Pay transparency is rapidly becoming a central part of employment law across Europe. The EU Pay Transparency Directive (2023/970) takes effect from June 2026, driving major change for employers and employees alike. It’s all about establishing clear, fair pay practices—making sure everyone knows how pay is set, reported, and reviewed.
Key Facts from the Directive
Employers need to guarantee equal pay for equal work, or work of equal value, without bias based on gender. This means every pay decision must follow documented, objective criteria. Roles must be evaluated and classified in a gender-neutral way—based strictly on skills, responsibilities, and working conditions.
Detailed Steps for Employers
- Review and document all pay practices. Every pay decision—from base salary to bonuses—must be tracked and justified using objective, gender-neutral measures. This signals fairness across all roles and levels.
- Update all job advertisements to include salary ranges. This applies to every position—from part-time to executive—and helps set expectations before candidates apply.
- Remove pay secrecy clauses from employment contracts. Employees must be free to discuss pay with colleagues. Anti-retaliation measures are required to protect anyone raising concerns or asking for information.
- Set up processes so employees can request information about average pay levels for comparable roles. Employers must respond promptly and provide the data—no lengthy delays or complex procedures.
- Implement robust HR data collection that tracks pay by category, role, and gender. Use this data for regular reporting—annual for employers with 250+ staff, and every 3 years for those with 100–249 employees.
- If unexplained gender pay gaps of 5% or more are found after reporting, employers must conduct a joint pay assessment with employee representatives to resolve and document the issue.
- Train HR teams, managers, and recruiters on the rules. Everyone must know how to evaluate jobs without bias, respond to requests, and hold transparent pay conversations.
National Variations
Each EU member state can introduce additional rules and guidance tailored to local contexts. It’s vital to monitor updates from national authorities to ensure full compliance: requirements may shift as local governments implement the Directive.
Employees’ Rights and Business Benefits
Employees now have the right to clear answers. They can access information about average pay for similar roles and challenge unfair practices. This approach not only meets legal standards but also builds an open, trusting work culture.
Proactive communication is key. Regular updates, open surveys, and visible criteria empower staff, ease concerns, and keep everyone engaged in the transition.
Building Lasting Change
Following the EU Pay Transparency Directive means more than ticking a compliance box. It means creating fair, open, and accountable systems. Employers who act on these requirements build stronger relationships, reduce risk, and lay the foundation for trusted, future-ready workplaces.
If you want to understand how the EU Pay Transparency Directive applies to your organisation or need practical support implementing these changes, reach out to us. We’re here to help with expert advice, clear guidance, and tailored solutions that work for your people and your business.