The EU Pay Transparency Directive (2023/970) is one of the most significant changes in recruitment and HR compliance in 2026. It is designed to strengthen equal pay for equal work or work of equal value, reduce gender and intersectional pay gaps, and improve pay transparency across all EU member states.
All EU countries must implement the Directive by 7 June 2026, making it crucial for employers, HR teams, and recruiters to understand their obligations.
This article answers the most important questions about the Directive and provides practical guidance for compliance.
The EU Pay Transparency Directive is a legal framework that requires employers to ensure fair, transparent, and non-discriminatory pay practices. Its key goals are:
Reduce the gender pay gap
Promote pay equality for all workers, including those facing intersectional discrimination (e.g., gender + ethnicity + disability)
Make pay criteria and progression rules transparent
Ensure equal access to salary information for employees
It applies to all types of work, from full-time contracts to traineeships, and includes all forms of compensation: salary, bonuses, benefits, and in-kind perks.
Employers: public and private sector organizations
Workers: anyone with an employment contract, trainees, or workers under collective agreements
Pay types covered: base salary, bonuses, commissions, allowances, and other benefits
Employers must take several steps to ensure transparency and non-discrimination in recruitment:
Salary disclosure: Job ads must include starting salary or a salary range, or provide this before the first interview
Ban on pay history questions: Employers cannot ask candidates about past or current pay
Gender-neutral job ads: Job titles and descriptions must be inclusive and non-discriminatory
Recruitment practices: Hiring must be based on objective skills and qualifications, not gender or other protected characteristics
Example: Instead of asking “What was your previous salary?” ask “This position pays between €40,000–€50,000. Does that align with your expectations?”
Employees now have the right to access pay information:
Their own pay – to ensure they are being paid fairly
Average pay by gender for their job category – helps identify potential pay gaps
Pay criteria and progression rules – including promotions, bonuses, and raises
Access to pay structure documents – pay secrecy clauses are no longer allowed
Important: Employees cannot request another individual employee’s salary. Transparency applies to aggregate data and objective criteria, not private information.
The Directive introduces new reporting and monitoring duties:
Companies with 250+ employees: annual reporting on gender pay gaps and pay structure
Smaller companies (≥150 initially): report every 3 years
Reports must include:
Average pay
Gender pay gap
Pay distribution by quartile
Share of men/women receiving bonuses
Pay progression over time
Joint pay assessments are required if the pay gap exceeds 5% and cannot be justified by objective, gender-neutral criteria
Tip for recruiters: Build reporting systems before the deadline to avoid administrative burdens and ensure compliance.
Non-compliance can lead to significant consequences:
Employees can claim full back pay, including bonuses or in-kind benefits
Employers bear the burden of proof: any pay difference must be justified objectively
Member states must enforce effective, proportionate, and dissuasive fines
Example: If a company pays women less than men for the same work without an objective reason, the company could face back pay claims and financial penalties.
Always include salary ranges in job ads
Stop asking about past pay in interviews
Document pay criteria and ensure they are objective and gender-neutral
Prepare for employee pay data requests
Large companies: start building gender pay gap reports now
Review compensation frameworks to ensure fairness and compliance
Why it matters: Companies that follow these guidelines reduce legal risk, improve employee satisfaction, and enhance employer branding.
Q: Can employees ask for their coworker’s salary?
A: No. They can only request average pay by gender for their category, not individual salaries.
Q: Does the Directive apply to bonuses and benefits?
A: Yes. “Pay” includes base salary, bonuses, allowances, benefits, and in-kind compensation.
Q: What if my company is small?
A: Smaller companies initially report every 3 years, but transparency obligations still apply.
Q: When does this become mandatory?
A: EU member states must transpose the Directive into national law by 7 June 2026.
This article was written by Valentina Charalambous, founder of Work Channel Recruitment Agency, a leading recruitment agency in Cyprus.
Valentina has over 10 years of experience in recruitment, including nearly 5 years in an international organization, working with complex departments and large teams. She has supported numerous employers in Cyprus across a wide range of industries, including FinTech, Hospitality, Gaming, Oil & Gas, Shipping, Tech, and IT, helping them attract top talent and successfully fill key positions.
Valentina holds a Bachelor’s degree in Economics from the University of Cyprus and a Master’s degree in Management from the University of Limassol, with a specialization in Human Resources. She is also a certified trainer accredited by the Human Resource Development Authority of Cyprus.
Through her extensive experience, Valentina combines strategic insight, HR expertise, and practical recruitment solutions, guiding companies in a rapidly evolving talent landscape.
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