The EU Pay Transparency Directive’s transition period is coming to an end, and the directive must be incorporated into every EU member state’s national law during 2026. That means the new rules are about to take effect. This info pack helps employers understand how to meet the directive’s obligations and what action is required.
In this info pack: what every employer needs to know about the EU Pay Transparency Directive
- What is the directive trying to achieve?
- What counts as work of equal value?
- Reporting and obligations for companies of different sizes
- The reverse burden of proof requires accurate reporting
- What happens if pay gaps are found?
- What is a joint pay assessment?
- The employee’s right to information — what it means for employers
- How does the Pay Transparency Directive change recruitment?
- Checklist: how to prepare for the directive coming into force
- Pay transparency is fundamentally a data project — meeting the obligations with software
What is the EU Pay Transparency Directive trying to achieve?
The Pay Transparency Directive aims to reduce the gender pay gap and make pay practices more transparent and fair. The directive isn’t trying to eliminate pay differences entirely — it requires that the same pay is paid for the same work or work of equal value, and that any inequitable differences can be identified. Where pay differences exist, employers must be able to justify them on objective grounds.
You need to be able to define what counts as work of equal value
The directive requires equal pay for the same work or work of equal value. To make that possible, employers must establish clear, objective criteria for evaluating job demands. The comparison has to be based on roles and tasks — not on individuals.
In practice, it can be difficult to separate an employee’s core role from the additional responsibilities or tasks that have organically piled on over time. Pay transparency requires role descriptions to be cleaned up and brought up to date, so that the evaluation of job demands — and the pay that follows — is objective and fair.
Reporting and obligations for companies of different sizes
The exact details of reporting to authorities will still be clarified by national legislation, but the directive requires companies with at least 100 employees to report on gender pay gaps regularly. In Finland, reporting is planned to happen via the Incomes Register, which eases the administrative burden.
It’s important that the company can also produce the report itself when needed and pass the information forward, as well as demonstrate to its employees and other stakeholders that the organisation operates in line with equitable pay practices.
The reverse burden of proof requires accurate reporting
Employers need to understand that the directive places the burden of proof on the employer if a suspicion of pay discrimination arises. If an employee believes they’ve been subject to pay discrimination and takes the matter forward, it’s the employer who has to prove otherwise. The employer must be able to show conclusively that any pay differences are based on objective reasons — such as job demands, responsibilities or experience — and not on factors like gender. That requires clear practices, documented processes, and accurate records of every pay decision.
What happens if pay gaps are found?
If reporting to the authorities reveals a pay gap of at least 5% between genders within the same group of workers, and the gap can’t be justified on objective, gender-neutral grounds, the employer must either correct the gap on their own initiative or initiate a joint pay assessment.
What does a joint pay assessment mean?
A joint pay assessment is an evaluation carried out together by the employer and employee representatives to determine whether equal pay is paid for work of equal value, regardless of gender. The point isn’t to publish individual salaries, but to identify structural and unjustified pay gaps.
A joint pay assessment isn’t an automatic obligation. It’s required when a company’s pay reporting shows a gender pay gap of at least 5% that can’t be objectively justified — for example, on the basis of responsibilities, skills or experience.
The exact details of the joint pay assessment process will be clarified as the legislation matures. The spirit of the directive points toward something resembling co-determination negotiations: a structured collaboration between the employer, employees, and their representatives.
The employee’s right to information — what it means for employers
Once the directive enters into force, current employees gain the right to request pay comparison information. In practice, an employee can ask about their own pay level and how it compares to colleagues doing the same or work of equal value, broken down by gender. Employers also have to make transparent the criteria used to determine pay and pay rises. Every employer needs to understand what the directive requires, what level of detail and timeframe applies to providing pay information, and how to handle requests in practice.
Read more about the EU Pay Transparency Directive in our complete guide for employers.
The Pay Transparency Directive changes recruitment — here’s what employers need to understand
The directive coming into force changes how many recruiters work. Going forward, pay has to be discussed more openly and earlier in the recruitment process than has typically been the case. The directive obliges employers to disclose the pay level for the role already at the recruitment stage. This information must be shared with all candidates equally, no later than before any pay negotiation. The employer has to share either the starting salary or a pay range based on objective, gender-neutral criteria. Employers are also no longer allowed to ask about a candidate’s current or past salary — pay negotiations must focus on the role being applied for, with pay defined by objective criteria.
Checklist: how to prepare for the Pay Transparency Directive coming into force
Make sure these are in place well before the directive enters into force:
- Clean up and structure your pay data: make sure the different pay components (base salary, bonuses, experience increments, and so on) are correctly and consistently broken out across payroll and HR systems.
- Define roles and job levels: build or update an objective job evaluation framework. Evaluate the role, not the individual.
- Update your recruitment process: remember that the starting salary or pay range must be communicated early on, and you can’t ask candidates about their previous pay.
- Set up a process for information requests: define how employees can submit information requests and how to respond quickly enough without compromising anyone’s privacy.
- Be ready to change how you talk about pay: conversations about pay are inevitably going to increase and become more open — prepare leadership and managers to have open, fact-based pay conversations.
Pay transparency is fundamentally a data project — how to meet the obligations with software
Once authorities and employees start looking at pay data, juggling Excel sheets won’t cut it. You need to make sure that things like experience increments, commissions and bonus practices are split out as their own pay components, so that variable and fixed parts of pay can be evaluated separately.
The obligations of pay transparency can also be solved with software. Evenpay is a software solution that helps you manage pay transparency in a sustainable, secure way. With the platform, things like job evaluation, pay band modelling, and secure data reporting all happen in one place. Administrative work decreases, clear processes let you respond to information requests quickly and easily, and the risk of unjustified pay gaps emerging is minimised.
Want to hear more about Evenpay? Schedule a free 30-minute demo and we’ll walk through how Evenpay prepares your organisation for the Pay Transparency Directive.
