pay range for the position, based on objective, gender-neutral
criteria and the relevant provisions of the applicable collective
agreement. This information must be provided in job notices and
announcements through which employment opportunities are made known
– which marginally gold-plates the Pay Transparency Directive (this
does not require the information to be in the advert itself, only
that job applicants can get access to it before interview).

The draft implements the pay history ban. Employers may not ask
candidates about current or past pay, nor obtain such information
through other means, including indirectly through recruiters.

What ongoing pay transparency obligations apply?

Employers must make the criteria for pay, pay levels and pay
progression easily accessible. These obligations are normally met
through the information provided at the start of employment,
particularly where pay and classification are determined by an
applicable collective agreement. Employers with fewer than 50
employees are exempt only from the progression criteria
transparency requirement – they must still make the criteria for
pay and pay levels easily available.

Employees have the right to request information about their
individual pay level and average pay levels by gender for
categories of employees performing the same work or work of equal
value. Employers must respond within two months (this is a looser
timeline than the Pay Transparency Directive which says
“within a reasonable period of time but…within two
months”) and employees or their representatives may seek
clarifications. Employers are required to remind employees of this
right annually.

Employers may fulfil this obligation by publishing, on their
intranet or a restricted area of their website, information on
average pay by gender for workers doing the same job or work of
equal value. 

What are the rules on pay secrecy?

Employees have the right to disclose their own pay to enforce
equal treatment, and contractual provisions restricting this are
void. Employers may require that information obtained on average
pay by gender be used solely for asserting the right to equal
pay.

What are the gender pay gap reporting requirements?

Employers with at least 100 employees will be subject to data
reporting to a monitoring body for publication. The Minister for
Employment and Social Policy is expected to issue decrees setting
out how the Ministry collects and processes worker data, which data
employers must provide and the technical support or training
available to help employers comply. 

Employers may publish the required information, for example, on
their website, though the draft frames this as optional rather than
a hard obligation. Category data must be made available to workers
and their representatives and, upon request, to the Labour
Inspectorate and equality bodies. Upon request, up to four
years’ prior information must be provided where available -
potentially including everything dating back to 2022, as there is
no clause limiting it to the implementation date.

Employers must give reasoned responses to requests for
clarifications about reported data, within a reasonable time (not
currently defined), and must correct unjustified
discrimination.

Larger employers (250+) submit reports annually, while those
with 150–249 employees submit every three years
(interestingly this was a change from the first draft which
required employers with 150+ employees to report annually). From
2031, the threshold will be reduced to employers with 100 or more
employees. This is a significant change to Italy’s current
gender pay reporting regime, which requires employers with more
than 50 employees to produce a report at least once every two
years.

Is there flexibility for multinational groups?

Where an employer adopts a group salary policy, the draft allows
aggregation of reporting data at national level if this provides a
more reliable representation and facilitates centralised compliance
management – an important facilitation for multinational groups
operating in Italy. 

However, this could come at a cost: employers who aggregate data
in this way might demonstrate that a single source determines pay,
potentially opening the door to group-wide equal pay
actions. 

When is remedial action required?

Employers subject to reporting must conduct a joint pay assessment with worker
representatives if: (i) a difference of at least 5% in average pay
in any category is revealed; (ii) the difference is not justified
on objective, gender-neutral grounds; and (iii) it is not corrected
within six months. 

Employers must make results available to workers and their
representatives, communicate them to the monitoring body and, upon
request, to the Inspectorate and equality body. Necessary measures
must then be implemented in collaboration with worker
representatives within a reasonable time, including analysing or
establishing gender-neutral assessment and classification
systems.

What are the enforcement mechanisms?

Workers can bring legal action under the Equal Opportunities
Code procedures, which can also be activated by worker
representatives, unions and certain associations. Protection
against retaliation applies where workers or their representatives
exercise equal-pay rights or support others in doing so.
Administrative sanctions under existing law apply where
discrimination in breach of the decree is established.

Are there any criminal sanctions?

No. The current draft does not impose any criminal
sanctions.

What should employers be doing now?

The focus on national collective bargaining agreements as the
primary reference point for equal value assessments is significant.
This approach may require closer alignment with national structures
and could limit reliance on global grading models. It may also make
cross-entity comparisons easier where pay is governed by the same
collective framework.

While the draft could still change before finalisation,
employers should be reviewing their current pay structures,
classification systems and data capabilities to assess their
readiness for compliance. We will continue to monitor the draft law
and any implementing measures adopted and provide updates as
developments arise.

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The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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