New Pay Transparency Requirements Coming to the EU
This article is co-authored by Helena Almeida, Vice President and Managing Counsel at ADP.
By June 7, 2026, each European Union (EU) member state must introduce a new pay transparency law. Now is the time for employers to assess their compensation levels to ensure that pay ranges are based on objective criteria, are fair, and stay competitive.
The EU Pay Transparency Directive will require employers with EU-based employees to provide detailed information on their processes for determining compensation by role, as well as their criteria for raises, promotions and career progression.
Each EU member state must enact new transparency laws by June 7, 2026. These laws must, at a minimum, meet the requirements and provide the protections of the EU Pay Transparency Directive, but may also include additional consistent requirements or protections.
Who is covered by the law
The new pay transparency laws will protect all employees in the EU. That means that if an employer has any employees based in the EU, or plans to recruit there, they will need to meet the transparency requirements for those EU applicants and employees.
For additional data reporting requirements that apply to employers with at least 100 EU employees, read: The EU Pay Transparency Directive Is a Gamechanger.
Transparency requirements for job applicants
Beginning June 7, 2026, all EU job applicants are entitled to know the initial pay or pay range for the job for which they are applying. The Directive calls for the provision of pay information that ensures informed and transparent pay negotiations (e.g., in a job posting or prior to the job interview). To respond, employers must determine pay ranges for open roles in advance and be prepared to discuss pay at the initial interview. In addition, employers cannot ask candidates about their past or current salary.
Transparency requirements for current employees
EU-based employees will also be entitled to more information about pay, pay equity and what it takes to get a raise or promotion.
The EU Transparency Directive states that employers must disclose the average pay ranges for employees doing the same work or work of equal value, both in the aggregate and by gender. In addition, employers must provide their workers with the objective, gender-neutral criteria used to determine:
- pay for individual roles;
- salary bands or levels for the organization;
- raises; and
- promotions/career progression.
How to get ready
The EU Pay Transparency Directive does not change current EU law prohibiting discrimination in pay and other terms and conditions of employment. Rather, it adds transparency and reporting requirements to existing legislation.
Now is the time for employers to evaluate their compensation levels — both internally and externally — and ensure current pay ranges are fair, competitive, and based on objective criteria related to the work.
- Assess pay ranges and work. Begin by checking your salary levels by role and pay grade, checking whether the work requires comparable skills, effort and responsibilities. If not, adjust the groupings to reflect comparable work.
- Benchmark current pay ranges against competitors completing similar work at similar organizations in the same general region or recruiting area. Consider whether the work is performed on site, remotely or in a hybrid configuration, and compare apples to apples if possible.
- Perform a pay equity audit to identify any potential pay gaps.
- Investigate any pay gaps identified in the audit to determine whether they can be justified based on nondiscriminatory factors, such as objective qualifications, experience or performance.
- Correct any pay gaps that may be due to bias or that are out of line with internal and/or competitive pay ranges.
The most straightforward way to prepare for more pay transparency and reporting requirements is to make sure your organization provides equitable pay. Assess roles based on effort, skills and responsibilities needed, group similar roles, and determine whether the people doing those jobs are paid within the same range. Then continue to benchmark and monitor internal pay, so that the organization can stay competitive, attracting the people they need and retaining the people they have.
