Ban on Pay Confidentiality Clauses – New Employee Rights to Discuss Salaries

The End of Salary Secrecy Between Employees

For years, a standard clause in employment contracts was salary confidentiality. Employees were obligated not to disclose their earnings to colleagues – under threat of disciplinary consequences. Directive 2023/970 puts an end to this practice.

What Does the Directive Say?

Article 7(5) of the directive states clearly:

“Workers shall not be prevented from disclosing their pay for the purpose of enforcing the principle of equal pay.”

This means that:

• Pay confidentiality clauses are void
• The employer cannot prohibit discussions about pay
• An employee cannot face consequences for disclosing their salary

Why Is This So Important?

The Problem with Confidentiality Clauses

Pay confidentiality clauses primarily served employers:

• They made it difficult for employees to detect pay discrimination
• They weakened employees’ negotiating position
• They perpetuated inequalities – especially the gender pay gap
• They created a culture of secrecy and distrust

Research Shows

• Women in companies with transparent pay earn on average 7% more than in companies with a culture of secrecy
• Employees in transparent organizations report higher job satisfaction
• Pay transparency reduces the pay gap by 20-40%

What Does This Mean for Employees?

Your New Rights

1. You can discuss salaries with work colleagues
2. You can ask about pay for similar positions
3. You won’t face consequences for disclosing your earnings
4. You can request information about average salaries in the company

How to Use These Rights?

• Talk to colleagues about salary ranges for similar positions
• Compare your earnings with market and internal data
• If you notice unjustified differences – report it to HR or unions
• Use information in raise negotiations

What Does This Mean for Employers?

Required Actions

1. Review employment contracts – remove pay confidentiality clauses
2. Update regulations – delete provisions prohibiting pay discussions
3. Manager training – new approach to salary conversations
4. Prepare for questions – employees will compare and ask

What You CANNOT Do

❌ Punish employees for discussing pay ❌ Pressure them not to disclose earnings ❌ Discriminate against employees who share information ❌ Take retaliatory action against “disloyal” employees

Exceptions to the Rule

The ban applies to disclosing one’s own salary. The following still apply:

• Confidentiality of pay data of other employees (data protection)
• Professional secrecy regarding strategic company information
• Ban on disclosing information to third parties outside the company for competitive purposes

Organizational Culture Change

The ban on confidentiality clauses is not just a legal change – it’s an impetus for organizational culture change. Companies that proactively implement transparency:

• Will build greater employee trust
• Will reduce turnover and recruitment costs
• Will gain an image as a modern employer
• Will avoid disputes and employee claims

Summary

The ban on pay confidentiality clauses is one of the pillars of the new era of pay transparency in the EU. For employees, it means greater control and the ability to fight discrimination. For employers – the need to transition to a culture of openness and fair compensation principles.

---

Next article: “Pay Gap Reporting – New Obligations for Companies”

Read Also

• GDPR and Employee Pay Data – How to Reconcile Transparency with Privacy?
• ‘Equal pay and EU directive on pay transparency’
• Pay Gap Reporting – New Reporting Obligations for Companies

Read also

• Pay Without Secrets – How to Discuss Compensation, Create Pay Ranges, and Motivate with Bonuses
• GDPR and Employee Pay Data – How to Reconcile Transparency with Privacy?
• Equal pay and EU directive on pay transparency

Frequently Asked Questions

When does the ban on pay confidentiality clauses come into effect?

EU Directive 2023/970 was adopted in May 2023 and member states have until June 7, 2026 to transpose it into national law. This means employers should begin reviewing and updating their employment contracts now to remove pay confidentiality clauses before the deadline.

Can my employer still require me not to discuss my salary with people outside the company?

The directive protects your right to disclose your pay for the purpose of enforcing equal pay, primarily with colleagues and employee representatives. However, employers may still have legitimate grounds to restrict sharing salary information externally for competitive reasons. The key distinction is that internal discussions about pay between employees cannot be prohibited or penalized.

Does the ban on confidentiality clauses mean employers must publish all salaries?

No, the ban on confidentiality clauses and pay transparency reporting are separate obligations under the directive. The ban means employees cannot be prevented from discussing their own pay, but it does not require employers to publicly disclose individual salaries. Separate reporting obligations apply to companies with 100+ employees regarding gender pay gaps.

What should I do if my current contract contains a pay confidentiality clause?

Once the directive is transposed into national law, any pay confidentiality clause will be void and unenforceable regardless of whether it remains in your contract. You do not need to sign a new contract for the clause to become invalid. If your employer attempts to enforce such a clause or penalizes you for discussing your salary, you have the right to seek legal remedies under the directive’s protection provisions.