Aim of the Pay Transparency Directive (PTD)
The PTD aims to strengthen the principle of equal pay for equal work in practice. It imposes increased pay transparency duties for employers in EU member states both at the recruitment stage and throughout the employment relationship and provides for stronger enforcement mechanisms. Crucially, the PTD sets a floor, not a ceiling—member states may, and in some cases already do, impose more stringent obligations.
Member states were required to implement the PTD by June 7, 2026. Not all have done so, and until they do, their current requirements remain in force.
The U.K.'s position
The U.K. will not follow the PTD, although Northern Ireland may do so in the future. The U.K.'s current rules focus more on pay gap reporting. From 2027 the reporting rules will include an obligation for employers to provide action plans on gender pay inequalities, and the U.K. government has expressed an intention to extend U.K. pay gap measures to the characteristics of race and disability.
However, there may be an indirect effect where multinational employers with operations in both the U.K. and EU member states may adopt a unified approach across their international practices, including the U.K.
Transparency obligations for all employers
Increased pay transparency on pay history and pay setting will be an obligation on all employers of any size.
Job applicants
The PTD requires employers to provide greater transparency by: disclosing pay rates to job applicants; a ban on asking candidates about their pay history; and ensuring recruitment processes are non-discriminatory and gender neutral.
Existing employees
Employers must make objective, gender-neutral criteria for pay, pay levels and pay progression easily accessible.
Workers have the right to request information about their own pay and average pay levels for other workers (by gender) who are on similar terms. Employers must also inform workers of their right to request this information annually.
There is a prohibition on pay secrecy clauses and employers cannot prevent workers from disclosing their pay for equal pay enforcement purposes.
Gender pay gap reporting obligations for larger employers
Which organizations must produce a report and by when?
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Employers with 250 workers or more are required to submit first gender pay gap report by June 7, 2027 based on 2026 data and then every year.
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Employers with 150–249 workers are requiredto submit first gender pay gap report by June 7, 2027 based on 2026 data and then every three years.
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Employers with 100–149 workers are required to submit first gender pay gap report by June 7, 2031 and then every three years, although Member States retain discretion to lower the threshold from 100 to 50 employees for pay reporting obligations.
Contents of the report
Employers must provide information on the:
1. mean and median gender pay gaps including any variable pay (bonus)
2. proportion of men and women receiving these pay components
3. gender distribution in each pay quartile
4. gender pay gap by categories of workers split between base and variable pay.
The report must detail where a pay gap of over 5% exists between any category of worker that cannot be objectively justified in a gender-neutral way.
Where is the report to be published?
Data from items 1 through 3 must be provided to the relevant authority and be made publicly available. Data from item 4 must be provided to workers, their representatives or the relevant authority on request.
Joint pay assessment: gender pay gap of at least 5%
A gender pay gap of at least 5% in any category of workers which cannot be justified by objective and gender-neutral factors must be remedied within six months of reporting. Failing this, employers must conduct a joint pay assessment with worker representatives. The results must be made available to workers, their representatives, and potentially labour inspectorates or equalities bodies.
Consequences of non-compliance
The PTD's enforcement regime provides for unlimited compensation for breaches with details to be decided by member states. Where workers' challenge pay inequities, employers must demonstrate that the transparency duties are met.
What should organizations be doing now?
Against the backdrop of fragmented implementation, with many member states having missed the June 7, 2026 deadline, each member state's individual transparency rules will still apply. However, in readiness for the new rules employers should:
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review pay transparency across recruitment and the existing workforce
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conduct structured review of salary architecture and compensation polices (i.e. total remuneration, not just base salary) to identify disparities and justify pay differences
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categorise roles using objective, gender-neutral criteria supported by adequate data and documentation
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assess whether pay gaps of 5% or more exist and whether they can be objectively justified
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train HR and managers to ensure they can comply with the new obligations
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monitor ongoing implementation of the PTD into local law in EU member states where your organization has operations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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