Preparing for the EU Pay Transparency Directive: a new era of pay equity

The legal context in brief

The EU Pay Transparency Directive (Directive (EU) 2023/970) represents a significant shift in how pay equality is regulated across Europe. While many organisations are already familiar with gender pay gap reporting, this new framework goes further. It is designed to strengthen pay transparency rights for both employees and job applicants, while also improving access to remedies in cases of gender based pay discrimination.

Ireland is currently in the process of transposing the Directive into national law ahead of the mandatory deadline of 7 June 2026. Recent reports indicate, however, that the Department of Children, Disability and Equality has acknowledged that not all measures will be in place by that date, with implementation expected to occur on a phased basis. 

Once enacted, the legislation will introduce a range of new obligations aimed at eliminating pay secrecy, ensuring equal pay for men and women, and addressing pay gaps within organisations. These obligations will apply to businesses of all sizes, although reporting requirements will scale in line with workforce numbers.

While Ireland has not yet published the full suite of draft legislative measures required to transpose the EU Pay Transparency Directive — and it remains unclear whether any enhanced, Irish specific measures will be introduced — several core obligations set out in the Directive will nonetheless be mandatory for employers once implemented.

Key obligations ahead for employers under the Directive

1) Gender pay gap reporting obligations. 

The Directive builds on existing gender pay gap legislation in Ireland by introducing the requirement that employers must report the gender pay gap (GPG) between “categories of worker” performing the same work or work of equal value with reference to basic, complementary and variable pay. 

Reporting obligations under the Directive in this regard will initially apply to employers with at least 150 employees, who must publish their GPG report by 7 June 2027 and every three years thereafter. The threshold will fall to 100 employees from 2031. Employers with 250 or more employees will be required to publish annually from 2027.

2) Joint pay assessments

The Directive requires employers to conduct a detailed pay audit, known as a “joint pay assessment”, together with the employee’s representative. The requirement will apply where:

• A GPG of at least 5% exists in any category of workers;
• The gap cannot be justified by objective and gender-neutral factors; and
• The gap has not been remedied within six months of the GPG report.

3) Ban on pay secrecy

Employers will no longer be permitted to prevent employees from disclosing or discussing their pay. The Directive frames this right in the context of enforcing equal pay, but it does not expressly give employers the power to restrict employees to using pay information solely for that purpose. Any contractual terms or policies that restrict pay disclosure will be unlawful.

4) Pay transparency in recruitment

The Directive introduces a series of measures designed to ensure fairness and equality from the very start of the hiring process. These new obligations as outlined below aim to create greater clarity for job applicants, reduce the risk of discriminatory pay practices, and promote a more inclusive recruitment environment.

• Employers will be obligated to disclose the initial salary ranges or pay level in job advertisements or prior to interview.
• Job advertisements and titles must be written in a gender-neutral manner to promote equality and inclusivity.
• Employers will also be prohibited from asking job applicants about previous pay history.

5) Employee’s right to pay information

The Directive introduces a new right for employees to request and receive information regarding their individual pay level and the average pay levels. Such information must be provided within a “reasonable period of time", and in any event within two months of the request. Employers must also remind employees of this right to receive pay information annually.

6) Pay setting and pay progression

Employers with at least 50 employees will be required to provide workers with accessible information about the criteria used to set pay, establish pay levels, and determine “pay progression,” meaning the steps by which an employee can move to a higher pay level. 

What are some of the key steps should employers take?

Employers can begin preparing by taking the following steps, noting that certain obligations will apply depending on employer size*.

• Conducting pay and GPG audits to identify risks and prepare for reporting obligations.
• Mapping job categories of workers and work of equal value.
• Reviewing policies, contracts and recruitment practices to ensure compliance with the Directive obligations.
• Assisting with the setting up of clear processes for employee pay information requests.
• Training managers and HR teams to ensure consistency, compliant pay and transparency in recruitment.
• Updating pay policies and structures, as required.

Getting ahead: 

The Directive undoubtedly marks a fundamental shift in pay equity and transparency, placing significant new obligations on employers. Yet its impact extends far beyond regulatory compliance. For organisations willing to embrace it, the Directive presents a powerful opportunity to create a more transparent culture, open meaningful conversations about pay, strengthen trust with employees, and build a reputation as a forward thinking employer committed to closing what remains, for many organisations, a persistent double digit gender pay gap. 

By approaching these changes proactively, employers can position themselves not only to meet legal requirements, but to lead confidently in a new era of pay equity. 

Need help preparing for the EU pay transparency directive?

If you have any queries in respect of the above or the implications for your business, please contact a member of the People Consulting team.