Considerations Regarding the Implementation of the EU Pay Transparency Directive

REPuBLIc OF EsT0NIA MINIsTRY OF EcoNoMIc AFFAIRs AND C0MMuNIcATI0Ns H. E. Mr Vaidis Dornbrovskis European Commission 14.04.2026 No 11-1/1369-1 Rue de la Loi 200 / Wetstraat 200 B-1049, Brussels Beigium H.E. Ms Hadja Lahbib European Commission B-1049, Brussels Beigium H.E. Ms Roxana Minzatu European Commission B-1049, Brussels Beigium Considerations Regarding the Impiementation of the EU Pay Transparency Directive Dear Mr Vaidis Dombrovskis, Dear Ms Hadja Lahbib, Dear Ms Roxana Minzatu, 1 hope this letter finds you well. The report on European competitiveness presented by Mario Draghi makes clear that restoring European competitiveness is an urgent priority. A key to address these challenges should be reduction of administrative burdens and reporting obligations of our companies. Against this background, we consider that the requirements introduced by the EU Pay Transparency Directive present significant challenges for effective impiementation. In this respect, we would encourage a fundamental reconsideration of the Directive’s requirements. We call on the Commission to support the Business Europe’s initiative to “Stop the Clock” and to extend the entry into force of the directive by at least two years. This would give time to identify and consider amendments that limit the administrative burden of salary transparency obligations, especially for SME’s. Suur-Ameerika 1 / 10122 Tallinn / ESTONIA Phone: +372 625 6342 / Fax: +372 631 3660 / E-mail: [email protected] / http://www.mkm.ee In our view, companies with fewer than 50 ernployees, namely SMEs, should not be subject to an obiigation to maintain pay structures in writing, given their limited administrative and compliance capacity. A more proportionate approach would help avoid placing excessive burdens on enterprises that are essential to Europe’s economic dynamism and employment. As regards Article 9, we consider that the definition of pay used for reporting purposes should either be leif to the discretion of Member States or be limited to pay in cash. Pay transparency is a tool for irnplementing the principle of equal pay, but for that tool to be effective, reporting obligations must remain clear and workable. If an overly broad definition of pay is used, the indicators may include an almost unlimited number of variabies (for example company cars, housing benefits, private health insurance, meal benefits, childcare support, additional pension contributions, stock options, and other benefits in kind), making it difficult for employees, labour inspectorates and employers alike to assess whether the principle of equal pay is being respected. In such circumstances, the additional administrative burden associated with broad reporting requirements is notjustified by the practical value of the results. We also encourage reconsideration of the list of indicators set out in Article 9. At least one of the core indicators should he aligned with those aiready used under other EU reporting frameworks, including CSRD and LMB, as the current definition of the gender pay gap differs across these instruments. Different EU legislative frameworks addressing gender pay gaps should, as far as possible, rely on the same definitions and methodologies. The current list of indicators is also unnecessarily extensive, particularly as several indicators are further divided into sub-indicators, some ofwhich appear to have limited practical relevance. One example is the gender pay gap in corresponding gross hourly pay in complementary or variable components. Streamlining the indicator set would improve clarity and reduce administrative burden for employers. In addition, we would also like to raise a broader overali policy consideration. In several EU policy areas, the Commission has pursued “omnibus” initiatives aimed at simplifying and consolidating requirements, thereby reducing fragmentation and administrative burden. In labour policy, however, such omnibus approach has been limited. We understand that this is partly due to the specific nature of labour policy, where rules are closely intertwined with national industrial relations systems, enforcement practices, and fundamental rights considerations. Nevertheless, the absence of comparable “simplification packages” in labour policy can have an unintended consequence: administrative and reporting obligations may accumulate over time across different initiatives, without a structured opportunity to streamline, align definitions, remove duplication, and ensure proportionality—especially for smaller employers. We would like to reaffirm our strong support for the objective of reducing the gender pay gap, which remains a persistent challenge in Estonia. In pursuing this goal, we encourage the Commission and the co-legislators to give due consideration to impiementation mechanisms that deliver the simplification objective in labour policy as eifeetively as in other domains, while fully respecting the specificities ofnational labour law systems and the role of the social partners. 2(3) Estonian Government is committed to close cooperation and would welcome further dialogue on the practical impiernentation of the Directive, with a view to ensuring that it effectively rneets its policy objectives. This engagement would also support efforts to avoid disproportionate administrative burden and to safeguard Europe’s competitiveness and job creation goals. With best regards, / Erkki Keido Minister of Economy and Industry of the Republic of Estonia 3 (3)