The EU is changing the way employers talk about pay. The new Pay Transparency Directive, adopted in May 2023, requires companies across Europe to share clearer information about salaries, close pay gaps, and report more openly on compensation.
With the June 2026 deadline fast approaching, now is the time for organizations to get ahead — by aligning pay structures, refining reporting, and ensuring compliance.
The Directive Sets Clear Requirements for Employers
The Directive applies broadly — covering public and private employers alike, and extending to full-time, part-time, fixed-term, and payroll employees, as well as agency workers and managers. While certain groups like interns may be excluded, independent contractors could still fall under its scope if their work qualifies as an employment relationship under local law.
Failure to comply won’t just mean fines. In some jurisdictions, the burden of proof in workplace disputes may even shift to employers, making early compliance not only a legal priority but a strategic one.
Key Requirements for Employer
- Transparent Pay Structures
Employers must implement pay structures based on objective criteria, including:
- Skills
- Effort
- Responsibilities
- Working conditions
Roles of equivalent value must be defined, categorized, and documented. Additional relevant factors such as education or experience may also be included, while ensuring soft skills are appropriately valued in pay decisions.
- Transparency Obligations
- At hiring: Candidates must be informed of salary ranges prior to interviews.
- During employment: Employees should have access to criteria used for salary determination and progression.
- Employees may request their own pay information as well as aggregated pay data for comparable roles. Employers must respond within two months and provide annual reminders of these rights.
- Reporting Obligations
Organizations with larger workforces are required to report on pay differences. Reports should be reviewed and confirmed by management, coordinated with employee representative bodies, and shared internally. Aggregated results may be published by central monitoring authorities in certain countries. - Joint Pay Assessments
If a pay discrepancy exceeding 5% within a role cannot be objectively justified, employers may need to implement a corrective plan in consultation with employee representatives. Plans should include:
- Submission and approval of corrective measures
- Sharing results with employees and representative bodies
- Implementing agreed adjustments to pay structures or role classifications
Why This Matters
The Pay Transparency Directive reflects Europe’s commitment to corporate transparency, accountability, and fair employment practices. Employers who proactively prepare for these requirements can reduce legal and financial risk, strengthen internal trust, and demonstrate strong governance across their operations.
How Cresco Can Support You
Cresco Global supports organizations in managing regulatory and operational challenges across different markets. Our team helps clients strengthen governance practices, align with evolving requirements, and build strategies that promote responsible and sustainable growth.
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