What is Pay Transparency?

EU member states, including Ireland, must transpose the EU Pay Transparency Directive by 7th of June 2026. The primary purpose of this directive is to strengthen the principles of equal pay for equal work or work of equal value. This reform will have significant changes overall pay and compensation governance & it is envisioned that this directive will drive fairness, 
equity and accountability across the business landscape. 

This directive is fast-approaching and so, many organisations are only beginning to assess how these significant changes will affect them, including the impact it will now have in terms of Gender Pay Gap reporting obligations. 

Equal pay for equal work or work of equal value

Work of equal value means that two roles that require comparable levels of skill, effort, responsibility, and working conditions must be paid equally — even if the roles are different in nature or title. It shifts the focus from job descriptions to the substance of the work, ensuring a more robust, fair, and transparent pay system. 

Pay Transparency in reality

The directive will have implications for employers even at the recruitment stage. Employers will now be required to disclose salary levels or ranges in job advertisements or upon request from candidates during the recruitment process. Furthermore, employers will not be permitted to ask candidates about their salary history at recruitment stage.

Employers will now need to ensure that their pay scales/structures are based on objective, gender-neutral criteria and furthermore, that employees clearly understand the pay progression mechanisms that are in place relevant to each category of workers.

The directive will now afford an employee the right to request and receive information regarding pay levels and the pay levels of others performing the same work or comparable work.

We all remember the inclusion of pay secrecy agreements in contacts, right? Well, from June of this year, employees will no longer be restricted from disclosing their pay for the purpose of the enforcement of the principle of equal pay.

Preparing ahead of time

Organisations should now begin by revising their recruitment process. This will include developing job advertisements that are objective, with gender-neutral criteria used. Hiring managers should be involved in this process to ensure full compliance. Each role should be mapped into a category of worker based on the principle of equal work or equal value.

Following on from this, organisations will need to establish clear pay structures, that are aligned to job levels or a category of workers. This task may prove to be more of a challenge to organisations who, historically, made ad hoc decisions regarding pay levels. An audit of internal pay levels is a good starting point to help identify any gaps or patterns. Organisations must proactively move to address such legacy issues surrounding pay, bonuses, allowances etc.

From a data reporting perspective, organisations need to verify accuracy of their HR & payroll data. This is to ensure the accurate and timely reporting required under the directive. Employees will have the right to request their individual pay levels and average pay by gender for doing the same work or work of equal value and so, it’s important that internal procedures 
are developed to response to such requests, in compliance with the directive and GDPR regulations.

Organisations must be prepared for a huge cultural shift that this directive represents. This will involve buy-in from the leadership team about new transparency expectations, how decisions are to be made moving forward regarding pay decisions, and full alignment with regards to transparency, fairness and accountability.

Why are these reforms needed?

This directive will aim to respond to long-standing issues in how pay & remuneration has been managed across many sectors. Many organisations’ pay structures have become inconsistent, and consequently, it has been difficult for organisations to identify anomalies in their pay structures.

Another issue many organisations face is their approach to how roles or positions are graded or positioned within the organisational structure. As a result, pay rationale often varies by location, manager, department and other practices.

The retention of key players has also played a role in terms of internal influences on reward decisions in recent years. These decisions have been shaped by external pressures such as the economic landscape, skill shortages & industry-specific trends have all resulted in a reactive, market-driven adjustment to pay, outside of normal pay structures.

Preparation is key

Now is the time to accelerate and position your organisation to ensure that it is fully compliant by June. Proactive planning will reduce the risk of non-compliance, strengthen pay government and ensure you are taking meaningful measures to workplace equality.