EU Pay Transparency Directive: What Irish employers must know

With a 13% average gender pay gap across the EU, the European Parliament has sought to align member states’ processes on reporting and transparency of pay 

Siobhra Rush, partner and head of Lewis Silkin Dublin, and Jacqueline Ho, managing knowledge lawyer.

While awaiting the EU Pay Transparency Directive’s enactment into Irish law, employers should act now to ensure full transparency around any pay gaps between workers doing the same or similar work.

This is the advice of Siobhra Rush, partner and head of Lewis Silkin Dublin, and Jacqueline Ho, managing knowledge lawyer.

With an average gender pay gap of about 13% across the EU, the European Parliament has sought to align member states’ processes on reporting and transparency of pay, through the EU Pay Transparency Directive.

In this Q&A interview, Siobhra Rush, partner and head of Lewis Silkin Dublin, and Jacqueline Ho, managing knowledge lawyer, outline the immediate actions should seek to take.

The directive was adopted in 2023 and marks a step change in how pay equity will be regulated across the EU by introducing binding obligations on employers to ensure equal pay for equal work and work of equal value through enhanced reporting, transparency requirements, remediation and enforcement mechanisms.

What is the EU Pay Transparency Directive?

The aim of the directive is to strengthen the principle of equal pay for equal work between men and women.

The directive requires employers to create transparent and gender-neutral pay structures to enable workers to access information about how pay, and pay progression works in their organisations. Workers gain new tools to identify and challenge pay differences from the recruitment stage and throughout their entire employment. 

  

  

  

 

What are the key obligations for employers?

While Ireland’s final legislation is still pending, the core obligations from the directive include:

Pay transparency at recruitment: Employers must provide applicants with the starting pay or pay range at an early stage, for example, in the job advertisement or in writing before the interview. There will be a complete ban on employers asking candidates about their current or past pay history.

Ban on pay secrecy: Clauses preventing employees from discussing or disclosing their pay for equal pay purposes will be unlawful.

Right to pay information: Employees can request details of their own pay and average pay levels, broken down by sex, for categories of workers performing the same work or work of equal value. Employers must respond within two months and inform staff of this right to information on an annual basis. This obligation will also be in addition to existing employer obligations for data subject access request under the GDPR.

Transparent pay criteria: Employers will need to make the criteria used for determining pay, pay levels, and pay progression easily accessible to workers. These criteria must be clear, objective, and gender-neutral.

Gender pay gap reporting: Gender pay gap reporting will not be new to Irish employers, although the current reporting obligations will need to be aligned with the Directive’s requirements. The accuracy of this information will need to be confirmed by management. Notably, the management confirmation should take place after consulting with worker representatives, who will also be entitled to see the methodologies applied by the employer. Employers will also have to internally report gender pay gap information by employment category.

Joint pay assessments: Where pay gap reporting reveals a gender pay gap in a category which is 5% or more and cannot be justified by objective (or gender neutral) criteria and which has not been rectified within a six-month period, employers must carry out a joint pay assessment in cooperation with worker representatives (e.g. trade union representatives). Any unjustified differences must be remedied within a reasonable time.

Equal value assessments: Employers must assess which roles are of “equal value” using objective criteria, including skills, effort, responsibility, and working conditions. Employers will need to identify these criteria for each role and job category in its organisation to group those roles that are of “equal value” and establish remuneration structures accordingly. EU guidelines exist to help employers with such analysis but will need to be aligned with Irish legislation and practices.

Stronger enforcement: In pay discrimination claims, the burden of proof will shift to employers who must prove compliance with equal pay principles. Workers will have at least three years to bring claims. Member States will be required to impose effective, proportionate, and dissuasive penalties.

When does it come into force?

EU member states have until June 7, 2026, to pass implementing legislation, but most, including Ireland, are running behind. Implementation so far has been inconsistent — some member states such as Estonia, the Netherlands and Germany indicating that transposition will be delayed or phased. In fact, Sweden has recently called for a renegotiation of the EU Pay Transparency Directive itself, a request which has also been echoed by Business Europe and its Irish counterpart, IBEC. Notwithstanding these developments, the European Commission confirmed its expectation for all member states to transpose by the deadline. Employers should not treat delays elsewhere as a reason to pause their own preparations, in particular if they have operations in other jurisdictions.

What is Ireland's current position in regard to the directive?

Ireland has already introduced gender pay gap reporting under the Gender Pay Gap Information Act 2021, but no final legislation to implement the broader directive has been published. Two draft bills are in preparation:

(1) a General Scheme of the Equality (Miscellaneous Provisions) Bill 2024, which would transpose the obligations in relation to pay transparency in recruitment and the ban on pay history questions. It is unclear how this draft will progress in its current form.

(2) Pay Transparency Bill to cover the remaining requirements. This is still being drafted, but has not been given priority status under the government’s Summer legislative programme. It was expected that the draft Bill would not be ready by the June deadline, in particular because the Directive requires governments to provide employers with the guidance/tools they need to categorise their workforces. While the Department of Equality has said implementation will be phased, and employers will not be penalised for not having implemented all requirements under the Directive by June 2026, there is palpable frustration amongst employers at the lack of information available to them at this late stage.  

What should employers do now?

Irish employers should not wait for final legislation. Key steps include:

Carry out a pay audit: Analyse the roles in your organisation using the EU toolkits to identify any pay gaps between workers doing the same or similar work.

Review pay structures: document the objective, gender-neutral criteria behind pay structures and strategies and make any adjustments that may arise from the pay audit.

Train managers and HR: Ensure managers and HR know how to respond to pay queries and information requests from staff. In particular, recruiters and HR should understand the new rules on salary disclosure at recruitment and the ban on questions about pay history.

Identify and engage worker representatives: The directive gives worker representatives a significant role through consultation and collaboration. Employers should identify these groups early and establish how they will work together on pay transparency.

For more on how the directive will affect your organisation, see Lewis Silkin’s Pay Transparency Hub:   www.lewissilkin.com