Pay Transparency
Gender equality is crucial for attracting and retaining employees. The directive aimed at establishing a transparent wage structure for EU member states not only introduces new legal obligations but also offers an opportunity for your company to become a more competitive and attractive employer.
Based on our Pay Transparency online survey conducted in September 2024
About the EU Pay Transparency Directive in a nutshell
The directive, which came into effect on June 6, 2023, aims to reduce gender pay gaps and promote workplace equality by increasing transparency in pay systems. Organizations must establish a wage structure that ensures equal pay for women and men performing the same or equally valued work.
The directive requires regular monitoring of gender pay gaps and the implementation of necessary measures if the gap exceeds 5%, to ensure equal pay. Employers must prepare to be able to provide wage reports in compliance with the regulation and ensure the pay structure related information flow. This requires a job evaluation system based on objective, gender-neutral criteria, as well as a transparent pay system and employee communication in line with the directive.
About the Pay Transparency directive
What are employers' obligations under the Pay Transparency Directive in practice?
- Transparent wage structure
- Reporting obligations
- Joint wage review
- Information for employees
- Recruitment
Transparent wage structure
A transparent wage structure, based on objective, gender-neutral criterias, should be in place to allow for the evaluation of employees in terms of the value of their work, ensuring that they are compensated equally and accordingly.
Reporting obligations
The frequency of reporting is determined by the size of the organisation's workforce (see table).
In cases where the gender pay gap exceeds 5% and cannot be justified by objective, gender-neutral criteria, the organisation must present the measures it has taken to ensure gender equality.
Number of employees
Reporting threshold and frequency
Reporting threshold and frequency
250+
No later than June 7, 2027
Annually, based on the previous calendar year
150-249
No later than June 7, 2027
Every three years, based on the previous calendar year
100-149
No later than June 7, 2031
Every three years, based on the previous calendar year
Less than 100
Member States shall not prevent employers from voluntarily sharing information. In addition, they may require such employers to provide information on remuneration.
Joint wage review
A joint pay assessment should be conducted to identify, address, and prevent pay disparities between female and male employees that are not based on objective, gender-neutral criteria.
Such an assessment is required if the gender pay gap exceeds 5%, cannot be explained by objective, gender-neutral factors, and has not been resolved within six months. In these cases, the pay assessment must be carried out jointly by the employer and employee representatives.
Information for employees
Employees must be regularly informed about the pay policy and any changes. An open communication channel should be provided where employees can ask questions about their pay and the compensation system.
Recruitment
Applicants must be informed about the initial pay or pay range associated with the open position during the interview process or, at the latest, before the employment contract is signed.
What HR processes and systems are affected by the Pay Transparency directive?
Recruitment and selection: pay transparency must be ensured already during the recruitment and selection process.
It is not permitted to ask candidates about their current or previous salary history.
Job evaluation: The principle of "equal pay for equal work," as outlined in the directive, can only be met if job positions are comparable. This requires a job evaluation system based on objective, gender-neutral criteria.
Compensation strategy: The principles and rules of the pay policy must be clear and accessible to employees. Employees have the right to request information regarding their pay from the employer.
Talent management: The expectations and criteria for career advancement must also be objective and accessible to employees.
What PwC can help you with
Our modular service is designed for flexible use, allowing you to tailor it to your specific needs. Whether you require a comprehensive package or just a few selected modules, our adaptable approach ensures you receive precisely what you need.
Learn everything about the directive, receive ready-to-use kick-off communication material package and get a high-level readiness analysis
Find out if your processes, your job architecture, the way of working and the available information for the employees comply with the directive and get a list of action points
Get a gender pay gap reporting tool built according to the directive and for future use and see the result of the gender pay gap analysis
Have comprehensive expert help to implement the necessary action points to ensure the organization readiness to meet the requirements
