Pay transparency in Italy: Legislative Decree No. 96/2026 – employer obligations, enforcement and strategic implications

Luca Daffra

Ichino Brugnatelli e Associati, Milan

luca.daffra@ichinobrugnatelli.it

Italy has become one of the first EU Member States to transpose Directive (EU) 2023/970 of 10 May 2023 on pay transparency and the enforcement of equal pay. Legislative Decree No 96 of 7 May 2026, published in the Official Gazette of 1 June 2026 (No 125), came into force on 7 June 2026. The Decree introduces the concept of ‘pay transparency’ into Italian employment law and, for the first time, requires employers to not merely abstain from pay discrimination but to adopt an active, documented and data-driven approach to remuneration, involving worker representatives in a structured process of verification and correction. For foreign counsel advising groups with Italian operations, the measure is significant both for what it borrows from the Directive and for the points at which it departs from it.

A pre-existing principle, a new methodology

Italian law has never recognised a general principle of ‘equal pay for equal work’ between private-sector employees performing the same tasks. The Court of Cassation reaffirmed this only recently, in judgment No 17008 of 25 June 2025: a private employer is not obliged to pay identical remuneration to employees doing comparable work, provided that pay is proportionate to the quantity and quality of the work and that there is no prohibited discrimination. Equal pay as a binding rule has therefore operated only within the anti-discrimination framework, anchored in Article 157 TFEU, ILO Convention No 100 of 1951, and Articles 3 and 37 of the Italian Constitution. Neither the Directive nor the Decree curtails employers’ freedom to differentiate pay; what they change is the methodology. Every pay difference must now be objectively justifiable and documented, and the transparency machinery makes indirect discrimination considerably easier to demonstrate.

Scope

The Decree applies to all subordinate employment relationships – fixed-term and indefinite, full-time and part-time – including managerial (dirigenti) positions, and extends, for pre-hiring purposes, to job applicants. Domestic work and intermittent (on-call) contracts are, however, excluded – a carve-out which has drawn criticism given the high incidence of female and low-paid workers in precisely such sectors.

Two definitions, and a narrowing

The Decree turns on two definitions. ‘Pay’ (retribuzione) is defined expansively, in line with the Directive: basic salary plus all sums and benefits paid directly or indirectly, in cash or in kind, in connection with the employment relationship, including complementary and variable components. So construed, it captures ordinary pay, accessory items, indirect and deferred remuneration – including additional monthly instalments and accruing severance indemnity – and company welfare benefits.

The more problematic definition is that of ‘pay level’ (livello retributivo). The Directive defines it simply as gross annual pay and the corresponding gross hourly pay. The Italian Decree adds a qualification: the totality of continuous and fixed pay elements, excluding non-structural individual treatments – components granted on a personal, discretionary or temporary basis, not generalised within the same category of workers and based on individual objective criteria. Because it is ‘pay level’, not ‘pay’, that governs the periodic reporting obligations and the individual right to information, this exclusion matters. It leaves precisely those items – individual bonuses, premiums and extra-contractual allowances – outside the transparency exercise, even though they are widely identified as the principal vehicle of indirect pay discrimination. The broad notion of ‘pay’ continues to govern the substantive assessment of discrimination; the narrowing bites only at the reporting and information stage, but that is exactly where transparency is meant to operate.

The point has crystallised around the treatment of individual superminimi – personal pay supplements above the collectively agreed bare minimum. The Directive contains no authorisation for Member States to strip out components before calculating average pay levels; its logic is sequential, requiring first that the full pay actually received be established, and only then that any difference be tested for objective justification. By allowing certain components to be removed at the measurement stage, the Decree risks anticipating that justification and producing a reductive effect. A worked example circulating among practitioners makes the stakes concrete: for three workers in the same role earning €28,000, €34,000 and €35,000, the Directive yields an average pay level of €32,333, against which two of the three diverge and must be explained; excluding ‘objective’ superminimi collapses the figure to €28,000, with all three nominally aligned and the gap rendered invisible. This raises the question of compatibility with the non-regression clause in Article 4 of the Directive, which prevents transposition from lowering the general level of protection. The prudent course – and the one this author would advise – is to include all pay components when constructing average pay levels and to reserve the objectivity test for the justification stage, where the Directive locates it.

Same work and work of equal value: the centrality of the CCNL

For ‘same work’ and ‘work of equal value’, the Decree anchors comparison to the national collective bargaining agreement (CCNL). Application of a CCNL signed by the comparatively most representative trade unions – including its job-classification and grading systems – creates a presumption of conformity with the principles of equal pay and transparency, subject to proof of individual discriminatory treatment. Cross-employer comparison is permitted where pay conditions derive from the same statute or CCNL, or from group-level agreements. Employers may also adopt their own classification systems, provided these rest on objective, gender-neutral criteria.

This anchoring is coherent with the Italian industrial-relations model, but it is not without its problems. Many CCNL classification systems are dated, conceived around job profiles only partly revised since the spread of information technology, and the presumption of conformity risks operating as an over-protective shield where grading has not kept pace with how work has evolved. The Directive’s notion of ‘equal value’ rests on skills, effort, responsibility and working conditions – variables that contractual job descriptions, designed for other purposes, may fail to capture. Employers running ‘clustering’ exercises therefore face a strategic choice: rely on the CCNL, as the Decree invites, or undertake a tailored, cross-functional assessment. Either route will expose pay differentials; the practical advantage lies in being able to explain them as the product of a reasoned and reasonable classification rather than of categories built for unrelated purposes.

Pre-hiring transparency and information rights

Several obligations are immediately in operation regarding recruitment transparency and information rights. Job advertisements and offers must indicate the initial pay or pay band for the position, on objective and gender-neutral criteria, and be drafted in gender-neutral terms. Employers may no longer ask candidates about their current or previous pay, whether directly or through recruiters. After hiring, employers must make accessible the criteria used to set pay and pay levels and – for businesses with 50 or more employees – the criteria for career progression; the duty to disclose progression criteria is a genuine novelty in Italian practice, where career advancement has traditionally been left to the employer’s discretion. The standard information notice under Legislative Decree No 152/1997 serves as the ordinary means of compliance, and employers applying a representative CCNL may discharge the duty by reference to it.

Employees have the right to request, and receive in writing within two months, information on average pay levels, broken down by gender, for categories doing the same work or work of equal value. The right may be exercised once a year; employers must remind staff of it annually; and clauses preventing workers from disclosing their own pay are void.

Reporting and joint pay assessment

The periodic reporting obligation under Article 9 applies to employers with at least 100 employees and requires disclosure of the gender pay gap, the gap in variable components, median gaps, the proportion of women and men receiving variable components, and the distribution across pay quartiles. Its implementation is staggered: employers with 250 or more employees must report by 7 June 2027, and annually thereafter; those with 150–249 by 7 June 2027 and every three years; and those with 100–149 by 7 June 2031 and every three years.

The most significant innovation for industrial relations is the joint pay assessment under Article 10. It is triggered only where three conditions coincide: an average pay-level difference of at least five per cent within a category of workers doing the same or equal-value work; a failure by the employer to justify that difference on objective, gender-neutral criteria; and a failure to correct it within six months of the relevant report. The five per cent threshold is not a presumption of discrimination but a risk indicator that places on the onus on the employer to document the reasons for any apparent gap. These might include seniority, experience, the greater complexity of duties performed etc. Where the assessment becomes mandatory, it is conducted with worker representatives, and its outcomes are shared with employees, their representatives, the Ministry’s monitoring body, the Labour Inspectorate and, on request, the territorial equality bodies. The Decree sets no peremptory deadline for the resulting remedial measures, leaving timing to the parties, with the Inspectorate or equality bodies available where agreement fails.

Substantively, the assessment must quantify, among other things, the proportion of women and men who received a pay improvement on returning from maternity, paternity, parental or carer’s leave, and must set out the measures the employer intends to take to remove unjustified differences, together with the effects of measures taken in earlier rounds. It aims to be plainly preventive: to trigger a recurring dialogue between management and worker representatives which, over time, erodes unexplained pay gaps rather than merely litigating them after the fact.

Enforcement

Remedies must follow the Equal Opportunities Code (Legislative Decree No 198/2006) and may be activated, on delegation, by worker representatives, trade unions and qualifying associations, while Article 41-bis protects workers and their representatives against retaliation. Procedurally, the reversal of the burden of proof is decisive: once the worker presents facts from which discrimination may be presumed, the employer must prove its absence. As commentators have observed, the real strengthening lies less in the evidential rule itself than in the transparency and information obligations, which generate the very facts that shift a substantive duty to justify pay differences to the employer. A monitoring body at the Ministry of Labour and Social Policy will collect and publish the data – drawing on the work of the European Institute for Gender Equality – and report to the European Commission by 7 June 2028 and every two years thereafter.

Conclusion

The Decree marks a genuine cultural shift: Italian employers must move from a passive prohibition of discrimination to an active, documented and dialogue-based approach to pay. Its anchoring to the CCNL brings welcome coherence and a simplifying presumption, but the restrictive definition of ‘pay level’ and the reliance on potentially dated classification systems may blunt the Directive’s edge and expose the transposition to challenge on non-regression grounds. The mandatory involvement of worker representatives, by contrast, is a structural incentive to develop the culture of social dialogue on pay that Italian practice has largely lacked. For domestic and multinational employers alike, the message is clear: neither the Directive nor the Decree bans differentiated pay, but both require the systems, data and governance needed to justify it. Employers should also bear in mind the risk of intersectional discrimination, where sex combines with other protected characteristics. The time to build these foundations is now.