Definition
An EU directive (2023/970) requiring employers to disclose pay information to job applicants and employees, report on gender pay gaps, and take corrective action where unjustified gaps exceed five per cent, with full implementation required by June 2026.
UK Context
Best Practices
- Conduct an internal pay audit now to identify and address unjustified gender pay gaps before the transposition deadline
- Develop objective, gender-neutral job evaluation criteria and transparent pay structures for all roles
- Remove salary history questions from recruitment processes and include pay ranges in all vacancy notices
- Establish systems for collecting, analysing, and reporting gender pay gap data by worker category
- Train HR teams and hiring managers on the new transparency obligations and the shift in burden of proof
Frequently Asked Questions
When does the Pay Transparency Directive take effect?
Member states must transpose the directive into national law by 7 June 2026. Reporting obligations are phased: employers with 250+ workers report annually from June 2027, those with 150-249 report by June 2027 and then every three years, and those with 100-149 report from June 2031 every three years.
What happens if the gender pay gap exceeds five per cent?
If reporting reveals a gender pay gap of five per cent or more in any worker category that the employer cannot justify with objective gender-neutral factors, the employer must conduct a joint pay assessment with worker representatives. This assessment must identify the causes, develop measures to address the gap, and evaluate effectiveness.
Does the directive apply to small businesses?
The reporting obligations only apply to employers with 100 or more employees. However, the transparency rights for job applicants (salary range disclosure, ban on pay history questions) and individual workers (right to request pay information) apply to all employers regardless of size.