What is pay transparency, and what does it require under the EU Directive?

The EU Pay Transparency Directive was adopted in 2023. By 2026, all EU countries must implement it into national law. It is designed to make pay across Europe more transparent, consistent, and fair.

For employers, this means:

• Publishing salary ranges and comparative ratios during recruitment.
• Explaining how pay and progression decisions are made.
• Reporting on pay gaps if you employ 100 or more people.

The goal? To give employers a clear framework so that pay decisions are explainable, fair, and trusted.

Note: Some countries, like Ireland, already have national gender pay gap reporting laws with lower thresholds (e.g. 50 employees). Always check your local reporting requirements. 

The Directive is part of a wider European effort to close persistent pay gaps and increase fairness in the workplace. On average, gender pay gaps remain at around 13% across Europe, highlighting why the Directive was introduced.

When recruiting:

• Salary ranges must be shared upfront (a clear band is fine).
• Don’t ask candidates about salary history.
• Write job descriptions in gender-neutral terms.

When managing employees:

• Be ready to show employees their pay level and where they fall within the pay band.
• Be prepared to share average pay levels for comparable roles, broken down by gender.
• Ensure pay and progression criteria are fair, objective, and transparent.

If you’re a larger employer (100+ employees):

• You’ll need to report on mean and median pay gaps (base and variable pay).
• Share the distribution of pay across quartiles.
• Disclose the proportion of men and women receiving variable pay.
• Report pay gaps by category of workers.
• If a gap of 5% or more can’t be explained, you’ll need to audit pay practices and agree a corrective action plan within six months.

The reporting schedule depends on your size:

• ≥250 employees: annually from 2027
• 150–249 employees: every 3 years from 2027
• 100–149 employees: every 3 years from 2031
• <100: exempt at EU level (but some countries may choose to go further)

Note: Always check national rules, e.g. Ireland (reporting from 50+ employees). 

For many organisations, the Directive means building more structured and transparent pay frameworks:

• Clear job architecture and role definitions.
• Salary bands and progression paths.
• Reporting systems that balance transparency with employee privacy.

That may feel like a big shift, but it’s also an opportunity: more openness builds trust, boosts confidence, and strengthens your reputation as a fair employer.

The EU Pay Transparency Directive isn’t just about compliance. It’s about giving leaders the clarity and structure to make decisions that employees can trust.