The EU Pay Transparency Directive: What it means for UK businesses and how to comply

The EU Pay Transparency Directive (EUPTD) is a recent law aimed at bringing fairness and equity to compensation across the EU. The law sets out new requirements for organisations to share salary information with candidates and report on pay gaps, among other initiatives. 

The EUPTD also gives victims of pay discrimination more routes to justice and the ability to receive compensation. The burden of proof shifts to organisations, who are now required to prove that discrimination did not happen. EU member states are also advised to set penalties for not complying with the equal pay rules.

Some countries already have laws in place that promote equity in pay, but the gender pay gap remains around 11% in the EU. The EU Pay Transparency Directive exists because gender pay fairness remains a priority and existing equal pay laws have proven difficult to enforce. 

The EUPTD introduces new rights and transparency for jobseekers and employees, aimed at improving equal pay and reducing gender pay gaps. To support these rights, organisations are required to comply with the following rules: 

• Disclose salary band to jobseekers: Employers need to provide candidates with an accurate pay range for the role before the interview process begins. Organisations can choose whether to share this publicly on job adverts or privately with shortlisted candidates.

• Refrain from asking about past salary: Organisations aren’t allowed to ask candidates what they’ve been paid in previous roles. Salary negotiations must be based on the given pay scale, rather than a jobseeker’s past earnings.

• Provide information about average pay levels: Employees have a right to request details about the average pay level for their role (or roles of equal value), including a breakdown by gender.

• Approach pay-setting more fairly: Businesses must base pay rates and salary bands for roles on factors like the skills and responsibilities required, rather than subjective factors.

• Allow employees to discuss pay: Organisations cannot ban employees from talking to each other about pay and reward, even if it was previously prohibited in their contracts.

The Directive’s rules apply to all organisations with employees in EU member states, regardless of headcount or where the headquarters are based.

As well as the main requirements of the Directive, organisations with 250+ employees also need to comply with specific reporting requirements. 

Eligible organisations must: 

• Report on gender pay gaps: Organisations are required to provide a report on gender pay gaps every year, starting in 2027.

• Address unjustified pay gaps of 5% or more: If a report shows a pay gap that crosses this threshold it must be justified or closed within six months. If it isn’t, the organisation must carry out a joint pay assessment with employee representatives.

These obligations are set out by the new EU pay transparency rules, but member states are free to expand on them. Organisations should check their relevant national laws to understand whether stricter reporting requirements apply.

The first milestone for relevant organisations was the 7 June 2026 deadline for compliance. The next major reporting deadlines are: 

• 7 June 2027: First mandatory gender pay gap reports for organisations with 150+ employees

• 7 June 2031: First mandatory gender pay gap reports for organisations with 100-149 employees

Although organisations with 100-149 employees aren’t required to publish reports until five years after the Directive goes into effect, there’s nothing stopping them from reporting earlier than this if they wish.

The deadline for EU member states to implement the Directive was 7 June 2026, but only Italy and Slovakia adopted the legislation by this date. Many countries have draft legislation ready or have partially implemented the rules, but others are further from completion. Ireland is implementing a phased rollout, and remains committed to the rules.

For organisations that have employees in EU member states, it may be wise to act in accordance with the EUPTD even if it is yet to be adopted into national law — especially if there are existing pay transparency laws that apply. It may also be easier to comply with the Directive as soon as possible if some of your employees reside in Italy or Slovakia, to improve transparency across the organisation. 

The new pay transparency rules don’t apply to UK employees, but UK organisations still need to comply if they have any employees in an EU member state. The compliance requirements are the same whether you employ directly through a local subsidiary or use an Employer of Record (EOR) service. 

Even if your organisation isn’t directly affected by the Directive, pay transparency should still be on your radar. Here’s why: 

• Gender pay gap reporting is already mandatory for some UK businesses: Organisations with 250+ employees must report on gender pay gap information. From 2027, it’s also mandatory to publish an action plan that explains how the organisation is taking action to close the gap.

• It’s easier if you decide to hire in the EU in the near future: If you’re considering expanding to the EU, it’s sensible to align your organisation’s approach to pay transparency with the EUPTD for an easier transition.

• Similar laws could be introduced in the UK: The gender pay gap in the UK is currently 6.9%. While it’s lower than the EU average, it’s possible that the UK government will introduce new rules — especially given the introduction of gender pay gap action plans and menopause action plans in the Employment Rights Act 2025.

• Transparency aids trust and retention: When employees understand how their pay is determined and feel confident it's fair, trust in the organisation grows. That translates directly into reduced turnover — a significant cost saving for any business.

• Employees care about fairness and transparency: In competitive hiring markets like London, Dublin, Manchester, and Edinburgh, candidates are increasingly choosing employers based on perceived fairness and culture. Publishing salary ranges and committing to equitable pay sends a powerful signal.

More data equals better decisions: Pay audits often surface inconsistencies that have built up over years of ad hoc salary decisions. Addressing these proactively is far less costly than doing so reactively under legal pressure.

Whether you're based in Dublin, Belfast, London or Edinburgh, here's where to focus your energy right now:

• Audit your pay structures: Understand what you're paying, to which employees, and why. Break it down by gender, role category, and level. If you can't explain your pay decisions clearly, you're at risk — legally and reputationally.

• Review your job adverts: For Irish employers, salary range disclosure is now required before the interview stage. For UK employers, market expectation is already there. Start normalising this practice now and you'll be ahead of both the legislation and your competitors.

• Establish objective pay criteria: Pay decisions should be grounded in clear, gender-neutral criteria — skills, experience, performance, and market data. Document these criteria and ensure managers are applying them consistently.

• Prepare for employee requests: Under the incoming Irish legislation, employees will have the right to request pay comparisons. Make sure your HR systems can generate this data accurately and efficiently.

Don't wait for the legislation to be finalised: The joint pay assessment process — required when a gender pay gap of more than 5% is identified — can be complex and resource-intensive. Starting your audit now gives you the time to address gaps without the pressure of a looming deadline.

The right HR software saves you time and effort when it comes to storing data, running reports, and evidencing that you’ve met the pay transparency rules’ requirements. HR tools like Personio allow you to:

• Manage job postings: Display a role’s salary details clearly before the interview process.

• Link job families to pay groups: Keep salary ranges consistent across roles of a similar level throughout the organisation.

• Document pay decisions: Record pay decisions clearly and with documentation to create an evidence trail with reasoning.

• Store salary histories: Respond quickly to employee requests and run audit-ready reports on salary changes over time.

• Report on gender pay gaps: Centralise relevant HR data, filter by job groups, and export easy-to-read reports on gender pay gaps.

• Keep compliance records together: Be ready for audits with evidence of your policies, approvals, communications, and report exports in one structured folder.

If you employ individuals in EU member states or plan to, choose HR software that can handle compliance with the EU Pay Transparency Directive.

Pay transparency and gender pay gap reporting is now a key part of HR operations if you have employees in EU member states, but it’s worth taking seriously even if you don’t. With gender pay gap reporting already mandatory for some UK businesses, it’s smart to strengthen your processes and consolidate your HR data in one place for easier reporting and evidencing. 

Managing pay transparency obligations manually across spreadsheets, disconnected systems, and siloed HR data is a recipe for risk. Personio brings your people data together in one place, making it straightforward to:

• Run compensation reports broken down by gender, role, and level

• Store and access salary history with a clear audit trail

• Set and communicate salary bands across the organisation

• Generate the data you need to respond to employee pay enquiries quickly and accurately

Whether you're navigating Ireland's EU Pay Transparency Directive implementation, strengthening your gender pay gap reporting in the UK, or getting ahead of future legislation, having the right HR infrastructure in place makes all the difference.

The new EU pay transparency rules apply to organisations with employees in EU member states. It doesn’t matter where the company is headquartered — it’s the location of employees that’s relevant for whether the EUPTD applies or not. This means that UK businesses with employees in EU member states need to be aware of and comply with the EU Pay Transparency Directive.

The compliance deadline for the EU Pay Transparency Directive was 7 July 2026, however most EU member states are yet to implement the rules into national legislation. The deadline for organisations with 250+ employees to submit their first annual gender pay gap report is 7 June 2027.

Companies with 250+ employees must report on gender pay gap information for the organisation. If there’s a 5%+ difference in pay between genders the organisation must explain why it’s justified, or close the gap within six months. Organisations that fail to do this must complete a joint pay assessment with employee reps.