Pay Transparency Directive

The European Union has been consistently striving to improve the conditions in the labour market. Among these initiatives is the Pay Transparency Directive (Directive (EU) 2023/970), which aims to reduce the gender wage gap through enhanced transparency incompensation practices.

According to the Directive which is anticipated to come into effect in July 2026, companies will be required to disclose gender-related pay equality data and ensure they provide transparent communication to employees and candidates regarding the salary range associated with each position. Overall,  the Directive presents a valuable opportunity to advance equality and fairness in the workplace, serving as a key pillar of employee trust, beyond reporting compliance.

Transparency and access to information during employment

Under the Directive, employees will have the right to be informed of their individual remuneration level and of the average remuneration levels broken down by gender, for categories of workers who perform the same work or work of equal value as them.

Transparency and access to information before hiring

The Directive also implies a requirement to inform applicants of the starting remuneration level for the job of the pay range.

Pay gap reporting

Under the Directive, employees will also be obligated to provide the state with a range of information relating to salaries and the gender pay gap. The average gender pay gap for each category of employees should not exceed 5% per employer. If this is the case, the employer will be obliged to justify and remedy the pay gap.

Joint Remuneration overview

The employer is obliged to undertake a joint remuneration review to address and remedy the pay gap in cooperation with the employees if:

• The remuneration report shows an average pay gap of at least 5% for any category workers;
• The employer has failed to justify the difference in average remuneration level within six months of the date of submission of the remuneration report.

During a joint remuneration review, the employer and the employee representatives should first identify the pay gap and the reasons for it. Subsequently, remedy the differences and take measures to prevent them.

The new regulations will apply to all employers, regardless of their size. 

According to the Directive, reporting on gender pay gaps will only be mandatory for companies with 100 or more employees (although national lawmakers may extend this obligation to smaller companies). The frequency of reporting and the deadline for submitting the first report will vary depending on the size of the company. Companies with more than 150 employees will be required to submit data on gender pay gaps in 2027, with the report covering data from 2026.

Position architecture and setting

• Develop a fair and comprehensive system for evaluating and comparing job categories and activities
• Establish a robust process for ongoing monitoring and review of job roles
• Create clear, detailed, and consistent job descriptions aligned with the evaluation framework

Setting pay bands & compensation strategy

• Identifying pay differences and qualitatively justifying the differences
• Deciding on possible changes to pay bands and performance review cycles
• Establishing criteria for changing pay bands

Recruitment & selection of suitable candidates

• Setting up a process to inform candidates about pay ranges
• Adjusting contracts, guidelines and other related documents
• Educating the recruitment managers

Smooth transition with change management

• Ensuring appropriate communication with employees, candidates, authorities and other stakeholders
• Addressing potential tensons from current employees
• Foster commitment to pay transparency by engaging and training key organisational members and stakeholders

Raise Awareness

• Educate your team on the Pay Transparency Directive’s key requirements, obligations and implications
• Align understanding with your organization’s broader goals and HR processes
• Engage and inform stakeholders to secure their commitment and support for pay transparency initiatives

Readiness audit including review of your documents

• Review and analyse your pay structures and the related HR policies, including reward strategies
• Assess documentation related to pay transparency and compliance
• Identify gaps and prioritise actions to ensure readiness for the Directive
• Conduct Job Evaluation utilising Deloitte’s Job Evaluation Questionnaire®
• Compile a detailed report highlighting findings and tailored recommendations

Calculating the gender pay gap in your company

• Calculate your organization’s gender pay gap to identify and address disparities
• Recommend costed measures to reduce the pay gap below 5%
• Offer ongoing support for calculations and reporting as needed

Comprehensive support and integration of the Directive in all relevant processes

• Design and implement gender-neutral policies and pay structures to address pay disparities
• Revamp the performance management system to support transparency and equity
• Train senior management, employees, and key stakeholders to foster understanding and commitment to pay transparency principles.
• Develop communication guidelines to support you complying with the Directive’s requirements