\nThis guide explains what the EU Pay Transparency Directive is, what it means in practice, and how it sits alongside the UK\u2019s own pay transparency agenda so HR teams can plan ahead with confidence.<\/p>\n
What is the EU Pay Transparency Directive?<\/h2>\n
The EU Pay Transparency Directive is formally called Directive (EU) 2023\/970. Its main aim is to strengthen equal pay between women and men by making pay systems more transparent and giving workers better tools to challenge unfair differences.<\/p>\n
In simple terms, the directive:<\/p>\n
- \n
- Gives job applicants more information about pay before they join.<\/li>\n
- Gives employees the right to ask for information about their own pay and the average pay of colleagues doing the same work or work of equal value.<\/li>\n
- Requires larger employers to report gender pay gaps by categories of workers to national authorities.<\/li>\n
- Introduces stronger enforcement rules, including a shift in the burden of proof to employers in equal pay cases.<\/li>\n<\/ul>\n
The directive entered into force in 2023. EU member states must turn it into national law by 7 June 2026. Once that happens, employers in those countries will need to follow the national rules based on the directive.<\/p>\n
For a clear official overview, see the Council of the EU\u2019s page<\/a> on pay transparency in the EU.<\/p>\n
Learn more about the EU Pay Transparency Directive<\/h3>\n
If your team is preparing for the new rules and wants a more detailed breakdown, Factorial has created an ebook on the topic. You can read the 2026 EU Pay Transparency Directive ebook<\/a>, which covers the key requirements, deadlines, and practical steps employers can take to get ready.<\/p>\n
Key duties under the EU Pay Transparency Directive<\/h2>\n
The directive creates several main duties for employers in scope:<\/p>\n
Recruitment transparency<\/h3>\n
Employers must give applicants information about the starting pay level or pay range for the role before interview, often via the job advert, and must not ask about salary history.<\/p>\n
Employee right to information<\/h3>\n
Employees can request details of their own pay and the average pay levels, broken down by sex, for colleagues doing the same work or work of equal value.<\/p>\n
Gender pay gap reporting<\/h3>\n
Employers with 100+ workers must report gender pay gap information by categories of workers at set intervals.<\/p>\n
Joint pay assessments<\/h3>\n
Where gaps of at least 5% are found in a category and cannot be justified on objective, gender\u2011neutral grounds, employers must carry out a joint pay assessment and take corrective action.<\/p>\n
Enforcement and burden of proof<\/h3>\n
In equal pay disputes, the burden of proof can shift to the employer, who may have to show that there was no discrimination.
\nThe detail will vary by country, but these core ideas will appear in each member state\u2019s implementation.<\/p>\nWhat does \u201cwork of equal value\u201d mean?<\/h2>\n
The directive is not limited to situations where employees do exactly the same job. It also covers work of equal value, which is assessed using objective factors such as:<\/p>\n
- \n
- The skills and knowledge needed for the role.<\/li>\n
- The level of effort required (mental or physical).<\/li>\n
- The degree of responsibility, including decision\u2011making and impact.<\/li>\n
- The working conditions, such as environment, risks, or unsocial hours.<\/li>\n<\/ul>\n
Two jobs with different titles and tasks can still be considered work of equal value if they are similar across these factors. For HR teams, this means pay reviews should not only compare people with the same job title, but also roles that are comparable in terms of skills, effort, responsibility and conditions.<\/p>\n
Recruitment: what changes under the directive<\/h2>\n
The directive makes recruitment more transparent across the EU. Employers will need to:<\/p>\n
- \n
- Provide salary ranges or the initial pay level for a role before interview,<\/strong> usually by including it in job adverts or sharing it early in the process.<\/li>\n
- Stop asking about salary history,<\/strong> so previous pay does not drive future offers and cement earlier inequalities.<\/li>\n<\/ul>\n
This will change day\u2011to\u2011day hiring practices in the EU. Job descriptions, application forms, interview scripts and recruiter training will need to be reviewed so they match these rules.<\/p>\n
Even though UK law does not currently require salary ranges in adverts or a ban on salary history questions, UK guidance and commentary suggest these practices are increasingly seen as good practice. Some UK employers have already voluntarily started to publish salary ranges to stay competitive with EU and US employers and to respond to candidate expectations.<\/p>\n
During employment: employee access to pay information<\/h2>\n
Once someone is employed in an EU country, the directive gives them stronger rights to pay information. Employees will be able to:<\/p>\n
- \n
- Ask for information about their own pay level<\/li>\n
- Ask for average pay levels, broken down by sex, for colleagues doing the same work or work of equal value.<\/li>\n<\/ul>\n
Employers are also expected to make the criteria used to set pay and decide progressions available to workers, and these criteria must be objective and gender neutral.<\/p>\n
In practice, this means employers need:<\/p>\n
- \n
- Clear job families and levels.<\/li>\n
- Transparent salary ranges or bands linked to those levels.<\/li>\n
- Documented criteria for pay rises, promotions and bonuses.<\/li>\n<\/ul>\n
Without these basics, it will be much harder to respond to information requests or justify differences when challenged. This links closely to performance and development processes; for internal resources, Factorial\u2019s guides on performance management systems and performance reviews are useful for building more structured frameworks around decisions that affect pay.<\/p>\n
Gender pay gap reporting: who reports and when?<\/h2>\n
The directive sets gender pay gap reporting duties for employers with 100 or more workers in an EU member state. Reporting focuses on pay gaps between women and men by categories of workers, not just one overall figure.<\/p>\n
- \n
- Employers with 250+ workers will report annually.<\/li>\n
- Employers with 150\u2013249 workers will report every three years.<\/li>\n
- Employers with 100\u2013149 workers will also report every three years, starting later.<\/li>\n<\/ul>\n
Exact timetables can differ slightly by member state, but commentary across employer guides confirms that first reports for the largest employers are expected from 2027, with smaller groups following on the three\u2011year cycle.<\/p>\n
Employers need accurate information about:<\/p>\n
- \n
- Base pay and relevant allowances.<\/li>\n
- Bonus and variable pay.<\/li>\n
- Job categories or groups of workers.<\/li>\n
- Who is doing the same work or work of equal value.<\/li>\n<\/ul>\n
If job data and pay elements are stored in multiple systems, or if job titles are inconsistent, preparing these reports will be more difficult.<\/p>\n
What happens if a gap of 5% or more is found?<\/h2>\n
Under the directive, a reported gender pay gap of 5% or more in any category of workers triggers extra duties if the gap cannot be justified by objective, gender\u2011neutral factors.<\/p>\n
Where that threshold is met and no justification is found, the employer must carry out a joint pay assessment with worker representatives and take corrective action. The assessment is intended to:<\/p>\n
- \n
- Identify the causes of the pay gap.<\/li>\n
- Check whether pay structures or practices are contributing to unjustified differences in pay.<\/li>\n
- Form a plan to address those differences.<\/li>\n<\/ul>\n
This means reporting is not just about numbers. Employers should expect to explain and, where necessary, fix any gaps that cannot be objectively justified.<\/p>\n
Enforcement and the burden of proof<\/h3>\n
The directive also changes the enforcement landscape. In equal pay disputes, the burden of proof can shift to the employer. If a worker brings a claim and can show facts suggesting possible discrimination, the employer may need to prove that there was no breach of equal pay rules.<\/p>\n
For employers, this makes documentation critical. You should be able to show:<\/p>\n
- \n
- How starting salaries were decided.<\/li>\n
- How progression and bonuses are determined.<\/li>\n
- Which objective factors explain differences in pay.<\/li>\n<\/ul>\n
Where processes have grown informally over time, HR teams may need to invest in clearer policies, manager training, and better record\u2011keeping to manage this risk.<\/p>\n
How the EU Pay Transparency Directive sits alongside UK rules<\/h2>\n
The UK is not required to implement the EU Pay Transparency Directive, but pay transparency is still moving up the domestic agenda.<\/p>\n
Existing UK gender pay gap reporting<\/h3>\n
UK employers with 250 or more employees must already publish gender pay gap data annually. The GOV.UK guidance<\/a> on
\ngender pay gap reporting explains which employers need to report gender pay gap information and what needs to be published.<\/p>\nUnder the Employment Rights Act changes, from 2027 these larger employers will also need to produce mandatory gender pay gap action plans, building on voluntary plans available from April 2026. Those plans must set out concrete steps to address workplace gender inequalities and, in many cases, will be expected to integrate pay and progression actions.<\/p>\n
UK moves towards more transparency<\/h3>\n
While there is still no UK\u2011wide law that forces employers to include salary ranges in job adverts or bans salary history questions, the UK government is using guidance and \u201csoft regulation\u201d to push employers towards more openness. In March 2026 the government published guidance encouraging employers to increase transparency for pay, promotion and rewards, as part of a broader \u201cplan to make work pay<\/a>.\u201d<\/p>\n
Why UK\u2011based employers should still prepare<\/h3>\n
Even if you only employ people in the UK today, there are good reasons to pay attention:<\/p>\n
- \n
- Market practice is shifting:<\/strong> Salary ranges in job adverts, and a move away from salary history questions, are becoming more common, even without a legal requirement.<\/li>\n
- Regulators and government are watching:<\/strong> The UK is expanding its focus from headline gender pay gaps to action plans and may extend reporting to ethnicity and disability in future.<\/li>\n
- Talent attraction and retention:<\/strong> Surveys show many candidates now expect pay transparency and may avoid roles where salary is hidden.<\/li>\n<\/ul>\n
In other words, even if EU rules do not apply directly to your UK workforce, aligning with pay transparency trends can help you stay competitive and reduce future compliance pressure.<\/p>\n
6 areas to review for the EU Pay Transparency Directive<\/h2>\n
Whether you are dealing with EU operations, the UK market, or both, a few practical steps will help you prepare.<\/p>\n
1. Review pay structures and job design<\/h3>\n
Check how your organisation sets starting pay and progression for different roles. Ask:<\/p>\n
- \n
- Do we have clear job families and levels?<\/li>\n
- Do we use pay bands or ranges, and are they documented?<\/li>\n
- Can we explain why one role is paid more than another in objective terms?<\/li>\n<\/ul>\n
If the answer is no, this is a priority area to work on.<\/p>\n
2. Look again at recruitment<\/h3>\n
- \n
- Review job adverts, application forms, interview guides, and offer processes.<\/li>\n
- Decide where and how you will show salary information, especially for EU roles.<\/li>\n
- Remove salary history questions from forms and recruiter scripts if you have EU staff, and consider doing the same for UK roles as a matter of best practice.<\/li>\n<\/ul>\n
3. Improve pay and HR data<\/h3>\n
- \n
- You cannot report or analyse pay fairly without good data.<\/li>\n
- Make sure pay elements are recorded consistently.<\/li>\n
- Clean up job titles and categories so they reflect real work.<\/li>\n
- Check that HR and payroll systems can produce the reports you will need.<\/li>\n<\/ul>\n
4. Connect pay with performance and progression<\/h3>\n
Pay transparency works best when employees understand how performance and development feed into pay decisions. Reading up on continuous performance management<\/a> and employee engagement<\/a> strategies can support work and help create clearer processes.<\/p>\n
5. Train managers and recruiters<\/h3>\n
Managers and recruiters will be the ones answering pay questions day to day.<\/p>\n
- \n
- Explain the key points of the directive if you have EU employees.<\/li>\n
- Make sure they understand why salary history questions can be risky.<\/li>\n
- Give them simple language to talk about pay ranges, criteria, and progression.<\/li>\n<\/ul>\n
6. Monitor legal and policy updates<\/h3>\n
The EU directive is still being transposed, and UK pay transparency policy is evolving. Keep an eye on:<\/p>\n
- \n
- Local laws in each EU country where you employ people.<\/li>\n
- UK developments around gender pay gap action plans and any future pay transparency measures.<\/li>\n<\/ul>\n
Short summary: EU Pay Transparency Directive<\/h2>\n
- \n
- The EU Pay Transparency Directive (Directive (EU) 2023\/970) aims to reduce unjustified gender pay gaps in EU member states by increasing openness about pay.<\/li>\n
- Employers with 100+ workers in the EU will have to report gender pay gaps by categories of workers at set intervals, with more frequent reporting for larger employers.<\/li>\n
- Employers must provide salary ranges or pay levels to job applicants before interview and are banned from asking about a candidate\u2019s salary history in the EU.<\/li>\n
- Employees in EU countries gain the right to request information about their own pay and the average pay of colleagues doing the same work or work of equal value.<\/li>\n
- If a gender pay gap of 5% or more is found in a worker category and cannot be justified on objective, gender\u2011neutral grounds, employers must carry out a joint pay assessment and take corrective action.<\/li>\n
- Member states must implement the directive into national law by 7 June 2026, with first reports expected from larger employers from 2027 and later deadlines for those with 100\u2013149 workers.<\/li>\n<\/ul>\n
How Factorial can help support your organisation<\/h2>\n
Preparing for pay transparency involves data, processes, and communication. Employers need a clear view of roles, pay, and progression, and a way to keep information consistent across recruitment, onboarding, performance and reporting.<\/p>\n
Using HR software like Factorial can help by:<\/p>\n
- \n
- Bringing employee and pay\u2011related data into one place.<\/li>\n
- Supporting structured workflows for hiring, onboarding and performance reviews.<\/li>\n
- Making it easier to track changes and prepare for reporting and action planning.<\/li>\n<\/ul>\n
Request a demo<\/a> of Factorial to learn more.<\/p>\n
\n\n\nSimplify Payslips & Payroll with Factorial<\/h4>\n \n
- \n
- Save time, reduce errors and stay complaint<\/li>\n
- Streamline your payroll processing<\/li>\n
- Generate employee payslips<\/li>\n <\/ul>\n \n \n Get a demo <\/a>\n <\/div>\n\n
- Regulators and government are watching:<\/strong> The UK is expanding its focus from headline gender pay gaps to action plans and may extend reporting to ethnicity and disability in future.<\/li>\n
- Market practice is shifting:<\/strong> Salary ranges in job adverts, and a move away from salary history questions, are becoming more common, even without a legal requirement.<\/li>\n
- Stop asking about salary history,<\/strong> so previous pay does not drive future offers and cement earlier inequalities.<\/li>\n<\/ul>\n
- Provide salary ranges or the initial pay level for a role before interview,<\/strong> usually by including it in job adverts or sharing it early in the process.<\/li>\n
![](\"https:\/\/factorialhr.co.uk\/blog\/app\/plugins\/factorial-utilities\/assets\/images\/banners\/inline\/backgrounds\/default_image.svg\")
\n <\/div>\n <\/div>\n<\/div>\n