Croatia is preparing for one of the most significant changes in labour law in recent decades. Directive (EU) 2023/970 on pay transparency must be transposed into national legislation, and its consequences will be felt by nearly every employer in the country – from small businesses to large corporations.

Why Did the EU Introduce the Pay Transparency Directive?

For years, data on the gender pay gap across the European Union has been collected – and the results have not been encouraging. According to Eurostat data, in 2024 the average gender pay gap across the EU stood at 11.1 percent in favour of men. Austria recorded a gap of 17.6 percent, Germany 15.6 percent, and Estonia as high as 18.8 percent.

Croatia performs considerably better on this list – the gender pay gap stands at just 6.6 percent, one of the lowest figures in the entire EU. Nevertheless, European legislators determined that even such differences are unacceptable. The key problem identified by the directive is the lack of transparency in pay systems, which allows discrimination to remain hidden and difficult to prove.

The End of Pay Secrecy: A Prohibition That Changes Everything

One of the most important measures introduced by this directive is the prohibition of pay secrecy. In practice, this means employers will no longer be permitted to prevent workers from discussing their salaries with one another. All pay secrecy clauses in employment contracts or workplace rules will need to be removed.

Workers will have the right to request written information about their own pay level and average pay levels, broken down by gender, for the category of workers performing equal or comparable work. The employer must respond within a maximum of two months of receiving the request.

Pay Transparency Starts with the Job Advertisement

Changes do not begin only when an employment relationship is established – they begin at the point of posting a job advertisement. Every person applying for a position will have the right to know the starting salary or salary range for that role, before the job interview itself.

In addition, the directive explicitly prohibits employers from enquiring about a candidate's current or previous salary. Job titles in advertisements must be gender-neutral, and recruitment processes must be conducted in a non-discriminatory manner.

What Changes in Day-to-Day Business Operations?

Following the alignment of the Labour Act with this directive, employers will be obliged to:

  • Proactively inform workers every year of their right to information on pay levels – without waiting for a worker's request
  • Establish clear and transparent pay structures based on objective, gender-neutral criteria such as skills, effort, responsibility, and working conditions
  • Regulate job classification and corresponding pay through workplace rules, a collective agreement, or – for employers with fewer than 20 workers – through individual employment contracts
  • Cooperate with worker representatives in identifying, correcting, and preventing discriminatory pay differences

Obligation to Report on Pay Gaps from 2027

The directive introduces precise obligations for regular reporting on gender pay gaps. All employers with at least 100 employees are subject to these requirements, with deadlines and frequency depending on the size of the employer:

  • More than 250 employees – reports must be submitted every year, first deadline: 7 June 2027
  • 150 to 249 employees – reports must be submitted every three years, first deadline: 7 June 2027
  • 100 to 149 employees – reports must be submitted every three years, first deadline: 7 June 2031
  • Fewer than 100 employees – reporting is on a voluntary basis

Reports will be submitted to the competent authority, and consolidated information will be publicly published by the Office for Gender Equality. If differences cannot be justified by objective criteria, employers will be required to take specific corrective measures.

When Is a Joint Pay Assessment Required?

If reporting reveals a pay gap of at least 5 percent in any category of workers, and the employer neither justifies nor corrects that gap within six months, they must initiate a joint pay assessment procedure in cooperation with the works council or trade union representative. The aim is to identify the causes of inequality and agree on concrete measures to address them.

Stronger Legal Protection for Discriminated Workers

The directive also brings important changes to court proceedings related to unequal pay. In the event of a dispute, the burden of proof shifts to the employer – if a worker presents facts from which discrimination may be presumed, the employer must prove that no discrimination occurred.

Workers will be able to claim full compensation for damages with no statutory upper limit, including material and non-material harm as well as loss of earnings. Particular protection is also granted through the prohibition of victimisation – an employer may not dismiss or otherwise penalise a worker who has exercised or attempted to exercise the right to equal pay.

What Does the Pay Transparency Directive Mean for Croatia in Practice?

Experts assess that the new rules will in the long run positively impact pay policies, worker satisfaction and productivity, even though they may initially appear to be an administrative burden. For Croatia, whose labour law is already relatively well structured thanks to the 2023 amendments to the Labour Act, aligning with the directive should not represent a dramatic shift.

Nevertheless, every employer will be required to carry out a thorough review of internal documents, employment contracts and communications with workers – and to do so as soon as possible, because the deadlines are approaching quickly. Preparing now means fewer problems in 2027.