The EU Pay Transparency Directive: Why Preparation Matters Now
With the 7 June 2026 deadline for transposing the EU Pay Transparency Directive (EUPTD) into national law approaching, organisations across Europe face important preparation decisions. The European Commission has confirmed that Member States are expected to implement the Directive on time, with first mandatory disclosures due in 2027 for larger employers.
This is not a development that can be left until the final stages of implementation. Early preparation will make the process more manageable and reduce unnecessary pressure later.
What the Directive Requires
The EU Pay Transparency Directive represents a significant shift in how organisations approach pay equity, transparency and accountability.
Employers should be aware of the following key obligations:
Salary transparency in recruitment.
Employers must disclose the starting salary or pay range for advertised positions, either in the vacancy notice or before the interview stage. Asking candidates about their pay history will no longer be permitted.
Employee rights to pay information.
Employees will have the right to request information on average pay levels, broken down by gender, for their category of work. Employers must respond within two months and ensure that pay criteria are objective and gender-neutral.
External gender pay gap reporting.
Depending on organisational size, companies will be required to report on their gender pay gap annually or every three years. Reporting must include pay differences across categories of workers performing equal or equivalent work.
Joint pay assessments.
Where reporting identifies an unexplained gender pay gap of 5% or more in any category, organisations must carry out a joint pay assessment with employee representatives to examine and address the causes.
A clear pay framework.
Organisations should be able to explain how pay decisions are made, including the criteria used for salary progression, promotions and career development.
Non-compliance carries reputational, legal and financial consequences, including potential fines and compensation claims.
Why Early Preparation Makes Sense
Some organisations are waiting for detailed national legislation before taking action. While understandable, this approach can create avoidable pressure later.
Experience from the introduction of gender pay gap reporting and sustainability disclosure requirements shows a consistent pattern: organisations that delay preparation often find themselves rushing job evaluations, introducing inconsistencies in pay decisions and addressing issues reactively rather than in a planned way.
Those that begin early are better positioned to review their structures carefully, correct issues in a measured way and avoid disruption once formal reporting obligations begin.
Where to Focus Now
For organisations ready to move from awareness to action, several areas deserve attention:
1. Review your current position.
Assess job structures, pay policies and data readiness. Identify gaps early, while there is still time to address them properly.
2. Establish a gender-neutral job evaluation approach.
Role grading and evaluation should be based on objective, consistent criteria that can withstand scrutiny.
3. Update recruitment and pay-setting processes.
Hiring and pay decisions must be transparent, consistent and aligned with the Directive’s requirements.
4. Strengthen data systems.
Accurate reporting and timely responses to employee requests depend on reliable data and clear internal processes.
5. Prepare managers.
Managers should understand the organisation’s pay framework and be able to explain it clearly and confidently.
More Than a Compliance Exercise
While the Directive introduces new legal obligations, it also provides an opportunity to review and strengthen pay practices more broadly.
Expectations around pay transparency are increasing across labour markets. Organisations that approach this proactively — rather than treating it purely as a compliance exercise — are likely to build stronger internal trust and credibility.
The regulatory direction is clear. Preparing early will reduce disruption and place organisations in a stronger position when reporting requirements take effect.
If you would like any further information or supprt on the EU Pay Transparency Directive please get in touch.