The EU Pay Transparency directive: what should employers know?

The EU Pay Transparency directive: what should employers know?

The EU Pay Transparency Directive creates more rights for employees and imposes new obligations on employers. This impacts all HR processes – from recruitment and contracts to payroll administration and reporting. Below we summarise the key changes and provide practical points to help employers become compliant.
 

What changes for applicants and employees? 

Greater right to information

Before hiring

• The directive creates obligations that apply before hiring employees. This includes applicant’s right to information about the starting salary or salary range and the objective, gender-neutral criteria that apply. For more detail, see our article: “Is your recruitment process ready for the changes coming in June 2026?” 

Individual and average pay information

• Employees have the right to know the criteria used to determine pay and pay levels. They can also request information about their own pay and the average pay of colleagues in similar job categories, divided by gender. This right covers the entire concept of pay, including base salary as well as supplementary or variable elements (for example bonuses and group insurance). Employees may request this information individually or via employee representatives or an equality body. In addition, employers may not prohibit employees from sharing information about their own pay. 

Other requirements

• The requested information must be provided within a reasonable period of time – in any case within two months of the request.

• Employees have the right to request an explanation of the information provided.

• Employers must inform employees annually of their right to information and the
  steps to exercise their right. 

Legal protection

Prohibition of detriment

• Employees who exercise their rights under equal treatment rules, or who assist others in doing so, must not be disadvantaged. 

Shift in burden of proof

• Once an employee presents facts and circumstances that suggest pay discrimination, the burden of proof shifts. The employer must then demonstrate that no discrimination occurred.

• Certain circumstances trigger a presumption of discrimination, for example:
   

  • failure to comply with the pay transparency obligations before or during employment; or 

  • failure to fulfil the reporting obligations. 

     

  Right to full compensation

  • Employees who are subject to pay discrimination are entitled to full compensation.
    This includes:
     

    • Overdue pay: all missed pay elements related to the discrimination;

    • Compensation for lost opportunities: for example, missed promotions or training;

    • Non-material damage: compensation for non-material damage such as reputational or psychological damage;

    • Legal costs: reimbursement of legal costs incurred by the employee if the employers is found liable.

       

  What can you do as an employer?

  • Review your pay policy and document objective, transparent and gender-neutral criteria.

  • Provide a central point of contact to monitor information requests easily.

  • Check employment contracts and remove or prevent clauses that restrict pay communication.

  • Communicate proactively and on a regular schedule.

  • Start early with data collection and reporting preparation.

   

  Wondering what we can do for you?
  Don’t hesitate to contact us!

  
  The directive requires new processes and clear communication. With our Pay Transparency Roadmap, we help you become compliant step by step.
  
  Interested? Feel free to contact us, together we will identify the approach that best fits your organisation.