The European Pay Transparency Directive (Directive (EU) 2023/970), adopted in 2023, required Portugal to transpose it into national law by June 7, 2026, which did not occur.
However, on August 5, 2026, the Draft Bill partially transposing the Directive into national law was published in Supplement No. 26 of the Labor and Employment Bulletin. This bill reinforces the principle of equal pay for men and women for work of equal value or for equal work. This draft legislation is currently undergoing a 20-day public consultation period and may still undergo changes during the legislative process.
What are the main proposed changes?
- Before entering into an employment contract, job applicants are now entitled to receive information about the starting pay or pay range, as well as the objective criteria used to determine it. On the employer’s side, it is prohibited to ask the candidate about their compensation history, whether in their current or previous employment relationships. The bill does not, however, require that the compensation or pay range be included in the job posting or disclosed before the interview; the information must be provided no later than the signing of the contract.
- The proposal expands the concept of “work of equal value,” taking into account factors such as required qualifications or experience, assigned responsibilities, physical and mental effort, and working conditions. The concept of compensation now encompasses not only base pay but also any other fixed or variable benefits, in cash or in kind, owed by the employer in exchange for work. Thus, the analysis of pay disparities must take into account a total compensation approach, including supplementary and variable components.
- Reporting requirement to the data protection authority: companies with 50 or more employees, including temporary workers, must disclose remuneration information disaggregated by sex, including:
– differences in total pay, median pay, and variable pay components;
– the proportion of men and women who receive variable components and their distribution by pay quartiles;
pay differences by employee group, distinguishing between base pay and variable components.
The frequency of reporting varies depending on the size of the company: 250 or more employees, annually, starting June 7, 2027; 150 to 249 employees, every three years, starting June 7, 2027; and 50 to 149 employees, every three years, starting June 7, 2031.
- Employees now have a strengthened right to access pay information. Each year, the employer must inform all employees that they have the right to request information about their own pay level and information on the average pay levels—broken down by sex—of employees performing work of equal value or of the same nature. In addition to this right, employees must also be informed of the proper procedure for exercising it. If an employee requests any of this information, the employer has two months to respond to the request.
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- In legal proceedings, the court may order the employer to pay full compensation for pecuniary and non-pecuniary damages, including interest on arrears, in cases involving violations of rights related to equal pay, even when no specific claim to that effect has been made. And even if the employee loses the case, the court may, on grounds of equity, exempt the employee from paying court costs.
- In the event of a repeat or repeated violation of rights and obligations regarding equal pay, ancillary sanctions may be imposed on companies, including: revocation of tax and financial incentives and public benefits; denial of financial incentives; exclusion from participating in certain public tenders for periods of up to two years; and the requirement to attend training on pay transparency.
Practical Impact
The potential adoption of this legislation will represent a significant change in how companies must structure, justify, and communicate their compensation policies.
Companies in Portugal should therefore begin preparing to, among other actions, review existing compensation policies, ensuring they are based on objective and non-discriminatory criteria; document all criteria used in setting salaries and related pay increases; and review recruitment procedures, including how compensation information is communicated to candidates, especially given the possibility of public disclosure of information on pay disparities, as well as the obligation to report to the data protection authority for companies with 50 or more employees.
