Practical Steps to meet the EU Pay Transparency Directive

The EU Pay Transparency Directive marks a major shift in how organisations handle equal pay compliance across the EU. Designed to tackle pay discrimination and close the gender pay gap, it introduces clear new obligations for employers in recruitment, pay structures, and reporting. Member states must transpose the Directive into national law by June 2026.

This guide provides some practical actions HR and business leaders should take now to build compliance in a structured risk aware way.

Review Pay Structures and Policies

Under the legislation, employees need to be able to understand how pay levels and progression decisions are made. Job evaluation frameworks and criteria for pay and promotions need to be objective, gender neutral and documented.

Information such as pay ranges and average pay for comparable roles should be available, the best way to do this is to carry out a job evaluation and salary levelling exercise, then share the banding and levels, so it is clear where roles sit. Contractual Pay secrecy clauses need to be removed from contracts and policies, and collective agreements should not prevent employees from discussing pay or accessing pay information.

Set Up Your Compliance Team

Before diving into specific actions, it’s wise to establish a cross functional working group who will hold responsibility for the compliance roadmap. Include senior stakeholders from HR, pay and reward, legal and compliance, payroll and finance, employee relations, data protection and communications.

Assign clear roles and responsibilities so that each aspect of compliance has an accountable lead. You may also wish to involve employee representatives.

Update Recruitment Practices

The Directive introduces pay transparency obligations that begin at the recruitment stage.

Be transparent about starting pay - ensure job adverts include the salary on offer for the role or the salary range. Remove pay history inquiries in the recruitment process by eliminating questions about a candidates previous salary from applications interviews or assessments. This prevents perpetuating past pay disparities. Use gender neutral recruitment language by reviewing career sites, job postings and recruitment processes to avoid gendered wording and discriminatory practices.

Train recruiting teams. Brief hiring managers and external recruiters on the new rules so transparency becomes standard practice.

Gender Pay Gap Reporting

Gender pay gap reporting is a core requirement of the Directive, so if you’re not doing this already you should prepare. Legislation and requirements differ in each member state and Employers above certain employee thresholds will be required to conduct detailed gender pay gap analyses and report the results under national law.

Where a pay gap exceeds five percent and cannot be objectively justified, employers may be required to carry out a joint pay assessment with employee representatives.

Practical steps include conducting an internal pay data audit to identify existing gaps running pilot analyses in selected countries or business units and ensuring access to appropriate pay analytics capability either internally or through external support.

Reporting obligations are expected to begin from 2027 onwards depending on company size and national implementation timelines (if a member state doesn’t already have gender pay gay reporting already in place).

Engage and Communicate

Transparent pay practices require clear communication.

Inform employees about pay structures, transparency measures, and their rights under the Directive. Engage employee representatives early particularly where joint pay reviews and assessments may be required. Develop a clear internal and external communications strategy to manage expectations and reputational risk.

Effective communication supports trust reduces misunderstandings and improves readiness for formal reporting and regulatory scrutiny.

Monitor Legal Developments and Adjust

Member states are likely to implement the Directive with national variations. Compliance will therefore require ongoing monitoring and adjustment. The core elements of the legislation will remain the same so companies can work on this basis if their member state/s have yet to introduce the domestic legislation and communicate nuances or particulars. It’s important to track legislative developments in each country of operation and update policies processes and reporting timelines as national laws come into force in order to account for local differences such as definitions of pay reporting thresholds.

Maintain Ongoing Compliance

Once initial implementation is complete pay transparency should be embedded into business as usual, and you should schedule regular reviews of pay decisions and job evaluations. You should also ensure employees are kept updated, monitor compliance mechanisms and address issues promptly. The purpose behind that is so that pay transparency becomes part of organisational culture rather than a one off compliance exercise.

Final Thoughts

The EU Pay Transparency Directive represents a significant step towards fairer and more accountable pay practices across Europe. Even if your organisation is not in the EU, following the principles of the legislation is becoming best practice and it fosters inclusive, open and transparent employment practice. While compliance requires careful planning and coordination it also presents an opportunity to strengthen trust enhance employer brand and support long term workforce equity. By taking practical steps now organisations can reduce legal risk, meet regulatory expectations, and build more transparent and equitable pay systems for the future.

At A Human Resource, we combine deep HR expertise and experience of pay and reward and can assist organisations to meet the requirements of the legislation. Find out more here Pay & Reward Solutions | AHR