The EU Pay Transparency Directive: What should HR do now?

Pay transparency is becoming a concrete part of HR's everyday work. Companies must be able to explain how pay is determined, which criteria are used, and why employees in comparable roles may receive different pay.

The EU Pay Transparency Directive sets minimum requirements for, among other things, recruitment, employees' access to pay information, and reporting. The requirements are set out in EU Directive 2023/970.

HR should start with roles and pay

The first step is getting the company's job structure in order.

HR must be able to identify employees who perform the same work or work of equal value. The assessment should be based on objective and gender-neutral criteria such as skills, effort, responsibility, and working conditions.

This means that roles, levels, and pay ranges need to be clearly defined. HR should also be able to document why an employee is positioned at a particular point in the pay range.

Recruitment needs to adapt

Candidates must be informed of the starting pay or pay range at a point when the information can be used in pay negotiations. Employers may not ask candidates about their current or previous pay.

HR should therefore establish the pay framework before recruitment begins, and ensure that the hiring manager knows the criteria.

Employees gain more insight

Employees will have the right to request information about their own pay level and about the average pay levels for women and men performing comparable work.

HR must therefore have a clear process for how requests are received, quality-checked, and answered. At the same time, managers need to be equipped to explain the organization's pay principles in a clear and respectful way.

An HR system can create clarity

An HR system can bring together information on role, level, gender, working hours, pay, and variable pay components.

This makes it easier to maintain job architecture and pay ranges, identify comparable employee groups, and track pay differences over time. Dashboards can also give HR an ongoing overview, so that any data issues or unexplained differences are caught early.

HiBob is a concrete example of how an HR system can support this work. In Bob, HR can work with the job catalog, job levels, pay data, and compensation bands. Bob Compensation can also analyze pay across roles, levels, gender, location, and more, as well as support approval processes and documentation related to pay adjustments.

The system can support the work. HR must still define the criteria, ensure data quality, and assess the reasons behind pay differences.

Start before the reporting deadline

The directive introduces reporting requirements based on company size. The first reporting deadlines apply from June 7, 2027 for companies with at least 150 employees. Companies with 100 to 149 employees will, under the directive's minimum requirements, be covered from June 7, 2031.

The Danish implementation has not yet been published as an adopted amendment to the Equal Pay Act. Companies should therefore follow developments on the Danish Parliament's website and Retsinformation.

We recommend gaining an overview and building structure around how your HR tech can support this.

Book a session if you'd like a brief conversation about your HR system and how we can help make it easier for you to meet the EU requirements.