What businesses need to know about Pay Transparency Compliance

With the transposition deadline approaching, the EU Pay Transparency Directive is set to become law in Malta by June 2026. The obligations are clear but demanding, and organisations that prepare early will be better placed to comply smoothly. The good news is that the path to readiness does not need to be complex.

Step 1: Define what value means to your organisation

Every business has its own structure, priorities and culture, so any pay framework must reflect these realities. The first step is to determine how your organisation defines value and the contribution each role is expected to make. This becomes the foundation for an objective, consistent approach.

Step 2: Evaluate roles and group them into categories

Once ‘value’ has been defined, you can build an evaluation tool that measures the contribution of each role. This tool must be robust, gender neutral and transparent. Using it to assess all jobs allows you to group roles into categories of similar worth. These clusters form the basis of the organisation’s pay structure and support the Directive’s requirement for equal work to be treated consistently.

Step 3: Establish salary bands

Each category should be assigned a clear salary band. This provides structure and fairness, helping employers meet the Directive’s core principle of equal pay for work of equal value while ensuring transparency across the organisation.

Critical success factors

  • Alignment: Pay structures cannot function effectively in isolation. Performance management, incentives and career development must support and reinforce the structure. Where these elements are misaligned, the benefits of transparency can be weakened, and confusion may arise among employees.
  • Managing the change: With greater transparency comes greater scrutiny. Employees will naturally have questions, and without clear communication, uncertainty can spread. Managing the transition with openness and consistency is crucial to building trust.

When approached thoughtfully, pay transparency becomes more than a compliance exercise. It strengthens fairness, clarity and engagement, and supports a culture where employees understand how decisions are made. Done right, it provides a strong foundation for a more motivated and cohesive workforce.

Article written by Yashar Dominic Klipp, Consultant - Organisational and People Advisory