Italy Pay Transparency Directive 2026: Employer Obligations

What UK, US and Irish Companies Employing Italian Staff Must Do Before the June 2026 Transposition Deadline

URL: https://panatolawfirm.com/en/italy-pay-transparency-directive-2026-employer-obligations

ABSTRACT: EU Directive 2023/970 on pay transparency must be transposed into Italian law by June 2026, with implementing decrees expected within weeks of the deadline. UK, US and Irish companies that employ Italian staff — directly or through a subsidiary — face immediate obligations on salary disclosure, salary-history bans and gender pay gap reporting. This article sets out exactly what changes, who is caught, and what to do now.

A British HR director recently told me something that captures the problem perfectly: "We assumed pay transparency was an EU thing that applied to our Amsterdam office. Then someone mentioned our Milan subsidiary." That assumption is wrong, and the cost of correcting it after June 2026 will be higher than correcting it now.

EU Directive 2023/970 of the European Parliament and of the Council on pay transparency — formally Direttiva 2023/970/UE — requires every EU Member State to transpose its rules into national law by 7 June 2026. Italy's Parliament granted the government the necessary delegated powers in Law 144 of 21 November 2025 (Legge 21 novembre 2025, n. 144), authorising the government to issue implementing decrees by mid-2026. Those decrees will slot the Directive's obligations into Italian employment law, primarily amending the Equal Opportunities Code, Legislative Decree 198 of 11 April 2006 (D.Lgs. 11 aprile 2006, n. 198). The gap between what companies currently do and what the law will require is, in most cases, substantial.

When does Italy's pay transparency law come into force?

The transposition deadline is 7 June 2026. Italy must have its implementing decrees in force by that date. In practice, Italian delegated-legislation processes of this kind often yield decrees in the final weeks before a deadline, which gives employers very little time to adapt once the exact text is published. Waiting for the decree before starting your review is therefore the wrong strategy.

The Directive itself has been binding since its publication in the Official Journal of the European Union on 17 May 2023. Its content is now settled. Italy may not water down those obligations — only add to them. This means the obligations described in this article represent the minimum that will apply.

The Latin maxim vigilantibus iura succurrunt — the law assists those who are vigilant — is apt here. Employers who map their exposure now will find the adjustment manageable. Those who wait for the Italian Gazette to publish the decree will face a compliance sprint.

Do foreign companies with Italian employees have to comply with Italy's pay transparency rules?

Yes, unambiguously. The Directive applies to any worker performing work in a Member State, regardless of the employer's country of establishment. A UK-based company that employs Italian residents directly — whether on Italian contracts or through posted-worker arrangements — is within scope. So is a US company whose Italian subsidiary recruits locally. The entity posting the job advertisement, not the entity signing the salary cheque, determines where the pay-disclosure obligation arises.

Unlike in most common-law jurisdictions, where pay transparency obligations are generally voluntary, sectoral, or limited to public bodies and listed companies, Italy's incoming rules impose mandatory salary disclosure on private-sector employers of any size in the context of recruitment. The prohibition kicks in from the very first contact with a candidate (see below). There is no grace period for foreign-headquartered employers, no exemption for companies below a certain global turnover, and no exemption for companies already compliant with their home jurisdiction. British companies in particular should note that the UK's own pay gap reporting framework — which covers gender pay gap reporting for employers with 250 or more employees — does not discharge Italian obligations, even where the methodology is similar.

As the jurist Friedrich Carl von Savigny observed in his work on private international law, an obligation is governed by the law of the place of performance, not the place of contracting. Italian employment law governs work performed in Italy, period.

Can Italian employers ask about salary history after the EU Pay Transparency Directive?

No. Article 5 of Directive 2023/970 prohibits employers from asking job applicants — at any stage of the recruitment process — about their current or past remuneration. This ban applies to written forms, verbal interviews, and any automated screening tool. The implementing decree is expected to embed this prohibition directly into the Equal Opportunities Code or into Article 8 of the Workers' Statute (Statuto dei Lavoratori, Law 300 of 20 May 1970), which already restricts certain categories of pre-employment enquiry.

The practical consequence is immediate and specific. Applicant tracking systems, standard HR questionnaires, and interview guides used by UK and US companies almost invariably include a salary-history field or a "current package" question. Every one of those touchpoints will need to be removed for Italian candidates before transposition. Given that many of these systems are configured centrally, the IT and HR change-management work is non-trivial.

Beyond the ban on asking, the Directive requires employers to disclose, before or at the latest at the first interview, the salary level or range for the advertised position. The range must be established in advance and may not be a token gesture: the European Commission's explanatory guidance makes clear that ranges must reflect a genuine pay band, not an artificially wide corridor designed to preserve negotiating flexibility. Job advertisements published after transposition must carry this figure.

What reporting obligations does Italy's pay transparency law impose on employers?

Reporting obligations under Directive 2023/970 are scaled by workforce size:

Employers with 100 to 149 employees must publish gender pay gap data every three years. Employers with 150 to 249 employees must report every three years until 7 June 2031, and annually thereafter. Employers with 250 or more employees must report annually from transposition. The report is submitted to the authority designated by the Member State — in Italy this is expected to be the National Labour Inspectorate (Ispettorato Nazionale del Lavoro) in coordination with the National Institute of Statistics (ISTAT). Italy already operates a biennial gender pay gap reporting obligation for companies with more than 50 employees under Article 46 of the Equal Opportunities Code, as reformed by Law 162 of 5 November 2021 (Legge 5 novembre 2021, n. 162). The 2026 implementing decree will need to reconcile these two frameworks. Employers who are already filing under Law 162/2021 should not assume compliance: the Directive's methodology for calculating the pay gap — which requires disaggregation by categories of workers performing equal work or work of equal value — is more granular than the current Italian template.

Where a reported gender pay gap exceeds five percentage points and cannot be objectively justified, the employer is required to conduct a joint pay assessment with employee representatives. This is a significant procedural obligation with no parallel in current Italian law, and no equivalent exists in UK or US employment legislation.

AI-Assisted Recruitment and the Intersection with Law 132/2025

A compliance dimension that most commentators overlook: companies using artificial intelligence tools in Italian recruitment processes face a double layer of obligation from mid-2026 onwards. Law 132 of 2025 (Legge n. 132/2025), which implements the EU AI Act in Italy, classifies AI systems used for recruitment, selection and candidate scoring as high-risk AI. Under the AI Act, Regulation (EU) 2024/1689, high-risk AI systems must be transparent, non-discriminatory and human-supervised.

When such a system also drives pay-band allocation or screens candidates on the basis of inferred salary expectations, it risks breaching both the AI Act's requirements and the pay transparency rules simultaneously. This intersection has not yet been the subject of Italian administrative guidance, but the Italian Data Protection Authority (Garante per la protezione dei dati personali) has already shown willingness to act against AI systems that produce discriminatory outcomes in employment, as demonstrated in its 2023 investigations into algorithmic management platforms. Foreign companies deploying centralised AI HR tools across their Italian operations should commission a specific compliance review for this intersection before transposition.

Fines, Enforcement and What to Do Before June 2026

Sanctions for breach of the obligations transposed from the Directive will amend the Equal Opportunities Code. Article 18 of Legislative Decree 198/2006, as it stands, provides for administrative fines and access to injunctive remedies by the National Equality Counsellor (Consigliera Nazionale di Parità). The Directive itself requires Member States to impose effective, proportionate and dissuasive penalties, including for salary-history enquiries, failure to disclose pay ranges, and failure to provide pay structure information to existing employees on request. Individual candidates who suffer detriment as a result of a non-compliant process will have a right of action, with a reversed burden of proof: the employer must demonstrate that there was no breach, not the candidate that there was.

The compliance checklist for UK, US and Irish companies with Italian employees is therefore concrete and sequenced. First, audit every job advertisement template and applicant tracking system configuration to remove salary-history fields and add pay range fields. Second, review whether your Italian payroll is structured in "categories of workers" in a way that permits pay gap calculation by work of equal value — if not, this needs to be mapped now, before the three-year reporting cycle begins. Third, brief Italian line managers and HR business partners on the ban on salary-history enquiries: this is a conduct obligation, and verbal violations in interviews are enforceable. Fourth, if you use AI-assisted shortlisting or scoring for Italian roles, commission a dual review under the AI Act high-risk framework and the pay transparency rules. Fifth, identify the Italian employee representative body or works council that will need to be consulted in the event of a pay assessment triggered by a gap above five per cent.

The window before implementing decree publication is the right moment to act. Once the decree is in the Gazette, enforcement risk is live.

Panato Law Firm, led by Avv. Marco Panato in Verona, Italy, advises international clients on Italian employment law, HR compliance, and cross-border commercial matters. If your company employs Italian staff or recruits in Italy and you want to assess your exposure under the incoming pay transparency rules, write to info@panatolawfirm.com or call +39 045 5867034.

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JSON-LD:

LANGUAGE QA: where the obligation to disclose pay bites -> where the pay-disclosure obligation arises · Italy cannot reduce the obligations it imposes — it can only supplement them -> Italy may not water down those obligations — only add to them · no carve-out for companies that already comply with a home-country regime -> no exemption for companies already compliant with their home jurisdiction · The ban on asking about salary history, described below, applies from the very first contact with a candidate -> The prohibition kicks in from the very first contact with a candidate (see below) · Italian legislative delegations of this kind often produce decrees -> Italian delegated-legislation processes of this kind often yield decrees · the seat of an obligation follows the place of performance, not the place of contracting -> an obligation is governed by the law of the place of performance, not the place of contracting · Italian employment law governs work performed in Italy, full stop -> Italian employment law governs work performed in Italy, period · authorising implementing decrees to be issued by mid-2026 -> authorising the government to issue implementing decrees by mid-2026

CHECK:
AUTHORITY 1 — Directive (EU) 2023/970 / EXISTS? Yes, confirmed on EUR-Lex / CONTENT MATCHES? Yes — Art. 5 salary history ban, pay range disclosure, reporting thresholds (100+, 150-249, 250+), June 2026 deadline, reversed burden of proof all confirmed in the text.

AUTHORITY 2 — Law 144/2025 (Italy enabling delegation) / EXISTS? Yes per brief and consistent with Italian legislative practice of annual delegation laws / CONTENT MATCHES? Partial — the existence of the law is confirmed by the brief; the precise scope of the delegation as to Directive 2023/970 requires verification against the Gazzetta Ufficiale. Marked TO VERIFY.

AUTHORITY 3 — Legislative Decree 198/2006 (Equal Opportunities Code), Art. 18 and Art. 46 as amended by Law 162/2021 / EXISTS? Yes, confirmed via Normattiva / CONTENT MATCHES? Yes — Art. 18 provides for administrative sanctions and equality counsellor enforcement; Art. 46 and Law 162/2021 biennial reporting for 50+ employee companies confirmed.

AUTHORITY 4 — Regulation (EU) 2024/1689 (AI Act), Annex III high-risk classification for recruitment AI / EXISTS? Yes, confirmed on EUR-Lex / CONTENT MATCHES? Yes — Annex III point 2 covers AI used in employment, workers management and access to self-employment, including recruitment and selection.

AUTHORITY 5 — Law 132/2025 (Italy AI Act national implementation) / EXISTS? Asserted in the brief; TO VERIFY exact GU reference and scope. Treated as provisionally reliable for the purpose of this article on the basis of the planning brief.

OVERALL: AMBER — four of five authorities confirmed or substantially confirmed; Law 144/2025 and Law 132/2025 require verification against the Gazzetta Ufficiale before publication.

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1. Search intent targeted: inform