Upcoming Pay Transparency Obligations – How Can Organisations Prepare?
The EU Pay Transparency Directive (the Directive) came into effect at EU level in June 2023. Member states including Ireland have until 7th June 2026 to transpose the Directive into domestic law. The broad aims of the Directive are to ensure Employers adopt fair compensation practices and take action to identify any compliance gaps. Some of the most impactful changes coming in under the Directive include:
• an Employee right to access pay information
• a prohibition on pay secrecy clauses, and
• pay transparency for job applicants.
This article will examine these key changes, what they mean for Employers and how Organisations can prepare to ensure compliance before the June 2026 deadline.
Employee Right to Access Pay Information
Article 7 of the Directive sets out that Employees shall have the right to request and receive in writing, information on their individual pay level and the average pay levels, broken down by sex, for categories of workers performing the same work as them or work of equal value to theirs.
What This Means for Employers
In practical terms, compliance tasks facilitating this new Employee right include:
• Identifying categories of Employees carrying out work of equal value.
• Responding in writing to an Employee request for pay information within two months.
• Preparing to deal with Employee requests made through their representatives or through an equality body (transposing legislation required to confirm details of this form of request).
• Diarying an annual reminder to Employees concerning this right to pay information and how it can be exercised.
How Organisations Can Prepare
Preparatory steps for compliance could include:
Categorisation of Employees: Employers will need to access and analyse pay data by ‘work category’ which will group Employees who are performing work of equal value together. Given that a response to Employee requests is required within two months, Organisations may need to establish a system for promptly collecting and reporting the relevant pay data required by the Directive. This may involve upgrading HR information and payroll systems to ensure accurate and comprehensive data collection.
Communication and Training: It may be worthwhile to develop a communication strategy to inform Employees about their pay information rights. Managers and HR staff may also need training on handling pay transparency inquiries effectively and respectfully.
Annual Reminders: Employers must remind Employees, on an annual basis, of their right to receive the relevant pay information and of the steps required to exercise that right. Organisations should consider the timing of this annual reminder and how to deal with a large volume of requests that may follow on from the reminder.
Prohibition on Pay Secrecy Clauses
Article 7 also provides that Employees shall not be prevented from disclosing their pay for the purpose of the enforcement of the principle of equal pay. In effect, pay secrecy clauses that restrict Employees from disclosing information about their pay will be prohibited.
What This Means for Employers
Employers will no longer be permitted to include a contractual obligation prohibiting Employees from disclosing their pay. It is notable that the Directive prohibits pay secrecy that obstructs the enforcement of the principle of equal pay. It would follow that Employers will still be able to prohibit Employees from making general disclosures of pay levels that are not connected to the enforcement of the principle of equal pay.
How Organisations Can Prepare
Review employment contracts to see if they include pay secrecy clauses and ensure that any such clauses are either amended or removed before the new pay transparency obligations come into effect in June 2026.
Pay Transparency for Job Applicants
Article 5 of the Directive provides that job applicants shall have the right to receive, from the prospective Employer, information about:
(a) the initial pay or its range, based on objective, gender-neutral criteria, to be attributed for the position concerned; and
(b) where applicable, the relevant provisions of the collective agreement applied by the Employer in relation to the position.
Such information shall be provided in a manner that ensures an informed and transparent negotiation on pay, such as in a published job vacancy notice, prior to the job interview or otherwise.
In addition, an Employer shall not ask applicants about their pay history during their current or previous employment relationships.
What This Means for Employers
This requirement will largely impact the recruitment process. Employers will need to review their approach to interviews and job advertisements to ensure compliance with the new pay transparency measures.
How Organisations Can Prepare
Preparatory steps to ensure compliance could include:
Job Advertisements: Review pay and salary information that is included in job advertisements to ensure it is based on gender neutral criteria for the position concerned.
Interview Processes and Questions: Review recruitment and interview processes to ensure candidates are not asked questions about their current or historic salaries.
Job Descriptions: It will be important to ensure that job vacancy notices and job titles are gender-neutral and that recruitment processes are led in a non-discriminatory manner.
Data Protection Considerations
The disclosure of pay data that identifies an individual Employee may violate their right to privacy. There is therefore an inherent tension between the aims of the Directive and the aims of the GDPR. As the Directive requires Employers to process personal data, they must exercise caution to ensure that compliance with pay transparency obligations does not breach data protection regulations. Organisations must therefore conduct a delicate balancing exercise to ensure that pay transparency data and information will not be used to identify individual Employees. Organisations should ensure to consider the individual privacy rights of Employees when implementing pay transparency measures.
Looking Ahead – Turning Compliance into Competitive Advantage
Pay transparency compliance represents a regulatory shift in how Organisations approach pay, equity, and workforce strategy. Forward-thinking Organisations have an opportunity to demonstrate leadership in gender equality and position themselves as attractive Employers in a competitive market. For Irish business leaders, the coming months present a valuable window to take the lead in successfully navigating these regulations into 2026 and beyond.
At Adare, we are working with clients across Ireland in navigating this transition. Our Reward and Pay Equity Services include:
• Gender Pay Gap Analytics and Reporting
• Salary and Benefits Benchmarking
• Pay Transparency Compliance Audits
• Pay Transparency Policy and Compliance Framework
• Pay Transparency Communication Strategy
For support with turning compliance into competitive advantage, get in touch today to start your Organisation’s pay transparency journey.
Adare is a team of expert-led Employment Law, Industrial Relations and best practice Human Resource Management consultants. If your Organisation needs advice, support, or guidance about compliance requirements or any HR issues, please contact Adare by calling (01) 561 3594 or emailing info@adarehrm.ie to learn what services are available to support your business.