HR managers in the UK are tasked with staying up to date with ever-changing employment regulations and staying compliant. The recent introduction of the EU Pay Transparency Directive, designed to bring more fairness and equity to the workplace, is the most recent example of one of these changes.
This blog post serves as your essential guide to understanding and navigating the implications of this directive, helping HR managers like you adapt to the changing rules and promote transparency in compensation. It was created together with our partner PIHR, experts in pay equity on a mission to help close the global gender pay gap.
The EU Pay Transparency Directive in a Nutshell
The EU Pay Transparency Directive, which was formally adopted in 2021, represents a significant step towards reducing the gender pay gap and enhancing pay transparency across Europe. It aims to ensure that all employees, regardless of their gender, receive equal pay for equal work. As an HR manager, understanding the key provisions of this directive is crucial to ensure compliance within your organisation.
EU Pay Transparency Directive by Country
Do you want to know how an individual EU member state is progressing in implementing the pay transparency directive? Here’s a comprehensive list of what’s happening in each country.
The technical term for the process by which an EU member state incorporates a directive into its national law is transposition. Unlike EU regulations, which apply directly to member states, EU directives give member states greater flexibility and allow them to adopt their own implementation measures. However, national law must codify these measures. Member states have until 7 June 2026 to achieve this for the EU Pay Transparency Directive, so there’s not much time left.
Austria
Austria has yet to implement the directive. The country’s existing Equal Treatment Act aims to support pay transparency and gender pay equality through requirements such as an obligation to state minimum salaries in job adverts and to report wages by gender. However, the EU directive goes further than existing legislation by requiring applicants to be aware of salary information when they start the application process, requiring pay transparency throughout the ongoing employer relationship, and imposing stricter reporting requirements.
Belgium
Belgium is drafting legislation to implement the EU directive at the national level, but it is unlikely to have completed the necessary work by the June 2026 deadline. However, one region, the Wallonia-Brussels Federation, was the first area in the EU to implement the directive for public sector employees in January 2025.
Bulgaria
There is no public information on Bulgaria’s transposition plans to implement the directive.
Croatia
Croatia has yet to implement the directive. Like Austria, existing legal requirements, such as the Labour Act, prohibit gender discrimination and protect the right to equal pay for equal work. However, this legislation does meet the requirements of the specific, structured approach outlined in the directive.
Cyprus
There has been no official announcement that draft legislation is publicly available. However, the Ministry of Labour and Social Insurance has confirmed that it is working with focus groups to determine the best way to implement the directive ahead of the deadline.
Czech Republic (Czechia)
The Czech government is preparing draft legislation to implement the pay transparency directive. One change already introduced is the banning of pay secrecy clauses in employment documents from 1 June 2025. Three of the largest business associations in Czechia have written to the government asking for a two-year postponement of the directive.
Denmark
Denmark has yet to implement the directive or take steps towards doing so. However, it already has equal pay legislation that requires employers to pay equal pay for work of the same value.
Estonia
According to reports, the government is working on draft legislation, which was due in the summer of 2025. There have been no communications about a new timeframe.
Finland
Finland published a draft proposal in May 2025 outlining how the government plans to comply with the pay transparency directive. Employee associations expressed concerns that the proposed legislation would not meet the minimum standards set out in the directive. According to the government, they will publish an official proposal by the end of 2025.
France
The French government expect to publish draft legislation to support the implementation of the directive by the end of 2025. The legislation requires mandatory pay transparency at every stage of the employer relationship, disclosure of objective remuneration criteria for companies with over 50 employees, employers to use gender-neutral classification criteria when deciding pay and a complaints mechanism for non-compliant companies. There is also a provision for the phased implementation of increased reporting via the Gender Equality Index.
Germany
Germany is working on amendments to its existing Pay Transparency Act to align the legislation with the EU Pay Transparency Directive. The exact date of this amendment is not confirmed, but the government expect to deliver it in the first half of 2026, ahead of the EU deadline.
Greece
There is no public information on Greece’s transposition plans to implement the directive.
Hungary
There is no public information on Hungary’s transposition plans to implement the directive.
Ireland
Ireland published draft legislation in January 20025, which covered transparency in job advertisements and a ban on asking questions about pay history. Existing pay gap legislation already covers reporting on the gender pay gap. However, the complete transposition of the directive is still underway, as its requirements are stricter than those currently in place in Ireland.
Italy
There is no public information on Italy’s transposition plans to implement the directive.
Latvia
There is no public information on Latvia’s transposition plans to implement the directive.
Lithuania
Draft legislation to implement the directive was published in May 2025 and then updated in September 2025. The draft legislation prevents employers from asking about salary history, requires monthly pay gap reporting, imposes stricter requirements on remuneration policies, and prohibits secrecy regarding salary details. It also follows the Directive’s requirements for remedial action if the gender pay gap exceeds 5%.
Luxembourg
There is no public information on Luxembourg’s transposition plans to implement the directive.
Malta
Legislation came into effect on 27 August 2025, which partially implements the directive. The legislation requires employers to provide pay information to employees on request and to disclose salary ranges to applicants. The government expects to produce further legislation to implement the directive’s other requirements before the June 2026 deadline.
Netherlands
The Netherlands published draft legislation in March 2025 that will amend existing legislation and comply with the directive’s requirements. The Dutch government has recently announced that the timeline for this legislation to come into force is now 1 January 2027.
Poland
Poland has partially implemented the directive through a government act passed in June 2025, which amends the Labour Code. This act changes the transparency requirements for salaries during recruitment and employment. New legislation to cover the directive’s reporting requirements is due to be published, but is unlikely to be in place by the June 2026 deadline.
Portugal
The government has established a working group to prepare for the implementation of the directive, but there is no public information yet on Portugal’s transposition plans.
Romania
The Ministry of Labour is currently developing legislation to implement the directive, but no public version is available at the moment. The Romanian government expects to approve this legislation by the end of 2025 and to have it adopted by February 2026, ahead of the June deadline.
Slovakia
The Slovakian government has published a preliminary legislative notice covering several aspects of the directive and is working towards sharing draft legislation. There has been no update on when this will be made public. Two major stakeholders have publicly noted the extra administrative and financial burden that the changes will create for businesses.
Slovenia
The government have established a working group to prepare new legislation, but there is no public information yet on Slovenia’s transposition plans to implement the directive. Slovenia has had existing legislation in force since 2013 that ensures equal pay for equal work.
Spain
Spain has existing legal requirements for pay transparency and gender equality, but has not yet begun implementing the directive in full.
Sweden
Sweden published draft legislation in May 2024 as part of preparatory work to transpose the directive’s requirements. The new measures will amend existing legislation that already complies with many of the directive’s requirements and should be in place for the deadline.
What Happens if Companies Don’t Comply?
As our video discusses 👇, achieving complete pay transparency is a complex and challenging endeavour that opens up many questions for businesses. Watch to learn more about how Étienne Ageneau makes salary transparency possible.
And regarding the EU Pay Transparency Directive, what happens if countries decide it’s too hard to implement this new directive?
Failing to transpose the EU Pay Transparency Directive into national law is considered a breach of EU law. Breaching EU law leads to a three-step process where the Commission sends a formal notice asking for an explanation before issuing a reasoned opinion (effectively a formal warning) and then finally taking the case to the Court of Justice for the EU. The CJEU can issue a binding judgment that forces the EU member to act.
After the CJEU judgement, the EU can issue fines (running to millions of pounds), which can be lump sums or daily fines that accrue each day the country fails to meet the directive.
There is also a reputational and political risk for countries failing to implement the directive. For example, member states may be criticised in the European Parliament or lose funding for gender equality programmes if they fail to implement the directive.
Navigating the Key Provisions
Here are the key elements that the directive mandates:
Equal pay for equal work: HR managers must assess job roles, responsibilities, and qualifications to identify and rectify any disparities in compensation based on gender.
Pay transparency: HR managers must work to provide employees with clear insights into pay scales and structures, enabling them to understand how their salaries compare to others in the organisation.
Salary transparency for job applicants: HR managers should be aware that job applicants have the right to request information on the expected salary range for specific positions.
Penalties for non-compliance: HR managers should rigorously adhere to the guidelines to avoid legal repercussions and protect their organisation’s reputation.
Regular auditing and reporting: HR managers should conduct regular pay equity audits and review compensation structures to ensure fairness.
Guidelines for HR Managers
Here are our tips for adapting to the directive seamlessly and efficiently:
- Educate your team: Ensure that your HR team is well-informed about the EU Pay Transparency Directive. Encourage continuous learning and a deep understanding of their roles in fostering pay equity.
- Review and adjust pay practices: Regularly review and adjust your organisation’s compensation practices. Proactively address any gender-based pay gaps and promote fairness in your compensation structure.
- Move towards pay transparency: Develop and implement a comprehensive pay transparency policy. Clearly communicate how compensation is determined and regularly share information on pay scales with employees.
- Embrace data-driven analysis with technology: Leverage the power of technology to drive data-driven pay equity analysis within your HR practices. With this approach, your organisation can efficiently collect, manage, analyse, and report compensation data, ultimately helping you promote transparency, achieve compliance, and foster a fair and equitable work environment.
- Monitor and adapt: Continuously monitor and adapt your HR practices to stay in compliance with evolving regulations and promote a culture of fairness in your workplace.
About PIHR
Pihr is a regulatory, SaaS impact company with a mission to help close the global gender pay gap. Their pay equity solution can help companies prepare and become compliant with local and international legislation, ensuring that more and more employers in Europe offer equal pay for equal work. The company was founded in Sweden in 2012 with a belief that anything is possible. Today, their powerful software is used in more than 700 countries and analyses more than 2,5 million salaries annually.
The Impact of the EU Pay Transparency
With the implementation deadline not until June 2026, considering the impact of the EU Pay Transparency Directive is a theoretical concept at the moment. However, it’s possible to envisage that this new directive will have a considerable impact in different ways:
Economic Impact
With greater transparency around wages, businesses are likely to face pressure to justify pay differences and introduce more structured, consistent pay frameworks. Linked to this, firms may find themselves having to pay higher wages to more people than previously. There may also be increased costs associated with implementing new systems and reporting on them. These increased costs could have a significant impact on the finances of small and medium-sized businesses, particularly.
However, the upside may be that greater transparency and fairness in pay within organisations lead to better morale, make firms more attractive to new talent, and improve retention among existing staff.
Social And Cultural Impact
Implementing the directive may raise social issues, such as companies conducting ‘box ticking’ rather than adequately addressing the root of the problem, and changes in company structures when high earners experience wage stagnation while other employees’ wages catch up with theirs.
In the long run, an EU directive requiring countries to focus on pay equality and transparency should achieve its intention and help address the persistent, systemic undervaluation of roles held by women and minority groups. There could also be a cultural shift in workforces, with employees openly discussing salaries and the idea of an emotional salary becoming more mainstream. Likewise, employees may feel empowered to ask for salary information and challenge unfair practices, and the role of unconscious bias in decision-making may evolve.
Legal Impact
The EU Pay Transparency Directive introduces a significant shift in power dynamics, as it will be incumbent on companies to prove there was no discrimination, rather than on employees to prove there was. This change may lead to more litigation and more companies (especially larger ones) settling.
There is also a potential impact on EU harmonisation, the process of making laws, standards, and regulations consistent across the whole of the EU. Some member states (such as France and Ireland) are refining existing pay equality legislation as part of their transposition processes, whereas others (such as Bulgaria and Romania) have minimal existing legislation and need to undertake a complete overhaul of their approach to pay equality. In the long run, there may be a more consistent approach with the EU member states on this issue than there is currently.
Long-Term Impact
While in the short term there could be several negative impacts (increased costs, wage stagnation, extra administration) from the implementation of the EU Pay Transparency Directive, in the longer term, the directive may lead to a significant cultural shift.
Over time, the EU Pay Transparency Directive will likely reduce the gender pay gap, lead to a more consistent professional approach to salary transparency and reporting, and improve mobility and fairness in the labour market. It’s also likely that the directive will affect companies based in non-EU countries but operating within the EU, requiring them to change their working practices as well. The cultural shift from the directive could be more impactful than the economic and legal one.
Final EU Pay Transparency Directive Thoughts
Navigating the new EU Pay Transparency Directive may present challenges, but it also provides an opportunity to foster a more equitable and transparent work environment. As HR managers working in EU states, navigating the new EU Pay Transparency Directive may pose challenges due to administrative and reporting requirements and the cultural shift it requires. However, the directive also presents opportunities to improve employee morale, attract top talent, and increase retention rates by creating a fairer, more transparent and empowering work environment.
Using Factorial’s business management software can help ease the administrative burden and compliance requirements of the EU Pay Transparency Directive by supporting the recruitment and salary review process, making it easy to view all employees’ salaries and identify issues, and providing the necessary reports in a few clicks. Factorial gives you visibility into making salary adjustments and shows you trends in your company.
👉 Sign up for a free demo today to speak to one of our consultants about how you can simplify your recruitment processes and lead the way on pay transparency.
