Pay transparency is a major topic of conversation globally and the deadline for EU’s legislation is rapidly closing in. The EU Pay Transparency Directive pressures Member States and organizations to act to close gender pay gaps and provide clearer communication and transparency around the topic of compensation.

Overview of the EU Pay Transparency Directive

The PayTransparency Directive is intended to create more transparent, accountable, and equitable pay practices. Its primary objectives are to reduce pay gaps – particularly between men and women – and to foster greater trust and fairness within workplaces. By requiring clear, standardized reporting and transparency around pay, the directive empowers employees with better insights into their pay conditions while holding companies accountable to equitable pay standards.

Implementation Timeline

All EU MemberStates must implement the Directive by 7 June 2026. Currently, members are preparing a draft legislation outlining how the Directive will be transposed into national law and what approach they want to take. Some MemberStates can build on existing national legislation that already aligns with parts of the Directive, while others are taking their first step towards equal pay.

Who needs to comply with the Directive?

The Directive applies to all organizations with employees within the European Union, regardless of industry or size. The EU Directive presents the minimum requirements for complying with the Pay Transparency Directive, however, MemberStates can also interpret this differently and extend the requirements. Specific compliance requirements (reporting) will differ depending on the number of employees where larger organizations will face stricter reporting requirements.

Key thresholds for reporting pay gaps between male and female workers (Article 9):

• 250+ employees: First mandatory pay reporting on the 7th of June 2027 and every year thereafter.
• 150–249 employees: Reporting begins the 7th of June 2027 and every third year thereafter.
• 100–149 employees: Obligations start on the 7th of June 2031 and every third year thereafter.
• National law may require employers with fewer then 100 employees to provide information on pay.

What does it mean for organizations and HR professionals?

To comply with the Directive, organizations and HR teams need to take a more active role in analyzing pay data, identifying pay gaps, and applying corrective measures. This includes regular pay audits, the development of transparent pay frameworks, and the elimination of bias in all compensation practices. The Directive forces companies, along with their HR teams and managers, to gain a clear understanding of their salary-setting structures — including how they define and assess equal and equivalent work, apply pay criteria, and articulate their overall compensation philosophy.This is because organizations must be able to confidently explain why individuals are paid what they are based on policies, processes, and internal views on fair and structured pay. Compliance with the Directive not only reduces legal risks but also aims to build employee trust and moral – contributing to higher retention and amore engaged workforce.

How can Allshares assist?

In 13 months, the new regulations will apply to your organization. Allshares can assist companies at all stages of the Pay Transparency Directive implementation. By combining advisory and local expertise with market-leading software, we can help you:

• Assess your readiness
• Review your job architecture and job evaluation
• Conduct your pay equity analyses and reporting global scale
• Implement efficient processes and tools to manage Pay Transparency on a daily basis

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