The EU Pay Transparency Directive is ushering in a new era of workplace equity, and while the June 2026 deadline might seem distant, the groundwork needs to start now.
This Directive requires that employers with over 100 employees regularly report on gender pay gaps. If a gap of 5% or more is identified in any job category and can't be justified by objective, gender-neutral criteria, employers have six months to address it. Failing that, a comprehensive pay audit, involving employee representatives, becomes mandatory.
Beyond reporting, the Directive empowers employees and job seekers with rights to salary transparency, bans on salary history inquiries, and protections against pay secrecy clauses.
Implementing these changes is no small feat. It requires overhauling pay structures, updating HR policies, and fostering a culture of openness. For HR, Compensation, and compliance teams, this is a significant undertaking.
As of now, only a few countries have made strides in transposing the Directive into national law:
· Countries with Draft or Final Legislation: Belgium, Sweden, Ireland, Germany, Netherlands, and Poland
· Countries with Preparatory Activity: Finland, Czech Republic, and Estonia
· Countries with No Official Transposition Activity: Austria, Bulgaria, Croatia, Cyprus, Denmark, France, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, Portugal, Romania, Slovakia, Slovenia, and Spain. (While these countries have not initiated official transposition activities, some have existing legislation related to pay transparency and equity.)
For organizations operating across Europe, this is a call to action. Start by auditing your current pay structures, ensure transparency in your recruitment processes, and engage with employee representatives early.
Change is challenging, but it's also an opportunity to build trust, attract top talent, and lead to fostering an equitable workplace.
If you need help, let’s talk.
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Sources: beqom and Ius Laboris