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EU Pay Transparency Directive
Colleague meeting

The EU Pay Transparency Directive (“the directive”) is a groundbreaking directive designed to enhance pay transparency and promote fairness in the workplace. Set to be implemented by EU member states by 7 June 2026, the directive aims to ensure that employees have access to clear and comprehensive information about pay structures and disparities. By fostering an environment of openness and accountability, the directive seeks to eliminate pay discrimination and support equitable remuneration practices. Organisations are urged to begin preparations now to meet the requirements and embrace a culture of transparency and fairness.

Timeline - where are we now?

• Directive Approval and Enforcement - March 2023: Approved by the European Parliament|April 2023: Approved by the EU council|June 2023: The Directive comes into force • Current status - Now 2025: Member States in the process of drafting and adopting national legislation and organisations are preparing for compliance • Implementation deadline - 7 June 2026: Deadline for all EU member states to transpose the directive into national law and for organisations to comply with its provisions|7 June 2027: Deadline for the first mandatory pay transparency reports for organisations with 150 or more employeesor more employees

Overview of the Directive requirements

Organisations must report on their gender pay gap annually or every 3 years, depending on size. Reports must include pay disparities by categories of workers performing the same work or work of equal value.

If the external report reveals a pay gap of more than 5% that cannot be justified by objective, gender-neutral criteria, organisations must conduct a joint pay assessment to address unjustified disparities.

Employees can request information about average pay levels broken down by sex and for their category of worker. Employers must provide this information and ensure pay criteria are objective and gender-neutral.

Employers must disclose the starting salary or pay range for advertised positions in vacancy notices or ahead of interviews. They are also prohibited from asking candidates about their pay history.

Organisations should develop and communicate a clear pay philosophy that outlines their approach to compensation, including criteria for raises, promotions, and career progression.

Employers must ensure fair compensation practices, including addressing pay gaps and providing compensation for victims of pay discrimination.
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We offer flexible support to suit your needs

  • End-to-end managed service to ensure compliance
  • Support in specific areas such as job architecture or equal pay
  • Technical ad hoc advice on the directive

Key focus areas to prepare for compliance

Agree strategic principles

Embedding compliance with the directive into your organisation’s broader strategy ensures it supports long-term goals rather than acting as a standalone obligation. The directive can be a powerful lever to drive operational efficiency, strengthen your brand, and promote workplace equity. Our immersive workshops uncover these opportunities to align compliance with your strategic priorities.

EU pay transparency readiness assessments

To ensure you are prepared for compliance, it’s important to identify priority gaps now. We can compare the current state of your organisation with the directive requirements to understand whether any gaps need urgently addressing. This would include looking over your data, business policies and processes and technology. We can also draw on our legal experts across the EU to conduct territory-specific deep dives, once the directive is transposed into local law.

Roadmap to compliance

A clear, structured plan is essential to ensure your organisation makes the right changes to meet the Directive’s requirements. We can help design a tailored roadmap to compliance that outlines the key actions, identify potential risks, clarify stakeholder roles, and establish governance processes. We also bring together specialists across all areas underpinning the directive - whether you need support in reward, communications, data or legal, we can deploy the right experts at the right time.  

Job architecture

A well-structured job architecture is essential for meeting the directive’s transparency and comparability requirements. It provides a consistent framework for classifying roles, defining job levels, and aligning with your pay philosophy - enabling objective comparisons of pay across similar roles. This foundation supports accurate pay reporting, clear communication, and fair decision-making. Our job evaluation tools and team of reward specialists can help you design a job architecture that strengthens your pay strategy and ensures your organisation is structurally prepared for compliance.

Conduct an equal pay review

Proactively addressing equal pay is key to complying with the directive and reducing legal and reputational risk. Leveraging our market-leading equal pay analytics and working in collaboration with employment law specialists, we can conduct a legally privileged equal pay review. This process helps identify any existing pay disparities and assess whether pay differences are objectively justified.

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Andrew Curcio

Andrew Curcio

Global Co-Leader Reward & Benefits, PwC United Kingdom

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