According to Eurostat, Denmark has one of the EU's larger gender pay gaps at approximately 12.9%. In sales, the picture is even worse: research shows men earn on average 26% more in commission than women. On June 7, 2026, the EU's Pay Transparency Directive (2023/970) takes effect, and it will fundamentally change how companies must handle, document, and report on their compensation structures, including commission and bonuses.
This guide covers everything you need to know about the directive: from the specific requirements and deadlines to how it specifically affects commission structures, and what your company needs to do to become compliant. We also look at the special challenges for Danish companies, where implementation is lagging behind.
The EU Pay Transparency Directive (Directive 2023/970) is landmark EU legislation adopted in May 2023. Its purpose is to combat gender-based pay discrimination through increased transparency and strengthened enforcement mechanisms.
A central element of the directive is its broad definition of "pay." It includes not just base salary, but all compensation: bonuses, commission, overtime pay, sick pay, pension, and any other benefit, cash or in-kind, that an employee receives in connection with their employment.
For companies with commission-based compensation structures, this means commission can no longer be treated as a separate, opaque component. It must be analyzed, documented, and reported on equal footing with base salary.
The directive applies to all employers in both the private and public sectors across all EU member states. Reporting requirements vary by company size: Companies with over 250 employees must report annually. Companies with 150-249 employees must report every three years. Companies with 100-149 employees must report every three years starting from 2031.
The directive places special requirements on handling variable pay, including commission. Here are the most important:
Employers must report mean and median gender pay gaps for "complementary or variable components" separately from base salary. This means commission structures must be analyzed in isolation to identify any gender-based differences.
Companies must report the proportion of male versus female employees receiving variable pay or bonuses in each pay category. If a larger proportion of men than women receive commission, this must be documented and explained.
If any job category shows a pay gap exceeding 5% that cannot be justified by objective, gender-neutral criteria, the employer must conduct a joint pay assessment together with employee representatives and remedy the problem within 6 months.
For commission-based roles, this means that if male salespeople on average earn 5% more in commission than female salespeople in the same category, the company must either document objective reasons or close the gap.
Commission structures must be based on criteria that are transparent, objective, and gender-neutral. These criteria must be made "easily accessible" to all employees. It is no longer sufficient to have opaque quota allocation processes or territory distributions that cannot be documented objectively.
The directive gives employees significant new rights that will affect daily operations in sales organizations:
Employees can request information about their individual pay level AND average pay levels, broken down by gender, for colleagues performing the same work or work of equal value. A salesperson can therefore ask to see what male and female colleagues earn on average in commission.
Employers may not ask candidates about their pay from current or previous employment. This is intended to prevent historical pay gaps from being perpetuated in new hires.
Pay ranges must be disclosed in job postings or before job interviews. For commission-based roles, this means companies must disclose OTE ranges and commission structures already in the recruitment phase.
Employees cannot be prevented from discussing their pay with colleagues. Clauses in employment contracts that prohibit employees from talking about pay are invalid.
The directive comes with significant enforcement mechanisms and penalties:
The burden of proof is reversed, so the employer must prove that discrimination has NOT occurred. It is no longer the employee who must prove discrimination.
Employees can receive full compensation for lost pay, related bonuses, lost opportunities, and non-material damages with no upper limit. There is no cap on what an employee can be awarded in compensation.
According to legal analysis, fines vary by country but can reach 2-4% of annual revenue. Some countries specify fines up to EUR 10,300 per violation. Non-compliant companies can also be excluded from public procurement.
Here are the key deadlines for the directive:
The directive entered into force.
Member states must have transposed the directive into national law.
First pay reports due for employers with more than 150 employees, based on 2026 data.
Employers with more than 250 employees report annually. Employers with 150-249 employees report every three years.
First reports due for employers with 100-149 employees.
According to implementation tracking, Denmark is among the EU countries that have not yet taken concrete steps toward implementation. The government is assessing implementation, but no timeline has been set. It is expected that Denmark will not meet the deadline of June 7, 2026.
The Danish Equal Pay Act already requires equal pay for work of equal value. Employers with more than 35 employees, where at least 10 of each gender are in the same function, must prepare pay statistics annually. But this existing legislation has not prevented Denmark's pay gap of 12.9%.
With the new directive comes more detailed reporting with separate analysis of variable pay. Lower thresholds with 100+ employees versus the current 35+. Strengthened employee rights with individual right to request pay information. And stricter enforcement with reversed burden of proof and uncapped compensation.
Data shows that the pay gap in sales is significant:
According to research from industry analysts, men earn on average 26% more in sales commissions than women across all commission-based roles. Women in sales earn 23% less in combined commission and base salary than men. This is despite the fact that Gong research and other studies show women actually outperform men by 1.5% in sales.
40% of Denmark's pay gap is "unexplained" - women are paid 7% less than men for the same work without documented reasons. It is precisely this type of unexplained gap that the directive aims to eliminate.
Only 24% of companies feel "very prepared" for compliance. Only 19% of organizations are ready for the reporting requirements. 29% have made no progress in the past year on preparations. There is thus a significant gap between the requirements and companies' readiness.
For companies with commission-based compensation structures, the directive creates several specific challenges:
How quotas are allocated must be documented with objective criteria. If men systematically receive "better" territories or larger accounts, this can constitute indirect discrimination.
If territories with higher earnings potential are predominantly assigned to men, this must be objectively justifiable. Random or historically based territory distribution is not sufficient.
The criteria used to set commission rates must be gender-neutral and objective. If different roles have different commission rates, this must be based on factors such as complexity, responsibility, and required competencies - not on who has historically held the roles.
If accelerators or bonuses systematically favor certain groups, this can constitute a problem. Analyze who actually achieves accelerators and whether there are gender-based patterns.
Here is a practical checklist to prepare your company:
Audit current pay structures: Analyze base pay AND commission/variable pay by gender across all job categories. Document commission criteria: Ensure all decisions about quota allocation, territory assignment, and commission rates are based on objective, gender-neutral criteria. Build job architecture: Create categories of workers based on skills, effort, responsibility, and working conditions. Review historical data: Identify and address unexplained gaps before mandatory reporting begins.
Implement compensation management software: Systems must be able to track and report pay data by gender, including variable components. Ensure data readiness: Capture accurate pay data including all commission and bonus payments. Create audit trails: Document approval processes for all commission-related decisions.
Update job postings: Include pay/commission ranges; remove salary history questions. Create information request processes: Prepare to respond to employee requests for comparable pay data. Remove pay secrecy clauses: Update employment contracts and policies. Train managers and HR: On the new requirements and how to respond to pay information requests.
Conduct regular pay equity analyses: Identify gaps before reporting deadlines. Prepare joint pay assessment process: Have procedures ready if the 5% threshold is exceeded. Involve employee representatives: Early involvement is required for pay assessments.
Modern commission management systems can support compliance with the directive in several ways:
Generate the required gender-based pay gap metrics for base and variable pay automatically. Save time and reduce the risk of manual errors in reporting.
Monitor pay equity across job categories continuously. Identify problems before they become compliance issues or employee claims.
Automatically document how quotas and territories are assigned. Create the objective documentation that the directive requires.
Record and make accessible the criteria used for commission calculations. Meet the requirement that criteria must be "easily accessible" to employees.
Test how adjustments will affect pay gaps before they are implemented. Make proactive changes to reduce gaps.
Enable secure responses to employee information requests. Balance transparency with data protection.
Companies that fail to comply with the directive risk serious consequences:
Fines of up to 2-4% of annual revenue. Uncapped compensation to employees who have been subject to pay discrimination. Back payment of wages, bonuses, and other benefits.
Exclusion from public procurement. Requirements to conduct joint pay assessments and remedy gaps within 6 months. Increased administrative burden from lack of systems.
Negative stories about pay gaps can damage employer branding. Difficult to attract and retain talent, especially female salespeople. Loss of trust among existing employees.
Although the directive creates compliance requirements, it also contains opportunities:
Companies that proactively embrace transparency can differentiate themselves in the competition for talent. Show potential applicants that you take equal pay seriously.
Transparency builds trust. Employees who understand their compensation and see that it is fair are more likely to stay.
Studies show that women outperform men by 1.5% in sales. By eliminating unconscious bias in compensation structures, companies can unlock untapped potential.
Proactive compliance reduces the risk of expensive lawsuits and fines. It is cheaper to prevent than to repair.
The EU Pay Transparency Directive is coming, whether your company is ready or not. For companies with commission-based compensation structures, the challenges are particularly significant because variable pay must be analyzed and reported separately.
Start by analyzing your current structures. Identify any gaps. Document your criteria. And implement systems that can support ongoing compliance.
Book a demo with Prowi and experience how automated commission management can help your company become compliant with the EU Pay Transparency Directive. We help companies create transparent, documentable, and fair commission structures that both motivate salespeople and meet legal requirements.